Malawi University of Science and

Technology

Business Management and

Entrepreneurship BMEN 410
Lecture 3: Turning Business Ideas into Reality

Issa J. Edward
Department of Applied Sciences
The Malawi Institute of Technology
Malawi University of Science and Technology
Introduction

 Recall our discussion in Lecture 2.

 We discussed the nature of business, its meaning, the various forms of
business ownership and the legal forms that are available. By now
you should be able to articulate these legal forms of business and the
advantages and disadvantages that come with each legal form. We
discussed various objectives that businesses have.
 Recall that one of the business ownership forms discussed was that of
privately owning a business. This means that you as an individual can
come up with a business idea and the turn that business idea into
reality by establishing you own
 This lecture presents the guiding steps in starting a new venture and
the various market entry options that are available for those starting
new ventures.
Intended Learning Outcomes

By the end of this lesson you

should be able to:

 State and describe the guiding

steps in starting a new venture
 Discuss the various market entry
options that are available for
those starting new ventures
 Starting a new venture
 There are fundamental steps that any business needs to follow
to get started. These would differ and depend on the
following:
1. Country jurisdiction – different countries may stipulate
different procedures to be followed in establishing a new
venture
2. The choice of the business owner- for example if the owner
wants full control of the venture, he/she may opt for a sole
proprietorship.
3. The nature of the business to be established can also dictate
the procedures to be followed. For example if you are to
establish an insurance company, there is a specific piece of
legislation that governs this nature of business
Starting a new venture – the process
 Here the general steps one can follow:
1. Planning the business: Deciding on the best way of starting
and owning a business. For example buying an existing
business or starting from scratch.
2. Taking care of the start-up legalities: Assess the various legal
forms of a business - consider legal issues and advantages of
different types of business set-ups and other requirements
according the jurisdiction
3. Setting up the business structure: Design an organizational
structure for a new and/or existing organization
4. Hiring employees amongst other things: Develop a
Human Resource Plan for a business.
Starting a new venture – Routes to market
 There are different ways a would-be owner of a new venture
can turn a business idea into a reality which include:
1. Begin anew business
a. Business start-up – starting from scratch to establish a new
business altogether
b. Go a franchising which include a formal franchise or a
purchase and trade mark/brand agreement
2. Purchasing an already existing business
a. Outright purchase of an exiting business
b. A buy-out
c. A buy-in
Starting a new venture – Routes to market
Routes to market– Begin a new business
 Start-up
 Creating a new business, which stands alone, and is not tied
to other organizations, except in the normal course of trading.
 One advantage with this option is the opportunity to create
your own brand positioning and culture. There is no carry
over Buggage. You start on a clean slate
 Franchising
 Is a method of distributing products or services involving a
franchisor, who establishes the brand’s trademark or trade
name and a business system, and a franchisee, who pays a
royalty and often an initial fee for the right to do business
under the franchisor's name and system
 One advantage of this route option is that you will be
inheriting an already established brand and customer base
Routes to market– Buy an existing business
 Outright Purchase
 It involves buying a business from somebody else.
 Buyout
 a buyout is an investment transaction by which the ownership
equity of a company, or a majority share of the stock of the
company is acquired. The acquiror thereby "buys out" the
present equity and pays money to his/her business partner so
that he/she can control all of a business they previously
owned.
 Buy in
A buy-in can be an agreement to purchase shares / stake in a
company that also has other owners.
Buying an existing business - Pros and Cons
 Pros
 High chances of maintaining profits
 Complete and already in place policies and procedures
 Staff are already trained and proficient in performing the daily
tasks
 Cons
 Higher price than it would be to start a new one
 Added fees so that the transaction is legal and protects both
parties.
 The staff and customer base may come with baggage - You
could be inheriting disgruntled employees
 Employees and customers may not like the change in
ownership for many reasons.
Conclusion
 In this lecture, you have covered the following main points:

 The guiding steps in starting a new venture

 A discussion of the various market entry options that are
available for those starting new ventures
 In the next lecture you will be introduced to the concept of
entrepreneurship
 Further Reading
 Kangaude-Nkata, E (2020): Business Management and
Entrepreneurship, Malawi University of Science and
Technology (MUST)

End of Lecture 3: Thank You