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THE IMPORTANCE OF ENTREPRENEURSHIP IN TANZANIA

ARE;

Creation of Employment-

- Entrepreneurship generates employment.

- It provides an entry-level job, required for gaining experience and
training for unskilled workers.
- Innovation- It is the hub of innovation that provides new product
ventures, market, technology and quality of goods

Impact on Society and Community Development

- A society becomes greater if the employment base is large and

diversified. It brings about changes in society and promotes facilities
like higher expenditure on education, better sanitation, fewer slums,
a higher level of homeownership. Therefore, entrepreneurship
assists the organisation towards a more stable and high quality of
community life.

Increase Standard of Living- Entrepreneurship helps to improve

the standard of living of a person by increasing the income. The
standard of living means, increase in the consumption of various
goods and services by a household for a particular period.
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Supports research and development

New products and services need to be researched and tested before

launching in the market. Therefore, an entrepreneur also dispenses finance
for research and development with research institutions and universities.
This promotes research, general construction, and development in the
economy.

Investment opportunities
The success of one new business produces many additional
entrepreneurial and investment opportunities. Initial entrepreneurial
activity may serve as a role model to inspire new generation of
entrepreneurs and become a breeding ground for new business ventures.
Contribute to GNP through tax payment
New businesses become tax payers, thus returning revenue to the
government. More revenue is also accruing to the government from
business employees when they pay income tax.
Technological Development
Entrepreneurs develop new products from new ideas. Every business
strives for profitability. Competition dictates that great stride be made in
technology.
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CHALLENGES FACING ENTREPRENEURS IN TANZANIA

Some of the problems facing entrepreneurs in Tanzania are: -

Problems in financial capital.

- Many Tanzanians find it difficult to initiate a business due to lack
of initial capital.
- Capacity limit of banks to offer loan from banks and lack of
collaterals required to validate one’s ability to apply for loan.
- Some of people have good ideas of starting their own businesses,
but they lack financial capital.

Problems in infrastructure.
- An entrepreneur stands better chances of success where efficient
telecommunication system, transport facilities and distribution
networks are well provided for.
- Poor road networks especially in the rural areas is the problems
facing entrepreneurs in Tanzania.

Poor business idea

Cash-flow management.
- Cash-flow management is the process of tracking how much money
is coming into and out of your business.
- This helps you predict how much money will be available to your
business in the future.
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- It also helps to identify how much money your business needs to

cover debts, like paying employees and suppliers.

Lack of entrepreneurship education.

- Most of Tanzanian are uneducated and they lack skills on matters
relating to entrepreneurship.
- Their involvement in entrepreneurship may lead to a lot of risks so
they opt not be involved.

Administrative policy, regulations and laws.

Tanzanian government does not have clear policy on supporting
entrepreneur and helping them to build their potential.

Poor marketing strategy.

The plan of action designed to promote and sell a product or service
among Tanzanian is poor. A marketing strategy is the combinations of all
the businessés decisions and actions to increase sales and achieve a
sustainable competitive advantage by understanding and fulfilling the
needs and wants of the customers.

Lack of entrepreneurship training.

Most of experts in Tanzanian have spirits and skills in entrepreneurship
but due to high cost of training materials, fund for accommodation and
traveling leads inadequate training.
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Culture and beliefs.

In Tanzania we have a mixture of several religious each with its beliefs
for example if an entrepreneur decides to invest in keeping pigs it is
unacceptable to Muslims. These always result into a narrowed market to
some business opportunity.

Criticism and self-doubt.

Another problem that an entrepreneur faces is criticism. Entrepreneur are
criticized by people who know and who don’t know him/ her. People who
criticize an entrepreneur they warn about the business idea and
consequences of a failed business. They impose their insecurities on an
entrepreneur. It might be a jealous and they might be considering your
business as a threat to their own business.

Customers disappointments. Sometimes Customers want/ requests

feature you won’t or can’t add, Sometimes, Customers’ demands for a
discount that you can’t give.

Mental and psychological stress. Some of people especially youth

graduating in various colleges and universities expecting for wage
employment rather than self-employment. This notion burns their
psychological readiness as well as self-esteems to organize and rise new
venture. In most cases, they do compare themselves as failures against
those who are employed in private or public organizations.
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Time management
Time management might be the biggest problem faced by entrepreneurs,
who wear many (and all) hats. If you only had more time, you could
accomplish so much more.

Choosing what to sell

Most of those who establish business they simply jump into blindly or
adapting. Marketing research to determine what type of product or service
is required for clear business path

SOLUTIONS TO PROBLEMS FACING ENTREPRENEURS IN

TANZANIA

Proper budgeting and planning are critical to maintaining cash flow,

but even these won’t always save you from stressing over bills. One way
to improve cash flow is to require a down payment for your products and
services. Your down payment should cover all expenses associated with
a given project or sale as well as some profit for business. By requiring a
down payment, you can at least rest assured you won’t be left paying
others’ bills; by padding the down payment with some profit, you can pay
your own.

- Another strategy for improving cash flow is to require earlier

invoice payments.
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Make time like money, it doesn’t grow on trees, of course, so you have to
be smart about how you’re spending it. To effectivelly time management;

➢ Create goal lists: You should have a list of lifetime goals, broken
down into annual goals, broken down into monthly goals, then
broken down into weekly goals. Your weekly goals, then will be
broken down into specific tasks by day. In this manner, what is on
your task list in any given day is all you need to do to stay on track
with your lifetime goals
➢ If any tasks do not mesh with your goals, eliminate them
➢ If any tasks do not absolutely have to be completed by you, delegate
them
➢ Consistently ask yourself: “Is what I’m doing right now the absolute
best use of my time?”

At this point, all you need is a core marketing plan what marketing
activities will you undertake to motivate purchases? Give your planner a
budget and tell them to craft a plan that efficiently uses that budget to
produce profits.

Being able to overcome self-doubt is a necessary trait for entrepreneurs.

Having a good support system is very crusial. family and friends who
know your goals and support your efforts as well as an advisory board of
other entrepreneurs who can objectively opine as to the direction of your
business.
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One of the best ways to deal with self-doubt is to work on your goals and
tasks lists. When you’re down and lack motivation, look at your lists and
know that the tasks you do today are contributing to your lifetime goals.
By doing them, you’re one step closer, and you can rest assured that you
are, indeed, on the path to business success.

Summary note

Entrepreneurs are faced with many challenges,despite many wtittings on

how best to handle them. Indeed, Perseverance and intelligence are your
allies; use them to your advantage to keep working toward your goals.
Understand that you’re not the first to struggle. Because of that, there are
many resources available to help you get through your darkest days as an
entrepreneur, so you can reap the immeasurable rewards that come with
building your own successful business.

SOURCES OF BUSINESS IDEAS & OPPORTUNITIES FOR

ENTREPRENEURS

1. Interests and hobbies An activity one enjoy doing during

leisure-time

In fact, most people have founded great successful businesses while

pursuing their interests or hobbies.
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2. Personal experience and talents

Most of the ideas and opportunities for successful businesses are the
results of the experiences in the place of work. For example, an
experienced manager working for a leading restaurant can eventually
decide to start a business related to hospitality even before he retires.

As a potential entrepreneur, therefore, it is wise to make the most use of

acquired skills and experiences as crucial sources of business ideas
generation.

3. Customer surveys

The starting point of any new business should be the clients.This is

because, their needs and wants justify the service or product that you can
offer to them.

The wants and needs of the customers are,therefore, the sources of

business ideas generation and you can ascertain them by carrying out
thorough survey.

4. Franchises

In a franchise a sole trademark distributor or manufacturer of a product

gives exclusive rights to independent retailers for local distribution. This
can be done in return for the consistency of the retailers to the set
operating procedures and payment of royalties. As one of the sources of
business ideas for entrepreneurs, franchising can take different forms but
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the most common and preferred one is where you are offered the image,
operating procedures and the name of an established business.

5. Distributorship or Dealership

A distributor is a person that has an agreement to sell products or services

produced by another company. In most cases, the agreement between the
two comform the cammision as payment modes to distributors as the
rewards of selling the products. `

6. Network Marketing

By creating a “network” of distributors, entrepreneurs earn considerable

income through residual commissions made from the distributors working
under them. This entrepreneur opportunity is also known as Multilevel
Marketing.

7. Licensing

Licensing is where entrepreneur take a new or existing product and use

their talents to market it. For example, entrepreneur could take almost any
product and try to get a license to a name brand, icon, or trademark of a
widely recognized business.
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8. Trade fairs and exhibitions

Trade fairs and exhibitions are among the top sources of developing
business ideas. They are usually advertised on the Internet, radio, and
newspapers, and by attending such events regularly, an entrepreneur
discover new services and products, meeting with manufacturers, sales
representatives, distributors, wholesalers, and franchisers who give a
number of feedback and inspirations to start a business that will thrive.
In fact, some of them may be in need of someone like you to partner with,
and this will be an exceptional opportunity to partner with renowned
entrepreneurs and franchisers. Sound business ideas from reliable sources
of new ideas for business become good investments when implemented.

BUSINESS IDEA

A business idea is a concept that is usually centered on a product or

service that can be either used for financial gain or satisfying ones wishes
of servicing others.

THE CHARACTERISTICS OF A BUSINESS IDEA ARE:

A promising business ides should have many characteristics but not

excluding;

- Innovative
- Uniqueness
- Problem solving and lastly is Profitable
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PROCEDURES TO FOLLOW FOR WORKABLE BUSINESS

IDEA

Idea screening

- Having options business idea is something good but still there is a need
to decide which ideas to pursue and which one to discard.
- It is posible to make the decision when the following rules or guidelines
will be considered
i. Is the selected idea identified customer needs
ii. Does it have any benefits to the target market?
iii. Is the idea have the technical feasibility?
iv. Is the idea inline with the level and scope of research and
development required?
v. What will be the profitability of the ide
vi. What is its potential appeal to the market?
vii. On the price; what are the costs of bringing it to market the
overall and per unit?
viii. where the product fits in the market? Is there a gap? How close
is it to competitor products?
ix. What resources will be required in development of the
business?
x. What will be the potential marketing strategies of the selected
idea?
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xi. What is the fit between business profile and business

objectives.
xii. Who are my business Business competitors? What are they
doing different to me?
xiii. What are the shortcomings of this business idea?
xiv. Do I have enough Capital to support this business?
xv. What is my SWOC analysis?

A SWOT analysis can help you to identify the strengths and weaknesses
of each idea. (strenght, weaknesses, opportunities and Challenges)

Here’s an example.

Strengths Weaknesses

• Previous experience of • No team management

selling and conducting experience
business • Breakable product,
• Strong and management making shipping more
experience expensive
• Patented product
• Exclusive deal with
manufacturing company

Opportunities Threats
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• Strong growth in • Regulation pending for

product category and product category in
sales international markets
• No “market leader” in
category

BUSINESS REGISTRATION PROCESS IN TANZANIA

- After having the clear plan of the business in the form of a business
plan, the next step is registering and licensing the business.
- Legally businesses registration and licensing is done by organs like
BRELA and TRA.
- In order to register for business, the following are the
steps/procedures one needs to adheres to

STEP 1: Apply for clearance of the proposed business name. Here

entrepreneurs are required to have special business name which is not
similar to others

STEP 2: Obtain a notarized declaration of compliance. The declaration

will asses if all the legal procedures of launching and registrations of the
business has been adhered
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STEP 3: Apply for company incorporation and obtain the certificate of

incorporation

STEP 4: Apply for taxpayer identification number (TIN) at the Tanzania

Revenue Authority. This gave the registraa assurance of paying back all
government bills

STEP 5: Apply for a business license at the Ministry of Industry and

Trade (MIT) and Local Government Authorities (LGAs).The license is
issued depending on the nature of the business.

➢ Together with the application, the following documents must be

submitted:

1. Certificate of incorporation
2. Memorandum of Association, which will describe the objectives of
the business, organization structure, type of products or services ect.)
3. Proof of Tanzanian Citizenship
4. Proof of a suitable company premises, here the proof will describe
where exactly the office will be, the buildings and if the enviroment is
suitable for its existance and operations. Example, oil and gas stations
should not be allocated close to peoples residence ect.
5. Taxpayer Identification Number (TIN)
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STEP 6: Apply for the VAT certificate at the Tanzania Revenue

STEP 7: Register for the workmen’s compensation insurance at the

National Insurance Corporation or an alternative insurance provider.This
will ensure health security of workers in the company.

STEP 8: Obtain Social Security registration numbers from all mandatory

social security schemes. This will ensure future life security of employees
of the company during retirement period.

EQUITY SOURCES OF CAPITAL FOR SMES

- Equity is a degree of ownership in any asset after subtracting all

debts associated with that asset.
- Equity represents the shareholders’ stake in the company.
- The calculation of equity is a company's total assets minus its total
liabilities.

There are various sources of equity finance such as;

Business angels
These are wealthy individuals who are ready and willing to invest in high
growth businesses in return for a share in the business.
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Venture capital.
Venture capital is a type of financing that is provided by firms or funds to
small, early-stage, emerging firms that are deemed to have high growth
potential, or which have demonstrated high growth
Crowd funding
is the practice of funding a project or venture by raising small amounts of
money from a large number of people
Enterprise Investment Scheme
Example, Seed Enterprise Investment Scheme (SEISfrom UK). These
are government schemes designed to help smaller higher-risk trading
companies by raising finance, offering a range of tax relief
to investors who purchase new shares in those companies.
The stock markets
This is a place where shares of public listed companies are traded.
A stock exchange facilitates stock brokers to trade company stocks and
other securities. A stock may be bought or sold only if it is listed on an
exchange.