CHAPTER 7: Getting started

Linda de Vries & Gideon Nieman

Part B: The entrepreneurial process

Chapter 7:
Getting started
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 LEARNING OUTCOMES

 demonstrate an understanding of the countdown to the start-

up of a new business venture
 meet the various requirements necessary for starting up
any business
 consider the various factors involved in locating a new
business venture
 continually evaluate the risks attached to managing
and starting a business
 design work structures to ensure that total quality
management is maintained
 consider and provide overall ethical leadership linked to
the specific enterprise
 understand the necessity of record keeping,
accounting systems and internal control.
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 PROCESS OF START-UP

 Planning

 Organising

 Leading

 Controlling

 Checklist for a business start-up

Table 7.1 Checklist for a business start-up (Textbook page 177)

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 LOCATING THE BUSINESS

 Factors to consider
– Access to target markets
– Availability of raw materials
– Support & technical infrastructure
– Transport infrastructure
– Availability of labour & skills
– Climatic conditions
– Political & social stability

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 LOCATING THE BUSINESS

 Home-based & residential area-based businesses

– Accessibility to clients
– Zoning ordinances
– Space restrictions

 Shopping centres
– When selecting a shopping centre consider:
 Feet count
 Parking
 Maintenance
 Lease agreement
 Security
 Attitude of centre management
 Location within the centre

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 RISK MANAGEMENT

 Types of risk
– Business risk
– Financial risk
– Personal risk

Figure 7.1 The wheel of

misfortune (Textbook
page 181)

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 RISK MANAGEMENT

 Management of risk
– Retention
– Reduction
– Avoidance
– Transfer
– 5 Step process of risk management

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 QUALITY SYSTEMS AND MANAGEMENT

 What are quality systems?

 Reason for having a quality system

– Improvement of performance, coordination
and productivity
– Greater focus on the business objectives and
on customers’ expectations
– Achievement and maintenance of the quality of
the
product to meet the customers’ stated and
implied needs
– Management confidence that the intended quality is
being achieved and maintained
– Evidence to customers and potential customers of© VAN SCHAIK PUBLISHERS
 QUALITY SYSTEMS AND MANAGEMENT
Reason for having a quality system continued

– Opening up new market opportunities or maintaining

market share
– For certification/registration
– The opportunity to compete on the same basis as
larger organisations (e.g. the ability to tender or submit
price
quotations)

 Putting a quality system in place

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 ETHICS

 Unethical behaviour
– Skimming
– Deception
– Inaccurate reporting

 Issues
– Relationships with clients, customers & competitors
– Management processes
– Employees obligations to employer

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 RECORD KEEPING AND INTERNAL
CONTROL
 Objectives of accounting systems
– To maintain source documents and provide an audit trail
– To provide an accurate, thorough picture of operating
results
– To permit a quick overview of present and past operating
results
– To facilitate prompt filing of reports and tax returns to all
government agencies
– To offer financial statements for use by management and
other stakeholders
– Must have effective internal contracts

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 LOOKING BACK

1. Discuss the process of business start-up. 

2. List the factors to consider in the physical establishment of
a business. 
3. List the factors to consider when selecting a shopping
centre as a location for a business. 
4. Which strategies can be followed in the management of
risk? 
5. Why does a firm need a quality system? 
6. List some of the unethical behaviours found in firms. 
7. Why are accounting, record keeping and internal control
are necessary? 
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 KEY TERMS

 Accounting systems  Planning

 Avoidance  Quality systems
 Control  Record keeping
 Ethics  Reduction
 Feet count  Residential-based
 Home-based businesses businesses
 Internal control  Retention
 Leading  Risk
 Location factors management
 Organising  Transfer

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 LOOKING BACK - ANSWERS

1. Discuss the process of business start-up.

– Planning the venture through the business plan
– Organising the venture through the gathering
of resources and various registrations
– Leading by managing the functions in the
enterprise
– Controlling the business through record keeping, internal
control, ethics, quality and risk management


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2. List the factors to consider in the
physical
establishment of a business.
– Access to target market
– Availability of raw materials
– Support and technical infrastructure
– Transport infrastructure
– Labour and skills accessibility
– Climatic conditions

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3. List the factors to consider when selecting a
shopping
centre as a location for a business.
– Feet count
– Parking
– Maintenance
– Conditions of lease agreements
– Security
– Attitude of centre management
– Location within the centre

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4. Which strategies can be followed in the
management
of risk?
– Retention
– Reduction
– Avoidance
– Transfer

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5. Why does a firm need a quality system?
– Improvement of performance, coordination and productivity
– Greater focus on the business objectives and on customers’
expectations
– Achievement and maintenance of the quality of the product to
meet the customers’ stated and implied needs
– Management confidence that the intended quality is being
achieved and maintained
– Evidence to customers and potential customers of the
organisation’s capabilities
– Opening up new market opportunities or maintaining
market
share
– Certification/registration
– Opportunity to compete on the same basis as larger
organisations (e.g. ability to tender or submit price quotations)

 © VAN SCHAIK PUBLISHERS

6. List some of the unethical behaviours found in
firms.
– Skimming – concealing income to avoid taxes or even
claiming excessive expenses
– Deception of consumers through advertisements
or claims
– Inaccurate reporting of financial information and
state of
affairs

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7. Why are accounting, record keeping and internal
control are necessary?
– To maintain source documents and provide an audit trail
– To provide an accurate, thorough picture of operating
results
– To permit a quick overview of present and past operating
results
– To facilitate prompt filing of reports and tax returns to all
government agencies
– To offer financial statements for use by management and
other stakeholders


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