PRACTICE OF ENTREPRENEURSHIP

EED 216

TABLE OF CONTENT

Topic 1: Know Technique for Generating Business Ideas

1. Define Business Opportunity
2. State Process of Exploiting Opportunity
3. Identify Business Opportunity using SWOT Analysis
4. Process of conducting Market Survey
5. Process of Business Idea Generation

Topic 2: Know How to Evaluate Business Idea for Enterprise

Development
1. Concept of Business Plan
2. Process of Preparing Preliminary Project Proposal
3. Process of Preparing Detailed Business Plan
4. Model Business Plan on a Selected Venture

Topic 3: Know Methods of Product/Service Selection

1. Define product /service;
2. Explain the nature and characteristics of
product/service;
3. Explain product selection criteria;
4. Identify key factors associated with product selection:
a. Infrastructure;
b. Technology;
c. Availability of raw material;
d. Government Policy/Regulation;
e. Legal aspects of business;
5. Explain the process of preparing feasibility study of a
venture;
6.Explain the steps involved in a technical analysis of a project:

a. Evaluate adequacy of infrastructural facilities for

product selection;
b. Identify the relevant technology available for
the selected product;
c. Evaluate sources and adequacy of raw materials for
the selected product;
7.Explain effects of government policy and
regulations on the selected product;
8. Identify legal aspects of business in
product selection.
Topic 4: Understand the Process and Procedure for Starting
an Enterprise
1. Outline the main features of the Companies and
Allied Matters Act (CAMA) 1990 and the subsequent
amendments;
2. Explain the functions of the Corporate Affairs
Commission (CAC) under the Companies and Allied
Matters Act 1990;
3. Explain the legal structure of business;
4. State factors to be considered in naming a
business;
5. Explain the procedure and requirements
for registration of a business name;
6. Explain the procedure and requirements
for incorporating a business;
7. Explain the reasons for the existence of registered
business names and companies;
8. Identify various agencies responsible for issuance
of licenses and permits.

Topic 5: Know the Various Operational Techniques in

Managing a Business
1. Define management and a manager;
2. Explain the functions of management and a manager;
3. Explain management structure for an enterprise;
4. Explain the communication process in the
management of an enterprise;
5. Explain the techniques and skills of:
a. Planning;
b. Organizing;
c. Staffing;
d. Leading;
e. Controlling.
6. Explain the basic techniques of marketing, production
and financial management in an enterprise;
7. Explain the principles of record keeping, auditing and
taxation (Preparation of a simple final accounts of a venture
or business).

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Topic 6: Know the Various Existing Industry
Support Agencies in Nigeria

1. Explain various industry/support agencies;

2. Explain the types, and sources of materials used
in both manufacturing and service Industries;
3. Explain the types and sources of plants and
machinery used in small scale Industries;
4. Explain the various information and assistance for
vital areas like finance, registration, project selection,
training, marketing, research, quality control, raw
materials, patent information etc.
5. Explain environmental factors associated with
Industrial and economic development in Nigeria.

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 COURSE TITLE: PRACTICE OF ENTREPRENEURSHIP

COURSE CODE: EED 216

INTRODUCTION
This course is designed to equip the student with necessary
entrepreneurial skills for self-employment. The course builds on
E.Ed.126 but with emphasis and focus on entrepreneurial skills
acquisition and development. The theoretical exposures given in EEd 126
provide a strong foundation for the practical aspects of entrepreneurship.
Entrepreneurship lies indeed in doing and not in talking. It is expected
that students will be made to take active interest in at least one area of
entrepreneurial activities before graduation. The course will involve
practical field trips to selected industrial set ups and further exposure to
actual industrial environment through:
(a) Industrial visits to companies in the immediate community
(b) Engaging in Community development efforts to affect their
immediate environment/community (Social entrepreneurship and
demonstration of Social Responsibilities)
(c) Industrial Attachment for experiential learning
(d) Mentorship
(e) Use of Industrialists/entrepreneurs as guest lecturers
(f) Identification and development of Small Scale Business Centre
as Laboratory.
(g) Setting up of various Business Clubs and extracurricular activities

GENERAL OBJECTIVES:
1. Know techniques for generating business ideas as well as
for identifying and assessing business opportunities
2. Know how to evaluate a business idea for developing an enterprise
3. Know methods of product/service selection
4. Understand the process and procedure for starting an Enterprise
5. Know the operational techniques in managing an Enterprise
6. Understand the various existing industries and support agencies
in Nigeria
7. Appreciate the role of commercial and development banks in small
and medium scale industries development
8. Understand the role of personal savings and portfolio investment
in National Economic Development

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 TOPIC 1:

TECHNIQUES FOR GENERATING BUSINESS IDEAS AS

WELL AS FOR IDENTIFYING AND ASSESSING
BUSINESS OPPORTUNITIES

INTRODUCTION:
Potential entrepreneurs require guidance on how to generate business
ideas. They are also expected to identify, assess and utilize business
opportunities to their advantage. It is against this background that effort
is made in this section to guide potential entrepreneurs to generate
business ideas and exploit available business opportunities. At the end of
this module students should be able to identify business opportunities
using SWOT Analysis. In addition they should learn how to conduct
market survey and select the most viable business venture and set up a
small business enterprise.

SPECIFIC LEARNING OUTCOMES:

1. Define business opportunity;
2. State the process of exploring opportunities
3. Identify business opportunities (using SWOT Analysis)
4. State the process of conducting a market survey in order to
establish demand/supply gap;
5. State the process of business idea generation

CONTENT:

1. Define business opportunity;

Business opportunity is an attractive investment idea or proposition that
provides the possibility of a return for the investor/risk taker. Such
opportunities are presented by customer requirements and lead to the
provision of a product or service which creates or adds value for its
buyer or end user.

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There are diverse opportunities in the following areas for the imagination,
creative, inventive and innovative minds:
 Stone and Mineral based industry
 Chemical and Allied industry
 Petroleum industry both upstream and down stream
 Mechanical and metallurgical industry
 Electrical industry
 Electronic industry
 Forest based industry
 Agro-based Allied industries
 Rubber based industry
 Leather industry
 Water Resources based opportunities
 Service Industry
 Miscellaneous activities such as Pharmaceutical, Paper processing
etc.

Activity: Students should use the strength, weakness opportunities and

threats (SWOT) model to identify opportunities around them.

2. Process of Exploring Opportunities

Nigerian business environment is saturated with lots of challenging

opportunities. Opportunities are not in short supply, rather,
entrepreneurs capable of capitalizing on existing business or of creating
new ones are in short supplies.

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Willing entrepreneurs must go through the following process in order to
capture attractive investment opportunities, take advantage and make a
success of them.

a) Recognize needs for running a venture:

A venture must be fully recognized. The very propelling influence, need,
motive or drive that is responsible for the entrepreneur’s eventual mindset
to want to run a venture.

b) Conduct self –approval:

Define your values, competitive strength, behavior, resources and other
capabilities (personal capability analysis). Prospective entrepreneurs must
analyse themselves and see if they possess the occupational, professional
and entrepreneurial competence needed to run an enterprise being
contemplated. Capability and value assessments are technically
referred to as “enterprise or company profile”

c) Scan the environment and industry.

This will enable the entrepreneur to understand the force, institutions
and actors that are currently and potential activities and performance.

Environment of business may be domestic or international, immediate

or remote, external or internal, absolute or comparative.

To understand the environment, the following are paramount:

 Environmental scanning
 Environmental forecasting
 Organizational adaptation to environmental changes.

d) Analyze Business ideas/opportunities: Possible business

idea/opportunities should be analyzed to enable the venturer to
determine the financial viability of the project; technical or
production pre-feasibility of the project; marketing,

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 commercial or economic viability of the project as well as social
desirability.

e) Select the best idea/opportunity/project. This stage is an

investment decision stage. Criteria for accepting or rejecting the
project, called selection factors, are put in place. Such selection
factors may be objective (quantitative) or subjective (behavioral,
qualitative or judgmental).

f) Capture/implement the idea/project; The first step of the

implementation process is to start with a comprehensive business
plan, which marshals, allocates and deploys resources needed for the
actualization of the business.

Evaluate success: Activity: Analyze a case of an enterprise which is not

more than three years –five years old.

3. Identify Business Opportunities (using SWOT Analysis)

Opportunities occur when people discover a problem of some kind that
can be helped with product/services, or when people decide they have
certain needs or want to satisfy. Opportunities may also arise from
change.

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Students should be assisted to identify, evaluate, select and capture
opportunities which can be operated, managed and realized as successful
ventures (counseling services). Young entrepreneurs need assistance
through advice, not only in the areas of profitable investment identification
and selection, but also in the field of management, technical know-how,
project evaluation, financing, location of suitable sources of appropriate
technology, establishment of enterprise services, growth alternatives and
adjustments to boundary threats. Assistance in the above areas helps the
entrepreneur to establish profitable ideas, capture, activate and actualize
them. It helps the entrepreneur uncover his interest and abilities through
expert assessment of environment, industry and capabilities of the
entrepreneur.

SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)

will enable the student mirror himself in relation to identification and
assessment of business opportunities. Strengths are his stronghold,
Weaknesses imply shortcomings, and Opportunities are possible areas
of exploitation while Threats are those things that are cogs in the wheel
of progress, such as competitors.

Exercises:
i. Group students to scan their environment for possible business
opportunities. Each group to report its findings.
ii.
iii. Guide students on a visit to a close-by trade fair or market.
Students should prepare a summary of the products/services on
display.
iv.
v. Give students assignment to watch television or listen to radio
advertisements at home and compose a newspaper article assessing;
the intended target audience, attention –getting values that were
visible, product information given, etc. Students to brainstorm and
prepare a concept web of opportunities that might arise from these
advertisements. Students to debate whether
ideas create opportunities or vice versa.
vi.
vii. Analyze a case involving identification of opportunities and ideas.
viii. Students to role play a variety of daily life situations that can
provide an introduction to identifying opportunities and ideas.

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4. Process of Conducting a Market Survey in Order to Establish
Demand/Supply Gap;
A market for a business is all the people within a specific geographical
area, who need a product or service and are willing and able to buy it.

For new entrepreneurs, the process of conducting a market

survey involves the following steps;

(1) Defining objectives of the market survey and specifying what

information is required.
(2) Working out the details of the study, such as;
 Identifying sources of obtaining information.
 Time and cost involvement for the study.
 Methodology to be used in gathering information.
 Developing a plan of action.
(3) Selecting samples and deciding what contacts and visit should
be made.
(4) Preparing questionnaire and plans for surveys and interviews.
(5) Collating and analyzing data.
(6) Preparing a report of findings.

Exercise:
Guide students to conduct a market survey and prepare a
detailed report. State uses of the survey.

5. Process of Business Idea Generation

Definition: A business idea is the response of a person(s) or organization

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.

Good business ideas result from effort and often creativity of the
entrepreneur.

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Finding a good idea is the first step in transforming the entrepreneur desire and
creativity into a business opportunity.

Sources of good business ideas: There are several sources of good

ideas. To be successful in generating or finding one, however, the
entrepreneur needs to keep his/her mind and eyes open and be alert to
opportunities.

Sources of business ideas include:

 Hobbies/interests
 Personal skills and experience
 Franchises
 Mass media (newspapers, magazines, TV, internet etc)
 Exhibitions
 Surveys
 Complaints
 Brainstorming
 Creativity

Reasons for generating business ideas:

 Business idea generation is a sine-qua-non ((inevitable) for business.
 Ideas are generated to respond to market needs
 Ideas are also generated to respond to changing fashions
and requirements.
 In order to stay ahead of competition
 To be in tune with latest technology so as to do things better.
 In response to product life cycle
 In order to spread risk and allow for failure.

Exercises
1. Do the nine dot exercise. Ask students to connect the nine dots
with four straight, continuous lines.
2. Do the creative square exercises as another example of creativity in
action
3. Provide solutions and explanations to the two exercises?

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 TOPIC 2:

EVALUATION OF BUSINESS IDEA FOR DEVELOPING AN

ENTERPRISE

INTRODUCTION:
In developing a business idea there is a need for potential entrepreneur
to adopt a carefully moderated and intelligent approach. It is against this
background that an attempt is made under this section to guide
potential entrepreneur to be more careful by examining and evaluating
every step in the course of developing and establishing business
enterprise. At the end of this module students should be able to prepare
a preliminary project proposal, explore Internet for company profile,
product catalog, product information, etc; as well as conduct a modest
business plan on a selected venture. Students should present the plan to
a panel of successful entrepreneurs for assessment.

SPECIFIC LEARNING OUTCOMES:

1. Define the concept of business plan;

2. Explain the process of preparing preliminary project proposal;

3. Explain the process of preparing a detailed business plan;

4. Prepare a model business plan on a selected venture;

CONTENT:

1. Concept of Business Plan

Planning is a process that never ends for business. It is extremely
important in the early stages of any venture when the entrepreneur will
need to prepare a preliminary business plan.

There are different types of plans that may be part of any business
operation. These include financial plans, marketing plan, human
resource plan, production plans, sales plans etc. Plans may be short
term or long term or may be strategic or operational. Whatever the
type of plan or the function, plans have one important purpose; to
provide guidance and structure to management in a rapidly changing
market environment.

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A business plan on the other hand is a written document prepared by
the entrepreneur that describes all the relevant external and internal
elements involved in starting a new venture. It is often an integration of
functional plans such as marketing, finance, manufacturing and human
resources. It also addresses both short term and long term decision
making for the first three years of operation. Thus, the business plan, or
road map, answers the strategic questions of where am I now? Where am
I going? And how will I get there? Potential investors, suppliers and
even customers will request or require a business plan.

Exercises
i. 1. Students to react to the following situations:
What unpleasant occurrence in your recent past could have
been avoided by Planning?
ii. Do you agree with the statement: ‘failingfail’? to
iii. Students to analyse a case where lack of planning led to failure.

2. Students to pick a personal goal that they would like to achieve in the
next few months, example; to improve on their examination scores in all
subjects next term. Using the planning guides, students should describe
the plan, procedures and standards that can help to accomplish this goal.
Students may also make daily, weekly or monthly plans. Students should
select a proposed venture from the opportunities available in the local
environment and apply the planning process to it.

2. Process of Preparing Preliminary Project Proposal

Structure of a Preliminary Project Proposal

This should be structured according to the following key headings,
keeping each section as brief as possible. If a heading is not relevant to
the project, simply ignore the unrelated heading.

1.Background: in this section, establish the context of the project by

giving an account of the problem it is trying to address.

2.State of the art: give an overview of existing and emerging

technology in the field, including an account of rival technologies
and a comparison of the advantages and disadvantages of the
various options.

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3. Proposal: give an overview of the proposed project and the
approach, i.e. the activities which will be undertaken to achieve the
project objectives. Clearly establish the research element or novelty
component in the proposal.

4. Consortium: give an overview of the proposed manpower and

establish the required ability to carry out the project successfully
(e.g. skills, competencies, etc.)

5. Objectives and Deliverables: Identify (1) the objectives and (2) the
deliverables of the proposed project.

6. Competitiveness: if applicable, establish the competitiveness or

advantages of the proposed solution compared to other solutions,
whether these already exist or are still being researched.

7. Cost: give an overview of the project cost (including start-up cost

and working capital requirements).

8. Impact: this section should include:

a. Markets and Uses: identify possible uses and markets for the
deliverables of the project.
b. Benefits and Beneficiaries: identify the beneficiaries of the project’s
results (e.g. the project public, third parties) and the manner in which
they will
benefit.
c. Roadmap: give an indication regarding what further steps,
effort, costs and timeframes are necessary before tangible
benefits can be realised from the deliverables or results of
the project (unless these are realised within the lifetime of
the project).
d. Spillover Benefits: identify any secondary benefits of the
project (e.g. facilitating participation in funding programmes,
improving Malta’s ranking, strengthen in a particular area, etc.)

9. Other Issues
If applicable, briefly identify any gender, ethical or legal issues
that may be connected with the proposed project.

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3. Process of Preparing a Detailed Business Plan;

Business plans can be written for retail business, wholesale business,

service business, manufacturing and any other type of business.
Business plans are written by prospective business owners or
support agency.

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 customers, competitors and suppliers.

A business plan should be organized to carry a cover page, table of

contents, executive summary, business description, Marketing plan,
organizational plan, operational plan, financial plan and appendices.

EXERCISES
I. 1. Distribute sample Venture/Business plan to students; students to
examine the plans and make their notes and observation, with
respect to its function, importance, mission and purpose.

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 II.
III. 2. Divide students into groups of five or more. Each group to plan
an event such as wedding, concert, anniversary, athletics, picnic,
school dance, debate, quiz, graduation etc. Let them identify
problem areas. Discuss problem areas with the students; let them
know that an event is somewhat like a venture. If it is not well
planned, it may end up with serious problems that are difficult to
solve when the event is actually taking place. Let them realize at
what point their venture will never work and should be abandoned.
They should also know that they may choose to proceed, abandon
or modify their venture after the planning framework has been
completed. It is better to halt a project before large amounts of
time and resources have been expended on something that cannot
succeed. Students should know that the single most important
factor in beginning a successful venture is careful panning. Many
things can go wrong, but careful planning can prevent many of
them from happening. Students should also know that sometimes
a venture might seem like a good idea before the careful planning
stage. Some problems however, may be imminent which cannot be
solved. The best course of action may be to abandon the
venture and lose just the planning time.
IV.
V. 3. Students to assume that they are investors with a large amount of
money to invest. Many venture plans have been presented for
their consideration. Let them suggest criteria to use to pick
the best plan. They should know if they do not do a good job,
they stand a very good chance of losing a lot of money.
VI.
VII. 4. Prepare a model business plan on a selected venture.

ix. Prepare a model business plan on a selected venture;

Outline of a business plan

1. Title: Feasibility study Report on

………………………………………..
Commissioned by………………………………………………………
2. Project consultants ……………………………………………
3. Table of contents: Page
a) Executive Summary
b) The Report
c) Project Background
d) Objective of study

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 e) Project description and
f) Loan advancement
g) Promoter
h) Location
Market and marketing plan
 Potential customers
 Competition
 Pricing
 Sales Tactics
 Advertising and Promotion
 Distribution.

Technical Feasibility and management plan:

 Factory
 Machinery
 Overhead charges
 Packaging materials
 Raw materials Manpower and Labour costs.

Financial Projection/Feasibility:
 Overview on capital requirement
 Financial plan
 Projected cash flow
 Projected profit and loss account
 Projected balance sheet
 Break-even analysis
 Source and application of funds

Organization Plan:
 Form of ownership
 Identification of partners/Principal shareholders
 Authority of Principals.
 Management team background
 Roles and responsibilities of members of organization

Assessment of Risk:
 Evaluate weakness of business
 New technologies
 Contingency plans.

Schedules:
 12 months projected sales

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  12 months projected purchase
 Fixed Assets and depreciation schedule
 Profitability index.

Exercises
1. Present a hypothetical business plan to students; Let them
analyze it bringing out clearly:
 Strengths and weaknesses in terms of available
resources, expectations of the planners (are they realistic).
 Anticipated opportunities and threats that can be seen
both internally and externally.
 Develop goals for the venture including timeliness. Both
long term and short term goals may be identified.
 In the light of the strengths, weaknesses and environmental
issues identified, develop operating objectives and operating
plans.
2. Present copies of annual reports of several organizations to
students. Let them study them and compare the relationship
between marketing expenditures and sales. This experience
may help students to gain a sense of the costs needed to obtain
revenue.
3. Group students. Each group to prepare a comprehensive business
plan for their selected hypothetical venture. Each group to take
their proposal to a financial institution to determine if their
financial plans are realistic and viable. Upon returning from their
research, the groups may confer with each other about the
implication of the findings for the venture plans. Students should
also share their experiences about their findings.
4. Students should list a set of principles or criteria that
financial Institutions apply to ventures to determine the
viability of a financial plan, and use them as a basis to self-
assess their financial plans

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 TOPIC 3:

METHODS OF PRODUCT/SERVICE SELECTION

INTRODUCTION
The need to guide potential entrepreneurs regarding how to go about
selecting the right type of product cannot be over-emphasized as it is
quite crucial for their future survival. The point is that choosing the
wrong type of product or service delivery could easily lead to business
failure which would be disastrous to a potential entrepreneur. Hence, an
attempt is made in this section to guide entrepreneurs to go for an
effective way of selecting the right type of product or service. At the end
of the module students should be able to analyze a given case in product
selection; select a product and prepare a feasibility report on a modern
business and evaluate the viability, using CBA (Cost Benefit Analysis)
methodology. They should also be able to generate venture idea on
selected exportable product obtained from the web.

SPECIFIC LEARNING OUTCOMES:

1. Define product /service;

2. Explain the nature and characteristics of product/service;
3. Explain product selection criteria;
4. Identify key factors associated with product selection:
i. Infrastructure;
ii. Technology;
iii. Availability of raw material;
iv. Government Policy/Regulation;
v. Legal aspects of business;
5. Explain venture idea generation;
6. Explain the steps involved in preliminary screening;
7. Explain the different steps in preparing pre-feasibility study;
8. Evaluate adequacy of infrastructural facilities for
product selection;
9. Identify the relevant technology available for the
selected product;
10.Evaluate sources and adequacy of raw materials for the
selected product;

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 11.Explain effects of government policy and regulations on the
selected product;
12. Identify legal aspects of business in product selection.

CONTENT

1. Define Product /Service;

Meaning of product/service
1. A transformed input via a throughput or the resulting output
secured through the conversion of selected inputs in a
transformation process (systems definition).
2. Any producible, manufacturable or serviceable items altered
from the original state to a desired advanced state thereby
creating specific values or objectives for its producers and
users.
3. Anything that can be offered to a market for attention,
acquisition, use or consumption (marketing definition).
4. A bundle of complex tangible and intangible attributes or
benefits. Such attributes/benefits include durability,
finish, image, colour, packaging, repair service, etc
(marketing definition)

Exercises: Based on the definitions, students should classify product

based on method of production, nature of output, nature of market.

2. Explain the nature and characteristics of

product/service;

Nature and Characteristics of Product /Services:

Product is an outcome of input-transformation-output. Where
inputs are men, methods, materials, money and machines,
transformation is the production process where the forms of raw
materials are changed into semi-finished products which output is
the final product/goods. Products/services must provide functional
utility to the consumer. The functional/performance characteristics
may be in terms of weight, liability, size, maintainability or operating
effectiveness. Products or services must:
 Be capable of advancing the “profitability” of the organization; and

 Satisfy a want

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3. Explain Product Selection Criteria:

When a new product is to be acquired/produced, a company usually

uses a defined product evaluation and selection process. Very early
in the process, a list of relevant selection criteria is compiled and
distributed to sales force. Later on, the criteria list is used to compare
the various product offerings and create a shortlist with products
selected for further evaluation.

Early in the product evaluation and selection process you would identify
products that are expected to meet the market requirements.

For the bottom-up ideas, after the ideas have been collected, the
funneling process begins. An "expert" team analyzes the ideas from
a product technology and manufacturability standpoint; and then
check the result against the Voice of Customers tools (i.e. web site,
claims, reports from the sales force and technical assistance staff, etc.).
If the PD Dept. states that yes the idea is really feasible from a technical
standpoint, then they are analyzed in terms of economics (costs to make
the product, investments required, etc.). In parallel, a market analysis is
done: how many sales in how many years at what price. Finally, the
financials are calculated and priority rank is done based on those
parameters. Here it is very important to use multiple criteria, as
otherwise the highest NPVs will overcome the others

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4. Identify Key Factors Associated with Product Selection:
 Infrastructure;
 Technology;
 Availability of raw material;
 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:
 Description of the process showing simplified flow charts
indicating comprehensive material and energy requirements;
 Consideration of alternative processes and justification for
the chosen process;

Firm Size and Production Schedules:

 From market studies, indication of demand for the product
 Consideration of availability of inputs and possibility
of importation of raw materials (where necessary)
 Consideration of the start up and technological know-how.

Machines and Equipment:

 Machines and equipments layout
 Specification of the machinery and equipment required,
indicating rated capacities of each.

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  Source of supply of machinery and equipment (indicating whether
local or foreign) and including costs and terms.
 Comparative analysis of alternative machinery and equipment in
terms of cost, reliability, maintainability and local technical
expertise.

Project Location (Infrastructure and Utility Analysis):

 Map showing project location
 Desirability of location in terms of distance from the source of
raw materials, market and other factors
 Desirability of location in terms of infrastructures and utility
supply.
 Comparative study of different locations indicating advantages and
disadvantages;

Raw Materials:
 Description and specifications relating to physical,
mechanical properties
 Current and prospective cost of raw materials, including sources of
materials
 Local availability, continuity of supply all year round, and
prospect for importation.

Waste Disposal:
 Description and quantity of waste to be disposed of
 Description of the chosen waste disposal method and cost
 Comparison with other methods to indicate cost benefits
 Compliance with legal requirement with regards to
environmental impacts

Environmental Impact Studies:

 Description of the environment of the project location.
 Description of the project needs and processing technologies
 Prediction of impact of the waste products and processing activity
on the environment
 Mitigation measure to treat impacts
 Residual impacts and further studies to treat such
residual impacts

Manpower Requirements:
 Skilled and unskilled labour requirement
 Technical and managerial staff requirement

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  Training needs assessment and training schedules
 Proposal on remuneration including fringe benefits

Venture Idea Generation

The starting point of being an entrepreneur and developing a new venture

is the identification of the basic product or service being offered.
This part of the venture creation process is perhaps the most difficult to
actualize. The origin of the new product/service idea is usually internally
generated through research and development, other sources of new ideas
could be through creative problem solving. A wide variety of techniques
can be used to obtain the new product idea. Whichever way it occurs, a
sound idea for a new product/service, if properly evaluated, is essential
to a successful launch of a new venture.

Some of the sources of new ideas include consumers, existing companies,

distribution channels, Government, R&D, Hobbies/interests,
Personal skills/experience, franchises, mass media, Exhibitions,
surveys, complaints, Brainstorming, creativity etc.

Even with a wide variety of sources available, coming up with an idea

to serve as the basis for a new venture can still be a difficult problem.
The entrepreneur can use several methods to help generate and test
new ideas, including focus groups, brainstorming and problem
inventory analysis.

5. Steps Involved in Preliminary Screening;

Every project has uncertainties. The nature of the uncertainties can be

expressed in the form of assumptions which must be valid but which
cannot be directly controlled. Assumptions can be the most critical
factors in a development project. Many projects fail because planners
make unrealistic assumptions or forget to define and examine the
implicit assumptions they are making.

24
After identifying as many critical assumptions as possible with the
information at hand, they can be looked at more closely and defined
more specifically.

25
7. Effects of Government Policy and Regulations on the
Selected Product;
Your business may need permits and other licences before you can start.
The licensing rules are different depending on the type of business that
you are setting up. These are examples of the sort of licenses you might
need, and where to apply for them:

The Abuja Environmental Protection Board, (AEPB) is in the process

of setting up formal licence requirements for certain kinds of
businesses, especially those business that may affect the
environment.

Food businesses (such as restaurants, catering services, snack bars,

bottled or packaged drinking water etc) as well as businesses dealing
with dugs formulation, repackaging and distribution need a licence from
NAFDAC.

Businesses dealing with children, such as nurseries or daycare centres,

are licensed by the Abuja Board of Education.

31
Land related businesses (Certificate of Occupancy) or if you are
planning on applying for a piece of land for business purposes you will
do that at
Abuja Geographic Information Service (AGIS)

Whatever your business is, your Counselor will be able to tell you
whether any special licences are needed. The CAC and NAFDAC promise
short processing time, but you should still allow enough time for them to
process your application. You will not be able to start your business
without NAFDAC licenses, if you are in the food, drug and cosmetics
industry.

8. Identify Legal Aspects of Business on Product Selection

In Nigeria different regulations apply to different products. The

entrepreneur is advised to consult his/her lawyers and/or technical
services provider for guidance. Below are some of the common
regulations that must be met –environmental impact report and
certification, NAFDAC registration, copyright and trademark law, etc.

ENVIRONMENTAL IMPACT ANALYSIS (EIA)

In siting your project in a location, it is important to analyze the impact

of the production operations on the immediate/surrounding
environment. It is essential that for any identified negative effect
designs for corrective actions and or mitigation must be incorporated in
the project implementation strategy. The EIA process must take
account of the following:

Socio-Cultural Factors
• Community Structure
• Traditional Cultural Habits and Customs
• Historic Sites
• Religious and Social Services
• Recreation
• Housing
• Internal and External Relations
• Protection of Vital Natural Resources

Social Infrastructure
• Education
• Sanitation

32
 • Health
• General Well-Being (Diseases, Physical Safety, Population Density,
Etc)

Emissions
• Liquid Waste
• Solid Waste
• Air Pollutants (Gases, Dust, Fumes, Vapours)
• Noise and Vibrations
• Odours
• Chemical Reactants (Producing Colours, Odours, Poisons)
• Hazardous Substances

Health Risks and Hazards

• Health Risk to Workers and Staff
• Increase of Already Existing Risks
• Risk of Accidents Affecting Social and Natural Environment
(During Construction and Operation, After Closing Down
Operations, During Transportation of Hazardous Substances)

Degradation of Social Structures

• Migration
• Displacement of Human Habitation
• Displacement of Economic Activities
• Disruption of Culture-Specific Social Relationships and
Infrastructures
• Deterioration of General Living Conditions

Degradation of Natural Resources

• Direct and Indirect Damage to Natural Water Resources
• Damage to Land Resources
• Uneconomic Use of Nonrenewable Natural Resources
• Damage to Plant Populations
• Disruption of Interlinked (Balanced) Ecosystems
• Displacement, Extinction of Species

REGULATION AND REGISTRATION OF FOOD AND DRUGS:

The National Agency for Food and Drug Administration and Control
(NAFDAC) is the government of Nigeria regulatory body responsible for
food and pharmaceutical products manufacturing, importation,
advertisement and distribution in Nigeria under the provision of the

33
government of Nigeria Decree 19 of 1993 and its accompanying
guidelines. No food item may be imported, advertised, sold or
distributed in Nigeria unless it has been registered by NAFDAC.

NAFDAC was established to protect and promote public health by

ensuring wholesomeness, quality and safety of food and drug
consumed in Nigeria.

General Requirements
NAFDAC regulation requires food labeling to be informative and accurate.
The following are NAFDAC’s requirements’ minimum labeling
1. A product brand name or common name must appear in bold
letters.
2. A complete “location” address of the main country of origin must be provided
on the product label.
3. The production ”batch” number, expiry date of date must be indicated.

4. Net content, specifying essential ingredient in metric weight for

solid, semi solid and aerosols and metric volume for liquids.
5. Ingredient must be noted by their common names in order of
their prominence by weight unless the food is standardized, in
which case the label must include only those ingredients
which the standard makes optional.
6. Food additives and colours must be declared on the label.
Spices, flavours and colours may be listed as such, without
naming the specific material; but any artificial colour or flavour
should be identified as such.
7. Labeling should be in English. If it is in another language, an
English translation must be shown on the label r package insert
(where applicable).
8. NAFDAC registration number must be included on the product
label.

34
COPYRIGHT AND TRADE MARK LAW

The Nigerian Standards Organization is responsible for issuing

patents, trademarks and copyright. Once conferred, a patent conveys
the exclusive right to make, sell, use a product or to apply a patented
process. The trademark Act of 1965 governs the registration. A
trademark grants the holder the exclusive right to use the registered
mark for a specific product or class of product.

Statutes which govern intellectual property regulation in Nigerian include

the copyright Act of 1988 (amended in 1992). Copyright law makes
counterfeiting, exporting, importing, reproducing, exhibiting, performing
or selling any work, without the permission of the copyright owner a
criminal offence.

35
 TOPIC 4:

THE PROCESS AND PROCEDURE FOR STARTING AN

ENTERPRISE

INTRODUCTION:
An attempt is made in this section to guide potential entrepreneurs
regarding the steps to adopt in the course of starting and operating their
proposed business enterprises. At the end of this module, students
should be able to identify the procedure as well as the documentations
required for registering different types of business ventures in Nigeria.
They should also understand the important elements in an Article and
Memorandum of Association.

SPECIFIC LEARNING OUTCOMES:

1. Outline the main features of the Companies and Allied

Matters Act (CAMA) 1990 and the subsequent amendments;
2. Explain the functions of the Corporate Affairs Commission
(CAC) under the Companies and Allied Matters Act 1990;
3. Explain the legal structure of business;
4. State factors to be considered in naming a business;
5. Explain the procedure and requirements for registration of a
business name;
6. Explain the procedure and requirements for incorporating
a business;
7. Explain the reasons for the existence of registered
business names and companies;
8. Identify various agencies responsible for issuance of licenses
and permits.

CONTENT:

1. Main Features of The Companies and Allied Matters Act

(CAMA) 1990 and the Subsequent Amendments;

Main features of CAMA 1990: - The Company and Allied Matters Act
(CAMA ) is divided into part A, B, C.

36
PART A
This part deals with incorporated companies: the procedure of
incorporating companies, the function of corporate affairs commission
(CAC), types of companies, composition of the companies, inflow and
outflow of capitals in a company, types of meetings, merger and
acquisition of companies and the winding up of companies.

PART B
Part B deals with business name: which business name is registerable
and unregisterable?

PART C
Part C defines incorporated trustees. Incorporated trustees are non profit
organization. It deals with the procedure of incorporation, function and
composition of incorporated trustees.

2. Functions of The Corporate Affairs Commission (CAC) Under

The Companies And Allied Matters Act 1990;

The functions of the commission as set out in section 7 of the Companies

and Allied Matters Act includes the following:
 To administer the Act, including the regulation and supervision of
the formation, incorporation management and winding up of
companies.
 To establish and maintain companies registry and offices in all the
states of the federation suitability and adequately equipped to
discharge its functions under the Act or any law in respect of
which it is charged with responsibility;
 Arrange and conduct an investigation into the affairs of any
companies where the interests of the shareholders and the public
demand;
 To undertake such other activities as are necessary or expedient
for giving full effect to the provision of the Act.

The commission also registers Business Names and Incorporated

Trustees as well as provides wide range of ancillary services.
37
3. Legal Structure of Business;

Business could be carried on as a small, medium or large scale

enterprise. It could also be carried on as domestic or international
business. It could also be publicly or privately owned. In Nigeria, legal
forms of business are sole proprietorship, partnership and companies.

Sole Proprietorships are one-man businesses. The owner provides the

capital, takes decision and assumes all risk. They are the most common.

The partnership is an Association of two or more persons carrying on

business with a view to making profits through the pursuit of lawful
objective. In Nigeria, the number of people to form an ordinary
partnership must not exceed twenty while in the case of banking; the
number must not exceed ten persons. The people forming the association
are called partners. They agree from the start what capital each brings to
the business, specific functions each will perform and how profits will be
shared. The partnership agreement or deed clearly specifies the right and
duties of partners and privileges of such partners.

The limited liability company (corporation) is an “artificial being,

invisible, intangible and existing only in contemplation of law”. Being a
mere creation of the law, it possesses only the properties which the
charter of its creation confers upon it either expressly or as incidental to
its very existence. 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 in Nigeria; private companies

and public companies.

38
A private company is composed of a minimum of two and maximum of fifty
members. A public company on the other hand has a minimum of seven
members with no upper limit.

The following documents are required by the Corporate Affairs

Commission (CAC) Registrars of companies) before incorporation of a
company;
 Articles and Memorandum of Association
 A list of persons who have 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 authorized share capital
 A statutory declaration that all the requirements for
registration have been complied with.

4. 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 among others;
1) The nature of the business to be undertaken
2) The type of goods/services to be produced and offered to the public
3) The environment of the business
4) The name should comply with the necessary requirements of the
CAC
5) The name has to be attractive/ appealing
6) The name should be easy to relate with.

Exercise;
Students should brainstorm to come up with additional factors.

39
5. Procedure and Requirements For Registration of A Business Name

A business name is the name or style under which any business is

carried on whether in partnership or otherwise. A business name will be
rejected by CAC if;
 It is found to be identical with or similar to any registered
trade mark or to a name by which any firm, company or
individual has already been registered as a corporate entity
under part A of the CAMA 1990 or part B as the case may
be.
 It is found to be deceptive or objectionable in that it contains
a reference direct or otherwise to any personage, private or
institution, or it is likely to mislead the public as to the
nationality, race or religion of the person(s) by which the
business is wholly owned.
 A business name would not be registered if it contains the word “national,
government, municipal other word which imports or suggest that the
business enjoys the patronage of the federal, state or local government.

40
6. Procedure and Requirements For Incorporating A Business;

Procedures and Requirements for Incorporation of a Business include:

1) Consulting a legal practitioner to prepare all the necessary
incorporation documents as itemized in topic 3
2) Filing the documents with the CAC
3) Payment of all the necessary fees
4) Issue of certificate of incorporation and a trading certificate (in the
case of a public limited company).

7. Reasons For The Existence of Registered Business Names and

Companies;

Reasons for the Existence of Registered Business Names

1) To avoid conflicting names
2) For easy identification
3) For purpose of product classification/identification
4) To maintain standards of product and services.
5) To maintain customer loyalty.

Exercise:
Students to further brainstorm on the reasons for existence of registered
business names.

8. Various Agencies Responsible For Issuance of Licenses

and Permits.
Licenses are official documents showing that permission has been given
to do, use or own something.

In Nigeria, licenses and permits relevant to enterprises are issued by the

following organizations:

41
S/N Organization Certificate/Licence/Permit
1. National Agency for Food and Drugs Foods and Drugs
Administration and Control (NAFDAC)
2. Nigerian Police Fire Arms
3. Export Processing Zones (EPZ) Finance
4. Nigerian Investment Promotion Tax Concessions/Pioneer Status
Commission (NIPC)
5. Nigerian Immigration Service Expatriate Quota
6. Nigerian Institute for Standards (NIS)/ Certificate for Standards
Standard Organization of Nigerian (Quality Control)
(SON)
7. Nigerian Export Promotion Council Certification relating to exports
(NEPC)
8. NACCIMA/Ministry of Commerce Certificate of Origin
9. National Office for Technology Intellectual Property
Acquisition and Protection (NOTAP)
10. Ministry of Environment Location Permit
11. Federal Inland Revenue Services Tax /Vat Certificates
(FIRS) and Board of Internal Revenue
(BIR)
12. State/Federal High Court Stamp Duty
13. National Copy Right Commission Patents, Trade Marks, Designs,
(NCRC) Copyright, etc

42
 TOPIC 5:

VARIOUS OPERATIONAL TECHNIQUES IN

MANAGING AN ENTERPRISE

INTRODUCTION:
Potential entrepreneurs need to fully understand certain guidelines
regarding the smooth running of business enterprises if they are to
manage them successfully. These operational techniques for managing
an enterprise are treated in this section. Students should be able to draw
an organogram for any SME. They should understand the
communication process in an enterprise as well as the function areas of
business and in particular the importance of good record keeping
practice.

SPECIFIC LEARNING OUTCOMES:

1. Define management and a manager;

2. Explain the functions of management and a manager;
3. Explain management structure for an enterprise;
4. Explain the communication process in the management of
an enterprise;
5. Explain the techniques and skills of:
i. Planning;
ii. Organizing;
iii. Staffing;
iv. Leading;
v. Controlling.
6. Explain the basic techniques of marketing and production
in an enterprise;
7. Explain the principles of record keeping, auditing
and financial management.

CONTENT:

1. Management and a Manager;

Meaning of management and manager

1. Management is described as the process of getting things
done through people in an effective and efficient manner.
2. Management can be used to refer to a group of people,
performing managerial tasks and functions. The term is used

43
 collectively to include all the individuals in that group. For
instance, a group of people often referred to as the
“management” of the organization.

A manager is a hired hand saddled with the responsibility of planning,

organizing, integrating activities of others in an organization. A manager
is an agent of an organization who works in accordance with the goals of
an employer. His motives centre on the attainment of organizational
goals and objectives. He works and ensures effective and efficient use of
organizational resources to achieve the set goals.

2. Functions of Management and a Manager;

Function of management or management functions are the functions

that are performed by managers. The performance of management
functions separate management from other employees and shareholders

44
 in an organization. A manager is a manager by virtue of the performance
of the functions of management. The key functions of management are
planning, organizing, leading (directing) and controlling.

The derivative functions of management are:

 Setting of objectives
 Forecasting
 Formulating and implementing policies
 Decision making
 Leading
 Motivating
 Communicating.

The functions of a manager on the other hand include:

 Provision of a clear direction for the organization
 Ensuring that the organization serves its basic purpose, which is
the efficient provision of goods and services.
 Management design and maintain the stability of the organization’s
operations.
 Managers choose the strategies needed to keep an organization
adapting in a controlled way to its changing environment.
 Managers ensure that the goals of the organization are achieved.
 Managers serve as the information link between the organization
and its environment.

3. Management Structure for an Enterprise

Organizational structure is the framework of jobs and departments that

directs the behavior of individuals and groups toward achieving the
organizations objectives. It is the network of relationships between the
various positions and position holders in the organization. The
organizational structure is a blue print or model indicating how people
and jobs are combined in an organization.

45
The organizational structure can be horizontal or vertical; it can also be
formal or informal.

Typical Example Of Management Structure:

1) Vertical Structure:

Chairman Board/of Directors

General Manager/CEO

Top Management Team

Middle/Lowest Level Management

2) Line organization: Line organization/Authority

Example of a line authority:

Rector, Dean, HODs (line
manager) Staff authority:
Bursary, chief security officer and registrar

3) Horizontal structure:

a) Departmentalization by function (functional structure)

46
 GM

Marketing Production Finance

Marketing Engineering Finance

Research Administration Planning

b) Departmentalization by territory (Geographical structure)

GM

Western Northern Easter Southern

Region Region Region Region

c) Departmentalization by customers (Customer structure)

GM

Customer Industrial Military

Sales Sales

47
 d) Departmentalization by Process (Process structure)

GM

Welding Punch Drilling

Process

e) Departmentalization by Product:

GM

Baby Toiletries Beverages Hot

Foods Drink

f) Matrix structure
g) Committee Organization

4. Communication Process in the Management of An Enterprise;

Communication in the management of an enterprise connotes the flow

of information or authority among individuals in the organization.

In selecting a structure for an enterprise, it is expected of a manager to

evaluate the relative advantages/disadvantages of preferred structure.

The teacher/facilitator should analyze the various structural patterns

listed above showing clearly the relationships and flow of authority.
Charts are necessary for this exercise.

Exercise
Students should practice drawing different organizational charts from
the simple to the most complex. They should decide which is suitable
for small enterprise.

48
5. Explain the Techniques and Skills of: Planning; Organizing;
Staffing; Leading; and Controlling.

Planning is the first of the series of functions that managers perform. It

entails a mental picture of what the organization is to be, what the
organization should achieve, when it should be achieved, who is to
ensure it is achieved and how the objectives are to be achieved.

Planning is important in many respects:

 It provides sense of direction to the organization
 Provides the organizations with objectives to be
achieved.
 Helps to minimize cost as trial and error in
operations and management are avoided.
 Helps to management uncertainty.
 Enhance the spirit of togetherness.

All other management functions hinge on planning for their execution.

Without plans, managers cannot know they should organize people
and resources or what they need to organize. Without a plan, they
cannot lead with confidence or expect others to follow.

49
There are different types of plans such as strategies, policies, rules,
procedures, programme, budgets, etc. The various levels of planning are
strategic planning, tactical planning and contingency planning.

Organizing: Organizing involves building up the dual structure, material

and human, of the enterprise. It involves identifying, mobilizing and
utilizing resources to achieve the set plans/objectives. Tasks are divided
into jobs, authority is delegated, appropriate basis for
departmentalization of jobs is determined and the optimum number of
jobs in each department is decided.

Staffing: Staffing involves finding the right people, with the right skills, abilities, and fit,
who may be hired or already working for the company (organization) or may be working
for competing companies.

Leading: Directing is the process of commanding which means building

together, unifying and harmonizing all activity and effort. Personnel are
encouraged to make their maximal contributions towards the attainment
of the organizations’ goals. In directing, and communicate so that objectives can be
achieved at the least cost.

Controlling: Controlling ensures that everything occurs in conformity

with established rule and expressed command. Controlling is the process
of ensuring that actual activities conform to planned activities. It is used
to evaluate actual performance, to compare actual performance to goals,
and then to take action on the difference between performance and goals.

50
51
6. Basic Techniques of Marketing and Production in an Enterprise;

BASICS OF MARKETING
Market Segmentation
Any market primarily consists of people, and the cassava and cassava
products market is no exception. It consists of buyers who differ in one
or many characteristics. They differ in their geographic, demographic and
psychological needs, and in their behavioural characteristics. It is a huge
market that one entrepreneur cannot effectively and competitively serve,
given his limited resources. Instead of marketing cassava and cassava
products to everyone in the market, the entrepreneur needs to
concentrate his/her efforts on one of the segments of the market in
which the products have the greatest potential appeal.

For this, the customers or prospects - have to be grouped into segments

consisting of homogeneous group in order to be able to address them
with messages which are target-group oriented. Good market
segmentation is a must for any successful marketing approach.

Marketing Strategy
Marketing strategy is defined by Philip Kotler as "the basic approach that
a business unit will use to achieve its objectives, consisting of broad
decisions on target markets, marketing positioning and mix, and
marketing expenditure levels."

The marketing strategy should cover major marketing tools, as shown in

the following example:

Price: Price of your product must be competitive in the market

Distribution: Preferably direct selling to potential users, but may also
use stores as retail outlets/orders takers, providing
direct delivery to buyers.
Advertising: Develop an advertising campaign directed at the target
audience, and supporting the positioning strategy;
emphasize the quality of your product and the quantity

52
 you can supply. Use the most appropriate media, obtaining
information on media effectiveness from publicity agencies,
other entrepreneurs or even competitors. Do not spend
money without first informing yourself.
Promotions: Consider which promotional activities are most
appropriate to your market. Promotions usually have a
good rate of return on investment, but one can reach only
a limited number of people. They therefore must be well
targeted. Good examples are customer discounts, trade
fairs, seminars, etc.
Publicity: Develop good public relations with the professional
buyers who may exert strong influence on industrial
users. Set aside adequate funds for such activities.
Personal Follow up customer leads with a personal presentation
Selling: of the product, emphasizing again the product
positioning. Encourage professional buyers by, for
example, giving them the incentive of a certain
percentage of the selling price.

Market Research
Conduct a market survey in selected areas among those identified users, to
find out their intentions with regards to volume of purchase monthly. All of
these activities cost money. Prepare everything well and get all the
information you need before you take any decision. Well-targeted and well-
prepared campaigns pay rich dividends, poorly prepared advertising and
promotional activities are like throwing money away.

Marketing control
To ensure that marketing activities are implemented according to the
marketing plan, the entrepreneur has to constantly monitor such
activities. To monitor means to see to it that the company has not
deviated from the plan. In cases where there are deviations, the
entrepreneur decides on corrective measures.

The entrepreneur has to evaluate the company's performance vis-à-vis

marketing objectives set at the start of the planning period. He needs to
carry out some types of marketing control like the annual-plan control,
the profitability control, and others.
53
In the annual-plan control, the entrepreneur monitors the current
marketing effort and results to ensure that sales and profit goals will
be achieved.

In the profitability control, the entrepreneur assesses the profitability

of the product in terms of shape and color, market segment served,
channels used, and the amount and quality of services rendered to
clients.

The results of marketing control are then used as inputs for marketing
plan for the next planning period.

HOW TO SELL
Marketing and selling involve a two-way flow of information. The market
(customers) needs to know all about the products and the producers need to
know all about the customers.

Warming Up
A meeting with a customer should begin with a so-called warming up
stage. This stage applies regardless of where the meeting takes place. In
many cultures it is part of being polite. The conversation can be light and
general, or more personal if the customer and producer know each other
or have friends in common or business contacts. An example would be to
ask the customer where he grew up or went to. The length of the
warming up stage varies from country to country.

Opening
When both parties feel at ease with each other, the discussion moves on
to business. The customer expresses his interest and needs and the
producer introduces his products. Usually the salesperson is prepared

54
and knows the information he wants to give to the customer. If the
salesperson is nervous at first, it is a good idea to practice a short
introductory talk before meetings.

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. When appropriate, more information can be given during
the conversation about the products and their advantages. Generally it
does not pay to criticize competitor products. Most successful
businesses focus rather on their own products.

55
Summarizing
Summarizing the customer’s own comments and customer is a technique that clarifies
the situation, your understanding of it and reinforces positive aspects brought up in
the discussion.

Trial Close
The producer does a trial close when he feels that the customer has
decided to buy his product. It is an attempt to close the selling
transaction and finalize the sale. A trial close should not be attempted too
early in the selling process as this could cause the sale to be lost.

The Close
If the trial close is successful, that is, if the customer agrees to buy a
specific product, the transaction has been made. This usually involves
a brief summary of what is needed and the purchase conditions, ending
with a definite order.

PRODUCTION

Production is that part of the business which is responsible for turning

raw materials into goods with the help of workers and equipment. The
shape, quality and quantity of the produced goods should meet customer
needs. The production costs should be kept as low as possible. Specific
production tasks include:

• Organisation of the workshop (who produce and when).

• Quality: well control-known high quality is the best propaganda for
your products.

• Organisation of the stock.

56
• Operation and maintenance of the equipment

PRODUCTIVITY IMPROVEMENT FACTORS

There are two major categories of productivity factors:

1. External Factors
2. Internal Factors

The external factors are those which are beyond the control of the
individual enterprise and the internal factors are those within its control.
To deal with all these factors we require different institutions, people,
techniques and methods.

57
The first step towards improving productivity is to identify problem areas
within these factor groups. The next step is to distinguish those factors
which are controllable. Factors which are external and not controllable
for one institution are often internal to another. Factors external (macro-
productivity factors) to an enterprise, for example, could be internal to
governments, national or regional institutions, associations and pressure
groups. Governments can improve tax policy, develop better labour
legislation, provide better access to natural resources, improve social
infrastructure, price policy, and so on, but individual organisations
cannot.

A general classification of the three main groups of macro-productivity

factors is shown in figure 1 below

Figure1. Main macro-productivity factors

Factors external to an enterprise are of interest to that enterprise

because an understanding of them can motivate certain actions which
might change an enterprise's behaviour and its productivity in the long
run. However, for now we shall concentrate on internal factors that an
entrepreneur should manage for growing his enterprise.

58
INTERNAL FACTORS OF ENTERPRISE PRODUCTIVITY

Since some internal factors are more easily changed than others, it is
useful to classify them into two groups: hard (not easily changed) and
soft (easily changed). The hard factors include products, technology,
equipment and raw materials, while the soft factors include the labour
force, organisational systems and procedures, management styles and
work methods. This classification helps us build priorities - which
factors can easily be dealt with and which factors require stronger
financial and organisational interventions. A brief description of some
key aspects of each internal factor follows.

HARD FACTORS

Product
Product factor productivity means the extent to which the product meets
output requirements.

Plant and equipment

These play a central role in a productivity improvement
programme through:
- good maintenance;
- operating the plant and equipment in optimum process conditions;
- increasing plant capacity by eliminating bottle-necks and by
corrective measures;
- reducing idle time and making more effective use of available machines
and plant capacities.

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Technology
Technological innovation constitutes an important source of higher
productivity. Increased volume of goods and services, quality
improvement, new marketing methods, etc., can be achieved through
increased automation and information technology. Automation can also
improve materials handling, storage, communication systems and quality
control.

Materials and energy

Even small efforts to reduce materials and energy consumption can
bring remarkable results. These vital sources of productivity include raw
materials and indirect materials (process chemicals, lubricants, fuels,
spare parts, engineering materials, packing materials).

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SOFT FACTORS

People
As the principal resource and the central factor in productivity
improvement drives, the people in an organization all have a role to play -
as workers, engineers, managers, entrepreneurs and trade union
members. Each role has two aspects: application and effectiveness.

Application is the degree to which people apply themselves to their work.

61
The second factor in the role played by the people involved in a
productivity drive is effectiveness. Effectiveness is the extent to which the
application of human effort brings the desired results in output and
quality. It is a function of method, technique, personal skill, knowledge,
attitude and aptitude - the “ability to do”. The ability job can be improved through
training and development, job rotation and placements, systematic job progression
(promotion), and career planning.

Organisation and Systems

The well-known principles of good organisation such as unity of
command, delegation and span of control, are intended to provide for
specialisation and division of work and co-ordination within the
enterprise. An organisation needs to be dynamically operated and led
towards objectives and must be maintained, serviced and
reorganised from time to time to meet new objectives.

62
Work methods
Work method techniques aim to make manual work more productive by
improving the ways in which the work is done, the human movements
performed, the tools used, the workplace laid out, the materials handled
and the machines employed.

Management styles
Management styles and practices influence organisational design,
personnel policies, job design, operational planning and control,
maintenance and purchasing policies, capital cost (working and
fixed capital), sources of capital, budgeting systems and cost control
techniques.

63
Figure 2 summarizes the main productivity factors internal to an enterprise.

Figure 2 Model of internal productivity factors

Source: Adapted from S. K. Mukherjee and D. Singh, 1975, p. 93.

This model serves as a checklist for identifying the most promising

productivity areas for management analysis planning and intervention.

64
7. Explain the Principles of Record Keeping, Auditing
and Financial Management.

Complete and accurate financial record keeping is crucial

to your business success for a number of reasons:

1) Good records provide the financial data that help you

operate more efficiently, thus increasing your profitability.

2) Accurate and complete records enable you to identify all

your business assets, liabilities, income and expenses. That
information helps you pinpoint both the strong and weak
phases of your business operations.

3) Good records are essentials for the preparation of current

financial statements such as income statement (profit and
loss) and cash flow projection. These statements, in turn, are
critical for maintaining good relations with your banker.
They also present a complete picture of your total business
operation, which will benefit you as well.

4) Good records are critical at tax time. Poor records could

cause you to underpay or overpay your taxes. Good records
are essential during an audit, if you hope to answer
questions accurately and to the satisfaction of the revenue
people.

5) In managing the finances of your business, you need reliable

records to make sound and timely decisions especially on
the funds allocation.

HOW TO MANAGE YOUR CASH

Money plays a major role in an enterprise. At the end of the business,

money is needed to purchase the necessary tools/equipment,
materials/supplies and other needs. In operating the business, money is
needed to pay for salaries/wages, utilities and other expenses. When a
sale is made, the business receives money in payment for the
goods/products/services rendered. Money received will be then used to
pay for materials, salaries, etc. This cycle continues as long as the
business carries on with its activities and transactions. The role of
money in a business enterprise, therefore, can be compared to the
function of blood circulating in the human body.

65
To be competitive, small business owners must prepare for all future
events and market changes. One of the most important aspects of such
preparation is cash flow planning. Failure to properly plan cash flow is
one of the leading causes for small business failures. Knowing some
basics of accounting will help you better manager of your cash flow.
Cash management is controlling in such a way that you have enough
for your immediate needs.

A. Pitfalls in Cash Management

The pitfalls in cash management common to small businesses include:

 Poor internal control

 Lack of cash planning
 Diversion of funds to unproductive uses
 Poor management of cash e.g. carrying excess cash, late
collection of bills, lack of expense control, etc.

B. Scope and Importance of Cash Management

Cash management is important to the business because management

needs cash to carry out its plans and policies. There are two important
aspects of cash management. The first is called Safeguarding. This
action protects cash from loss due to theft, fraud and other criminal
manipulation and oftentimes, carelessness. The second aspect of cash
management is maintaining adequate funds to meet the needs of the
business. This can be done by planning or budgeting the cash projects
and disbursement of business operations.

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C. Cash items in a small industry

To start with, let us identify the items that can be regarded as

cash/or cash equivalents. These are the following:
 Cash on hand
 Cash in banks, current account
 Bank deposits
 Postal money orders
 Bank draft
 Cashier’s checks
 Manager’s checks
 Traveler’s checks

 Short-term liquid investment readily convertible to cash

and not likely to a significant change in value. An
equivalent that matures within 3 months or less from the
date of acquisition is cash equivalents.

D. Safeguarding Cash

Once you have classified all your cash items accordingly, you have to
keep close guard of your cash because it is easy to steal. The following
are some ways by which records may be manipulated to conceal the
theft:

 Misrouting books of original entry, documents and schedules and

reconciliation
 Recording of duplicates or false purchase of expense
vouchers
 Padding of payroll
 Forging of documents
 Writing off assets to sales discounts

E. Internal Control in Small Business

Internal control is a system of checks within a business to safeguard its

assets, especially cash. This control usually provides that the work of
one person will be reviewed and examined by another. The following are
internal control applications commonly used in small firms:

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  Segregation of business and personal funds
 Immediate recording of all cash receipts
 Deposit of cash intact
 Use of petty cash fund entrusted to a petty cashier for all
payments other than checks
 Reconciliation of bank accounts monthly
 Use of Daily Cash Report
 Approval of disbursements, signing of checks and bad debts write-
off
 Annual audit by a chartered accountant on a retainer basis
 Careful selection of employees

Business and Personal Funds

Business activities should be separated from personal activities
of the owners.

Deposit of Cash
Deposit your cash collection in the bank intact and monitor
the deposits made.

Impress Petty Cash Fund

Establish a separate petty cash fund sufficient to cover small
expenses to pay for postage, transportation, and purchases of small
supplies without writing cheques for every small purchases. When
the fund balance reaches a low level, list the expenditures in detail
and draw a cheque payable to the custodian of the fund for
reimbursements.

Reconciliation of Bank Account

A very simple but effective protection of cash is done through the
reconciling of bank accounts by a qualified person other than the
cashier. You, as the owner, should regularly review bank
reconciliation along with the bank statement. By so doing, you will
become familiar with the status of your funds.

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Daily Cash Report
A daily summary of cash will provide information as to your current
cash position. This summary should show balance at the beginning
of the day and deposits, disbursements and balance at the end of
the day.

Figure 7
Sample Form
Name of the Business
Bank Reconciliation Statement
Date

Balance shown per bank statement, Date xxx

Add: deposits in transit xxx
reconciling items (adjustments) xxx xxx
Sub-total xxx

Deduct: outstanding cheques

Cheque no. xxx
Reconciling items (adjustments) xxx xxx
Adjusted balance per bank statement xxx
===
Balance shown per cheque book, Date xxx
Add: Interest income xxx
Reconciling items (adjustments) xxx xxx
Sub-total xxx
Deduct:
Bank service charges xxx
Reconciling items (adjustments) xxx xxx
Adjusted cheque book balance, Date xxx
===

Figure 8
Sample Form
Name of the Business
Daily Cash Report
Date

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 Opening cash balance, Date xxx
Add: Receipts
Cash sales xxx
Collection of accounts receivable xxx
Other receipts xxx xxx
Total cash available xxx

Less: Disbursements
Cash purchases xxx
Payments of accounts payable xxx
Payroll xxx
Other payments xxx xxx

Closing cash balance, Date xxx

===

Vouchers should be pre-numbered and a record of cheques issued

maintained for reference and control purposes. Review and approve bad
debt write-offs. This will keep you informed of accounts charged off. This
will also prevent an employee from pocketin writing that account off as bad debt.

F. PREPARATION OF THE FINAL ACCOUNTS

Steps Involved in Book-Keeping to the Final Accounts
The steps involved from Book-Keeping to the preparation of final
accounts can be divided into eight (8) steps as follows:
1. Collection of the original data of the transaction from the source
document. The source document is any written evidence showing
that a transaction has occurred e.g. receipts or cheque stubs.
2. Entry of the transaction in the journal;
3. Identification of the relevant accounts involved in the transaction;
4. Determination of which of the accounts to be debited or credited;
5. Posting of the entries in the journal into the accounts in the ledger;
6. Extraction of the balances of the accounts in the accounts in the
ledger at the end of the period under review in order to prepare a
“Trial Balance”;
7. The preparation of the income statement of an enterprise;
8. The preparation of the statement of financial position of an
enterprise formerly known as balance sheet.

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 SPECIMEN I
INCOME STATEMENT OF AN ENTERPRISE FOR THE YEAR ENDED
ST
31 DECEMBER, 201X
N N
Sales (Revenue) xxx
Sales Return
(x)
Less cost of sales xxx
Opening inventory xx
Purchases xx
Carriage inwards (x)
Purchases returns (x)
(xx)
Gross profit xxx
Other income:
Discount received x
Rent income
x
Total income
xxx
Less: Expenses:
Discount allowed x
Salaries x
Electricity x
Telephone & internet x
Insurance x
Rates x
Bad debts x
Advertisements x
Motor vehicle expenses x
Depreciation x (xx)
Net profit xx

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 SPECIMEN II
STATEMENT OF FINANCIAL POSITION OF ABC ENTERPRISE AS AT
ST
31 DECEMBER, 201X
Cost Accumulated Net Book
Depreciationn Value
ASSETS N N N
Non-Current
Assets
Freehold Property xx - xx
Motor Vehicle xxx x xx
Office Equipment xxx x xx
xxx x xx
Current Assets:
Inventory x
Trade receivables xx
Less: Provision for doubtful debt(x) x
Accrued rental income x
Cash at bank x
Prepaid insurance x
Prepaid rates x
xx
Total Assets xxx
Owner’s Equity and Liabilities:
st
Owner’s equityJanuary, at201x 1 xx
Net profit for the year xx
st
Total equity at 31 December, 201x xxx
Current Liabilities:
Trade payables x
Accrued salaries x x
Equity and liabilities xxx

72
 EXAMPLE I –SIMPLE FINAL ACCOUNTS OF A SOLE TRADER
The following statement of financial position was extracted from the
st
ledgers of Boom Enterprises as at 31 December, 20x6.
DR CR
N N
Purchases/Sales 1,200,000 4,900,000
Returns 20,000 10,000
Discounts 50,000 90,000
Trade Receivables/Payables 1,150,000 1,200,000
Inventory at 1/1/20x6 950,000
Carriage inwards 150,000
Carriage outwards 50,000
Long Term Debt 200,000
Drawings 150,000
Land and Building at Cost 1,500,000
Rents 150,000
Motor Vehicle at Cost 800,000
Advertisement 20,000
Provision for Doubtful Debt
25,000
Salaries & Wages 900,000
Bade Debts 25,000
Cash in Hand 250,000
Cash at Bank 300,000
Equipment MBV 1,000,000
Accumulated Depreciation of Equipment 300,000
st
Equity as at 1 January, 20x6
2,340,000
8,865,000 8,865,000

Additional Information
1. Inventory at close is N350,000
2. Depreciation for equipment during the period is N100,000
3. Depreciation of 5% is charged for motor vehicle and Land &
Building
4. Provision for Doubtful Debt amounting to 10% of trade receivable
is to be made

Prepare:
st
i) Statement of income for the year ended 31 December, 20x6
st
ii) Statement of financial position as at 31 December, 20x6

73
Solution
1) INCOME STATEMENT OF BOOM ENTERPRISES FOR THE
ST
YEAR ENDED 31 DECEMBER, 20X6
N N
Sales/Revenue 4,900,000
Less Sales Return (20,000)
Cost of Sales 4,880,000
Opening inventory 950,000
Add Purchases 1,200,000
2,150,000
Add Carriage Inwards 150,000
Less Purchases Returns (10,000)
Less Closing Stock (350,000) (1,940,000)
Gross Profit 2,940,000
Add Discount Received 90,000
3,030,000
Less Expenses
Discount Allowed 50,000
Carriage outwards 50,000
Rent 150,000
Advertisement 20,000
Salaries & Wages 900,000
Bad Debts 25,000
Depreciation of Equipment 100,000
Depreciation for motor,
Land & Building 115,000
Increase in Provision Doubtful Debt
(10% x 1,150,00 –25,000) 90,000 (1,500,00)
Net Profit 1,530,000

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2) STATEMENT OF FINANCIAL POSITION OF BOOM ENTERPRISE
ST
AS AT 31 DECEMBER, 20X6
Cost Accumulated Net
Book Depreciation Value
Assets N N N
Non-Current Assets:
Land & Building 1,500,000 75,000 1,425,000
Motor Vehicle 800,000 40,000 760,000
Equipment 1,400,000 400,000 1,000,000
3,300,000 515,000 3,185,000
Current Assets:
Inventory 350,000
Trade Receivables 1,150,000
Less: Provision for Doubtful
Debt (115,000) 1,035,000
Cash at Bank 300,000
Cash in Hand 250,000 1,935,000
Total Assets 5,120,000
Owner’s Equity and Liabilities
Equity 2,340,000
Net Profit for the year 1,530,000
Less: Drawings (150,000) 3,720,000
Non-Current Liability:
Long Term Debt 200,000
Current Liability:
Trade Payable 1,200,000
5,120,000

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G.PRINCIPLES OF
AUDITING

Annual Audit
An annual audit helps prevent frauds. The fact that an audit is
conducted may discourage trusted employees, who may otherwise be
tempted to embezzle funds from the business.

Financial Planning is a continuous process that flows with strategic

decision making. The Operating Plan and the Financial Plan will both
support the Strategic Plan. The best place to start in preparing a
budget is with sales since this is a driving force behind much of our
financial activity. However, we have to take into account numerous
factors before we can finalize our budgets.

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Nature and Purpose of
Auditing

Nature of an Audit
The day-to-day running activities of the company are vested on the
Directors. Upon engagement of the auditor for any audit work which is a
two-stage operation for each year; in which case, the first stage is a
system audit whereby the audit is conducted to a particular date within
the accounting period. This first stage is also known as interim audit.
Stage two is that the audit is carried through to completion in one
continuous session, which involves verification of items in the final
accounts i.e. final audit.
Audits are performed by audit team comprising of audit trainees and
qualified accountants. A manager will oversee their work while the actual
audit is signed by one of the partners in the name of the audit firm.
(Mohammed, 2003).
Reasons for an Audit
The reasons for an audit exercise can be:
 Statutory: as required in Companies and Allied Matters Act (CAMA)
1990 and some other enabling statutes for certain industries.
 In order to enhance the confidence of the owners of the business
enterprises
 To enhance the confidence of other interested parties in the
business enterprise
 To prevent and detect errors and frauds.

Advantages and Disadvantages of an

Audit Advantages
By advantages of an audit we mean the benefits to be enjoyed by a
company that its accounts have been audited and may include:
 It makes possible the arrangement of income tax assessment with
the Inland Revenue be more easily done where the accounts have
been audited by a qualified accountant.
 In case of making claims from insurance company as a result of
claim from loss of profits under an insurance policy e.g. fire, the
availability of an audited account would make it more easily
processed.

77
 In applying for loans from banks or overdraft, the negotiations
would be easier to be taken where the c been audited.

 The application of sound auditing techniques would always detect

fraud committed by staff of the client and the fact that an audit
would be undertaken would guide against perpetration of future
fraud while inefficiency and weaknesses of the workers could be
revealed.
 Since an auditor is familiar with his clients business and financial
statements, this fact would make any advice readily workable if
required by the client. (Mohammed, 2003).

Disadvantages
 Audit fees: the cost of audit work can be high
 Audit work allows auditors to interfere in the private affairs of the
company
 Management and staff time is taken by the auditor

78
H.PRINCIPLES OF TAXATION
1. Definition of Taxation

Taxation may be defined as the compulsory levy by government through

its various agencies on the income, capital or consumption of its
subjects. These levies are made on personal income such as salaries,
business profits, interests, dividends, commissions, royalties, rent etc.
2. Classification of Taxes

Taxes may be classified into two broad categories: direct and indirect
taxes.
i) Direct tax is where the person assessed is also the person who
bears the burden of the tax. The person who pays the tax is unable
to shift the burden to any other person.
ii) Indirect tax is where the person who pays the tax can shift the
burden to someone else.
3. Essentials of a Good Tax System

Adam Smith outlined the following as being essential for a good and
equitable tax system.
i) Universality: It should be all embracing
ii) Certainty: The amount of the tax liability and time of payment
must be determined with certainty
iii) Convenience: The time and manner of payment must be
convenient to the tax payer
iv) Economy: The system of collection must be economical.
4. Relevant Tax Authority

Tax shall be payable for each year of assessment on the total income of
every individual, corporation –sole or body of individuals deemed to be
resident for that year in the relevant state in Nigeria except
a) Persons employed in the Nigerian Army, Navy, Air Force and the
Nigerian Police.
b) Officers of the Nigerian foreign service
c) Residents of the federal
d) Persons resident outside Nigeria but who derive income or profit
from Nigeria

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5. Incomes Chargeable To Tax

Tax is payable for each year of assessment on the aggregate amounts

which comprise the income of every taxable person from all sources
whether from inside or outside Nigeria.
6. Items Specifically Allowed As Deductible

These are:
i) Interest on money borrowed and applied as capital
ii) Interest on loans for developing an owner occupied residential
house
iii) Rent
iv) Any expense incurred for the repair of premises, plant, machinery

v) Bad debts incurred

vi) Contribution to a pension fund
vii) Expenses for research and levy paid to the national science and
technology fund.
7. Items Specifically Disallowed as Deductible
i) Domestic or private expenses
ii) Capital withdrawn from the business
iii) Any losses recoverable under an insurance on contract of
indemnity
iv) Rent or cost of repairs of premises or part not used for producing
income
v) Taxes on income or profits levied in Nigeria or elsewhere
vi) Any payment to a pension and provident fund or scheme except as
permitted by the joint Tax Board
vii) Depreciation of fixed assets
viii) Any appropriation of profit
ix) Any expenses incurred within or outside Nigeria as management
fees.
8. Types of Personal Income
i) Earned Income: The income earned from sources such as
employment including salaries, fees, commissions, bonuses,
allowances, pension, gratuities and other benefit. They are: salary,
wages, fees, commission, bonus, allowance, pension and gratuities.
ii) Unearned Income: This is income from sources such as rent,
dividend and interest less related expenses.

80
 TOPIC 6:

THE VARIOUS EXISTING INDUSTRIES AND

SUPPORT AGENCIES IN NIGERIA

INTRODUCTION:
The role of support agencies and various existing industries is quite
paramount and therefore potential entrepreneurs need to be intimated
about the assistance they render and the functions they discharge. This
section therefore intends to highlight them. On completion of this course
students should be able to identify various industry/support agencies in
Nigeria and their functions. They should also know types and sources of
plants and machinery used in small scale industries, nature and type of
material inputs for each industry type and be able to source information
about market and financial assistance; as well as understand the
environmental factors associated with Industrial and economic
development in Nigeria.

SPECIFIC LEARNING OUTCOMES:

1. Explain various industry/support agencies;
2. Explain the types, and sources of materials used in both
manufacturing and service Industries;
3. Explain the types and sources of plants and machinery used in
small scale Industries;
4. Explain the various information and assistance for vital areas like
finance, registration, project selection, training, marketing,
research, quality control, raw materials, patent information etc.
5. Explain environmental factors associated with industrial and
economic development in Nigeria.

CONTENT:

1. Explain Various Industry/Support Agencies;

World wide findings over the years have shown that small firms and
entrepreneurships play very important roles in national economic growth
and development. The Government of Nigeria, like its counterparts, the
world over, has realized the importance of small and medium scale
enterprises and has, over the years formulated various public policies to
encourage, support and fund the establishment and development of
SMEs. Developments in small and medium enterprise are what give a

81
developing nation the base for employment creation, solid base for
creating a middle class and encouragement for the use of local raw
materials and technology.

In Nigeria, the main types of industry include:

 Extractive/Primary Industry: This encompasses stone quarrying, extraction

of mineral raw materials, etc.

 Manufacturing/Secondary Industry: This involves changing the form

of raw materials to useable or semi-useable products e.g. maize to
flour, etc.

 Service/Tertiary Industry such as banks and professional service providers;

 Construction Industry such as roads, bridges, etc.
There are several support agencies established by government to assist
the various industries in different dimensions. Among the support
agencies are:

THE NIGERIAN EXPORT PROMOTION COUNCIL (NEPC)

The NEPC was established through the promulgation of the NEPC Act of
1976 and formally inaugurated in March, 1977. The Council’s Amendment Decree of
1992 was to minimize the bureaucratic bottlenecks and increase autonomy in
dealing with members of the Organized Private Sector. Its goal and mission are to
make the non-oil export sector a significant contributor t opportunities for exporters to
promote sustainable economic development. Their Web sight is www.nepcng.com

Activities of the Council

 To promote the development and diversification of Nigeria's export
trade
 To assist in promoting the development of export-related
industries
in Nigeria
 To spearhead the creation of appropriate export incentives
 To actively articulate and promote the implementation of export
policies
and programmes of the Nigerian Government
 To co-ordinate and monitor export promotion activities in

82
 Nigeria
 To collect and disseminate information on products
available for export
 Collect and disseminate local manufacturers and exporters
information on foreign markets

 Provide technical assistance to local exporters in

such areas as export procedure and documentation,
transportation, financing, marketing techniques, quality
control, export packaging, costing and pricing, publicity
and other similar areas
Provide directly or jointly, with training institutions,
training for its staff and assist with the manpower
development of the export community in Nigeria
 Organize and plan the participation of Nigeria in trade fairs and
exhibitions in other countries
 Administer grants and other benefits related to export
promotion and development

Undertake studies of the current economic conditions, with

special attention to the export sector with the aim of advising
Government on necessary policies and measures
Co-operate with other institutions on matters relating to
export financing, export incentives specialized services to
exporters
 Engage in export promotion publicity
 Assist in finding appropriate solutions to practical problems
encountered by exporters in the process of exportation
 Plan and organize outward trade missions and provide
support from Nigeria
 Services to in-ward missions from other countries

 Perform such other functions as may be conducive to the

achievement of the objective of the Export Decree (Act).

THE NIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC)

The Nigerian Investment Promotion Commission (NIPC) is an Agency of

the Federal Government which was established in 1995 to, among other
things,-“coordinate, monitor, encourage and provide necessary
assistance and guidance for the establishment and operation of
enterprises in Nigeria.”

By this decree the government abolished almost all restrictions on

investment, especially restrictions on foreign investment into the

83
Nigerian economy. Most of the efforts of the NIPC are, therefore, focused
on attracting foreign investment.

The NIPC also has a new very informative web site at www.nipc-ng.org.
It has a very comprehensive section on tax incentives.

NIGERIAN INDUSTRIAL DEVELOPMENT BANK (NIDB)

NIGERIAN BANK FOR COMMERCE AND INDUSTRIES, (NBCI);
THE NATIONAL ECONOMIC RECONSTRUCTION FUND (NERFUND);
THE BANK OF INDUSTRY (BOI).

Over the years, a number of Development Finance Institutions (DFIs)

were established by various governments to provide funds that would
boost economic activities in the country and in the process, reduce the
rate of poverty. Sadly, however, years after independence, the rate of
poverty has continued to grow.
Some of the Development Finance Institutions that were introduced over
the years to help fight poverty are:
The Nigerian Bank for Commerce and Industry (NBCI), Nigerian
Industrial Development Bank (NIDB), and the National Economic
Reconstruction Fund (NERFUND).

In the early 2000 the NIDB was transformed into the Bank of Industry
(BOI),
In addition to the above the government, since the advent of the new
democracy, initiated more programmes aimed at fighting poverty in the
country. They range from the National Poverty Eradication Programme
(NAPEP) to Small and Medium Enterprises Development Agency of
Nigeria (SMEDAN)

84
The microfinance scheme has just been introduced in 2007, as an
evolution of the community banks to Microfinance Banks (MFBs) that
would primarily focus on small scale lending as a way of empowering low
income earners and small ventures so as to fight poverty and boost
economic activities.

THE RAW MATERIALS RESEARCH AND DEVELOPMENT COUNCIL

(RMRDC).

The Raw Materials Research and Development Council (RMRDC) is an

agency of the Federal Government of Nigeria vested with the mandate to
promote the development and utilization o materials.

The primary mandates of the Council are:

a. To draw up policy guidelines and action programmes on raw
materials acquisition, exploitation and development;
b. To review from time to time, raw material resources
availability and utilization, with a view to advising the
Federal Government on the strategic implication of depletion,
conservation or stock-piling of such resources;
c. To advise on adaptation of machinery and process for raw
materials utilization;
d. To provide special research grants for specific objectives and
device awards or systems for industries that achieve
breakthrough or make innovations and inventions; and
e. To encourage the publicity of research findings and other
information relevant to local sourcing of raw materials.

85
Their web site is: www.rmrdc.gov.ng

THE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AGENCY

OF NIGERIA (SMEDAN):
SMEDAN was established by the SMEDAN Act of 2003 to promote
the development of the MSME sector of the Nigerian Economy.

SMEDAN vision is to establish a structured and efficient micro, small

and medium enterprises sector that will enhance sustainable
development of Nigeria. The mission is to facilitate the access of micro,
small and medium entrepreneurs/investors to all resources required for
their development.

86
SMEDAN proposed services through their sites and offices include:
Proposed Design and Establishment of Comprehensive BSCs and IPs:
To be able to provide Business Support Centers (BSCs) in each State, to
provide business advisory services. i.e Link MSMEs to sources of funds;
provide internet/website facilities; provide market information; provide
business consultancy services; collate and make available business
plans and prototypes; implement capacity building programmes; advise
on regulatory and standardization frameworks and collate all relevant
business information that could be useful to SMEs.

Capacity Building and Proposed Promotional Services:

 Develop, test and disseminate new business models illustrating best

business practices to upgrade SMEs operations.

 Conduct seminars, conferences, workshops, and interactive

sessions for promotional and capacity building purposes.

 Encourage and facilitate business clusters, networks and

cooperatives for enhanced productivity and easier access to
factors of production including finance.

 Encourage and facilitate new investments in designated priority areas in

each State.
fora.Organize trade and investment exhibitions and interactive

 Develop and apply standards and quality control measures for

technologies and products of SMEs.

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  Improve the financial management skills of MSMEs through training
workshops.

 Develop and implement effective strategies for opening up

domestic and international markets for MSMEs products.

Proposed to be a Main Financial Intermediary between MSMEs &

Sources of Finance:

 Liaise with financial institutions to harness and pool resources for

utilization by MSMEs.

 Develop and implement a strategy for the effective and timely

disbursement of SMIEIS funds.

 Hold regular consultations with international donor

agencies, trade groups, relevant ministries, research institutes,
states and local governments with the view to share ideas and
partner in implementing programmes for the development of
MSMEs.

 Attractforeign investments and funds for the development of the

MSMEs sub-sector.

Proposed Policy Development:

 Develop and seek statutory approval for a national policy on
MSMEs. Conduct impact assessment studies and use same to
recommend improvements in policy intervention.
www.smedan.gov.ng

THE INDUSTRIAL DEVELOPMENT CENTERS (IDCs)

One of the many institutions established by government to promote the

development of small and medium scale enterprises was the Industrial
Development Centers (IDCs). IDCs is to provide extension services to
SMEs in such areas as project appraisal for loan application, training of
entrepreneurs, managerial assistance, product development, production
planning and control, as well as other extension services. The first IDC
was established in Owerri in 1962 by the former Eastern Nigeria
Government, Ministry of

88
Trade and Industry, and was taken over in 1970 by the Federal
Government.

Subsequently, more IDCs were established at Zaria, Oshogbo, Maiduguri,

Abeokuta, Sokoto, Benin City, Uyo, Bauchi, Akure, Ilorin, Port Harcourt,
Kano and Ikorodu. Over the years the achiev been commendable and in most instances
they have been overtaken by
other government agencies doing the same programmes.

TECHNOLOGY BUSINESS INCUBATION CENTERS, (TB

Part of the NEEDS programme of the Obasanjo era included the creation
of jobs, education facilities with special emphasis on Technology
business Incubation Centers, (TBIC’s). The goal is to promote and engage
the semi-formal productive sectors of the economy:

Under NEEDs I and II, the institutional and policy framework for this
was being established through Small and Medium Enterprise
Development Agency of Nigeria, (SMEDAN), Technology Business
Incubation Centres, (TBIC’s) and Small and Medium Industries
Investment Scheme, (SMIEIS).

In summary SMEDAN and TBIC’s aim to provide for nurturing start –ups and survival
of value added and technology–related manufacturing.

2. Types, And Sources Of Materials Used In Both

Manufacturing And Service Industries;
3. Types And Sources Of Plants And Machinery Used In Small
Scale Industries;

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 LOCALLY AVAILABLE RAW MATERIAL AND MINERAL
RESOURCES BY POSSIBLE USES AND PROCESSING
EQUIPMENT REQUIRED, AND POSSIBLE MARKETS

Table 1 shows the uses, processing equipment for major agricultural raw
materials while Table 2 does the same for minerals. It is evident that
many of these raw materials and mineral resources can be put to
multiple uses while the processing equipment in many cases has
multiple applications. Markets often exist locally and internationally for
the products

Table 1: Uses, Processing Equipment and Markets for Raw Materials

S/No. Raw Product/Possible uses Processing Possible Markets
Materials Equipment for Products
Required
1. Maize - corn flour, corn flakes, - Milling plant with - local and foreign
animal feed, baby food, dehuster, grinder, food and drug
starch and derivatives, sifter manufacturers
pharmaceuticals, - distilling - local and foreign
confectionery equipment, distillers
- Alcohol fermentation tanks - paper and allied
- adhesives, industrial - chemical extractors, products
chemicals concentrators manufacturers
- corn oil oil extraction plant - furniture
- particle board chaff compressor and makers
manufacturing compactor
2. Rice - Breakfast cereals, - Milling plant with - fond and drug
animal feeds, baby foods, dehuster, grinder, manufacturers
confectionery, flour mills sifter - local and foreign
- malting and brewing - Malt production distillers
- parboiled rice plant, fermentation - food packaging
-particle board tanks and retailing
manufacturing - Boilers , washers, companies
driers - furniture
- Chaff compressor makers
and compactor
3. Cow pea - livestock feeds - bean flour mills, - livestock
- Thickener in baby dehusters, sifters,etc farmers, private
foods individuals
- domestic consumption - local and foreign
as food baby food and
other
manufacturers
- individual and
households

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4. Soya bean - composite flour - dehuster, - local and foreign
- baby food, cereals, dryer/steamer, baby food and
livestock feeds milling machine, other food
- confectionery packaging manufacturers,
- protein concentrate - crusher/oil animal feed mill
- edible oil extractor and refining - domestic
plant consumers, food
and drug
manufacturers
5. Groundnut - edible oil, margarine - steamer, milling - pharmaceutical
- peanut butter machine, crusher/oil companies,
- cosmetics - soap, extractor, vegetable oil
perfumes and creams mixer/blender manufacturers
- animal feed - washer, driers, - local and foreign
- babay food, cereals. grinders, mixers, baby food and
- dehuster, animal other food
feed mill manufacturers
- pharmaceutical
companies
- farmers
- food processing
plants.
6. Cassava - starch (textile finishing) - cassava mill - agro-allied
- livestock feed (washing, weighing industry
- alcohol scales, drier, - domestic
- adhesives pelleting machine, consumption
- garri peeler, packaging - local garri
- confectionery machine), mixers, manufacturers
packaging machines - chemical
manufacturers.
7. Cocoa - cocoa butter - cocoa mill, grinder, - cosmetics
- wine and beverages steamer, dryer manufacturers
- cocoa powder/ash - distilling units - food and drug
- confectionery (grinder, steamer, manufacturers
- livestock feeds dryer) - bakeries
- suppository - cocoa butter
- detergents manufacturing plant
8. Kolanut - beverages distilling units - export market
- stimulants (grinder, steamer, for products
- wines dryer) - local beverage
- dyes manufacturers
- soft drink concentrates - domestic
consumers
9. Coconut - edible oil - oil extraction units - export market
- cosmetics, soap - crushers, for products
- furniture and fibre - blender, - local
units - furniture making pharmaceutical
- confectionery equipment and confectionery
- animal feeds - charcoal chamber industries
- vinegar - domestic
- decorations consumption

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 - charcoal

10. Oil Palm - edible oil - oil mill local and

(Fruit and - margarine - hammer mill international
Nut) - substitutes for coco - crushers pharmaceutical,
butter - oil extractors, cosmetics and
- confectionery - boilers confectionery
- coffee whitener - pulp compactors manufacturing
- palm wine - drums, moulds, industries,
- fertilisers - mixer furniture makers,
- soap/detergent distillers,
- cosmetics domestic
- yeast consumers
11. Yam/ - starch and its - boiler domestic
cocoyam derivatives - grinder consumption,
- baby foods - dryer flour millers, food
- composite flour and drug
- chips manufacturers.
12. Citrus - orange juice - juice/oil extractors local and
- wine - distilling units international
- essential oils beverage
- aromatic manufacturers,
- jellies pharmaceutical
- marmalade companies,
- flouring domestic
- syrups consumers,
confectioners.
13. Mango, - medicinal extracts - grinder/extractor -pharmaceuticals
Pineapple, - edible fresh and juice - crusher, mixer, - export markets
Pawpaw, - concentrates packaging - local and
Guava - jellies - grinder, juice/pulp, international
- juice extractor confectioners,
- flavouring - crusher, mixer beverage
- nectar - distilling units, manufacturers,
- syrup packaging domestic
- jam consumers.
- wine
14. Sugar cane - sweetener - mixer, extractor, - local and
- confectionery crushers international
- beverages - boiler, distilling market
- paper units, packaging
- leather tanning
- pharmaceuticals
15. Timber clipboard and furniture sawmilling and same
furniture equipment
16. Bamboo pulp and paper dryer, paper mill same
17. Cashew roaster nuts roaster, cracker same

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 extractor
18. Rubber Tyres and Tubes Oven, extrusion same
machine, roller mill,
conveyor belt
19. Potato Chips peeler, washing same
utensils, boiler,
dryer, frier and
packaging machine
20. Banana food/confectionery peeler, slicer, dryer same
and miller
21. Plantain food/chips peeler, chipping same
machine, fryer and
dryer
22 Pineapple/ fruit juice continuous juice Same
Orange expeller, pasteuriser,
filteration machine,
cooking machine,
packaging machine.
23. Sorghum flour, starch, animal Jaw crusher, same
feed, malt pulverisers, screens,
hammer miles
24. Millet flour, feedmill, same same
confectionery
25. Wheat flour, malt milling machine same

Table 2: Uses, Processing Equipment and Markets for Mineral Resources

S/No. Minerals Product/Possible uses Processing Possible Markets
Equipment for Products
Required
1. Clay - bricks, pottery, - ceramics processing - domestic
sanitary ware equipment- crushers, demand for
- ceramic insulator moulds, vibrator, kiln crockery
- refractory and - jaw crusher - local
insulating bricks - impact grinders intermediate
industrial users
- pan mills - international
-vibrating screen demand for
magnetic separators finished/interme
diate products
- foundries, iron
and steel plants
- cement,
fertilizer
- petrochemicals
- ceramic
manufacturers
2. Feldspar - ceramic and glass ceramics processing - ceramics
wares, enamel, polished equipment - manufacturers
stone and slabs, tiles crushers, mixers, - dealers in stone
and refractories moulds, vibrators, ware

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 kiln

3. Gypsum - chalk, cement, mixer, moulds, dryer - chalk making

pharmaceuticals, plaster industry,
of paris (POP), ceiling pharmaceutical
boards, decorative industries- local
plaster, moulds, paint, and foreign.
paper
4. Limestone - construction - vertical shaft/rotary - cement
- cement manufacture kiln manufacturers
- ceramics - jaw crusher - construction
- water treatment - conveyers contractors
- As filter in plastics, - impact hammer - stone masons
fluxes in iron and steel crusher - precipitated
smelting - ball mills calcium
- As source of industrial - electrostatic carbonate
salt precipitator production
- As decorative - conditioning tower
ornaments - precalcinic system
- As monumental slabs - cutting/shaping
tools
- hydrator
- rotary kiln
- packaging
5. Bitumen Road construction, coal Bitumen processing construction and
and Heaby tar. plant pharmaceutical
oil companies - local
and foreign
6. Granite floor tiles, war decorative - diamond multiple local and foreign
finishing, monumental blade frame saw construction
slabs - jaw crusher investors and
- rotary screen service providers
- hammer mill
- compressor
conveyor
- grinding and
polishing line
- circular saw
- trimming machine
7. Tantalite - Allow, electronic and - computer and local and foreign
computer manufacturing electronic construction
manufacturing investors.
equipment
8. Kaolin - fertilizer - Sieves, Plungers, -
- chalk Tanks and Filter pharmaceuticals
- chemicals and Press - cosmetics
pharmaceuticals - Hydrocyclones - electrical
- paint and paper - dryers products
products - vibrating screen manufacturers
- ceramic tiles and - separators - paper, paint
porcelain wares - calciners and ceramic

94
 - pipes insulator etc - pumps manufacturers
- floatation machine
- weighing scale
- bagging machine
9. Talc - cosmetics (powders) - jaw crushers, -
- pharmaceutical hammer mill, pebble pharmaceuticals
processes mills - cosmetics
- paper and paint - classifiers - electrical
production - floatation cells products
- ceramic industries - slurry pump manufacturers
- compressor - paper, paint
- hydrocyclone and ceramic
- filter press manufacturers
- flash drier
- weighing scale
- bagging machine
10. Phosphate - fertilizer (NPK) - rotary washers - fertilizer
- phosphoric acid - trommel manufacturers
- jaw crusher - phosphoric acid
- vibrating screen manufacturers
- hydraulic classifier
- rougher bed
- floatation machine
- mixing tank
- silos
- hammer mill
- classifier
- packaging
equipment
11. Gemstone - Jewellery and grinding, polishing, local and
ornament cutting and water international
- electronics pumps markets
12. Laterite Tiles, building & hydroclones, sieves, local and foreign
construction tanks, filter drier, markets
separator
13. Columbite Iron and Steel excavator, separator, Same
pumping
14. Tin Same excavators, Same
separators, air
flooding, pumping
machines
15. Marble Building and cutting, polishing, Same
construction excavators
16. Galina Same excavators and Same
separators
17. Zinc ore iron sheet and steel excavators, Same
separators and air
flooding
18. Gold iron, steel, electronics excavators, Same
and ornaments separators, air
flooding machines

95
19. Rock building and excavator, cutting, Same
aggregate construction polishing
20. Whoframite electronics, ornaments, excavator, separator Same
building and
construction
21. Aquamarine food and chemicals distillers and drier Same
22. Silica ornaments, jewellery and excavators and Same
electronics separators, cutting,
polishing,
23. Copper ornaments, jewellery and excavators and Same
electrical, electronics separators, cutting,
polishing,
24. Lead Same excavators and Same
separators
25. Iron ore iron and steel excavators and Same
separators
26. Potash soap production, water hammer mill and domestic and
treatment crushers export
27 Coal cokes, fuel hammer mill and same
crushers
28 Sandstone Building Not indicated Same
29. Lignite paraffin wax crusher, dryer mill, Same
mixer, grater screen
30. Bauxite Refractories and crusher, Same
abrasives beneficiation plant
31 Bronze Fittings clay, bronze, heater, Same
wires, latente
Source: CBN SMINIS Document 2006.

4. Explain The Various Information And Assistance For Vital

Areas Like Finance, Registration, Project Selection, Training,
Marketing, Research, Quality Control, Raw Materials, Patent
Information Etc.
Nature and Types of Information Required by
Entrepreneurs
A. Marketing information
B. Technical information
C. Information and communication technology (ICT)
D. Financial Information

Where to Obtain Information and Assistance

1. Industry data is helpful in comparing a business to other similar

businesses. This data is available from trade associations or government
agencies and includes ratios such as: stock turnover, cash discounts,

96
percentage mark-up and average sales per month.

2. Membership-based organizations can provide services such as

political lobbying, conducting research, organizing education and
training programmes, implementing new technology, responding to
members’ questions and concerns and discuss through newsletters, magazines and
special reports.

3. Subscribing to trade papers and magazines is also desirable.

4. Training programmes help entrepreneurs to develop formal plans for

improving their management skills and ability.

5. Consultants can be of assistance both directly and indirectly. Pay

special attention to the approach and techniques used by a consultant to
solve business problems.

6. The library is a primary resource for information. Libraries are a

storehouse of information which may be useful in operating a small
business. Books, periodicals, reports and newspapers may contain
information which can be of help in solving some of the problems in
operating a business.

7. Internet can be used to carry out research and to find useful

information and data. E-mail can be used to communicate with providers
of information who have web sites on the internet.

8. Business Development Services providers. There are many

Business Development Services providers who will offer guidance in
various aspects of business operations.

97
Who Can Provide Information and Assistance?

“FREE”

1. Employees. Few entrepreneurs can do everything themselves, and

they need qualified employees to relieve them of most of the day-to-day
operational problems. The people who work for a business can provide
answers to specific problems in a business.

2. Customers. These people can supply very special information about

the products and services they buy.

3. Suppliers. Because the success of most suppliers depends on the

businesses they serve, it stands to reason that they should be interested
in an entrepreneur’s success.

4. Other Business Owners. Most businesses have common problems

and owners are generally willing to discuss their problems with one
another.

5. Free Web Sites. Information and communication technology

specialists will direct you to free web sites. Consult them.

“FOR A FEE”

1. Professionals. Use the talents of professionals, such as web

designers, IT specialists, financial advisors, bankers, management
consultants, insurance agents, accountants and bookkeepers, estate
agents, surveyors and lawyers, to assist in solving business problems.

98
2. BDS Providers. Use the Directory of BDS Providers to contact them.

5. Environmental Factors Associated With Industrial And

Economic Development In Nigeria.

NATURAL ENVIRONMENT

A: Natural Resources
• Land
• Atmosphere
• Surface Water
• Groundwater
• Flora
• Fauna
• Ecosystems
• Energy Resources

B: 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

EMISSIONS
• Liquid Waste
• Solid Waste
• Air Pollutants (Gases, Dust, Fumes, Vapours)
• Noise And Vibrations

99
 • Odours
• Chemical Reactants (Producing Colours, Odours, Poisons)
• Hazardous Substances

HEALTH RISKS & HAZARDS

• Health Risk to Workers And Staff
• Increase of Already Existing Risks
• Risk of Accidents Affecting Social and Natural Environment
(During Construction & Operation, After Closing Down Operations,
During Transport of Hazardous Substances)

DEGRADATION OF NATURAL RESOURCES

• Direct and Indirect Damage to Natural Water Resources
• Damage to Land Resources
• Uneconomic Use of Nonrenewable Natural Resources
• Damage to Plant Populations
• Disruption of Interlinked (Balanced) Ecosystems
• Displacement, Extinction of Species

DEGRADATION OF SOCIAL STRUCTURES

• Migration
• Displacement of Human Habitation
• Displacement of Economic Activities
• Disruption of Culture-Specific Social Relationships and
Infrastructures
• Deterioration of General Living Conditions

100
101
n process management,
GENERAL EXERCISES:

identify reasons for the selection.

and administrative
requirements for a small business.

positioning of all major business components.

target.

and suggest strategies to achieve expansion.

production process.

inventory management and control.

directions.

102
Entrepreneurial Project Topics

innovative business.

owner for improving the business.

-
added” ideas that could be adopted by the o

business.

identify
business opportunities to deal with them. Prepare a feasibility report.

the use of technology as a business opportunity.

103