PRACTICE OF ENTREPRENEURSHIP (EEd 218)

COURSE OUTLINE

TOPIC 1 - TECHNIQUES FOR GENERATING BUSINESS

IDEAS AS WELL AS FOR INDENTIFYING AND
ASSESSING BUSINESS OPPORTUNITY
TOPIC 2 - HOW TO EVALUATE BUSINESS IDEA FOR
DEVELOPING AN ENTERPRISE
TOPIC 3 - METHODS OF PRODUCT/SERVICE
SELECTION
TOPIC 4 - THE PROCESS AND PROCEDURE FOR
STARTING AN ENTERPRISE
 CORSE OUTLINE
TOPIC 5 -VARIOUS OPERATIONAL TECHNIQUES IN
MANAGING AN ENTERPRISE
TOPIC 6 - VARIOUS EXISTING INDUSTRIES AND
SUPPORT AGENCIES IN NIGERIA
TOPIC 7 - THE ROLE OF COMMERCIAL AND
DEVELOPMENT BANKS IN THE PROMOTION OF
SMEs
TOPIC 8 - ROLE OF PERSONAL SAVINGS AND
PORTFOLIO INVESTMENT IN NATIONAL ECONOMIC
DEVELOPMENT
 TOPIC ONE
• TECHNIQUES FOR GENERATING BUSINESS IDEAS AS
WELL AS FOR INDENTIFYING AND ASSESSING BUSINESS
OPPORTUNITY
• WHAT IS BUSINESS OPPORTUNITY? Business
opportunity is an attractive investment idea or
proposition that provides the possibility of a return for
the investor/risk takes such opportunities are presented
by customer’s requirements and lead to the provision of
a product/service which creates/adds value for its buyer
or end user.
•
• THE PROCESS OF EXPLORING OPPORTUNITIES
• Recognise needs for running a venture:-
• Conduct self-approval:-
• Scan the environment and industry:-
• Analyse business idea/opportunities:-
• Select the best idea/opportunity/project:
• Capture/implement the idea/project:
• IDENTIFYING BUSINESS OPPORTUNITIES (USING
SWOT ANAYLYSIS)
• Opportunities occur when people discover a problem
of some kind that can be heeped with a
product/service or when people decide they have
certain needs/wants to satisfy.
• SWOT ANALYSIS:- Strengths, Weakness, Opportunities
and Threats. This analysis enables an entrepreneur
mirror himself in relations to identification and
assessment of business opportunities
• Strengths are his stronghold, weakness are his
shortenings, and opportunities are possible
areas of exploitation while threats are those
things that are cogs in the wheel of progress
such as competitors.
• PROCESS OF CONDUCTING A MARKET
SURVEY IN ORDER TO ESTABLISH
DEMAND/SUPPLY GAP
• . The process of conducting a market survey
• involves the following steps-
• Defining objectives of the market survey and specifying
what information is required
• Working out the details of the study,
• Selecting samples and deciding what contacts and visit
should be made
• Preparing questionnaire and plans for surveys and
interview
• Collating and analysing data
• Preparing a report of findings
• PROCESS OF BUSINESS IDEA GENERATION
• Business idea is the response of a person or
organisation to solving an identified problem or
to meeting perceived needs in the
environment/markets, community etc.
• A business idea is a pre-requisite for a successful
business venture. Finding a good idea is the first
step in transforming the entrepreneur’s desire
and creativity into a business opportunity
• SOURCES OF BUSINESS IDEAS
• Hobbies/interests . Surveys
• Personal skills and experience Complaints
• Franchises Brainstorming
• Mass media
Creativity
• Exhibitions
• REASONS FOR GENERATING BUSINESS IDEAS:-
• In order to stay ahead of competitors
• It us inevitable for business
• Ideas are generated to respond to market needs
• They are also generated to respond to changing fashions
and requirement
• To be in tune with the latest technology so as to do
things better
• In response to product life cycle
• In order to spread risk and allow for failure
 TOPIC TWO
• HOW TO EVALUATE BUSINESS IDEA FOR
DEVELOPING AN ENTERPRISE
• WHAT IS BUSINESS PLAN?
• It is a written document prepared by the
entrepreneur that describes all the relevant
external and internal elements involved in
starting a new venture.
• PROCESS OF PREPARING A DETAILED
BUSINESS PLAN
• Business plan can be written for retail
business, wholesale business, service
business, manufacturing and other types of
business. Stages of writing a business plan
are:- after deciding to go into business, before
starting the business and when updating is
required.
• A business plan is written by:-
• Identifying all the questions that could be asked
about the business
• Determining what further information needs to
be gathered to answer all the questions.
• Obtaining all the necessary information
• Comparing various alternatives
• Making a decision on each question
• A business plan should:
• Have a good appearance
• Provide an index
• Provide a summary
• Number each copy
• Be signed to show who is submitting it
• Depend on the nature of the business

Before preparing a business plan, research should be done in

the areas of consumers, competitors and suppliers.
• OUTLINE OF A BUSINESS PLAN
1. Title
2. Project consultants
3. Table of contents:
i} Executive summary
ii] The report
iii] Project background
iv} Objective of the study
v} Project description and Loan advancement
vi }Promoter
vii} Location
• Market and marketing plan
• Potential customers
• Competition
• Pricing
• Sales tactics
• Advertising and

• Technical feasibility and management plan

• Factory
• Machinery
• Overhead charges
• Packaging materials
• Raw materials, manpower and labour costs
•
• Financial projection/feasibility
• Overview on capital equirement
• Financial plan
• Project cash flow
• Projected profit and loss account
• Projected balance sheet
• Bank even & analysis
• Source and application of funds
• Organisational plan
• Form of ownership
• Identification of partners/principal shareholders
• Authority
• Managements team background
• Roles and responsibilities of members of organisation

• Assessment of Risk
• Evaluate weakness of business
• New technologies
• Contingency plans
• USES OF BUSINESS PLAN
• Venture capital
• Fundraising
• Total Quality Management
• Management by Objective
• Strategic planning
 TOPIC THREE
• METHODS OF PRODUCT/SERVICE SELECTION
• WHAT IS PRODUCT/SERVICE?
• It is anything that can be offered to a market for
attention, acquisition, use or consumption

CHARACTERISTICS OF PRODUCT/SERVICE
Product/service must provide functional utility to
the consumer. The functional characteristics may
be in terms of weight, liability, maintainability,
size or operating effectiveness. Product/service
must:-
• Be capable of advancing the “profitability and
survival” goal of the organisation and
• Satisfy a want
• KEY FACTORS ASSOCIATED WITH PRODUCT
SELECTION:
• Infrastructure
• Technology
• Availability of raw materials
• Government policy/regulation
• Legal aspects of business
Once a product has been selected for production, there
is need for further analysis of some key factors to
determine how production will proceed
• and what legal requirements and licenses must be met. Below
are some of these factors that must be investigated.
• Processing activities
• Firm size and production schedule
• Machines and equipment
• Project location (infrastructure and utility analysis)
• Raw materials
• Waste disposal
• Environmental impact studies
• Manpower requirements
 TOPIC FOUR
• THE PROCESS AND PROCEDURE FOR STARTING
AN ENTERPRISE
• LEGAL STRUCTURE OF BUSINESS
• Business can be carried on as a small, medium
and large scale enterprise. It can also be carried
on as domestic or international business. It
could be publicly or privately owned. In Nigeria,
legal forms of business are sole proprietorship,
partnership and companies.
1. SOLE PROPRIETORSHIP:This is one-men
business. The owner provides the capital,
takes decision and assume all risk. They are
the most common.
2. PARTNERSHIP: It is an association of two or
more persons carrying on business with a view
to making profits through the pursuit of lawful
objective. The number of people to form an
ordinary partnership must not exceed twenty
3. THE LIMITED LIABILITY COMPANY (CORPORATION):
It is an artificial being, invisible, intangible and
existing only in contemplation of law. The company
has the right to acquire, own and sell property, sue
and be sued.
In Nigeria, company formation and operations are
secured through company incorporation in
accordance with the company Act 1968 and the
CAMA 1990 and its subsequent amendment in
2004.
• There are two types of company formation –
private and public companies. a private
company is composed of a minimum of 2 and
maximum of 50 members. A public company
has a minimum of 7 with no upper limit. The
following documents are required by CAC
registrars of companies before incorporation
of company:-
• Articles and memorandum of association
• A list of person who consented to become
directors with their written consents to act as
such (not required for private companies)
• Notice of situation/location of registered office
(within 14 days)
• A statement of authorised share capital
• A statutory declaration that all the requirements
for registration have been complied with
• FACTORS TO BE CONSIDERED IN NAMING A BUSINESS
• It is important that each business has a distinct name different from
others. This is because it has to be its own identity and uniqueness.
Many factors are usually considered in naming a business such
factors include:-
• The nature of the business to be undertaken
• The type of goods/service to be produced
• The environment of the business
• The name should comply with the necessary requirement of CAC
• The name has to be attractive/appealing
• The name should be easy to relate with
• PROCEDURE AND REQUIREMENTS FOR
REGISTRATION OF A BUSINESS NAME
• Registration of a business name requires among
other things the submission of a statement in
writing on the prescribed forms, signed by the
appropriate persons and containing the following
particulars:-
• The business name or if the business is carried on
under two or more business name, each of those
business names
• The full address of the principal place of business, and
every other subsidiary place of business.
• The general nature of the business
• In respect of registration of a firm, the present
forename and surnames, nationality, sex, age,
occupation and the corporate name and registered
office of such corporation which is a partner.
• Date of commencement of the business whether
before or after coming into the operation of the 1990
Act.
• Passport photographs duly certified in the
prescribed manner in case of sole proprietorships
or firms consisting of only individuals.
• Professional certificates in cases of sole
proprietorships or firm intending to carry on any
professional business.
• Submission of tax clearance certificates for at
least three years.
• REASONS FOR EXISTENCE OF REGISTERED
BUSINESS NAMES AND COMPANIES
• To avoid conflicting names
• For easy identification
• For purpose of product
classification/identification
• To maintain standards of products and services
• To maintain customer loyalty
• PROCEDURE AND REQUIREMENTS FOR
INCORPORATING A BUSINESS
• Consult a legal practitioner to prepare all the
necessary incorporation documents
• Filing the documents with CAC
• Payment of all necessary fees
• Issue of certificate of incorporation and a
trading certificate (in the case of a public
limited company)
 TOPIC FIVE
• VARIOUS OPERATIONAL TECHNIQUES IN
MANAGING AN ENTERPRISE
• WHAT IS MANAGEMENT?
• Management is described as the process of
getting things done through people in an
effective and efficient manner OR a group of
people performing managerial tasks and
function
• WHO IS A MANAGER? A manager is a hired hand
saddled with the responsibility of planning,
organising, integrating activities of others in an
organization.
• While management is the art of getting things
done through people, managers are people
responsible for achieving organisational goals
• Functions of management or management
functions are the functions that are performed by
managers.
Key functions of management are:-
Planning – Leading
Organising – Consulting

FUNCTIONS OF A MANAGER:-
• Provides clear direction for the organisation
• Ensures the organisation serves its basic purpose
• Maintains the stability of the organisation’s operation
• Chooses the strategies needed to keep an organisation adapt in a
controlled way to its changing environment.
• Serves as the information link between organisation and its
environment
• MANAGEMENT STRUCTURE FOR AN ENTERPRISE
• Organisational structure is the framework of jobs
and departments that directs the behaviour of
individuals and groups towards achieving the
organisation’s objectives. It is the network of
relationships between the various positions and
position holders in the organisation. The
organisational structure can be horizontal or
vertical; it can also be formed or informed
• BASIC TECHNIQUES OF MARKETING AND
PRODUCTION IN AN ENTERPRISE
• . Marketing means much more than just
selling, the latter (ie selling) being just one -
although an important one – of the marketing
instruments, which entrepreneurs have at
their disposal.
• MARKETING STRATEGY
• Marketing strategy is the basic approach that a business
unit will use to achieve its objective, consisting of broad
decisions on target markets, marketing positioning and
mix and marketing expenditure levels.

• MARKETING RESEARCH
• Conduct a market survey in selected areas among those
identified users, to find out their intentions with regards to
volume of purchase monthly. Get all the information you
need before you take any decision.
• MARKETING CONTROL
• To ensure that marketing activities are
implemented according to the marketing plan,
the entrepreneur has to constantly monitor
such activities.

• HOW TO SELL
• Marketing and selling involves a two-way flow
of information.
• STEP BY STEP OF SELLING
1. Warming up – A meeting with customer should begin with
the warming up stage. The conversation may be light and
general, or more personal.
2. Opening – when both parties feel at ease with each other the
discussion moves to business – the customer expresses his
interest and needs and the producer introduce his products
3. Discussion – the needs of the customer should be the centre
of the conversation, with the customer doing most of the
talking and the producer, most of the listening. Honesty is the
best policy.
4. Summarizing – the customer’s comments should be
summarized and repeated to him. This technique will
clarify the situation, your understanding of the situation
and reinforce positive aspects brought up in the
discussion.
5. Trial close – the producer does a trial close when he
feels that the customer has decided to buy his product.
This stage is an attempt to close the selling transaction
and finalise the sale The close – if the trial close is
successful, that is, if the customer agrees to buy a
specific product, the transaction has been made.
• PRODUCTION
• Production is that part of the business which is responsible for
turning raw materials into goods with the help of workers and
equipment.

• PRODUCTIVITY IMPROVEMENT FACTORS

• Productivity improvement is not just doing things better, more
importantly; it is doing the right things better. Three main
productivity factor groups are:
Job – related Resource – related
Environment – related
 TOPIC SIX
• VARIOUS EXISTING INDUSTRIES AND SUPPORT
AGENCIES IN NIGERIA
• There are several support agencies established by
government to assist various industries in different
dimensions, among the support agencies are:-
1. THE NIGERIAN EXPORT PROMOTION COUNCIL
(NEPC) www.nepeng.com
2. THE NIGERIAN INVESTMENT PROMOTION
COMMISSION www.nipc-ng.org
3. BANK OF INDUSTRY (BOI)
4. RAW MATERIALS RESEARCH AND DEVELOPMENT
COUNCIL (RMRDC) www.rmrdc.gov.ng
5.THE SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT AGENCY OF NIGERIA (SMEDAN)
www.smedan.gov.ng
6. THE DEVELOPMENT CENTRES (IDCS
7. TECHNOLOGY BUSINESS INCUBATION CENTRES
(TBICs): .
• TYPES OF INFORMATION REQUIRED BY
ENTREPRENEURS
• Marketing information
• Technical information
• Financial information
• Legal information
• Information and communication technology (ICT)
• WHERE TO OBTAIN INFORMATION:
• Industry data
• Membership – based organisations
• Training programmers
• Consultants
• The library
• Subscribing to trade papers and magazines
• Internet
• Business development services providers
• WHO CAN PROVIDE INFORMATION?
FREE’ e.g
• Employees
• Customers
• Suppliers
• Other business owners
• Free web sites

‘For a fee’ e.g

• Professionals
• BDS providers
• ENVIRONMENTAL FACTORS ASSOCIATED WITH
INDUSTRIAL AND ECONOMIC DEVELOPMENT IN NIGERIA
• NATURAL ENVIRONMENTAL FACTORS
• Natural Resources
• Land Atmosphere Surface water
• Ground water Flora Fauna
• Ecosystems Energy resources
• Social Resources Cultural factors
• Economic factors Social infrastructure
• Social development
• ENVIRONMENTAL IMPACTS OF ECONOMIC
ACTIVITIES ON VARIOUS RESOURCES AND
FACTORS
• Emissions
• Health hazards
• Degradation – Natural resources and
ecosystems
• Degradation – Social structures
 TOP[C SEVEN
• THE ROLE OF COMMERCIAL AND
DEVELOPMENT BANKS IN THE PROMOTION
OF SMEs
• BANK OF INDUSTRY (BOI)
• NIGERIAN AGRICULTURAL COOPERATIVE AND
RURAL DEVELOPMENT BANK (NACRDB)
• ROLE OF FINANCIAL INSTITUTIONS AND BANKS
IN THE CREATION AND DEVELOPMENT OF
ENTERPRISES
• Sources of Business financing:-
• Equity Financing
• THE PROCESS OF OPENING AND OPERATING A
HEALTHY BANK ACCOUNT
• Opening a simple checking/current or savings
bank account should not be too complicated
. There are 7 essential steps:-
• Step 1 – choose an institution (a bank)
• Step 2 – Go to the bank’s office to pick application form
• Step 3 – Pick the product you want
• Step 4 – Provide your information
• Step 5 – Agree to terms
• Step 6 – Print, sign and mail (if applicable)
• Step 7 – Congratulate yourself
• CONSIDERATION IN APPLYING FOR A BUSINESS LOAN
Different lending institutions have different procedures which have to be
followed by the loan applicant. The factors that are taken into
consideration when appraising a loan application are:-
Type of loan
Purpose of the loan
Credit worthiness and integrity of the borrower
• Capability
• Repayment period
• Security
• Guarantors:
• Business plan
• TYPES OF LOAN
• Trade Credit
• Short term credit
• Long – term credit
• Equity funds
• ROLE OF MICROFINANCE (FORMAL AND INFORMAL) IN
FINANCING ENTERPRISE
• A microfinance institution (MFI) is a semi-formed, non-
governmental and community development organisation
involved in rural development (Marx, 2001)

• ROLE OF CAPITAL MARKET IN FINANCING ENTERPRISES

• Capital Market – it is where long-term funds are bought
and sold. Such as: shares, Debentures and Government
bonds
• CAPITAL MARKET INSTRUMENTS
• Equities Debts
• Derivatives Government bonds
• Rights Corporate bonds
• Options and futures Reference shares
• Debentures Exchange traded funds
•
• WHAT CAPITAL MARKET OFFERS ENTERPRISES
• Public and private sector equities
• Public and Private sector debt financing
• Infrastructure finance
• Non refundable capital
• Convertible long term capital
• Derivatives
• Deficit financing
• Non convertible long term capital
• MONEY MARKET
• Financial institutions can use short-term savings to
lend out in the form of short-term loans:
• Credit on open account
• Bank overdraft
• Short-term loan
• Bills of exchange
• Factoring of debtors
 TOPIC EIGHT
• ROLE OF PERSONAL SAVINGS AND PORTFOLIO
INVESTMENT IN NATIONAL ECONOMIC
DEVELOPMENT
• Income – it is the money that is received as a
result of the normal business activities of an
individuals or a business.
• Saving: In common usage, saving generally means
putting money aside, for example, by putting
money in the bank or investing in a pension plan.
• Savings within personal finance refers to the
accumulated money put aside by saving.
• Within personal finance, money used to
purchase shares, put in a collective investment
scheme or used to buy any asset where there
is an element of capital risk is deemed an
investment.
• ROLE OF SAVINGS IN STARTING AND SUBSTAINING BUSINESS
• If you want to start a business, start saving your money.
• If you want to save money to start your own business you
have two options:
• You can try to work on the new venture while you are still at
your current job. Depending on your situation, this might be a
better option than the second one.
• Save enough money so that you can quit your job and focus
on your new company full time.
Beyond saving for a new business, there are other options
such as borrowing.
• RULES FOR PERSONAL FINANCIAL FITTNESS (i.e
benefits of interest)
• Save early
• Save as much as possible (at least 15% of your earnings)
• Earn compound interest
• Try to earn a high interest rate
• Save in unit trust funds to earn high interest
• Leave deposit and interest earned in the account as
long as possible
• Choose account for which interest is compounded often
• PERSONAL FINANCIAL PLANNING AND
MANAGEMENT
• A key component of personal finance is financial
planning. Financial planning is a dynamic process
that requires regular monitoring and evaluation.
It involves five steps:-
Assessment Setting goals
Creating a plan Execution
Monitoring and reassessment
• SHOPPING HABITS
• When the economy is positive, shoppers feel
more freedom to be selective about where and
how they shop. But when the economy is
otherwise, shoppers exercise more discretion
about where and how they spend their money.
• Loyalty can be stolen: Shoppers will deviate from
past shopping habits to achieve additional value.
• Control your habits, improve your life
• PORTFOLIO INVESTMENT
• Portfolio investment are shares, bonds and
debentures.
• Some examples of portfolio investment are:
• Purchase of shares in a company
• Purchase of bonds issued by government
• Acquisition of assets
• HOW THE STOCK MARKET WORKS
• Stocks are bought and sold at the stock market where public
companies seeking capital meet investors who seek profits.
• The first stock exchange began in 1602 in Amsterdam,
Holland. America’s first stock market opened in 1792.
England’s first stock market opened in 1773 and Nigerian
stock exchange opened in 1961.
• When someone wants to buy or sell stock, they usually go
to a brokerage firm and talk to a licensed stock broker, who
will execute their trade – i.e help to buy or sell stock – and
charge a transaction fee.
• A share of stock is a small ownership stake in a
company when you buy stock, you become a
shareholder or stockholder. Companies sell stock in
order to raise the money needed to expand or
improve their businesses. Companies that raise capital
in this way are called public companies. Stocks can
help your money grow in two ways. If the share price
of your stock goes up, you can draw a profit also
known as a capital gain – when you sell your shares. If
the share price goes down, you can lose some of your
money.
• Some stocks pay investors a dividend, which is a
portion of the company’s profits, on a regular
basis. Stock prices are driven by supply and
demand.
• Companies may give bonus shares to existing
shareholders in addition to paying dividends. This
issuing of bonus shares increase the units held by
shareholders and serve as a source of capital gains.