LEARNING UNIT 1: DESCRIBE BASIC ASPECTS OF ENTREPRENEURSHIP

1.1 Explanation of the concepts associated with Entrepreneurship

Business refers to an organization or enterprising entity engaged in commercial, industrial, or

professional activities. The purpose of a business is to organize some sort of economic
production (of goods or services).

Business also refers to the efforts and activities undertaken by individuals to produce and sell
goods and services for profit.

Entrepreneurship is the process of creating something new with value by devoting the
necessary time and effort, assuming the accompanying direct /indirect rewards and risks.

It is also a process by which individuals pursue opportunities, and put the respective ideas
into useful practice.

An entrepreneur is an innovator or developer who: recognizes and seizes opportunities,

converts these opportunities into commercial ideas, adds value through time, effort,
money or skills, assumes the risks and realizes rewards from these efforts”.

An entrapreneur is a person within a large corporation/enterprise who takes direct responsibility

for turning an idea into a profitable finished product or service through assertive risk taking and
innovation.

An intrapreneur is an employee who thinks and acts like an entrepreneur within a business. They
apply problem-solving, creativity, communication skills and critical thinking to deal with
ambiguity and to become agents of change and growth for their employer.Therefore,
Intrapreneurship, on the other hand, refer to the process of acting like an entrepreneur within an
existing organization.
Enterprise:  means any entity that engages in, or owns or controls an interest in any entity
that engages in, competition with any business unit

Creativity is thinking up new things. Innovation is doing new things.“ Innovation is about
making creativity real. Creativity is the process of generating a new idea or thinking up
new things. Invention is creating something that did not exist before while Innovation: This
refers to the development of new processes for something that already exists.

1.2. IDENTIFICATION OF ENTREPRENEUR’S CHARACTERISTICS

 CHARACTERISTICS AND COMPETENCIES OF AN ENTREPRENEUR

OR QUALITIES / TRAITS OF AN ENTREPRENEUR

1. Risk taker
2. Innovative
3. Flexible
4. Goal setter
5. Hard work:
6. Persistent
7. Self – confidence
8. Devoted
9. Accountability.
10. Accommodative
11. Creative
12. Focused
13. Ambitious
14. Information seeking
15. Persuasive
1. Risk taker: A successful entrepreneur should be in position to bear risks. This is because any
new businesses are likely to pose a number of risks.

2. An entrepreneur should be innovative. They should always introduce new changes and ideas
and should think positively and quickly to get over failures.
3. A successful entrepreneur should be flexible .He should be able to change or to be changed
easily according to the changing situations and should possess a desire for change and
constant improvement.
4. A successful entrepreneur should be a goal setter. He should be able to set realistic goals that
are achievable in the set period of time.
5. Hard work: Is 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.
6. 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 successful in business.

7. A successful entrepreneur should have self – confidence in himself and his business. He
should be comfortable with having decisions resting upon him or her.
8. An entrepreneur should be devoted to his business. He should extremely love and be loyal to
the business and his customers and should do this wholeheartedly.
9. 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
10. 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.
11. A successful entrepreneur should be creative. He should produce or use original and unusual
ideas aiming at disapproving others or out competing them.
12. A successful entrepreneur should be focused. He should always direct his attention towards
fulfilling the set goals.
13. A successful entrepreneur should be ambitious. He should have a great desire to be
successful, powerful and wealthy.
14. A successful entrepreneur should be information seeking. He should look for or try to find
information concerning all aspects of his business.
15. 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.
1.3 Role of an entrepreneur in the community

Entrepreneurship is important in mobilizing and coordinating capital, and in controlling and

integrating production. It helps especially in those aspects of organization where innovation and
risk taking are needed. Generally, entrepreneurship helps to promote national economic growth.
Entrepreneurship has a lot of benefits both for the entrepreneurs and the society in which these
businesses are carried out. Some of these benefits include:
 Employment Generation
 Entrepreneurs increase the national income
 Dispersal of economic power amongst the population
 Balanced regional development
 Nursery for entrepreneurship talent
 Reduce the harmful effect of monopoly
1.4 Role of entrepreneurship to entrepreneur:
a. Opportunity to get control.
Owning a firm or a business endows the entrepreneurs with the independence and opportunity to
control their own business. They can aim to achieve targets that are important to them.
Entrepreneurship provides entrepreneurs a chance to take decisions according to their own
wishes.
b. Offers a chance to make a difference
Some people begin and put a lot of effort just to make a difference in society. This has given rise
to the concept of social entrepreneurship, which is a recent phenomenon. Such people search for
opportunities to serve a cause that is significant to them and try to find pioneering solutions to
some of the most pressing and challenging problems of society.
c. To reap high Profits
Reaping high profits by being an entrepreneur is one of the most important factors that motivate
people to become one and take up all the challenges associated with it. The profits their
companies and businesses make play a vital role in any decision made by entrepreneurs. Owning
a business or a firm is the best way towards accumulation of wealth.

d. Helps people work to their full potential

Many entrepreneurs find their work to be extremely enjoyable. They consider their business as
an instrument of self-actualization and self-expression. Owning a firm or a business acts as a test
for the creativity skills, abilities, and determination of an entrepreneur and is taken up as a
challenge towards success.

e. Offers a chance to pursue their interests.

Most entrepreneurs don’t believe their work to be actual work. Most of them establish businesses
closely associated with their interests. As such, there is no particular age for retirement of
entrepreneurs.

1.5 The importance of Entrepreneurship

1.6 Competences lacking in Unsuccessful entrepreneurs

1.7 The entrepreneurial cycle

 Idea Generation
 Opportunity Evaluation
 Planning
 Company Formation/Launch
 Growth.

Learning unit 2: Assess business environment

Business environment are all internal and external factors that contribute in operation of
business in location.
The business environment can include factors such as: clients and suppliers; its competition
and owners; improvements in technology; laws and government activities; and market,
social and economic trends.

Business environment helps in identifying business opportunities, tapping useful

resources, assists in planning, and improves the overall performance, growth, and
profitability of the business.

2.1 Categories of business environment.

Business environment are all internal and external factors that contribute in operation
of business in location.

a. Internal environment
Internal factors that contribute to the business operations include:

-Financial resources

-Assets

-Human resources

-Technological resources

b. External environment

External factors that contribute to the business operations include:

 -Suppliers of Inputs

-Customers

-Marketing Intermediaries

-Competitors

-Publics

-Economic environment

-Social and Cultural environment

-Political and Legal environment

-Technical environment

-Demographical environment

-Natural environment

All internal and external factors should be analyzed carefully before developing the
identified business idea.
2.2 Meaning of made in Rwanda.

The Made in Rwanda is a holistic roadmap aimed at increasing economic competitiveness by

enhancing Rwanda’s domestic market through value chain development
2.3 Vision of Made in Rwanda (MIR)
With the Made in Rwanda Policy and an effective partnership with the private sector, the
Government of Rwanda strives for economic transformation through enhanced competitiveness
and industrial growth.
2.4 The objective of the MIR Policy
Address the trade deficit and increase job creation by promoting exports, boosting production of
and stimulating sustainable demand for competitive Rwandan value-added products by
addressing factors constraining their quality and cost competitiveness”
There are multiple aspects to this objective. Firstly, the key word is ‘competitive’.
Secondly, this policy aims to reduce the trade deficit by boosting domestic supply to compete
with imports, as well as improving export capabilities.
Thirdly, this policy aims to change the perception that Rwandan-made products are of lower
quality than imports.
2.5 Principles of made in Rwanda
The following guiding principles have guided the development of this present policy:
1. Safeguarding competition: Rwanda is an open market economy, committed to regional
integration, trade liberalization and private sector-led growth.
2. Competitiveness is necessary for long-term development: To achieve the Vision 2020 goals
of economic transformation in a sustainable manner, the key drivers hindering the underlying
competitiveness of the Rwandan economy need to be addressed
3. Meaningful public-private partnership: Any attempt to enhance the competitiveness of the
Rwandan economy needs to be grounded in meaningful relationships with the Private Sector,
responding directly to identified constraints and needs, leveraging private investments,
knowledge and skills.
4. GOR will facilitate economic transformation: GOR’s role is to support the emergence of a
competitive private sector which will generate jobs, exports and economic transformation.
Where supply-side capacity issues hinder firms’ ability to respond to market signals, GOR will
support as required(GOR:government).

5. Ensuring quality: Cost competitiveness should not come at the expense of quality. The
success and sustainability of Made in Rwanda depends on its reputation as being safe, reliable
and d4urable.
2.6 Pillars of Made in Rwanda
The Policy has five main pillars:
i. Sector Specific Strategies
ii. Reducing the Cost of Production
iii. Improving Quality
iv. Promoting Backward Linkages
v. Mind-Set Change

2.7 Challenges of made in Rwanda

1. Lack of access to working capital and raw materials
2. Cost of raw materials impacts negatively on cost of production due to
 High cost of land
  High finance cost
 High cost of complying of government regulations
 High cost of transport
 High cost of raw materials
 High cost of water
 High cost of electricity
3. Most companies import at least some of their raw materials
4. Capacity under utilization
 Lack of sufficient raw materials
 Lack of sufficient working capital
 Limited market
 Lack of skilled labor
 Lack of appropriate technology

2.8 Business opportunities related to Made in Rwanda

1. Agriculture (ex: Meat and dairly, milling products, sugar Construction (ex: Wood based
products, cement, metallic,…)
2. Tourism (ex: Leisure tourism, MICE,..)
3. Knowledge based services ( ex: Finance, ICT, Kuvugira inka, ..)
4. Manufacturing (ex: Texture, tiles, brick,..)
5. Arts crafts (Leather product, Uduseke,..)

LEARNING OUTCOME 3: GENERATE BUSINESS IDEA

 Meaning of business idea

A business idea can be referred to as the response of a person or persons, or an organization to
solve an identified problem or to meet perceived needs, realize fantasies or dreams, improving on
existing situations or products, etc.

Why generate business ideas (Reasons for generating business ideas)

There are many reasons why entrepreneurs would need to generate business ideas.
Some include:
1. You need an idea: A good idea is essential for a successful business venture – both when
starting a business and to stay competitive afterwards

2. Respond to the market needs: Markets are made up essentially of customers who have
needs and wants waiting to be satisfied

3. Changing fashions and requirements: Provide opportunities for entrepreneurs to respond

to demand with new ideas, products and services
4. To stay ahead of the competition: Remember, if you do not come up with new ideas,
products and services, a competitor will. So the challenge is to be different or better than
others
5. To exploit technology – do things better: Technology has become a major competitive tool
in today’s markets and for one to be better with changing technology, generation of business
ideas is crucial.

6. Because of product life cycle: All products have a finite life. The firm’s prosperity and
growth depends on its ability to introduce new products and to manage their growth

7. To spread risk and allow for failure: It is necessary for firms to try to spread their risk and
allow for failures that may occur from time to time by constantly generating new ideas.

Good entrepreneurial business ideas should be:

a) Market driven or focused

 Solve a problem
 Find a market need
 Customer focused not product driven
 Targets an identified sizeable market segment
b) Feasible or possible
 Attractive –there is a demand
 Achievable –it can be done
 Durable –it lasts
 Value creating –it is worth something
 Safe
 Affordable
c) Unique
 Faster/Better/Cheaper
 Differentiated (commodity)
 They have a “Special Sauce”
d) Fundable
 Having a consistent Revenue stream
 Manageable risk
 Sustainable -Market exists with frequency of purchase
 Scalable or Replicable
 Barriers to entry
  Growth potential
 Product pipeline
 Exit plan

Sources of business ideas

The following are the different sources of business ideas:
1. Personal interest in searching for new things/Hobbies.
2. Franchises (improving upon an existing idea).
3. Mass media (newspapers, magazines, TV, Internet).
4. Business exhibitions.
5. Surveys.
6. Customer needs, advice, complaints, preferences, wishes, etc.
7. Changes in society.
8. Brainstorming.
9. Being creative.
10. Prior or previous jobs.
11. Seeing a need or a gap in the marketplace.
12. Using skills as foundation for a business.
13. Discussion with a successful entrepreneur

Techniques of discovering new business idea

 Observation
 Story telling
 Interview
 Survey
 Brainstorming

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BUSINESS FEASIBILITY STUDY

A Business Feasibility Study can be defined as

1. A controlled process for identifying problems and opportunities, determining objectives,
describing situations, defining successful outcomes and assessing the range of costs and
benefits associated with several alternatives for solving a problem.

2. Is the initial design stage of any project, which brings together the elements of knowledge
that indicate if a project is possible or not.
3. Feasibility study means an analysis of a project to determine if it is practical or not.
  FIVE TYPES OF FEASIBILITYSTUDY
1. Technical feasibility: This involves assessing whether the technology used sills required
for running the business are available.

2. Operational feasibility : This gives answer to :

 Once business is started, will it be easy going and operational in available

conditions?
 Will it be manageable with available resources (capital, manpower, land, machinery,
etc…?)
3. Economic feasibility : This gives the answers to :
 Who will be potential customers?
 Who will be potential supplier?
 Will our business attract customers, survive market competition and will get
reasonable profit?
4. Scheduling Feasibility or Timeliness feasibility : This gives the answer to the following
questions:
 How much time will be needed for research and planning?
 How much time will be needed in arranging capital, purchase of equipment, etc?
 How much time it will take for initial installation?
 How much time it will take to start production and trading?
 How much time it take to start earning profit?
5. Legal feasibility : This refers to the make sure that our planned business activities will
not violating any laws which can put business in serious troubles such as , financial
bankruptcy or even imprisonment.

 BENEFIT OF CONDUCTING A FEASIBILITY STUDY

Below are some key benefits of conducting a feasibility study:

a) Improves project teams’ focus
b) Identifies new opportunities
c) Provides valuable information for a “go/no-go” decision
d) Narrows
e) the business alternatives
f) Identifies a valid reason to undertake the project
g) Enhances the success rate by evaluating multiple parameters
h) Aids decision-making on the project
 i) Identifies reasons not to proceed
 COMPONENTS OF BUSINESS FEASIBILITY STUDY
 Product feasibility
 Market feasibility
 Organizational feasibility
 Financial feasibility
 Recommendations and conclusion

STEPS INVOLVED IN FEASIBILITY ANALYSIS

 Step 1. Conduct a preliminary analysis

 Step 2. Prepare a projected income statement
 Step 3. Conduct a market survey
 Step 4. Plan business organization and operations
 Step 5. Prepare an opening day balance sheet
 Step 6. Review and analyze all data
 Step 7. Make "go/no go" decision

Step One: Conduct a Preliminary Analysis

The primary purpose of the preliminary analysis is to screen project ideas before extensive time,
effort, and money is invested. Two sets of activities are involved.
1. Describe or outline as specifically as possible the planned services, target markets, and
unique characteristics of the services by answering these questions:
 Does the practice serve a currently unsaved need? (e.g., multicultural
populations or age groups who are not currently being served)
 Does the practice serve an existing market in which demand exceeds
supply?
 Can the practice successfully compete with existing practices because of
an "advantageous situation," such as better design, price, location, or
availability (e.g., balance assessment and rehabilitation, programmable
devices)?

Step Two: Prepare a Projected Income Statement

Anticipated income must cover direct and indirect costs, taking into account the expected income
growth curve. Working backward from the anticipated income, the revenue necessary to generate
that income can be derived in order to build a projected income statement.
Step Three: Conduct a Market Survey
A good market survey is crucial. If the planner cannot perform this survey, an outside firm
should be hired. The primary objective of a market survey is a realistic projection of revenues.
The major steps include:
 Define the geographic influence on the market.
 Review population trends, demographic features, cultural factors, and purchasing power in
the community.
 Analyze competing services in the community to determine their major strengths and
weaknesses. Factors to consider include pricing, product lines, sources of referral, location,
promotional activities, quality of service, consumer loyalty and satisfaction, and sales.
 Determine total volume in the market area and estimate expected market share.
 Estimate market expansion opportunities (e.g., responsiveness to new/enhanced services).
Step Four: Plan Business Organization and Operations
At this point, the organization and operations of the business should be planned in sufficient
depth to determine the technical feasibility and costs involved in start-up, fixed investment, and
operations.
Step Five: Prepare an Opening Day Balance Sheet
The Opening Day Balance Sheet should reflect the practice's assets and liabilities as accurately
as possible at the time the practice begins, before the practice generates income.
Prepare a list of assets required for practice operations. The list should include item, source, cost,
and available financing methods. Necessary assets include everything from cash necessary for
working capital to buildings and land. Although the resulting list is rather simple, the amount of
effort required may be extensive.
Step Six: Review and Analyze All Data
This review is crucial. The planner should determine if any data or analysis performed should
change any of the preceding analyses. Basically, taking this step means "Step back and reflect
one more time."
Step Seven: Make "Go/No Go" Decision
All the preceding steps have been aimed at providing data and analysis for the "go/no go"
decision. If the analysis indicates that the business should yield at least the desired minimum
income and has growth potential, a "go" decision is appropriate. Anything less mandates a "no
go" decision.