WOMEN ENTREPRENEURSHIP DEVELOPMENT /

WED
TRAINING MANUAL

Contents
Introduction .......... Introductory Module Presentation of the workshop Module 1 Operating under the challenges of Women Entrepreneurship.. Session 1. Assessing your personal Entrepreneurial Competencies. Session 2. Problems of Women Entrepreneurs in Ethiopia.. Session 3 Networking... Module 2 Developing Your Managerial Competencies Session 1 Developing the Qualities of Effective Small Business Manager. Session 2 Introducing Quality Management to Your Business Session 3 Operating under the legal and regulatory Environment and obtaining Business Development Support services. Module 3 Developing Your Marketing Skills Session 1 Marketing Your Products Session 2 Practicing a Mini Market Survey Session 3 Developing Your Products and Services. Session 4 Pricing to Sell Your Product Session 5 Reaching Your Customers Session 6 Promoting Your Products and Services Session 7 Improving Your Personal Selling Skills Module 4 Developing Your Financial Skills. Session 1 Calculating Costs of Your Products and Services. Session 2 Calculating Your Breakeven Point Session 3 Setting up and Maintaining Simple Record Keeping System Session 4 Preparing Your Profit and Loss Account Session 5 Calculating the Balance Sheet Module 5 Business Planning.. Session 1 Conducting SWOT Analysis.. Session 2 Goal Setting Session 3 Making a Cost and sales Plan. Session 4 Preparing Cash flow Plan 1 5 7 10 15 18 20 23 25 27 33 37 45 48 52 56 59 63 64 67 69. 71 89 95 107 117 120 148 165

INTRODUCTION
Micro and small enterprise (MSE) development for women is currently being promoted as a key intervention for women by government agencies across the political spectrum. In industrialized nations, women's enterprise development is an essential element of strategies to decrease welfare budget and unemployment. It is one of the main plans of gender policies in many international development agencies. Entrepreneurship development for women is also an important part of the measures adopted in the platform for action of the Fourth World Conference on Women and the Program of Action of World Summit for social development. This emphasis is partly because of evidence of rapid expansion of women's entrepreneurship since the 1980's and hence increasing numerical importance of women entrepreneurs as development constituency. There is broad consensus on the development potential of small-scale enterprises and the importance of an enabling environment. Both women and MSE are seen as under-utilized and currently underperforming resources to be tapped for growth, poverty alleviation, and employment creation. Targeting women in MSE development is seen as an important strategy for economic growth because of women's numerical representation in the sector and low level of productivity. Research also indicated that women's enterprises might have a greater contribution to stimulation of the local economy than those of men because of women's greater tendency to purchase local inputs (Downing 1990). The efficiency arguments are strengthened, particularly in the case of financial institutions because the wide spread finding confirms that women are better re-payers than men. Some have further argued, particularly women's business advocates in the US and Canada, that women follow more effective enterprise strategies which respond to the needs of flexibility, social responsibility and environmental
3

concerns and development.

therefore,

represent

the

future

for

enterprise

At the same time women's enterprise development has been seen as making a positive contribution to individual economic empowerment and improving women's wider social and political condition. Entrepreneurship also offers a number of potential advantages for women, Firstly, where women have been able to set up economic activities, this success has helped many women to build up an independent resource base. In Ethiopia, this is particularly important to provide substantial support for themselves and their children. Entrepreneurship has also enabled some women to have an income which they may control themselves or contribute to the household and improve their status. Womens income earning may bring about wider changes in their position in the household. Many women see entrepreneurship as a good opportunity and as an alternative to wage employment. Reasons given by women for becoming entrepreneurs include: personal ambition; creativity, a desire for independence; to be one's own boss, self realization and an ambition to improve the quality of working condition; to raise economic returns; to develop a flexibility that caters for the combination of family responsibilities with gainful employment (Turner 1989). Although there are exceptions and an increase in female entrepreneurship, women are overwhelmingly clustered in a narrow range of low investment, low profit activities for local market. Institutionalized inequality at the medium, small and household levels seriously limits the ability of women entrepreneurs to take advantage of the opportunities offered by market growth. Women's restricted access to property, income, credits and training in some countries constitutes fundamental constraints on female enterprise. In addition to this women's ability to enter new markets is seriously limited by lack of technical and business management skills, and the skills they do have are frequently undervalued.

FOR WHOM IS THIS MANUAL? The manual is designed to trainers to be used to train women entrepreneurs in Ethiopia, who have the potential to start and operate their own business or for women who have already started small businesses. For potential business operators this manual helps to create business awareness and serve as a reference in the development of entrepreneurial competencies. For women who have been in business this manual enables them to gain general skills for operating and improving their business, such as planning, record keeping, costing, marketing and management. In the global business world such business skills become a necessity even for the smallest businesses. The manual can easily be adapted to train male entrepreneurs, or mixed groups. The trainers (Facilitators) who use this manual have to have some previous knowledge in business management and they need to have the following qualities and qualification. A respect for adults / women they are going to train Good facilitating skills and an understanding of how adults learn. Diploma graduates in any social science field of studies. Even if, we assume that most of the trainers who use this manual may not have training of trainers skills, we include a training topic in adult learning, training methods (approaches), energizers, ice breakers, evaluation and follow up methods...etc in the second part of this manual. The second part of this manual serves as a tool for trainers. It is advisable to have at least two trainers for each session, because there is a need for more assistance in this type of training activities.

How to use this Manual?

This Manual consists of five modules, each of which can be used independently. The titles of the modules and of the sessions within each

module are chosen so as to show the need for the women entrepreneurs active involvement. Module 1: Operating under the challenges of Women Entrepreneurship The over objective of this module is to developing personal entrepreneurial characteristics of women entrepreneurs so as to improve performance of women operating businesses and, to Identify major problems faced by women entrepreneurs and discuss on the possible solutions of these problems. Module 2: Developing Your Managerial Competencies The over objective of this module is to enable participants to

develop effective women small business managers who can successfully challenge the strategic, operational and administrative aspects of managing under the small business environment (internal and external) and also to build up the capacity of women managers to analyze their own situation in order to take appropriate actions by improving their managerial knowledge, skills and attitudes.

Module 3:

Developing Your Marketing Skills The over objective of this module is to enable participants

to describe the four important components of marketing (product, price, place and promotion) and to discuss ways of improving marketing strategies for their own business. Module 4: Developing Your Financial Skills The over objective of this module is to enable participants to:
calculate

the business cost thereby for estimating the price of their goods and services and to calculate calculate the volume of sales at which the business neither makes profit nor losses. set up and practiced a simple record keeping system.
prepare

profit and loss account and calculating balance

sheet.

Module 5: Business Planning The overall objective of the module is to enable participants to explain the very principles of business planning and its importance. In addition, it helps entrepreneurs to describe the steps followed to prepare business planning. Accordingly, training participants will be able to make a realistic and achievable business plan by setting a SMART goal.

Introductory Module
WED TRAINING MANUAL

Introductory Module
Presentation of the Workshop
OBJECTIVES: At the end of this session, the Participants will be able to: call at least the names of five participants in the workshop, tell at least two new facts they learned about each participant; act in ways that show their feeling in the workshop (smile, laugh, sit comfortably, talk to others freely, stop trying to take notes). TRAINING MATERIALS:
Flip chart paper and marker Zopp card Beans and paper bag or half cut pictures. Training Program

SESSION GUIDE
REARRANGE THE ROOM AFTER OPENING OF THE WORKSHOP If the opening ceremony was held in the same room, chairs will probably be in rows. Tell participants that in participatory training it is important for everyone to see and hear each other so they should make a circle/U-shape or T-shape of seating arrangements. Tell participants that they will not need to take notes. If there

are tables, move them against the wall.

9

INTRODUCE SESSION AND EXPLAIN OBJECTIVES Ask participants What is the most important element in

participatory training? participants.

Let them guess until some one says

Tell participants: unlike the traditional classroom, there is no teacher who knows everything and students who know nothing. All the participants have ideas, experiences and special knowledge to share. Participatory training is not based on lectures, but rather on group work, so participants need to know each other well and speak out freely.

PRESENTATION OF SESSION OBJECTIVES After a brief welcome, instructor reviews the background of Describes the training methodology and presents the

women entrepreneurs' development Program (WEDP) and its results. overall objectives of the workshop to participants. PARTICIPANTS AND PROGRAM INTRODUCTION To illustrate the presentation process, instructor facilitates

participants introduction with a note of humor, to break the ice as soon as possible. At the beginning 20 minutes is allowed for participants to get to know those around them. For participants introduction the instructor uses half cut pictures, which will help participant to find a partner. After everybody identifies her partner, they introduce each other. The following are included in the introduction name, line of business, hobby, and experience in business, business problemsetc. After participants finished pairs introduction, partners start to introduces each other in front of the whole group. Then the training facilitators introduce each other. PRESENTATION OF PARTICIPANTS EXPECTATION Ask participants: What is your expectation from the training?

10

After participants give answers to this question, the instructor will level their expectation in relation to the objective of the training program. Some participants may expect to get money. But the instructor levels this by saying that you will learn how to market your goods and products, method of calculating costs and prices, and how to prepare business plan. After taking this course, participants will be able to get money, but the training program by itself is not directly help to get money. This is the process of leveling the expectation of participants with the objective of the training program.

GENERAL INFORMATION Instructor takes this opportunity to provide information that will help participants follow the rules or procedures in the process of conducting the training session: Give the participants the schedule for the workshop, coffee-breaks and meals; Suggest that someone be designated as timekeeper; Finally, instructor gives the detailed program of the workshop, defining its content, session by session. DETERMINING THE RULES OR PROCEDURES DURING THE TRAINING SESSION Instructor asks participants to identify the rules or procedures for the workshop and writes them on the flip chart as they are given. Ask participants to take care to obey these rules throughout the training program. To assist in developing the rules, instructor notes responses on the flip chart. EXPECTED RESPONSES Share experience; Listen closely; Ask questions if clarification is needed; Ask permission to speak;

11

Do not interrupt the speaker; Be focused; Do not repeat what has already been said; Be willing to learn and become open to others; Strictly respect the schedule, etc.

CONCLUSION Instructor reviews the participants expectations before ending the session. The conclusion focuses on the fact that, by now: They all know each other; They know where they are heading; They all know the rules or procedure; we are now ready to get to the important aspect of Entrepreneurship and Business Management Skill for Women Entrepreneurs.

12

Module

WED TRAINING MANUAL

13

Module 1

OPERATING UNDER THE CHALLENGES OF WOMEN ENTREPRENEURSHIP

Overview
Entrepreneurs are important and the central economic actors. They are pivots of the economy and a catalyst for economic change and development. Entrepreneurship training aims to identify certain personality characteristics or traits in individuals that appear to be possessed by successful entrepreneurs. The economic success of both female and male MSE owner is constrained by many factors. Women may experience the constraints more intensely due to the socio-economic roles and responsibilities assigned to them. Some of the more common constraints include lack of access to finance, information, productive resources and markets; low level of business skills and knowledge; lack of relevant education and experience; and effects of market saturation. Womens household responsibilities and role as mothers represent a constraint affecting only women. Other constraints exclusive to women and applicable in the developing country context are influence of extended family on womens businesses and lack of right in decision making which often result in women having less self-confidence and assertiveness compared to men.

The significant constraints of women entrepreneurs are lack of adequate supply of indigenous entrepreneurial talent. objectives.
Developing personal entrepreneurial characteristics of women entrepreneurs so as to improve performance of women operating businesses and, Identify major problems faced by women entrepreneurs and discuss on the possible solutions of these problems.

Accordingly, this module will have the following

The module has the following four sessions lasting about five hours.

14

1. Assessing your personal entrepreneurial competencies 2. Problems of women entrepreneurship in Ethiopia. 3. Successful women entrepreneur 4. Developing networking to advance women entrepreneurship. Each session starts by setting clear and achievable sessions objectives. This module takes about 5 hours or one day.

15

Module 1 Session 1

Assessing Your Personal Entrepreneurial Competencies

OBJECTIVES:
By the end of the training session the participants will able to: List their strength and weakness as an entrepreneur. Explain personal qualities needed to run a business. Identify the characteristics of a successful entrepreneur.

TRAINING MATERIALS:
Handouts:- Personal Entrepreneurial Competencies Flip Chart and Colored Pens Checklists What is an Entrepreneur? (Handout) Questions to start the discussion.

Time: 1: 30 hours

Session Guide
INTRODUCTION
Introduce the session and explain the objectives. Explain to the participants that they are going to assess their personal entrepreneurial competencies. ASSESSING ENTREPRENEURIAL SKILL 1. Instructor distributes entrepreneurial innovation checklist to participants and tells them to read the checklist carefully and respond by marking the most accurate answer. 2. After participants finish the assignment, tell them to exchange the paper with the other participants who sit beside them. Instructor distributes the answer sheet and asks them to calculate the rank

16

Instructor explains the message of the exercise and discusses with participants.

CASE STUDY SUCCESSFUL WOMAN ENTREPRENEUR The instructor presents a case study and sticks pictures on felt board. Ask one volunteer to summarize the whole story (See Notes to the Facilitators). Then the Instructor reads out the following questions:

Questions:
1. How did you describe W/ro Alemitus behavior? 2. What are her strength and weakness as an entrepreneur? 3. What do your think the lady should have done before she started the business?. Instructor explains questions in a way that is understandable.

Expected Responses
1. She is a successful business operator.

Strength
She is hard working She is eager to get information. She is able to make decisions. She is organized with her time. She is open to new ideas. She is able to learn from mistakes. She sets goals for herself. Prepares a detailed business plan. Does market survey.

17

Weakness
She is weak in money handling and record keeping. Her product is a little bit more expensive than other similar products.

SUMMARY The success of any business operator lies in his/her personal entrepreneurial competencies.
CONCLUSION

Instructor concludes the session. To succeed in business one should know first her personal characteristics and then try to build up the strong points and plan by taking into account her weaknesses. To that end, you must develop your personal characteristics by giving due attention to the ten personal entrepreneurial characteristics (PEC). We will discuss in detail about PECs in the following session. RECAP OF OBJECTIVES Instructor makes sure the participants understood the objectives of the session by asking them to say something about the session or to give comments on the case.

18

Handout 1 - 1A Entrepreneurial Innovation Check list

Read each statement carefully, and then respond by marking the answer that most accurately describes your behavior, feeling, or attitude as it actually is, not as you would like it to be, or think it should be. Try to mark your first reaction (created by Eugene Raudsepp, Princeton Creative Research)

Entrepreneurial Behavior
1. My parents encouraged me to take an interest in discovering things for myself 2. At least one of my close relatives is an entrepreneur 3. Throughout my education, I had many part-time jobs 4. I am curious about more things than most people are 5. I always seek challenging problems to solve 6. I am not too painstaking in my work 7. When faced with a problem, I usually investigate a variety of options 8. Before taking on an important project, I learn more I can about it 9. When comforted with difficult problem, I try solutions others would not think of 10. Once I undertake a new venture, I am determined to see it through 11. I concentrate harder on projects I am working on than most people do 12. I cannot get excited about ideas that may never lead to anything 13. I am able to work for extended period, frequently to the point of exhaustion 14. I find it easy to identify flows in others' ideas 15. I regard my self as a "specialist" not a "generalist" 16. Uncertainty and unpredictability easily frustrate me 17. I can easily give up by immediate gain or comfort to reach long-term goals 18. I have great tenacity of purpose 19. Things that are obvious to others are not so obvious to me 20. I get a kick out of breaking rules

Agree

Disagree

19

21. I become upset if I cannot come immediately to decision 22. I get into trouble because I am too curious or inquisitive 23. I am able to win other people over to my point of view 24. I tolerate frustration more than the average person does 25. I rely on intuition when I am trying to solve a problem 26. A logical step-by-step method is best for solving problems

20

Scoring Instructions To score the exercise, circle and add the values for your answers.
Disagre S.N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Agree
4 3 4 4 3 0 4 4 4 4 4 1 4 3 1 1 4 4 4

e 1 1 1 1 1 4 1 1 1 1 1 4 1 1 4 4 1 1 1

S.N 20 21 22 23

Always 2 0 3 3 3 5 1

Often 3 2 4 4 4 4 2

Sometimes 5 3 5 5 5 3 5

Rarely 1 5 1 1 1 1 3

Never 0 1 0 0 0 0 0

24
25 26

21

Handout 1 1B

Case study Alemitu and her business

W/Ro. Alemitu is a businesswoman engaged in producing cultural cotton products, in Bole area. She produces cultural dresses, T-shirts, gowns, table and sofa clothing and other small gift items. Before she started this business, she had been working as an employee in a similar firm. Alemitu gained wide experience in producing such items, studied the prevailing market situation and then decided to start her own business. She shared her decision with her family members and asked them to give her some money, which will boost her investment together with her savings from her previous salaries. She selected a very suitable business site, where many tourists get in and out from the country and fully organized her office so as to start her work effectively and efficiently. Even if Alemitu took a risk in leaving her job to start this type of uncertain business, she is confident enough on her personal behavior in handling customers and managing employees. She is cheerful, humble and hard worker by her nature. This behavior enabled her to attract customers. She promoted her business by inviting guests and by using different methods of advertisement. Alemitu believes in planning before making any move concerning businesses. She sets a clear and realistic goal and plans towards that goal. Alemitu is also known by her strong personality for quality goods and services. She always advises her employees to be very conscious in their work in providing quality products, handling customers and being committed to their responsibility. For her quality products are the results of using quality materials and quality work process. On the contrary, Alemitu is poor in handling and controlling business money. Even if she has an accountant in the business, she does not have any idea why he was here and always interfered in his activities. When she wanted to give money to her family members she simply took the money from the cash box without the consent of the accountant. Other than this, some of her customers complained about the high prices of her products. Even if her effort and the staff cooperation made her business profitable for the time being, it is risky to continue like this in the business without correcting the above-mentioned mistakes. Do you think Alemitu is a successful entrepreneur? If she is not, why? If she is, why?

22

MODULE 1 SESSION 2

Problems of Women Entrepreneurs in Ethiopia

OBJECTIVES:
By the end of this ACTIVITY, the Participants will be able to: List problems of women entrepreneurs in Ethiopia according to the following: Cultural problems, Religion problems, Political problems, Family problems, Skills problems. Access problems

TRAINING MATERIALS:
HANDOUT: SESSION Transparency Major Problems of Women Entrepreneurs. GUIDE TIME: 1 hour Flip chart and colored pens (markers) Over Head Projector (OHP) transparency paper and different color markers

INTRODUCTION Introduce the session and explain objectives. Explain the purpose of the activity and link it to the previous activity. We look at problems that hamper womens businesses from growing. In this activity, participants will attempt to make a complete list of problems faced by Women Entrepreneurs in Ethiopia today. IDENTIFYING THE MAJOR PROBLEMS
Explain the major problems and give examples of each. Cultural problems for example women are restricted with family matter and have problem of mobility. 23

Religion related problems: for example, women give most of their time to religion-related activities. Access problems: for example, women do not have access to and control over income. Family related problems: for example, womens businesses are influenced by extended family system. Skills and attitudes problem: women lack appropriate business skills to enter new areas of activities (do not have planning, marketing and record-keeping skills)

EXPLAIN BRAINSTORMING METHOD

Explain the brainstorming method. Brainstorming is a method used to encourage people to develop as many ideas as possible. Instructor asks participants to list problems, which hamper women businesses from growing. All ideas are collected and written on a flip chart by the instructor or by co-facilitator, if any.

DISCUSSION ON THE PROBLEMS

Divide the participants in five groups to list problems and organize them into the five major problem areas. (15 minutes). Each group appoints a facilitator to lead the group and a secretary to write down all ideas on a flip chart. When the groups are finished, each group puts of its paper on the wall and reports on its list to the whole group.

DISCUSSION ON POSSIBLE SOLUTIONS The instructor asks to the previous group to discuss and suggest possible solutions to these problems; After the groups have accomplished the task, each group presents its recommendations.
The instructor again asks the same group to discuss on the possible solutions and to list them, after 15 minutes. The representatives of each group present their suggested solutions to the whole group. The instructor can lead the whole group to further supplement the possible solutions and list the whole range of ideas on flip charts and put them on the wall.

24

CONCLUSION The instructor summarizes the session by involving the group in the discussion of the usefulness of this session in their day-to-day activities. RECAP
The instructor summarizes the whole session by asking questions such as.

-What are the major problems which hamper women entrepreneurs businesses from success? -How can be these problems solved? -Etc.

25

Handout 2- 1

PROBLEMS OF WOMEN ENTREPRENEURS

In many regions, the extent to which economic growth, poverty alleviation and empowerment are achieved through the micro and small enterprise sectors is limited by various constraints on entrepreneurship development. The constraints often affect both women and men, though women tend to be affected more intensely. This is because of the societys perception of women, the roles and responsibility assigned to women by the society, and unequal power relations between women and men. These constraints results from societal norms that are institutionalized at the macro level and affect only women due to the perceived gender differences. Constraints affecting MSEs in general, but women entrepreneurs more intensively include: Access to finance/ access to credit Access to information Low level of skills and knowledge Lack of relevant education and experience Effects of market saturation Etc. Women often have fewer opportunities than men to gain access to credit for various reasons, including lack of collateral, unwillingness to use household assets as collateral, the small amount of credit requested and negative perception of female entrepreneurs by loan officers. Information is another resource that small enterprises have difficulty in accessing. The information can be about markets, suppliers, technology, export opportunities etc. Information can be obtained through informal networks or through membership in organizations such as trade guilds, associations and unions. Female compared to male business operators have great difficulty in accessing information because of difficulties in attending events due to their dual work roles and the resulting time constraints. A lack of relevant skills and knowledge constrains the growth potential of small and micro enterprises. This is compounded by deficiency in basic education. Women tend to be less likely to have had education and experience relevant to starting and managing a business and thus have less potential for success. Many entrepreneurs, particularly women, are located in low value markets where there are few barriers to entry. The sectors tend to be crowded because of these low barriers. This leads to saturated markets and little room for growth.

26

Module 1 Session 3

SUCCESSFUL WOMEN ENTREPRENEUR

OBJECTIVES:
By the end of the session participants should be able to: Identify the characteristics of successful entrepreneurs from hearing the experiences of successful women.

TRAINING MATERIALS:
Overhead projector and screen Transparency and handout 1 Questions to start the discussion. On a big sheet of paper; General definition of an entrepreneur in a market economy. Fit to thank guest.

TIME; 1: 30 Hours

SESSION GUIDE
ACTIVITIES BEFORE THE SESSION STARTS

1. Identify and invite a guest speaker, a successful local woman entrepreneur. 2. Meet with her before the session and explain the purpose of her visit: it is to describe her experience as an entrepreneur, the challenges she faced and how she succeeded.

INTRODUCTION
Introduce the session and explain the objectives. Explain that the group will be meeting an entrepreneur who will talk about her experiences and answer some questions after the presentation.

27

PREPARE QUESTIONS FOR THE GUEST SPEAKER. Ask participants to work in pairs to think of some questions to ask the guest. When participants have considered their questions, ask them to tell the group, and write them on a flipchart ,show transparency and distribute Handout 1- 3A. Discuss all these questions and decide who will ask each question. Make sure the participants understand that they can also ask other questions. Tell participants that they will not only listen to the entrepreneurs story, but will also be trying to notice the personal qualities such as those that contribute to making her a successful entrepreneur.

EXPERIENCE SHARING
Introduce the woman entrepreneur, and introduce the group members to her She talks for about 30 minutes sharing her experience as an entrepreneur. Afterward, she answers participants questions for 20 minutes. When she has finished, thank her and give her small gift(s).

WHAT IS THE LESSON LEARNED FROM THE ENTREPRENEUR?

Ask participants: what did you learn from the guest entrepreneur? What makes her a successful entrepreneur? Which of her personal characteristics do you like most? Expected Responses
She is persistent She seizes an opportunity She takes a moderate and informed risk. She makes an effort to obtain information. She strives to improve quality She leads people to do what she wants She sets goals for herself. She plans ahead, and monitors the results. She invests for tomorrow rather than spending today. She has the ability to decide.

28

EXPLAIN PERSONAL ENTREPRENEURIAL COMPETENCIES Instructor displays entrepreneurial characteristics written on a flip chart or on the board and asks participants to read it loudly. CONCLUSION
Conclude the session by telling participants that there are different kinds of entrepreneurs, but that there are certain lessons that will be useful for all. Ask participants to look over the list of lessons learned and tell which lesson they felt was the most important and why?

RECAP OF OBJECTIVES
Instructor makes sure the objectives of the session have been achieved by asking the participants to list the general entrepreneurial characteristics and to define what is an entrepreneur.

29

HANDOUT 1 - 3A

How did you decide to become an entrepreneur?

What resources and skills did you have to start with?

What were your first challenges/difficulties? How did you overcome them?

Did you ever think about stopping your work? Why?

What characteristics of your personality help you the most in your business?

30

HADOUT1 - 3B

The Guest Speaker

What are some types of entrepreneurial behaviors that you learned from this successful woman entrepreneur? had. She is persistent She seizes an opportunity She takes a moderate and informed risk She makes an effort to obtain information She strives to improve quality She leads people to do what she wants She sets a goal for herself She plans ahead, and monitors the results She rebounds from failure She invests for tomorrow rather than spending today She has the ability to decide. Here are some ideas others have

Yourself What characteristics do you have?

What are the characteristics you do not have and would like to develop?

What other ideas do you have?

31

HANDOUT1 - 3C

CHARACTERISTICS OF AN ENTREPRENEUR
In a new business the entrepreneur is the most important person who has the responsibility for the management and success of the business. This responsibility means a lot of pressure, but also a lot of freedom. The business success in turn depends on the entrepreneurs personal characteristics, situation and skills. The more entrepreneurial characteristics and skills an entrepreneur has, the more likely it is that her/his business will succeed. The kind of characteristics and skills an entrepreneur needs will vary with the type of business she/he has or decides to start. The family and financial situations are also important factors to consider before starting a business. More than likely, you as an entrepreneur have some of the necessary characteristics and skills. If you lack certain skills they can be developed through training or studies. You can make yourself aware of the characteristics that need improvement and change your attitude and behavior. The characteristics of an entrepreneur that contribute to success are the result of her achievement motivation. The characteristics of achievement-motivated persons as identified by Mc Cleland '' A successful entrepreneur must be a person with technical competence, initiative, good judgment, intelligence, leadership qualities, self-confidence, energy, attitude, creativeness, fairness, honesty, tactfulness and emotion. Robert D. Histrch identified a few more capabilities or personal characteristics that an entrepreneur should possess. According to him, the entrepreneur must have an adequate commitment, motivation, and skills to start and build a business. Some key characteristics of successful entrepreneur are:

Motivator:

An entrepreneur must build a team, keep it motivated and provide an environment for individual growth and career development.

Self confident: Entrepreneurs must have belief in themselves and the ability achieves their goals. Committed: An entrepreneur must be committed to the project with long a longer time horizon Energetic/efficient: The success of long hours for a sustained period of time. an entrepreneur demands the ability to work

Persistent: An entrepreneur must have an intense desire to complete a task or (problem solver) to solve a problem. Creativity: is an essential ingredient. for action, Initiative. An entrepreneur must have initiative accepting personal responsibility and above all make good use of resources. Goal setter: An entrepreneur must be able to set challenging but realistic goals. Moderate risk taker: An entrepreneur must be moderate risk taker and learn from any failures.

32

PERSONAL ENTREPRENEURIAL CHARACTERISTICS (PEC)

Many entrepreneurs do not have enough skills or the necessary characteristics or are not in the right situation when they start to plan for new business. But skills can be learned, characteristics developed and situations improved. The entrepreneur can work on her weaknesses and turn them into strengths. Here are the major personal entrepreneurial competencies needed to develop to be successful in business. Those characteristics classified in three clusters. These are achievement cluster, planning cluster and power cluster. Achievement cluster: 1. 2. 3. 4. 5. Demand for efficiency and quality Opportunity seeking Commitment to the work contract Persistence Risk taking

Planning cluster: 1. 2. 3. Information seeking Goal setting Systematic planning and monitoring

Power cluster 1. 2. 3. Self confidence Decision making Persuasion and networking

In a business, an entrepreneur will have to make important decisions. They cannot be passed on to someone else to make or not to make at all. Being able to make difficult decisions that could have serious consequences is important in running the business.

33

FLIPCHART
HANDOUT1 - 3D

SESSION 3 - SUCCESSFUL WOMAN ENTREPRENEUR

WHAT IS AN Entrepreneur ENTREPRENEUR?

A person committed to the achievement of a goal

in a market economy

Committing
Time Capital Creativity

To achieve
the production of goods or services to satisfy customers who will pay the price

34

Module 1 Session 4

Networking
OBJECTIVES:
By the end of the training session, participants shall be able to: Discuss the possibilities of simple form of networking, setting up an association. List the advantage of networking with other women entrepreneurs

TRAINING MATERIALS:
Overhead projector and screen. Flip Chart and Colored Pens. Handout Benefits of Networking.

TIME; 1 Hour

Session Guide
If possible invite specialists who can give advice about forming associations and cooperatives.

INTRODUCTION
Introduce session and explain the objectives. Tell participants that in this session we will discuss the benefit of networking with other entrepreneurs.

WHAT IS NETWORKING?
Ask participants: what do we mean by networking? Have you ever been a member of an association or cooperatives? Gather participants responses and write them on a flipchart.

Expected Responses
An association which will be formed on a voluntary basis for exchange of information

35

Organization which undertakes joint activities. Collaboration among small business operators, etc

WHAT ARE THE MAJOR PROBLEMS OF WOMEN ENTREPRENEURS?

The instructor forms four groups of 56 members, and tells them to list the advantages and disadvantages of networking. The assignment will take 10 minutes. After ten minutes group representatives are allowed to present their answers, then the instructor opens the floor for 20 minutes for discussion and encourages participants to say something about networking.

Expected Response Pooling of resources, less duplication of efforts, improved effectiveness; Forum for collaborative efforts; Stimulating new ideas; Fostering trust and transparency; Simultaneous promotion of several organizations, etc EXPERIENCE SHARING
The instructors invite some specialists or relevant association leaders and introduce the guests. Make sure that the women understand that the discussions here are only to offer them information on how to establish associations and to form cooperatives. It is entirely their own initiative to take it up further. The facilitator encourages the participants to share their experiences (if there is any) of traditional networking; After each woman has made her presentation of her experience, the instructor asks the rest of the group and the specialist to comment on the possibility of using traditional forms of networking to develop simple forms of networking, forming association or even a marketing cooperative.

36

CONCLUSION Tell participants that if they take initiative they can start a simple form of networking after the end of this workshop or another session can be organized if they want to pursue the issue further. RECAP OF THE OBJECTIVES The instructor asks participants what they have learned? Finally the instructor summarizes by saying that the process of introducing and internalizing network mechanisms and securing ownership often involves a change in attitudes and approaches towards communication and exchange of information.

37

HANDOUT 1 - 4A

Networking
Networking in order to foster co-operation between organizations for a common goal can have numerous benefits, some of them are highlighted below: Pooling of resources, less duplication of efforts, improved effectiveness; Distribution of information, exchange of experience between organizations, the spread of sector knowledge and client referral at local level; Excavating decentralized and hidden knowledge; Simultaneous promotion of several organizations; Forum for collaborative efforts; Clarifying own objectives; Stimulating new ideas; Fostering trust and transparency Coordination between members referring and referencing clients to each others' specialized services, thereby meeting a greater diversity of demands; Enabling members while delivering specialized or focused interventions to also maintain a broader strategic awareness; Stimulating a participatory learning process, where questions are raised by individual members and a joint attempt is made to find an answer; Strengthening capacities by identifying needs and creating learning opportunities; Fostering creativity and risk taking by removing members from institutional limitations.

The process of introducing and internalizing network mechanisms and securing ownership is slow and often involves a change in attitudes and approaches towards communication and exchange of information. If there is no suitable networking structure in place and it is intended to build one, the case studies suggest that the starting point should always be a specific problem. In Zimbabwe, the envisaged development of Occupational Standards, decentralization of decision-making and commercial management of training institutions were such door openers to get access to relevant representatives. In Zambia, the mapping of the stakeholder landscape was used as a starting point. Susan Wilkinson suggests the following guiding questions for introducing the network concept:

Is there sufficient demand for the concept? (Is it understood? have people grasped the concept? to what extent does a network culture exist? what basis is there for networking? what are the motivating factors and expectations behind it?); At what location, type of partner and level of decision-making should the concept be introduced?

38

(Where is the ground most fertile reap intended benefits? is orientation highest among traditional development partners or non-traditional ones? where should the investment with this concept be made (sector, beneficiaries, geographic coverage, type of organizations?); How soon should the concept be introduced? (Are people ready for it? sufficient motivation? attitudes a road block?); What support interventions are required to cultivate preparedness for the network concept? (How can a network orientation be built up? what level of orientation to networking already exists? how can existing systems or practices be enhanced? what capacities need to be strengthened practices introduced, attitudes influenced?)

39

Module

WED TRAINING MANUAL

40

Module 2

DEVELOPING YOUR MANAGERIAL COMPETENCIES

Overview In many instance of small business situations the successes or failure of businesses is widely acknowledged as due lack effective managerial competencies. Moreover, the noted differences of managerial roles in small and big businesses prove the complex nature of managing small businesses. The small business manager operates under different sets of external and internal environment. The small business manager plans for the long-term makes strategic plans as well as assumes dayto-day implementation functions. The small business manager must routinely demonstrate personal selling skills and even in charge of operational effectiveness. Managing small businesses require is actually much more complicated than many large businesses. This again is further constrained by the demand and supply related problems of small business management skills. On top of these, the presence of gender inequalities calls for the development managerial competencies. Accordingly, the module will have the following objectives: To develop effective women small business managers who can successfully challenge the strategic, operational and administrative aspects of managing under the small business environment (internal and external). To develop the capacity of women managers to analyze their own situation in order to take appropriate actions by improving their managerial knowledge, skills and attitudes.

41

The module has the following four sessions lasting approximately about 6 hours minutes or about one day. 1. 2. 3. 4. Developing the qualities of effective small business manager. Developing leadership skills. Introducing quality management in small business. Operating under the legal and regulatory environment and

obtaining business development support services.

This module brings together management principles as they apply in small businesses, particularly in women owned and managed small businesses. It starts by defining the concept of management by bringing the example of a womans everyday activity in a family. Following the conceptual definition of management participants will elaborate the challenges and opportunities facing small businesses.

Emphasis is placed to examine the effects of gender relations in developing managerial competencies of women managers and operators of small businesses. Participants search for better approaches to narrow gender gaps, which will be complimented by advice from experts and experiences. An issue of role conflict as it applies to women managers will be highlighted.

Developing the leadership skills of women is the way for the successful application of other management roles. A session on leadership development will allow participants to exercise leadership skills.

Introducing the concept of quality management will consolidate the management concepts elaborated in the sessions. The envelope game will enhance the application of quality management in all aspects of small business management. Since people are the key to business management the session also brings the issue of human resources in the picture.

42

The fourth session on legal and regulatory issues including accessing business development services provides opportunity for women entrepreneurs to meet with relevant government agencies and other support institutions.

43

Session 1

Developing the Qualities of Effective Small Business Manager

Objectives: by the end of the session participants will have: Defined the concept of management as it applies in small business situations. Identified at least three qualities of effective small business manager. Duration: 2 hours Session overview: 1. Management in the realm of everybodys experiences. 2. Developing your managerial skills. Handouts: a. Management is best use of people, resources and ideas (Transparency). b. Common problems facing small business managers (Transparency).

Overview:

The purpose of this session is to enable participants to recognize the importance of having management skills in running their businesses successfully. It also provides an overview of the modules in the training program. However, it also goes beyond providing an overview. The perception of management among small business operators as something complicated and too technical must be changed. Participants must conclude that management is using and developing
44

the skills they already have. The meaning of management as it applies to small business situations will be discussed by simplifying into everyday activity. Though management can be simplified it is also complicated when it comes to the role of small business managers in general and women /owner managers in particular.

Session guide: a. Management in the realm of everybodys experiences. 1. Greet participants, introduce the session's objectives and relate them with the rest of the sessions in the module and the training program. 2. Tell participants that in this session they will discuss on management skills by giving examples in relation to their own everyday life experiences. 3. Elicit and write responses in a flip chart to include a list of activities for a woman in managing her household affairs. 4. Tell participants that among their answers you are going to take one example for further discussion. Accordingly, continue by asking participants to identify the necessary steps needed for cooking and serving dinner for the family. 5. Get participants agree on the objective or expected results of the activity as getting dinner prepared and served to the family. Discuss ideas among other things to include: Check whether the family will need dinner including healthy and delicious food. Decide to prepare dinner or set objectives. 6. Ask participants to list activities and resources that must effectively and efficiently be utilised in cooking and serving the dinner. The availability of money.

45

 Identifying and buying the right food items at a specified amount, quality and time. The home worker and family members. Preparing kitchen utensils. Using kitchen equipment and preparing food. Availability of time. Preparing tables and arranging plates. Serving the dinner. Ask whether the family has enjoyed the dinner. 7. Ask participants to identify the personal qualities needed to prepare dinner for the family. Among the answers include: The motivation to prepare dinner (the idea). Affection to the family. The cooking skills needed. 8. Recall to participants that they have identified the idea of preparing dinner as an objective, they have also listed activities that can ensure the best use of resources to prepare the dinner and thirdly they have listed the personal qualities needed to prepare and serve the dinner.
9.

Agree with participants on the definition of management to include getting things done or management as an efficient and effective use of resources, ideas and people. Write the definition and post in the training room so that it can be visible to all participants throughout the training days.

10. 11.

Ask participants to elaborate the three terms used in the Elicit answers for ideas to include vision, mission, goal setting,

definition: ideas, people and resources. strategies, techniques, etc. For people to include motivations,

46

emotions, 12.

skills,

etc.

Resources

include

money,

buildings,

equipment, time, etc. Distribute handout 2.1A and agree with participants on the definition of management as true for all types and size of business. B. Developing your business management skills. 1. Since you already know each participants type of business occupation divide participants into four groups of similar or related businesses. If all participants are in one or in similar businesses use a one-group brain storming method. 2. Ask each group to list resources and specific activities involved per day or week (depending on their choice) in running the business they are engaged in (allow not more than one flipchart). 3. Give each group flipchart paper and markers; they should have 15 minutes to complete the task. 4. At the end of 15 minutes bring the four groups together to report their findings. Each group will have approximately 5 minutes to make its presentation. You can add in the list by including possible comments from the plenary. 5. Reconvene the groups and allow at least 5 minutes for presentation. Illicit ideas and write them on the flipchart:

Finance: budget, book keeping; Time: daily production schedule and long term planning; Production: quality and quantity of products; Marketing: promotion, distribution, sales; Purchasing: materials and supplies; People / labour: hiring, training and maintaining workers.

6. Ask participants to recall the definition of management and implications with the listed resources and activities. Such as the

47

implications of managing cash, time, human resources, production process, etc. 7. Summarize the session by relating the management skills they have identified and they need to improve in the training program. 8. End the session by informing participants that the subsequent sessions will build up on management competencies by introducing quality management and managing under the business environment.

48

Session 2

Introducing Quality Management to Your Business

Session objectives: by the end of the session participants will have Identified at least three main challenges and opportunities facing small business mangers in pursuing quality management. Described at least 3 roles of small business managers in quality management. Identified specific areas and methods for improving operational effectiveness in a simulated business situation. Session overview: a. Changing attitudes towards quality. Session Guide: A. Changing attitudes towards quality. 1. Greet participants and introduce the sessions objectives by relating to the rest of the training. 2. Start by asking participants to define the meaning of a product or service quality in business. Specifically ask participants to give their responses from the point of view of producers and customers. 3. Lead participants to agree in categorizing the responses as representing producers or customers point of view. Make sure that both points of view are represented in the discussion. 4. In one flipchart write participants interpretations of product or service quality from the traditional producers point of view and in another flipchart write ideas representing customers point of view. Among answers include producers interpretation of quality as adherence to specifications or conformance quality and customers
49

view of quality as an inherent value to the customer or design quality. 5. Initiate discussion by asking participants who should define quality in business, the customer or the producer?
6.

Lead the group to agree on the customer role of defining quality and agree with the definition of quality as the characteristics of a product which make it able to satisfy customers needs.

7. Write the above mentioned definition in big letters and post it in an easily visible area of the training room. Ask participants the implications of the above definition in context of the Ethiopian small business situation. 8. On the flipchart write the statement quality products and services are the results of quality management and ask participants suggestions. Answers can include Knowing the market: customers needs and requirements. Need to produce goods and services, which meet those needs and requirements. 9. In pairs ask participants to define quality management. Give participants at least 10 minutes to come up with one definition by each pair. 10. In a flipchart write participants' definitions and after getting all distribute handout one (definition) and compare with ideas

participants definitions. Lead participants to agree on a common working definition of quality management. Quality management is the capacity of an enterprise to achieve and sustain a level of product or service quality as defined by the quality policy of the entrepreneur, whilst keeping costs to a minimum.

50

11.

Summarize by asking participants whether quality management

is producer centered or customer centered. Lead the group to agree quality management as customer centered. B. The Envelope Making Game: simulating quality management game. Objective: to enable participants experience the various elements of quality management (as system in order to improve operational effectiveness.) 1. Explain that participants will play a game on envelope making in which they will do production planning. The product: paper envelopes (hold up a sample). Raw materials: paper, glue. Equipment: scissors, rulers, and pencils. Labor: you 2. The objective of this exercise is for you to experience the importance of proper planning, organization, efficient use of resources and high quality standards for the success or failure of a business. 3. Divide participants into four groups of five, in each group one person will be observer. Have participants sit at tables in their groups. The observers can stand behind their groups. 4. Distribute handouts 2,3,4,and 5 the instructions and order forms and finance sheets, for the exercise, and explain (see instructions). Distribute the observers guidelines to the observers. 5. Show a sample envelope, ensure that it is of excellent quality. 6. Ask observers to join the groups, make sure they have read their guidelines and are clear with the instructions. 7. Have participants start the first round (planning). Have 20 sheets of paper (5 for each group) ready for the groups to experiment. Do not
51

distribute them, give them to groups that ask paper to experiment. The paper should be marked in such a way that any envelopes made during this planning session can easily be distinguished from envelopes made later. Groups are also allowed to use one item each of available materials (scissors, ruler, and pencils) during this planning round, but only if they ask for it. 8. Each group should experiment, formulate their plans, and discuss how best they can achieve their goals. They have 40 minutes for planning. At the end of each period each group must have completed their order forms and submitted to the trainer. Distribute the requested materials and keep the request forms. 9. Ask groups to ask for the second round (production). Make sure observers are still with their groups. Time the round carefully. Participants are not allowed to use any materials other than those they ordered and received from the trainer. 10. While the groups are producing , prepare a quality check desk , Number of envelopes planned; Number of envelopes delivered. Number of envelopes accepted. After exactly 40 minutes of production time ask the groups to stop working and the observers to collect the envelopes. 11. While participants take a break, ask the observers to help you check the quality and quantity of each batch of the envelopes and write the results in the forms you have prepared. Envelopes that do not fulfill the request standards should definitely be rejected. 12. Reconvene the groups, tell them the results of the quality check and ask them to complete their calculation of profit and loss accounting on the finance sheets handed out with the instructions. with a sheet for each group indicating :

52

13. 14.

Ask the observers to give feedback on the process they observed Ask each group to summarize their experience, discussing Did you achieve your goals? What were your difficulties? Did everything go as planned? What went wrong? Did you try to reduce the quality standards? With what results? What would you do differently next time?

during the two rounds. questions such as :

C. Applying

quality

management

principles

to

your

own

business situations. Ask participants to go back to their groups to work on the following task. Recall some of the problems the group had in the envelope game that they also have in their business. Each group should bring two ideas. 1. Reconvene the groups and receive two points from each group Write the responses on the flip chart. They might include: Organization of different tasks. Limited resources. Planning. Checking the quality of each product. 2. In a general discussion ask participants other problems related to applying quality management in their business situations. Show transparency and distribute Handout 6. 3. Ask participants to give their ideas on how to solve these problems. Elicit ideas and write them on the flipchart. Show transparency and distribute Handout 7.

53

4. Divide participants into pairs and give the following task. In dividing participants into pairs it is important to keep participants in a similar business in one pair. 5. Allow pairs to discuss and write ideas in their workbooks. 6. When finished ask for examples from the group and lead a discussion by eliciting some examples and discussing possible solution to each example.
Pair Task Think about your own operations, especially in your production process. At what points in the whole process would it be appropriate to introduce quality control measures? At what point in your operations do you need to increase quality management? (Example record keeping, punctual delivery, relationship with workers, etc.) For practical purposes you can select one of the two businesses and the other person will listen to her friends ideas and discuss on the solutions. (Time 10 minutes.)

54

INSTRUCTION NOTES

Planning and running a business is not simple, even if you produce a simple product, in this case envelopes. If you want to be successful it is very important to plan properly, and to work efficiently with the least waste of resources. The exercise is done in two rounds: Planning: 40 minutes Production: 40 minutes. 1. Planning The most important part of the planning is to find out how much you can produce during the 40 minutes. Production round. Based on this you will know which and how much equipment and material you will need. The market is clear; your customer is the training institute. Since they rely on you, you must give a binding commitment as to how many envelopes you will deliver. The contract conditions are as follows: 5 cents per accepted envelope; 1 cent per extra envelope (exceeding the agreed number); 1 cent penalty per envelope that you fail to deliver. The specifications are:
55

 Size 17 x 14 cm (+ or - 2 mm); Tidy and well glued; Not glued on the inside; Exact cutting; Exact folding; Clean appearance. The training institute is quality minded and only accepts envelopes fulfilling those specifications. The equipment and raw materials are available, and their prices are specified on the order form attached. At the end of the 40-minute planning period, submit your order form including your binding commitment. If you have enough time, use the upper part of the finance sheet to calculate whether your production will be profitable. 2. Production For the production of envelopes, you again have 40 minutes. At the end of this period, all envelopes must be submitted to the Quality Control Desk. The Quality Controller will tell you how many envelopes have been accepted and how many rejected. Once you have this information, use the lower part of the finance sheet to calculate the financial results.

56

ORDER FORM Item paper Scissors Rulers Pens Glue stick Labor (Per minutes) Total group member, per 40 Maximum Quantity Available No limit 3 3 5 3 Quantity Ordered Price per Item 1 cent 10 Birr 3 Birr 5 Birr 10 Birr Total Costs

57

Finance Sheet
Forecast Expected sales: Less costs: Profits Results: Sales: Planned envelopes at 5 cents Extra envelopes at 5 cents Costs Planned total costs Additional unforeseen costs --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------______________

Total unforeseen costs Total costs --------------------_______________

Sales less costs = actual profit or loss

---------------------

58

OBSERVATION GUIDELINES 1. Read instruction notes for the groups carefully. 2. Join your group, observe what they do, listen to what they discuss, take notes. 3. Some points to watch during the planning round: What does the group do at the beginning of the round? Do they choose a leader, does someone take the leadership with out being asked? How is the actual planning done? Do they ask for paper and equipment to experiment? Do they plan to divide the tasks? Do they talk about/plan quality control? Do they organize themselves and the material and Do they work according to plan? What is actually happening during the production who is Does someone watch the time, control the quality?

4. Some points to watch during the production round: equipment in order to have an efficient production flow?

doing what?

SOME COMMON FACTORS AFFECTING QUALITY No transfer of information about customer requirements to

production process: what products, what specifications, etc. Low skills and motivation of entrepreneurs and workers. Lack of proper supervision and management.

59

Inspection of final product at end but not during the

production process. Low quality products are tolerated. No analysis of why there is low quality, no attempt to

correct production process. BASIC RULES OF QUALITY MANAGEMENT

Aim To produce and deliver a consistent supply of high quality products to your customers at a competitive price. QM is about increasing both the quality of the product and the quality of internal performance. This leads to customers having more confidence in your business ability to meet their requirements. Quality creates a competitive advantage, which is very sustainable in the long term. It is impossible for the competition to retaliate immediately, it will never be easy for the competition to catch up. Methods Define a clear policy regarding standards for quality of products, and work practices. Communicate this policy to the

60

whole enterprise and train workers in how to meet these standards. Always consider the needs of the customer as your basis for quality standards: continuous market research, open

communication with consumers and distributors. Be able to respond quickly and adapt to market demand: be proactive rather than reactive: be your own best competitor and always look for ways to improve your product and your business. Document and analyze all aspects of your business: identify and eliminate existing and potential malfunctions in the system. Maximize the use and motivation of your human resources: have regular meetings with your workers where you discuss ideas and strategies on how to improve the business. Control your financial resources through regular record keeping and analysis.

61

Session 3

Operating Under the Legal and Regulatory Environment and Obtaining Business Development Support Services

Objectives: by the end of the session participants will have the necessary information on How to operate within the law. Identified the sources and means of accessing further sources for business development support services. Session overview: a. Regulation and legal issues. b. Business development support services. Duration: 90 minutes Methodology: group and plenary discussion. Materials: 1. Handout 2. Brochures registration. 2.4 on A Brief and Information business on Business and Development support services in Addis Ababa. tax licensing

Preparation: At least two weeks before the training program the trainer must identify and fix appointment with guest speakers from the relevant regulatory and business promotion support agencies.
62

You must adequately explain to invited guests the objectives of the session, the time available and raise potential issues for discussion. At least three guest speakers from the regulatory agencies related to tax and business licensing as well as from the municipality should be available during the session. In identifying and contacting guest speakers, the trainer and /or her organization must try to bring resource persons who can also speak with authority. It is also important to agree with guest speakers on the contents and duration of their presentations. Normally it is advisable to have shorter presentations of about 20 minutes. This will help participants to have more chance to raise questions from their actual experiences in business. Experience also shows that participants are more interested and willing to have more time in the discussion. However, as the time available from the overall duration of the training program is very limited trainers are advised to try to work within the available time though there can always be flexibility. It is also possible to make the event a kind of panel discussion if time is and adequate preparations are made agreed to have at least 2 hours. Obtain the most important brochures or guidelines available from the regulatory and support agencies. Just in case enough copies are not available make photocopies enough with the number of participants. At least two brochures are suggested one from the Federal Inland Revenue Authority series of Tax Payer's Information Series brochures and another brochure on business licensing.

63

Prior to the session, the trainer needs to make adequate preparation with participants. This will help participants to bring out issues of their most important concern. There are a number of ways for the trainer to make good preparations. Two alternatives are suggested below. Depending on the situation, the trainer can choose one or can identify other more suitable alternatives. Prepare small taken gifts to the guest speakers that will be given after a word of thanks by participants representative. The trainer should be able to organize her own information on the locally available business development support services. Brief information on the name and address (physical and mailing addresses of organizations), telephone and fax numbers, key contact persons, types of services provided and other relevant information can be prepared in not more than three pages weeks ahead of the training program. A sample of structured information note for Addis Ababa is shown in Handout 2.4A. The trainer is therefore expected to make presentation and lead discussion of the second part of the session. In an alternative approach, a guest speaker from at least from one important business support organizations can be invited. If available tray to obtain adequate copies of guides on business support services from relevant sources such as from trade and industry associations, chambers of commerce, etc. In both approaches, participants should be able to get all brochures and handouts at least two or three days ahead of the session. This will help to raise important issues and make effective use of the limited time. Session Guide: a. Regulation and legal issues.
64

1. Explain the objectives of this session introduce your guests and explain why they are here. 2. Invite guests for presentation and at the end of each presentation allow at least up to ten minutes, ask participants for questions of understanding or clarifications. 3. After the presentations and quick reactions for participants' questions invite the guests to join the panel for a wider discussion on regulatory and legal issues. 4. It is important that the trainer acts as moderator so that the discussion will not end in problems but something that can work for solutions, understanding and collaboration. 5. Finalise the session by summarising key issues raised, solutions discussed and potential future actions. 6. Make sure and inform participants that similar discussions can be organised in the future as a follow up to the training program. 7. Thank the guests preferably invite participants representative to give a word of thanks and a small gift. 8. Also thank participants for their contributions and make a short break. b. Business Development Support Services 1. In case you have invited gust speaker introduce the gust and the purpose of the presentation. 2. After the guest has made about 15 minutes of presentation invite participants for discussion. 3. Lead the discussion by recalling the previous module on the importance of developing networks for obtain existing services in a better way developing demand for new and better services. Issues like the involvement of the private sector in the provision of business development services should be raised for discussion. 9. Conclude the session by summarising key services available, issues raised on obtaining better services and solutions suggested. Stress that in order to improve existing business
65

development support services and introduce new innovative services advocacy and lobbing must be strengthened among women SME operators. Moreover, developing networking among themselves is by no means the only alternative to obtain better services. 10. Thank the guest for taking her time and the interest to support women entrepreneurs preferably and invite participants' representative to give a word of thanks and a small gift to the gust. 11. End the session by thanking participants for the contributions.

66

Module

WED TRAINING MANUAL

67

Session 1

Marketing Your Products

Objectives: by the end of the session participants will have

Defined marketing in simple terms. Described the importance of marketing. Listed the four parts of marketing mix. Duration: 1: hours

Session Overview
a. The importance of marketing. b. Defining marketing c. Knowing about your customers. d. Knowing about your competitors.

Materials
Flipchart and colored pens Overhead projector and screen Handout 3.1A- My Marketing Decisions. Handout 3.1B- Customer Checklist. Handout 3.1C- Competition Checklist

Session process Introduction to the session. 1. Greet participants and start by presenting the session's objectives. 2. Ask participants to recall their discussion from module 2 (the key parts of managing a business). Tell participants that one of the key parts we will look at closely in this session will be marketing.
68

The importance of marketing 1. Role-play: Production- and market-oriented entrepreneurs. Select two participants for a role play. One participant represents productionoriented businesswoman, the other market-oriented businesswoman. Give the following instruction to the players.

Let them greet each other and start to talk about business. The one representing production orientation view will say, I will sell a special cake because I know how to make it and I have a big oven. In reply, the other businesswoman will say Oh! No in my case, because more and more people are eating bread, I will learn how to make and sell bread. 2. After the role-play ends, ask participants to identify the difference between the two entrepreneurs. Elicit ideas to label one as marketoriented and the other as production- oriented. Ask participants to give ideas on the advantages and disadvantages of being production- and market-oriented. Write key points participants raised during the discussion and lead the group to conclude they should adhere to market orientation. 3. Individual exercise: my marketing decisions. Distribute handout 3.1A and ask each participant to fill the forms. Ask them to discuss the products they now sell and why they choose to sell them. Which reasons were most important? What customers needs do they satisfy?

Give them at least 10 minutes to fill the forms. After 10 minutes, invite volunteers to share their ideas with the rest of the group. After presentation, let others comment whether the marketing decisions were production-oriented or market-oriented. If time allows presentations and discussions can continue with few more participants.

69

A. Define marketing 1.Ask participants what marketing means to them? Write their answers in the flip chart. Make sure the list includes the following: Understanding the needs of current and potential customers; Producing and selling things that people want. Setting the right price customers will be willing to pay. Communicating to potential customers the benefits of using your product. Ensuring that your products get to your customers. 2. Elicit ideas to come up with a simple general definition of marketing that can summarize the above-mentioned ideas as marketing is understanding and satisfying customers needs profitably".

Tell participants that the first thing in marketing is understanding customers and competitors. Since market is all about customers and competitors in the next part of the session they will focus on knowing about customers and competitors.

70

B. Knowing about your customers. 1.What does it mean to know your customer? Tell participants to focus more closely on customers point of view. Try to put yourself in the place of the prospective customer and think of how you will meet his/her needs. Entrepreneurs need a picture of their customers when they make and sell a product. Knowing what people want to buy makes it easier to make products that sell. Lead participants to focus more closely on customers and groups of customers by asking questions such as: Who eats food? Who buys food? Who makes purchasing decisions? What kind of food products would interest these buyers? 2.Practice with customer checklist Distribute Handout 3.1B Customer checklist
Tell participants: here are some questions about your customers, try to answer as many as possible. If you cannot answer any of them you may need to do some research of your own. Participants may work in pairs if they prefer.

When participants have finished working with their customer checklists, ask which questions were easy, which were difficult to answer? How can we find out more information? Ask participants: What other information do we need to know about our market? Lead participants to the idea that in addition to knowing about our customers, we need to know as much as possible about our competitors. C. Know about your competitors. 1. Ask participants what do we mean by competition? Elicit a definition of competition write on the flipchart. Tell participants: Now that you know more about your customers or potential customers, you must see who else is selling to them- or would like to sell them-and how you compare to them.

71

2. Ask participants: What is it important to know about your competition? Elicit ideas and write them on flipchart. If participants dont mention it, tell them that knowing about their competitions strength and weakness is important. 3. Individual exercise: Let participants work on the following questions: Who are your competitors? What do you know about them? Can you name 2 facts about your competitors? Responses might include:

They offer a better service; They deliver to homes; Their product is fresher than mine, because of packaging, etc. When they finished the individual exercise, ask few volunteers to share information about their competitors. 4. Practice with competition checklist

Distribute Handout 3.1C- competition checklist. Ask them to complete their competition checklist in pairs by interviewing each other. When participants have finished, discuss the competition checklists. Ask participants which questions were easy, which were difficult to answer? How can we find our more information? 5. Competitive advantage Ask participants: why is it important to know about your competitors? What is the most important information about your competitors? Elicit answers, write on flipchart. Explain: the more you know about your competitors, the better you can position yourself in the market, in terms of price, quality, and distribution, etc. Your strength in these areas represents your competitive advantage. 6. Conclusion Ask participants to highlight key points learned in the session. After few participants responses on the importance of marketing, defining marketing and the significance of knowing about customers and competitors tell participants that one way to get information is through market research, which will be practiced

72

and discussed in the next session. By knowing about customers and competitors through market research we can identify our market opportunities and prepare a marketing strategy.

73

My Marketing Decisions
Handout 3.1A

Which Products Do I Sell?

Why Did I Choose to Sell them?

74

Competition Checklist
Handout 3.1B Who are your main competitors?

What products do they offer?

How much do they charge?

How long have they been in business? Are they busy? What are their projects?

What is their strength?(why do people buy from them and not from you?)

What are their weaknesses? (How are you better than them?)

Who are their suppliers?

Do they advertise? How often and where?

Do they offer special promotions to attract customers?

Are their customers happy with the current choice?

How will your competitors react when you start to take over some of their business?

75

Customer Checklist-"Markets Do Not Buy - People Do"

Handout 3.1C 1. How Many potential customers are there? For example how many people in this area use this product? 2. How many real customers are there? How many can you realistically sell to? 3. Who are they? Are they housewives, mothers, grand mothers, children, and other business, etc. what is their revenue? 4. Who does the buying? Is the buyer the user? (Are they buying on behalf of some one else?) 5. Where is the buying done? In the home? In a shop? In the market? 6. Where are the customers? in the next street ? In the next town? etc. 7. What kind of product do they want? (high quality, middle quality, what ever they can get? 8. Why do they want the product? 9. Where do they get it at present? Only from you? From you and other competitors? 10.If people do not use your product, which product do they use instead? 11.How much will they pay for the product? 12.What do customers feel is "missing' from the products currently on offer? 13.When and how often customers buy? Once a day /week /month? Mornings, afternoons, evenings, special occasions? 14.How much or how many do they buy? 15.Is the market growing or getting smaller? (Are people buying less of this product or more? Are there more people buying this product or less? Why?)

76

Module 3 Session 2

Practicing a Mini Market Survey

Objective: by the end of the session participants will have: Described the importance of conducting market survey for a small business. Conduct a mini market survey.

Time: 1day (1 hours in class the remaining part of the day for market survey in the field) Session overview:
A. B. Understanding market survey. Practicing a mini market survey.

Materials: What is a market survey?

Why

do

small

businesses

need

market

survey?
What are the information requirements How do you conduct a market survey? Practising a mini market survey

Suggested methodologies:
Presentation.

Session process: What is a market survey? 1. Greet participants and explain the session objectives. Relate the session objectives with the previous session by asking participants to recall the definition and importance of marketing. After few participants responses by relating the sessions tell

77

participants that this session will serve as a foundation for improving their marketing skills. 2. Continue by asking participants what is the first thing they do to prepare their marketing plan or make important decision on the appropriate mix of the marketing mix elements. Write participants ideas on the flip chart and make sure that among the answers include: Knowing about customers and competitors. Understanding about the market and marketing situation. 3. Ask participants how they would know about their customers and competitors. Elicit answers to include by "gathering and analyzing data about their customers and competitors". 4. Ask one of the participants to give appropriate term for the process of gathering and analyzing information about customers and competitors. Answer "market research or market survey". 5. Tell participants that in this session they will improve their skills in gathering and analyzing a market survey. But first they need to establish reasons for conducting market survey. Why do small businesses need market survey? 1. Let participants give reasons for market survey. Elicit ideas from participants to include To know customers very well. To keep an eye on competition. To be aware of trends continuously by being aware of their environment. Ask participants Why do many owners and managers of small business are not enthusiastic in market research? Write participants responses on the flipchart to include the following; -Tend to focus on day to day routine problems, overlook the big picture.

-The small customer base makes it easy to get feedback from small people and likely leads to complacency.
78

-Being suspicious of formal market research and fear of high cost, hence prefer heavy reliance on informal sources.
In another question ask participants to give their experiences on why many small businesses heavily relay on informal sources information? And though information is vital for the survival of let alone small businesses but also big businesses however they are notoriously variable. When should market survey be conducted? What are the methods of informal information sources? Listening and observation are the main tools.

Who should conduct market research for the small businessperson? What are the information requirements Ask participants to list in pairs what kind of information they have to gather to understand their customers. Allow them to work for about 10 minutes and write their responses on the flip chart. Distribute Handout 3.2 A and check participants' responses with the Handout. In another pair task, ask participants to list in pairs what kind of information they have to gather to understand their competitors. Allow them to work for about 10 minutes and write their responses on the flip chart. Distribute Handout 3.2 B and check participants' responses with the Handout. How do you conduct a market survey? Ask participants' experiences in how they gather information about their customers and experiences. Elicit answers to include By continually keeping track of customers' preferences, by casually discussing our product and our business with as many people as possible: customers, potential customers, retailers, wholesalers, restaurants, hotels, competitors, friends and family. Conducting a formal study such as by gathering primary data by directly interviewing. Gathering secondary data from statistics bulletins or similar studies.

79

Practising a mini market survey 1. Form four small groups (4-5 five participants in each group) and distribute handout 3.2C (Wubit and the Woreda Bread Market). Ask each small group to read the case carefully and work on the following questions.

Group Task
1. 2. 3. 4. Decide what kind of information is needed for the study. Give reasons why the information is wanted. Identify information sources (from where it can be collected) Describe how the information will be used.

It is important that your work is as brief as possible and the following are your guidelines. In studying the customers you may not have many questions. Try to answer few key questions such as: how many potential customers are there? What is the average purchase? What are customers needs? Which is the right place to sell? What is the right price? What is the right promotion?

In getting information on competitors try to find information on key factors of competitors marketing mix elements.

Handout 3.1B

Sample Market Research Questionnaire

1. Personal data (these questions can be asked at the end) Name of the interviewee: Sex: Age: Position in family: Family size: Address:
80

 Level of education: Income level: 2. 3. 4. 5. 6. 7. 8. 9. Profession: Have you bought or would you be interested in buying/using this product, why? When do you buy it and how often? Will you buy it in the future? Are you satisfied with this product? Would you change it? What is your ideal product? Describe it: what does it look, taste, smell, feel, etc., like? Describe the size, packaging color What price would you be willing to pay? Have you seen other similar products in the market? Describe brand name, price, and quality, sold where? Do you usually look for new products? How do you find out about new products? Other questions:

81

Handout 3.2B

Information on competitors

1. Who are my competitors?

2. Product Their products Product quality Packaging. 3. Price What is their price? Is there a price competition? Do they make discounts?

4. Place Where are they located. Can they reach customers effectively.

5. Promotion What kind of advertisement methods they use and how effective they are. How do they promote their sales? Such as displays, and other types of sales promotion tools. Do competitors have skilled sales persons? 6. The marketing mix of competitors (conclusions from 2-5)

82

Handout 3.2C

Wubit and the Woreda Bread Market

Wubit has saved most of the money she got from the boutique she sold one year ago. When her friends asked her reasons for selling the boutique, her response was that her decision was right and she had no regrets. She always says to her friends when I opened the boutiques in this area the market was very good. There were few boutiques in the area. The place has also the advantage of many passers by potential buyers. Business was good I had a good turnover and profit. But later on some rich businessmen came and opened more and more boutiques. The first few boutiques were also successful. The number of boutiques increased and we started to compete for few customers. Our sales slowly declined with our profits and I thought unless I decide early I will in lose. So I sold the boutique . She is literate and numerate. She always says, I am a good observer and listener.

However for some time, she was seriously thinking to start another business and she succeeded in doing so. This time, she started the business of producing and selling bread in the Woreda she lives. She knows the people have to travel long to buy bread within the Woreda. Besides she knows the bakeries in town are few and of a monopolistic type. As a result, she believes the quality and size of bread do not correspond to the price. Friends, family and many Woreda residents encouraged her when she was talking about her interest to start the bread business.

Though the business had a fair start she also knows she must study the market in a more formal way. She says she has to improve her knowledge and skills to conduct her own market survey. Her chances of getting credit from banks will also depend on the justification of a good market. She needs your support. She knows her informal observation must be used to finalize the market survey. Will you help?
83

Session 3

Developing Your Products and Services

Objective To enable participants to identify the issues they must consider in developing products and services that can satisfy customers needs. Duration: 1 hour Session overview: Finding out and satisfying customers needs. Summarize key issues for preparing marketing strategy. Materials: Mini market survey reports. Suggested methodologies: individual and group exercise.

Session process Introduction Introduce the session by presenting the objectives and the sessions relation to the previous and next sessions. Also tell participants that the session is the first element of the marketing mix and must be seen as part of one ingredient in preparing a successful marketing strategy. A. Finding out and satisfying customers needs. 1. Ask participants why customers buy goods and services? In asking this question give specific examples such as why people buy clothes, shoes, radio, etc. Get participants responses on each product in the following way: People buy clothes to satisfy the need to wear something to protect from cold or hot weather conditions, to look attractive, etc.

84

People buy shoes to satisfy the need to wear something to protect their feet, get comfort and look attractive. People buy radio to satisfy the need to get information and entertainment, etc. 2. Continue by adding more products and services and let participants give their reasons for why people buy them. After a few minutes of discussion, ask participants what should be the objective of any business. Lead the discussion to reach the conclusion: the reason for the existence of any business is to satisfy customers' needs profitably. 3. Now ask the small groups to recall their findings on the results of the mini market survey they have conducted on bread. Let them consider a woman planning to start a bakery business in the Woreda. The groups must use their own survey results related to the product aspect of the market mix. Tell participants that although other elements of the marketing mix such as price, place, promotion are equally important they will also be discussed in the next session. Since the groups need some time to work, give them at least 10 minutes. They might also need guidance on how to single out the product aspect of the bread market survey. You can write the following guiding points on the flip chart or prepare transparency ahead of the session. Customers' needs: the type, quality and quantity of bread; type of packaging; etc. Providing what customers want and making decisions to meet changing needs. Develop means to meet customers' needs: Raw materials, production methods, etc. Keep track of customers' needs and wants: which products/services are selling well or not, seek new ideas, etc. 4. After the presentations of all groups, invite all participants for a general discussion in which you lead participants to decide on the product aspect of marketing strategy for bread.
85

B. Summarize key issues for preparing marketing strategy. 1. Encourage participants to comment on the importance the market survey experience they had to design marketing strategy. Participants will emphasize the benefits of studying their customers and competitors to find out and satisfy their needs and wants. 2. Ask participants how they are going to apply the product aspect of marketing mix elements in their own business situations. Let few volunteer participants give their ideas and invite others to comment. 3. Check if there are still important points to be raised or not clear enough to apply in their business situation. If participants raised such issues allow sometime to find ideas that satisfy them or suggest alternatives or follow up support that can be done as part of the training program. 4. Ask a few participants to mention key points they learned in the session. Write their responses on the flipchart. If participants provide a good indication of meeting the objectives, conclude the session by linking with the next ingredient of the marketing mix, i.e. price.

86

Session 4

Pricing Your Products

Objective: by the end of the session participants will have buy. Practice at least one pricing technique. Duration: one hour Session overview: A. Defining a price B. Identifying factors in setting prices: C. Practicing price setting Materials: Handout 3.4A Pricing Ground Rules Suggested methodologies: Brainstorming. Group exercises plenary Defined price from the point of view of customers. Outline issues they must consider in pricing products so that customers

Session Process: Introduction Ask participants the meaning of a price. Elicit answers to include the amount of money customers are willing to pay for a product or service or price can be the customers definition of value.

A. Defining a price 1. Tell participants that every price contains its cost of production and a reasonable profit. It is also important to tell participants the linkage between the costing and breakeven analysis sessions of the next module.

87

2. It is important to emphasize price as just another marketing mix tool and its decisions are also affected by other marketing factors such as product design, promotion, distribution, etc. It must therefore be coordinated with other marketing mix parts. 3. Agree with participants to define pricing as setting value of products, which they bring to customers. 4. Based on the definition of pricing ask participants' experience in setting prices by small business operators, particularly the experience of using information in setting prices. Let participants also give their ideas for improving better practices for small and medium enterprises. B. Identifying factors in setting prices: 1. In a pair task ask participants what considerations they are going to make in determining the right prices. Allow at least 10 minutes for participants to generate ideas. After 10 minutes, invite one representative of each pair to tell their points to the rest of the participants. 2. Write participants ideas on the flipchart and lead the group to develop key factors that must be considered for setting prices. Make sure that the following points are elaborated in the discussion. Cost of production (internal). Market factors: supply and demand (external) Sales volume (internal). Competitors' prices (external) Economic conditions (external) Business locations (internal). Seasonal fluctuations (external) Psychological factors (external) Selling and distribution cost (internal). Product quality and image (internal). Credit terms and purchase discounts (internal). Customers' price sensitivity (external) Product communications (internal). 3. Tell participants that some of the listed factors influencing pricing decisions are within the control of the businesswoman

88

while others not. One-by-one, let participants identify factors as controllable and uncontrollable. Next to each word as written above in italics) write as internal (controllable) and external (uncontrollable) factor. 4. Distribute Handout 3.4A "pricing ground rules" and tell participants that though pricing can have different objectives and approaches there are also generally agreed guidelines to follow. Let participants compare the handout with participants ideas. C. Defining objectives for setting prices: Stress that the end result of identifying the influence of different factors in pricing is to decide on the objectives of setting product prices. Ask participants some of the potential objectives of pricing. Elicit participants ideas with reasons such as survival, current profit maximization, product quality leadership etc. D. Practicing price setting 1. Tell participants that they are going set the price of bread, for which they have done the mini market survey. Assuming the cost of producing 100 gram of bread is Birr 0.35, the task of each small group will be to set the selling price of 100 gram of bread using the above mentioned factors. It is also further assumed that the bakery will produce and sell one type and size of bread alone. In setting the price participants can use their own experience in the buying of bread and the price, size and quality of bread produced by bakeries they know. 2. Once the trainer made their tasks clear they can join their respective small groups they have formed for the mini market survey. The groups will need at least 15 minutes. Give them newsprint and marker to present their results. It is important that the groups should not be allowed to share information. 3. At the end of 15 minutes, reconvene the larger group and invite a representative of each small group to present their results. Check that the groups have a pricing objective and they have considered both internal and external factors before
89

deciding the price. Ask questions such as what will happen if the bakery starts by setting lower prices. Let participants discuss the implications of setting a lower price at the beginning and suggest ideas. At the end tell participants that the differences or similarities observed in the prices show the different objectives and factors considered by each group. The situation is something like the market place. E. Summarizing and concluding the session. As part of checking participants learning, ask each participant to give at least one point they have learned in the session. Write participants responses on the newsprint. Make sure that participants mention key learning points. Also ask participants whether they can apply the pricing approach they have discussed. If participants conform please conclude the session by thanking for their participation.

90

Handout 3.4A

Pricing Ground Rules

1. Price must cover costs; 2. The best way to lower price is lowering cost; 3. Price must not be static. It must reflect the dynamics of cost, demand changes in market, etc. 4. Prices must be to assure sales. Price cannot be set for competitive operations alone. 5. Product utility, longevity, maintenance, end use must be judged continually. 6. Prices must be set to preserve order in the market place.

91

Session 5

Reaching Your Customers

Objectives: by the end of the session participants will have: Learned about the various forms of distribution available to them. Identified the most appropriate distribution channel(s) for the

product.

Duration: 1 hours Session Overview

A. B. C. Reaching Your Customers. Identifying Different Channels of Reaching Your Customers. Choosing the Most Appropriate Form of Reaching Your Customers.

Materials:
1. Handout 3.5A- Different Channels of Reaching Your Customers. 2. Handout 3.5B- Some Criteria for Selecting Appropriate Channels of Reaching Customers. Suggested methodologies: Session Guide: Brainstorming.

A. Introducing the session

-

Explain the session objectives and quickly review the two other elements of the marketing mix. Recall from the previous sessions that participants have worked in selecting products and services that can satisfy customers' needs at a price customers are willing to pay. Tell participants that in this session participants will discuss how to improve their marketing skills by reaching their customers in the right place, time, etc.

Pair and group discussions.

92

C. Reaching Your Customers. 1.Ask participants the significance of place in a marketing situation. Participants can use examples from their own business situation. List participants responses, answers could include: A shop. Selling door to door. Using the local market place. Joining marketing cooperative. Through the wholesaler.

2.After main types of channels of reaching customers are mentioned by participants Distribute Handout 3.5A- Different Channels of Reaching Customers and compare the handout with participants contributions. 3.Elicit the objective of a place as choosing the means of reaching customers in marketing management and lead participants to agree to the objective as making products and services always available and easy to buy wherever the customers are. C. Choosing the Most Appropriate Form of Reaching Your Customers. 1.Ask why participants, like other businesspersons do, have chosen different methods of reaching customers. Answers could include high cost of personal selling, because distributors have experience and knowledge of the market. 2.In a pair discussion, ask participants to list at least three most important criteria they use in choosing a specific channel of reaching their customers. Accept at least one criterion from each pair and write the responses in the flipchart. Answers can include:

93

The type of product (durable, non-durable, technical or The volume and frequency of sales (selling in small

simple, etc.) units to large customers, in bulk, at intervals etc.) The buying habits of customers. 3.Ask participants to go to their respective group in the market survey exercise and ask the group to list the means of reaching or delivering their products or services to the customers. It is also important for participants to develop criteria before they make decisions. Criteria could include time, transport cost, availability of customers, etc. Ask them to list the advantages and disadvantages of each channel of reaching customers. 4.After 15 minutes reconvene the larger group and ask participants to make a five-minute presentation on the decision they made by choosing the best way of reaching their customers. Ask the rest of participants to give their comments to improve the suggested means of reaching customers. 5.It is likely that participants in all four groups and even for the product might suggest different means of reaching customers such as selling door to door, retail shops, wholesalers, cooperative shops, big customers (large quantity buyers) such as hospitals, hotels, etc.

94

Handout 3.5A

Different Channels of Reaching Your Customers.

(Consumer Goods)

Producer

Consume

Producer

Retailer

Consum

Producer

Wholesaler

Retailer

Consumer

Produce r

Wholesaler

Wholesaler

Retailer

Consu

95

Handout 3.5B

Some Criteria for Selecting Appropriate Channels of Reaching Customers.

1. Selling and distributing your products will depend on several factors: How quickly does your product need to be consumed. Packaging requirements for each method of distribution. Will people buy it on its own or do they expect to buy it What your production capacity is? What your marketing capacity and marketing network are? Your ability to store the product and transport it and how The cost of the different alternative distribution methods.

from a shop, which sells other things as well.

much this will cost?

2. Selecting the most appropriate method of distribution? Consider these factors first:

Number of customers you want to reach: agents or

wholesalers can reach more customers than a small producer, therefore these would be more effective if you want to reach many customers in a large geographic area.

Perishability: perishable products require a more direct Producer's financial situation and marketing

and short distribution route to the consumer.

experience: a business, which cannot afford and does not have experience in marketing, would benefit from using an agent or wholesaler.

Businesses maintaining control over promotion and

price: these types of businesses use a more direct distribution

96

system. Each different channel will have different costs, you need to find out what these are.

Financial

situation:

distributor's

financial

situation,

marketing experience and network.

Cost of alternative channels: cost of the different

alternative channels need to be assessed in order to identify the solution that offers the most reliable, sustainable and profitable service for your distribution needs.

97

Promoting Your Products and Services

Objectives: Describe the importance of promotion for improving the marketing situation of small businesses. List key differences between advertising, sales promotion and personal selling. Describe the advantages and disadvantages of advertising for small and medium businesses. Prepare promotional plan for a specific product.

Session 6

Duration: 2 hours Session overview:

Analyzing different methods promotion Analyzing Problems with Advertising and Sales Promotion for Small Businesses in Ethiopia. Identify the Most Effective Method of Promotion for their Business. Suggested Methodologies: Group task Pair task Plenary

Session Guide: A. Analyzing different methods promotion.

1.Start the session by introducing the session objectives and reviewing the other three marketing mix elements: product, price and place. Tell participants that in this session they will have activities to help them improve their marketing management skills
98

by focusing on the fourth important ingredients of marketing mix, i.e. promotion. 2.Ask participants to form small groups by similar types of businesses. The group size may range from 3-7 participants depending on the type of businesses represented in the training program. It is ideal to limit the number of groups to not more than four. Give each group a marker and flipchart paper so that they can put their ideas for presentation.

Group task
1. List any of form persuasive activity you do in your type of business to influence potential customers to buy your products and services. 2. Distinguish the nature of each activity whether it requires personal or nonpersonal communication with potential customers. 3. Identify each promotion activity as advertising, sales promotion or personal selling. Time: 15 minutes.

3.Reconvene the larger group and ask each groups representative to make a presentation. After each presentation allow the other participants to give their comments. On the flipchart write any improvement suggested by the larger group on each type of business. Each can come up with the following activities for its type of business:

Television. (non personal presence) -Advertising Radio. (non personal presence) -Advertising Newspaper. (non personal presence) -Advertising Posters. (non personal presence) -Advertising Sign boards. (non personal presence) -Advertising Leaflets (non-personal presence) Advertising.
99

Direct mails. (non personal presence) -Advertising Magazines. (non personal presence) -Advertising Attractive window display.(personal presence) -Sales

promotion

Participate in trade fairs and exhibitions(personal presence) Demonstration.(personal presence) -Sales promotion Training in how to sell a product or a service.(personal Making shops clean, tidy and attractive.(personal presence)Good style of sales presentation (personal presence) Follow up customer satisfaction (Personal presence)

-Sales promotion

presence) -Sales promotion

Sales promotion

-Personal selling.

-Personal selling.

After-sales services and maintenance (personal presence) Good meeting and greeting of the customer (Personal Being enthusiastic and alert to opportunities (personal Giving adequate attention to customers (personal

Personal selling.

presence) -Personal selling.

presence) -Personal selling.

presence)-Personal selling. 4.Ask each groups reasons for identifying each promotional activity as advertising, sales promotion and personal selling. Continue to lead the group to define advertising, sales promotion and personal selling. Elicit ideas to come up with the following type of simple definitions.

100

Advertising- is a process of non-personal communication

of ideas with potential customers to create and sustain demand for products and services.

Sales promotion- is a short-term effort to attract potential

customers attention to encourage them to buy the products of the business.

Personal selling- is a personal contact between sales

person and potential customers resulting in sales. 5.Tell participants that in this session advertising and sales promotion will be focused on. The next session will complete the marketing promotion plan by working on improving personal selling skills. B. Analyzing Problems with Advertising and Sales Promotion for Small Businesses in Ethiopia. 1.In a pair task ask participants to work on the following task. Allow at least 10 minutes for participants to work in pairs. 2.After 10 minutes, ask participants to give responses .

C. Identify the Most Effective Method of Promotion for their Business. 1. Ask participants to return to their product or service groups and give them the task of preparing a promotional plan. Recall that in the previous exercise, participants have improved their product, set good prices and decided on a good system of
101

reaching customers. The promotional plan should focus only on integrating advertising and sales promotion activities. Each group should also prepare and demonstrate at least one type of advertising activity. 2. Give each group flipchart papers and markers; they should have 20 minutes to complete the two tasks.

Task assignment: Product or Service Group

Your group has two tasks to perform within the next 20 minutes

Task 1- Prepare a marketing promotion action plan for your product (who the target customers are, what product or service, where to sell and when to sell) Task 2- Decide at least two promotional activities. Your group is free to use whatever method you believe will be effective in accomplishing the above stated two tasks above.

102

3. At the end of 20 minutes, bring the four groups together to report on their findings in approximately 5 minutes. They should describe the targeted customer groups and justify their reasons. Accept possible comments from the plenary. 4. In pairs, let the participants prepare a poster. Give them another 20 minutes. The task is to identify the customer group, the product, and the message of the poster. Once the pairs have finished, put all posters on the wall and ask participants for suggestions for improvement.

103

Session 7

Improving Your Personal Selling Skills

Objective:
By the end of the session participants will have Identified and practiced techniques to improve personal selling skills. Duration: one hour Materials: Suggested methodologies: simulation

Session process: 1. Introducing the session Explain the session objectives and relate the session to the four marketing mix elements. Stress that a product satisfying customer needs, having a price that can sell the product, has reached where the customer can buy it as well as advertised and well displayed, still has no guarantee that it will be sold successfully. 2. Simulation exercise: "the three saleswomen" Preparation The trainer has to prepare at least three types of products ahead of time. The products can be candies, beauty soaps, etc. that can easily be available for the training purpose. You can also prepare at least three volunteer participants to play in the game. You prepare the products based on the players interest. Since the objective is to improve the personal selling skills of the participants, the selected or volunteering participants can make a good display of their products. 3. Invite the three volunteer players and tell them that their role is to sell the products they have within 5 minutes. Give them the following further instructions. Display their products in an attractive manner. Describe their products Tell the price. Encourage other participants to buy.

104

4. Each saleswoman will play the game one after the other. Most of the participants will be observers. For one saleswoman at least 3-5 participants will act like customers. For the two saleswomen there will be 3-5 different customers for each. 5. Before playing the game tell participants that they can take notes if they find anything important for discussion. 6. Tell participants that the buyers must be as difficult as possible: complain about quality, price, packaging, and taste, inquire about ingredients, production methods, hygiene, etc. The sellers must be as persuasive as possible: try to close the deal. Each buying group will have five minutes to perform its role. 7. Conduct the game for at least 30 minutes. Depending on the availability of time, you can give few extra minutes. 8. After participants have played the three rounds, invite all the participants for discussion and ask the performance of each as a salesperson to the other sellers. Write participants responses on the flipchart. Write the strong points and weak points of each seller and further ask participants to give ideas to improve selling skills. Distribute Handout 3.7 and ask participants to compare the characteristics of a good salesperson with their experience in the game. 9. Ask participants what new techniques they have learned to improve their personal selling skills. Also, ask why selling skills are important. If you think most responses indicate that participants are serious to improve their personal selling skills, conclude the session by thanking for their participation.

Pair Task
Identify problems associated with ineffectiveness of most advertising programs in Ethiopia. Give your comments by relating to each advertising media. What alternatives do you suggest to improve advertising practices for small and medium businesses? What suggestions you can give to improve the effectiveness of sales promotion activities?

105

Handout 3.7

Rules for effective personal selling: what makes a good salesperson?

Create the desire to buy your product. Prepare for each sales call, have an objective, and know all about the customer and their business with you. Earn the confidence of your customer: make your customer feel important, do not criticize competitors products s/he bought before. Be market-oriented, not product-oriented, talk about the important specific benefits and advantages of your product to your customer, and to her customers if she resells your goods. Offer what the customer wants, not what you want to provide. Always know all about your product, and carry samples if you can. Base your promotion on quality, not on price. Focusing exclusively on low price implies that quality is also low. Do not discuss price until after you have discussed the advantage of your product. Take responsibility for yourself, do not blame the suppliers, your staff or your customers. Listen to the customer, elicit her objections, and deal with them in a pleasant but firm manner. Do all you can to close the sale, do not take no for an answer. Remember! Good sales techniques require practice. Customers are the most important part of your business: without customers you have no business.

106

MODULE

Developing Your Financial Management Skills

107

WED TRAINING MANUAL

108

Session 1
Calculating the Costs of Your Products and Services

Objectives: by the end of the session participants will able to List all costs involved in their businesses. Identify different types of costs in producing goods and services. Calculate the costs of a product.

Session overview: A. Listing and identifying costs in the business. B. Calculating the cost of a product. Duration: 2 hours Materials: Handout 4.1A Case study: Wubit Bakery Handout 4.1B Recorded Expenses for the First Month of Operation. Suggested methodologies: Case study. Pair and group discussion. Plenary. Presentation

Session process: 1. Welcome participants and explain what the session is about by reading the objectives. 2. Ask participants to identify the difference between the cost of a product and the price of a product. Let few participants give answers by giving specific examples. Emphasize, with examples from the participants, that the cost of a product or a service is what the owner or operator has paid for its production and the price is used to sell it above the cost. 3. In another question, ask participants to list all their costs in their respective businesses. Give at least 5-10 minutes for this individual exercise. Ask three volunteer participants to tell the rest of the group. If participants are from three main lines of businesses: manufacturing, trading and services it will be useful.

109

However, if participants are from one line of business one or two participants will be enough. 4. Ask each volunteer to name all the costs relating to producing and selling a product or a service. On a flip chart, write the type of business and under it write the costs of a product. Ask the remaining participants to comment on the list of costs presented. Adding costs or removing non-cost items can improve the list. Below is the example of a woman in a bakery business. Note that neither the list below nor participants' examples can be exhaustive as costing varies with specific businesses. At this stage, costs are listed without any categorization. Flour; Electric bill; Salary; Water bill; House rent; Interest on loan; Depreciation; Oil; Sugar; Salt; Stationery; Packaging (plastic bags); Selling expenses; Telephone expense; etc. 5. Distribute the case study (Handout 4.2B) and ask one volunteer who can read clearly and loudly read the case. Check that all participants are clear with the case study and the given tasks. Tell participants that they will do the tasks in pairs and they have ten minutes to complete the task. Separate costs that will vary in proportion with the amount of bread produced. Identify costs remaining the same or do not vary with the amount of bread produced. 6. Elicit answers to include wheat flour, workers on the bakery machine, electric energy for the bakery machine.
110

7. After 10 minutes, invite one participant from three pairs to give their responses on the three tasks. After each presentation, ask whether the remaining participants agree or have other suggestions. 8. Guide the discussion to agree on the following responses: List of costs that do not vary with the quantity of productions includes saleswoman salary, guards salary, cleaners salary, insurance, rent, office stationery, repair and maintenance and telephone charges. Tell participants that since these types of costs do not proportionally vary with the quantity of production they are called fixed costs. Ask participants to justify their answers by taking each cost that regardless of the quantity of bread produced small or big the fixed costs will not change. 9. Costs that vary in proportion to the quantity produced include producer workers wages, wheat flour, oil, sugar, yeast, salt, electric power for bakery machine and spoilage. 10. Now ask participants why costing is important? Elicit ideas and write participants responses in the flip chart. The following reasons need to be included: Without knowing the true cost of a product it is difficult to set a price. To identify areas for reducing cost of production while still maintaining quality. To make important decisions on the business such as change of equipment, raw material, adding or reducing workers, etc. 11. Based on your exercise what are the benefits of putting costs in different categories. 12. Tell participants that they have listed all costs involved in producing and selling bread. They have also agreed on the importance of costing to improve their businesses. Tell participants that now they will do costing exercise for one product using the case study they have used for classifying costs.

111

13. Stress that the most important thing in costing is for each type of cost to know the quantity used and its unit price so that it will be possible to know the cost incurred by multiplying them. 14. Form four small groups involving 4-5 participants is each group. Give them at least 5 minutes to understand the case and their tasks. Once all groups are clear with their task, give them at least 20 minutes to complete the exercise. You will have to visit each group and support as some participants might have difficulties in going at a similar pace with the rest of the group members.
Small group tasks 1. Categorize costs into fixed and variable costs. 2. Estimate the variable cost per unit of bread. 3. Estimate the fixed cost per day or per unit of bread. 4. Suggest ideas based on your findings.

15. When all groups have finished the exercise, ask each groups result. The cost of producing one unit of bread in Wubit Bakery. If all groups have found the correct answer, ask one representative to come and show how they have arrived at that figure. In case all groups did not get the correct estimate, slowly guide the discussion to reach the correct figure. 16. Now you have calculated the total cost of producing a unit of bread. The owner W/o Wubit can use the cost to decide on her selling price; what are the other factors she should think of before making her pricing decision final. Tell participants to relate their responses with price session in the Marketing Module. 17. In the next session, they will practice a technique called breakeven point to relate the fixed and variable costs with the quantity of production and prices in order to decide profitable prices.

112

Handout 4.1A The enterprise newsletter One More Bakery for the Woreda It is over one month since a new bakery was opened in Woreda A. Wubit Bakery, as the name suggests, it is owned and operated by W/o Wubit. It is a small size bakery using modern technology. She decided to start the business after her market survey proved the presence of a big demand for bread in the Woreda. Since there is only one bakery in the area, the community leaders have also encouraged W/o Wubit to start the business, as the opening of a new bakery would reduce the distance people have to walk to buy bread everyday. She rented a house earlier used for distributing alcoholic drinks in the area. The owners decided to close and rent the house for another business. Some modifications were made at the owners expense to make the house fit for producing and selling bread. Increasing scarcity of fuel wood and the absence of cheap and abundant traditional energy sources have forced the owner to opt for an electrical oven. One reason for buying the machine was also its power consumption. Compared with its generation of similar machines the machine preferred was economical and effective in the use of energy. The imported oven has the capacity of baking up to 10 quintals of flour bread per day. A close relative has donated electrical mixing machine, weighing and measuring scale, two large tables, side planks, knives, funnels, brushes, bread tray, bread display cabinet, chairs and cash box. The bakery started operation with 7 workers including the owner manger. There are 4 bakery workers: 2 measure and mix the ingredients and operate the mixing machine, 1 person operates shaping and cutting dough and 1 person has the baking responsibility. The owner, 1 sales person, 1 nighttime guard and 1 cleaner are supporting operation by selling bread, buying raw materials and handling administrative services.

113

She bought supplies that can last for one month. She has to buy all supplies at least one week before it is depleted although she can get supplies within three days since there are flourmills in the area. For the time being, the bakery produces a 100-gram bread that can also be used for making sandwiches. The majority of the population commonly prefers this bread. W/o Wubit negotiated with one Women Cooperative Restaurant to supply bread on credit. For the moment, the credit buyers themselves will come to take the bread every day. The cooperative can buy up to a credit limit of Birr 200 per day. She will collect her credit sales at the end of the month. It is a daily production process. It works 7 days a week all day round throughout the year. The operation started with the daily production of 100-125 kilograms of bread per day. It will gradually reach up to 1000 kilograms of bread per day. The owner manager decided to start the business on the first day of the Ethiopian New Year in 1994. Before Meskerm 1, 1994 she had used Birr 150,000, all the money she obtained from different sources to start the business. However, for various reasons producing and selling bread was delayed until September 17, 1994. The owner has the following information in her notebook on the sources of her business money and how she has used the money just before starting the business.

Sources and uses of money for Wubit Bakery Sources of the Uses of the money money Own savings Birr60, Electric oven 000 Donation Bank loan 15,000 Equipment, tools and furniture 75,000 Cash in cash box to pay for expenses

Birr 11500 0 15,000 2,500

114

Total

Birr 15 0, 00 0

Cash in bank for buying supplies, pay expenses, etc. Supplies (flour, oil, sugar, salt, yeast, etc.) Total

7,500 10,000 Birr 15 0, 00 0

115

Handout 4.1B

Wubit Bakery 1. Recorded Expenses for the First Month of Operation

Expenses in the first one month of operation 1. Salary of 4 bakery workers including one Forman Birr 45/day 2. Electric bill for the oven and mixer for 14 days 3. Flour per kilogram 4. Salt per kilogram 5. Sugar per kilogram 6. Oil per liter 7. Yeast per 0.5 kg 8. Water bill for the month 9. Plastic bag for one month for selling bread 10. Annual interest for bank credit 11. House rent for one month 12. Owner salary 13. Telephone 14. Electric bill 15. Insurance for one year 16. Sales person, guards, etc salary 17. Annual trade license 18. Repair and maintenance for the month 19. Municipal license fee 20. Stationery for the month 21. Advertisement for signboard 23. Owner's salary 22. House rent for one month 25. Transport cost 26. Bank charge 2. Technical information The bakery is producing 1250 units bread from 100 kilograms of flour. Each bread weighs 100 gram. For 100 kilograms of wheat, the ingredients are salt 0.5 kilogram, sugar 1 kilogram, oil 1 liter and yeast 0.5 kilogram. To bake 100 kilograms of flour the oven electric cost is about Birr 28 The price of each one hundred-gram bread is Birr 0.50. Birr 1080 682 275 2 5 7 15 50 120 7500 1500 1500 70 75 2500 750 180 100 300 150 1000 1500 1500 300 250

116

Session 2

Calculating Your Breakeven Point

Objective: by the end of the session To enable participants to calculate the volume of sales at which the business neither makes profit nor losses. To be able to analyze the implications of change in prices and costs on sales and profits. To enable participants to calculate their own businesses' break-even point Session overview: A. Understanding breakeven point. B. Practicing breakeven point. Duration: One hour Suggested methodologies: Individual exercise. Group exercise. Case study Materials: Handout 4.1A Case study: Wubit Bakery Handout 4.1B Recorded Expenses for the First Month of Operation. Preparation:

Check that participants have the case study on costing in session 1(handouts 4.2A, 4.2B and the results of the costing analysis they have done for Wubit Bakery.

Session process: Understanding breakeven point

1. Introduce the session by explaining the session objectives and linking it with the other sessions in the module. It is important particularly to link with the costing session. Recall the costing session in which you will ask participants on the meaning and importance of fixed costs and variable costs.

117

2. Get participants responses based on the case study they have done on costing for Wubit Bakery. Make sure that participants are now familiar with the concepts of fixed and variable costs and have successfully practiced basic costing exercise. 3. Give participants the following simple example of a woman selling one product alone. Assume that the woman has no other expenses except the 150 Birr house rent she pays. Whether she sells the shoes or not she must pay house rent. She buys the shoe at Birr 70, which is the variable cost. 4. Now ask participants what the woman needs to know to calculate, at what point she will start making a profit. Answer: she must have an idea at what price she is going to sell the product. 5. Continue the discussion by asking participants if the woman plans to sell each product at Birr 100 how is it possible to know her sales. Answer by multiplying the price with the number of units sold. 6. Tell participants that the woman needs to know how many shoes she must sell in order to cover at least the cost of buying the shoe and the house rent. She also knows that from this point up she can also start making profit. 7. Tell participants that to calculate the breakeven point, they can use the following steps. i. Calculate variable costs per unit. ii. Calculate fixed costs per period (in this case per month). iii. Estimate your selling price per unit. iv. Calculate breakeven sales by using the following formula; breakeven point is equal to fixed costs divided by the difference between selling price per unit and variable cost per unit. 8. On the flipchart write the formula and ask one volunteer to come and make the calculation for the above-mentioned example on the flipchart or board. Breakeven point = Fixed costs (Selling price- Variable cost) 5= Birr 150 (Birr 100- Birr 70).

118

9. Ask another volunteer to come and calculate her breakeven sales. Answer must be at a price of Birr 100 the woman must sell at least 5 shoes for Birr 500 breakeven sales value. She must sell at least 5 units if she is to avoid loss. However if she sells above 5 units she will make profit. 10. Ask participants what will happen if the woman increases the price of shoes from Birr 100 to 120. Let another volunteer come and do the calculations on the flipchart or board. Answer will be her sales will be reduced to 3 shoes and sales will also reduced to Birr 320. Ask the implications of this on the women. Answers can include loosing customers and eventually declining overall sales. 11. Now ask participants to describe the benefits of calculating breakeven point. Elicit answers to include the following. Helps to make pricing decision by helping to take into consideration costs and demand for the product or service. Helps how much you have to sell in order to cover your fixed costs and make a profit.

Practicing breakeven point

1. Ask participants to go back to their own small groups they have formed in the previous session where they worked for the costing exercise. 2. Ask participants to revisit the costing exercise they have done for Wubit Bakery. Tell participants that their task is to calculate the breakeven point using the information in handouts 4.1A, 4.1B and the results of the costing exercise they have Group task done. Also tell participants that they can use the same method or1.stepsmany unitsin bread must be produced(the bakery is neither to make no a profit orThey How used of the example if the woman-selling shoe). a needloss. least 20 minutes for this exercise. at
2. 3. How much the business can afford to change the price of bread compared with the existing market price of bread in town. What will happen if the bakery increases its fixed cost, what is particularly the impact on sales and profit. 119

3. You need to follow how each group is performing the task. Your support must focus on groups that seem to have lower mutual support and are not in the right track. Help them to support each other and guide them to follow the right steps. 4. After 20 minutes reconvene the larger group and invite the small groups to present the results and show to the rest of the group how they have done it. 5. If all groups have done the breakeven calculation correctly let the groups give the results of their discussion on the rest of the tasks given to them. Lead the group to discuss the implications of different decision options (increase price, increase cost, etc.) on the business. 6. Conclude the session by asking participants readiness to apply breakeven analysis in their own business situations. Encourage participants to give their ideas particularly their concerns and problems. Listen to their concerns and give them your ideas including the importance of the next sessions for reinforcing the benefits of calculating and analyzing breakeven point.

120

Session 3

Setting up and Maintaining Simple Record Keeping System

Objectives: by the end of the session participants will have

Described the benefits of keeping records of business transactions. Set up and practiced a simple record keeping system.

Session overview: A. The importance of record keeping system. B. Setting up simple record keeping system. Duration: 6 hours

Materials:
Handout 4.3A The Record Book Handout 4.3B Wubit Bakery Handout 4.3C The Record Book (worked out ) Handout 4.3D Debtors' Record Book Handout 4.3E Creditors Record Book

Suggested Methodologies: Individual exercise

Session Process:

A. The Importance of record keeping in improving your business management.

121

1. Introduce session objectives and relate the session with the rest of the session in the Module. 2. Start by asking participants what does record keeping mean? Write participants answers on the flip chart. Elicit ideas to include record keeping as a written form of keeping business transactions on how much money the business receives in and pays out or going out of the business. 3. Ask participants to give as many reasons as possible for recording and analyzing business transactions. Write all responses as they come on the flipchart paper. Lead the discussion to develop a list of main reasons for having a record keeping system. Make sure that the following are also included in the list. To conform to tax laws; To avoid theft; To know how much profit/loss you are making; To calculate profitable prices; To know when you will be able to buy new equipment; To keep track of what you owe; To keep track of what you are owed; To be sure that money belongs to the business; To analyze the financial situation of a business; To be able to reach informed decisions on important aspects of the business;

4. Ask participants' experience in keeping records of their business transactions. Divide participants in two groups, namely those practicing record keeping and those without record keeping experience. Further sub-divide the two groups into manageable small groups (comprising of 3-5 participants). The task for small groups with participants having no record keeping experience will be the same. At the same time, the small groups with record keeping experience will have the same task. 5. Tasks for participants without record keeping experience in their business. What are your reasons for not keeping records? Did anything happen in your business because of the absence of record Knowing a number of rich and skilled businesspersons without any record

keeping? keeping experience, do you think it is still necessary to have record keeping for your businesses? 6. Tasks for participants with record keeping experience: What kind of record keeping they have or are there similarities and What were your purposes of record keeping in your businesses? differences with in the group?

122

Who is doing your record keeping within your business? Yourself or external

consultants? What are the advantages and disadvantages of using external consultants in record keeping? If you use external consultants how can you overcome the disadvantages? What were your benefits and costs of record keeping in your experiences? 7. Reconvene the larger group and invite the small groups for presentation, allow five minutes for each group to present. Let the small groups without record keeping experience present first. First, allow about ten minutes of general discussion on the presentation of participants without record keeping experience. Make sure that among the reasons for not keeping records the following are included: Lack of record keeping skills. Not realizing the benefits of record keeping. The costs of record keeping are higher than the benefits. Absence of simple and appropriate record keeping system, etc.

8. Stress that having record keeping for the sake of record keeping alone makes the costs of record keeping higher than the benefits. Unless record keeping improves business management to realize increased business performance and growth, it could simply be a waste of resources. At the same time, it is also well known that many small businesses fail or cannot grow due to lack of good record keeping system. 9. Invite the small groups with record keeping experience to make a five-minute presentation and ask for suggestions from the rest of the participants. Allow at least ten minutes of general discussion on record keeping experience. Lead the discussion to make the following points: There are always variations in the types of record keeping needed in every business, depending on the nature of business, volume of business, purposes of record keeping, etc. Therefore, it is not necessary to standardize record keeping system for every business. The disadvantages of having an external consultant come if the owner herself does not have record keeping skills. external persons; To set up and maintain a record keeping system, the benefits must be higher than the costs for your business. Under such circumstances the business might even loose money because of the possibility of cheating or fraud by

B. Setting up a Simple Record Keeping System

1. Recall from the participants' presentations that they discussed that each business can have a record keeping system suitable to its needs. However, emphasize that in this 123

session they will set up and practice a generic record keeping system, which they can adapt to the specific needs of their own business. 2. Ask participants to suggest the characteristics of a quality record keeping system. Answers include low cost, accurate, neat and less complex or easy-to-work record keeping system. 3. Let participants suggest what must be the first step for setting up a simple record keeping system? Answers must include having the basic source documents or written proofs for business transactions such as receipts, invoices, etc., that may result in the coming in or going of money from the business. 4. Invite a volunteer to come out and show the contents of a source document. Ask the rest of participants to comment and lead the discussion to agree on the following information. Date of the transaction; Who was involved in the transaction; What was the transaction? How much money is involved in the transaction?

5. Also ask what will they do in case they could not get a written proof for business transactions. Get participants ideas and lead the discussion to agree at least to write the above information on a piece of paper and keep in a file. 6. In another pair task, ask participants to suggest the most basic records small enterprises need to have to set up a simple record keeping system. Tell participants that their responses will be based on at least four of the objectives listed above for having a record keeping system. The following are the objectives: Handout 4.2A. 8. Distribute handout 4.2B for each participant and ask them where it should be registered in the record book. 9. Balance the books To control the day-to-day activities of the business; To prepare income statement; To prepare balance sheet; To prepare cash flow plan.

7. Show enlarged format of a record book on a large flipchart paper. You can also enlarge

124

Record Book
Date Receipt No DESCRIPTION In
CASH BANK SALES VARIABLE COST

Out

Balance

In

Out

Balance

Material

Energy

Labor

FIXED COSTS

125

Handout 4.3 B

Wubit Bakery
Wubit Bakery had the following transactions from Sep. 17-Oct. 10 (Meskerm 7-30, 1994 Ethiopian Calendar). The bakery was not opened as scheduled on September 11. Except for this month, all transactions in the record book are closed every month starting from the first day of the month for 30 days. Your task is to record the transactions in the record book and close the accounts for the first month of the bakerys operation.

September 17
She counted her cash on hand and she found Birr 2500. The bank statement shows another 7500 Birr. The supplies bought were counted and a stock value of Birr 10,000 was recorded. Bought 6 packs of plastic bags at Birr 120 for customers to carry bread (enough for one month sales), no receipt was given. Paid Birr 1000 for signpost installed done a one week ago no receipt was given. Credit sales Birr 150 to Women Cooperative Restaurant (WCR). Cash sales Birr 400 Bought stationery Birr 150

September 18
Credit sales Birr 150 to WCR. Paid annual trade license fee Birr 180 Cash sales Birr 575

September 19
Cash sales Birr 430. Paid property insurance on check Birr 2500

September 20
Credit sales Birr 150 to WCR. Cash sales Birr 440.

September 21
Cash sales Birr 600 126

September 22
Credit sales Birr 150 to WCR. Cash sales Birr 490.

September 23
Cash sales Birr 655. Deposited Birr 2430 to the bank account from the cash box.

September 24
Credit sales Birr 150 to WCR. Cash sales Birr 550. Paid annual municipal license fee Birr 300

September 25
Credit sales Birr 150 to WCR. Cash sales Birr 540 Deposited bank Birr 1595 Paid Birr 100 for maintenance of equipment.

September 26
Cash sales Birr 560.

September 27
Credit sales Birr 150 to WCR. Cash sales Birr 560.

September 28
Cash sales Birr 565.

September 29
Cash sales Birr 560.

September 30
Cash sales Birr 770.

October 1
Credit sales Birr 150 to WCR. Cash sales Birr 568 Paid Bank Birr 1875 bank in cash for the first monthly repayment. Paid two week salary for bakery workers Birr 630 127

October 2
Credit sales Birr 150 to WCR. Cash sales Birr 572. Paid Birr 25 in cash for September's water bill.

October 3
Credit sales Birr 150 to WCR. Cash sales Birr 575. Paid Birr 682 electric bill for oven and mixer.

October 4
Credit sales Birr 150 to WCR. Cash sales Birr 570

October 5
Cash sales Birr 730

October 6
Credit sales Birr 150 to WCR. Cash sales Birr 590.

October 7
Cash sales Birr 744. Paid Birr 70 for September's telephone bill.

October 8
Credit sales Birr 150 to WCR. Paid Birr 75 in cash for electric bill other than oven and mixer. Cash sales Birr 600. Paid Birr 750 in cash as salary to sales person, cleaner and guard.

October 9
Cash sales Birr 755 Paid house rent on check Birr 1500 Owner salary paid Birr 1500.

October 10
Collected Birr 1950 from WCR in cash. Cash sales Birr 605. 128

Paid transport services used for the month Birr 300. Bank informed deduction of Birr 250 for the current account services. Paid 10 days salary for bakery workers Birr 450. Supplies costing Birr 2600 (flour, sugar, oil, yeast and salt) were counted and recorded.

129

Record Book
Sept 17 embe 17 17 17 17 18 18 18 19 19 20 20 21 22 22 23 23 24 24 24 25 25 25 25 26 27 27 28 29

199

Date

Receipt No

DESCRIPTION In

CASH

BANK

SALES

VARIABLE COST

Out

Balance

In

Out

Balance

Material

Energy

Labor

FIXED COSTS

01/1 01/2 01/3 01/4 01/5 01/6 01/8 01/10 01/12 01/13 01/14 01/15 01/17 01/18 01/18 01/21 01/22 01/23 01/24 01/25 01/26 01/27 01/28 01/29 01/32 01/34 01/35 01/37 01/39

Cash beginning ofthe month Bought 6 packs of plastic bags Signboard installation on cash Credit sales to WCR Cash sales Bought stationery on cash Credit sales to WCR Paid annual trade license fee Cash sales Cash sales Paid property insurance on Credit sales to WCR check Cash Sales Cash sales Credit sales to WCR Cash sales Cash sales Deposited bank from cash box Credit sales to WCR Cash sales Paid annual municipal license Credit sales to WCR fee Cash sales Deposited cash from cash box Paid maintenance service on to bank Cash sales cash Credit sales to WCR Cash sales Cash sales Cash sales

120 1,00 400 0 150 180 575 430

2500 2380 1380 1780 1630 1450 2025 2455 250

7500 120 1,000 150 400 150 150 180 425 430 5000 150 440 450 150 490 505 7430 150 550 300 150 540 159 5 9025 100 560 150 535 565 560 9025 7500 4350 2500 0

440 600 490 655 243 550 0 300 540 159 100 5

2895 3495 3985 4640 2210 2760 2460 3000 1405 1305 1895 2425 2990 3550 3550

243 0

560 560 565 560

130

Record Book
Date Receipt No DESCRIPTION In
CASH BANK

Out

Balanc e 355

In

Out

Balance

BBF 30 1 1 1 1 2 2 2 3 3 3 4 4 5 6 6 7 7 8 8 8 8 9 9 9 10 10 10 10 10

9025

SALE S

VARIABLE COST

Material

Energy

Labor

FIXED COSTS

01/41 01/42 01/43 01/44 01/45 01/46 01/47 01/48 01/49 01/50 01/51 01/52 01/53 01/54 01/55 01/56 01/57 01/58 01/59 01/61 01/62 01/63 01/64 3 01/65 01/66 01/68 01/69 01/70 01/71 01/72

Cash sales Credit sales to WCR Cash sales Paid bank loan on cash Paid two weeks salary for bakery Credit sales to WCR workers Cash sales Paid water bills for September Credit sales to WCR Cash sales Paid electric bill for the oven and Credit mixer sales to WCR Cash sales Cash sales Credit sales to WCR Cash sales Cash sales Telephone bill for September Credit sales to WCR Cash sales Electric bill other than the oven Salary paid to sales person, guard, Cash sales etc. Paid house rent on check Owners salary Cash sales Paid 10 days salary to bakery Collected credit sales in cash from workers Transport cost WCR Bank charge

770 568 187 630 5 572 50 575 682 570 730 590 744 70 600 75 750 755 150 150 0 0 450 300

432 0 0 488 301 8 238 3 5 181 176 1 1 233 165 6 4 222 295 4 4 354 428 4 421 8 8 481 474 8 399 3 474 3 324 8 174 8 235 8 190 3 385 3 355 3 3 355 3

7500 770 150 568 630 150 572

4350

50 150 575 682 150 570 730 150 590 744 70 150 600 75 750 755 1500 1500 605 450 300 250 8845 131

605 195 0

250 8775 1547 9 1080

Debtors Record Book (Card)

Customer name: Address: Woreda- 0, Kebele- 00, House no-000, P. O. Box-, Tel-, etc. Credit limit: Will start to pay on or will pay on: Date Details Sale Paid Balanc value Amou e nt

Signature

Fill the form for Women Cooperative Restaurant. Note that one card or one page in the book for each customer.

Creditor name: Address: Woreda- 0, Kebele- 00, House no-000, P. O. Box-, Tel-, etc. Accounts payable amount: Credit duration: Grace period: Number of installations: Date Details Credit Amou nt Amoun t Paid Balance Signature

Creditors Record Book (Card)

Session 4

Can be used for credit suppliers. One card or one page in book for each creditor or supplier. 101

Preparing Your Profit and Loss Account

Objectives: by the end of the session participants Will be able to prepare profit and loss account; Will describe the importance of preparing profit and loss account;

Duration: one hour. Materials: Handout 4.4 layout of a simple profit and loss account Suggested methodologies: Individual exercise

Session process: 1. 2. Introduce the session by reading the objectives and relating to the previous Ask participants to recall their discussion in Session one on the importance of sessions in the Module. keeping records of business transactions. Write participants responses in the flipchart. Elicit answers to include being able to know whether the business is making profit or loss overtime. 3. Ask how many of the participants have experience in preparing a profit and loss account for their businesses. Some of them might have experience and it is likely that many of them have not. Ask participants with experience to share their methods of calculating profit and loss account. Note that some participants might give their estimate rather than from record keeping. However, the methods for calculating profit and loss could be interesting in their own way. In order to build on participants experience the trainer can ask the following questions: How they estimate sales for a particular period; for a day, week or month. Do they use cash credit sales together. What about cash received for what happened in another period. How do they calculate the cost of goods sold (materials bought or used). Whether they count their stocks for the preparation of profit and loss Do they use record keeping for preparing profit and loss account. If yes, Apart from the cost of materials what other costs are included in the

account. what are the records such as record book, credit account, receivables account. calculation. 102

 4.

How do they treat depreciation in the calculation of profit and loss

statement. After a few participants have shared their experience, tell participants that they will now use the record books (the cashbook, creditors book and debtors book) they have prepared in session 1 of this module. 5. Distribute Handout 4.4A (layout of a simple profit and loss account). Using the record book and based on other participants experience, guide all participants to prepare a one week profit and loss account for Wubit Bakery in the period of Meskerm 7-30, 1994. 1st. Calculate the months sales income. Check that all participants got accurate figure from the record book. Ask how they used the cashbook; the debtors record and creditors record books. 2nd. Calculate the cost of materials sold

Find out the amount of materials used in the period by using the following method. Write each step and then put the right figure from the record keeping work.
Materials used in the period Amount in stock at start

=
Amount

+ Amount added to stock during the period

in stock at end of the period

Note that there must be physical counting of the stock at the end of the period.

3rd Calculate gross profit Deduct the value of material used in the period from the sales revenue And the result will be gross margin or gross profit. 4th Calculate other costs during the period

Add the totals of other expenses such as wages to workers, owners salary, rent, bank interest, repair and maintenance, sales womens salary, depreciation, insurance, etc.

5th Take the total of other expenses from the gross margin. You will now arrive at net profit or loss. 6. Make sure that each participant is doing the exercise at equal pace. All of them must have identical results.
103

7. You can now ask participants what kind of analysis they can make from the results of the profit and loss account. Elicit ideas and write on the flip chart. Ideas can include: Comparing net profit or loss from period to period. 8. Ask participants ideas on how they will use the analysis to improve the profitability of their businesses To assess whether the business has improved from time to time. To make important decisions on the withdrawal, investment, etc. To calculate cost and help to set prices. 9. In pairs, let participants go through the record book and prepare profit and loss account for the month of Meskerem 1994. It is important that each participant works individually and you need to assist some participants as they have to go at equal pace with the rest of the group. For this, they might need about 20 minutes. 10. Once all the participants have finished the exercise, ask if all have arrived at the same figure. There might be differences due to slight computing or transferring mistakes. Invite one volunteer to show how she has done the calculations.

104

Session 5

Calculating the Balance Sheet

Objectives: by the end of the session participants will have

Prepared a balance sheet for their business using their business records. Analyzed and interpret the balance sheet for improving their businesses.

Duration: 1 hour

Suggested methodologies:
Pair task process: Session (exercise)

1. Introduce the session by presenting the objectives and linking with the rest of the sessions in the module. 2. Ask participants if any one has experience in preparing or using a balance sheet. In case you find someone ask her what the balance sheet means for her, how she prepares and uses the balance sheet for improving her business. 3. If no one has experience in preparing and using the balance sheet, which is likely in most small business situations, you can initiate discussion by asking participants to give ideas on the meaning of a balance sheet. Start by asking a simple question of how much money they have used and for what purpose they used when they started their own businesses. 4. Draw a big blank balance sheet form on the flipchart or whiteboard. On one side write uses of money and get participants responses in their personal business experience. For the purpose of understanding how the balance sheet is prepared, ask one volunteer participant to tell the rest of the group how she has used her start-up money. If she can remember the exact amount used write on the flipchart. If the participant cannot remember she can tell the
105

estimate. Answers will be such as money used for buying equipment, raw materials, etc. 5. On the other side of the flipchart, write sources of money and ask her to remember from where she got the start-up money in other words her sources. On the flipchart write the figures she will tell you on the sources of money side of the balance sheet. 6. Ask participants from what they have seen on the flipchart whether the sources and uses of start-up capital must be balanced or not. The answer definitely will be they must be equal. Tell participants that the name balance sheet is given because the figures on the sources and uses of money must balance. 7. Since the above information shows at the start of the business changes have definitely happened one month after starting the business. As this will be difficult to remember, she can instead give imaginative figures. Figures such as for the first month her net profit was Birr 100, her raw materials were valued at Birr 20 and a relative has given her equipment with an estimated price of Birr 500. Hence, one month after starting the business what changes do they imagine in the above starting sources and uses of business money. 8. Now ask participants what changes they can expect in the sources and uses of money exactly one month after the business has started. Invite a volunteer to come out and fill the changes happened on both sides of the balance sheet (the sources and uses of money). Let the participant herself draw the blank balance sheet and write the changes made on the appropriate items on each side. If the participant has done it correctly, thank her for the participation. 9. Ask participants to identify the difference between profit and loss account and the balance sheet. Answer must be the profit and loss account shows profit or loss of the business for a certain period of time such as one week, one month, etc. whereas the balance sheet is an overview of the business's sources and uses of money at a particular point in time. 10. In a pair task, let participants complete one side of the balance sheet by listing the items needed and the sources of information on the uses of the business money. Relate the exercise with the record keeping, profit and loss account and costing part. List of items where the total business money is used
106

Items Cash Money in the bank Receivables Stocks Equipment,

Source information

of

Cash book Cash book Credit customers record Stocktaking record Equipment record

11. Tell participants to continue completing the remaining side of the balance sheet; the sources of money for the above mentioned uses. List of items where the money comes from Items Source of information from Own savings Money owed to suppliers Money owed to banks Profit or loss Donation Creditors record Creditors record Profit and loss account

12. As it is rare for small business operators to prepare and use a balance sheet it is important for you to stress that balance sheet can be simplified and easily applicable to their business situations. Tell participants that they are going to practice preparing a balance sheet by using record books they have developed in this module. Emphasize that a clean and accurate record keeping is vital to prepare a balance sheet that can accurately tell the state of the business at any point in time.

Preparing a balance sheet 1. Pair task: let all participants prepare a balance sheet for Fresh Bakery. Distribute Handout 4.4B (The Fresh Bakery Case). The basic information is also found in the record keeping, costing, profit and loss account sessions. The pairs are expected to use all financial records they used in the Module. Give them about 20 minutes.
107

2.

3.

4.

5.

Prepare balance sheet for Fresh Bakery using the financial records you have developed in the module. Compare the balance sheet at the start of the business with the new one you prepared. Give interpretation of the results and suggest recommendations. Observe the pairs and assist if some pairs are not performing at similar pace. You must make sure that each pair works effectively, without dominating the other partner. After all pairs have completed the task, ask one of the pairs to present their results and to explain how they have prepared it and its interpretations. Ask if all pairs got the same result. In case some pairs did not get it right, let them tell their results and how they have done it. It is important that other participants explain and make sure that all participants are progressing at a similar pace. Ask participants how they are going to use the balance sheet to improve their business. Elicit participants ideas and write on the flipchart. The following points can be included: How the money is used in the business and how to use it better. It can tell whether the business is growing, stagnant or declining. Check learning points of the session by asking participants the following questions. If random responses prove to be correct, summarize and end the session by thanking their contributions. What is a balance sheet? What information the balance sheet contains? What does it tell?

108

109

Module

Business Planning

WED TRAINING MANUAL

110

Module 5

BUSINESS PLANNING
OVERVIEW
Planning is a decision-making process involving the selection of courses of action that an enterprise and its departments will follow. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Therefore, planning bridges the gap between where one is and where one would like to be in the future. It makes it possible for things to occur that would not otherwise happen.
Planning is very important to show: If the business can make a profit; To know how well the business is expected to do in the future; What money is expected to come into and go out of the business?

Therefore, business planning training program is essential to up-grade skills in this subject.

The overall objective of the module is to enable participants to explain the very principles of business planning and its importance. In addition, it helps entrepreneurs to describe the steps followed to prepare business planning. Accordingly, training participants will be able to make a realistic and achievable business plan by setting a SMART goal. Moreover, the business-planning module will help to assemble all previous modules to build up the business plan. Each module is used to improve the marketing, basic management and financial management skills of the trainees. Now the trainees can put together the different modules to prepare a business plan.
The module has the following sessions. This module lasts about 6 hours or a day: 1. SWOT Analysis 2. Goal Setting 3. Making a Sales and Cost Plan 4. Cash Flow Plan / Forecast.

111

MODULE 5 SESSION 1

CONDUCTING SWOT ANALYSIS

OBJECTIVES:
At the end of the session, the participants will able to:
a) b) Explain what a SWOT Analysis is? Analyze the strength, weakness, opportunities and threats related to the success of

their businesses.

TRAINING MATERIALS:

Flip Chart and Marker OHP and Transparency

Handout
SWOT Analysis Model Blank SWOT matrix.

TIME 1 Hour

Session Guide
INTRODUCTION
Introduce the session and explain objectives. Explain that the objective of this session is to

become familiar with another tool with which a business idea can be assessed and evaluated.

WHAT IS SWOT ANALYSIS?

Ask if anyone knows for what SWOT stands?

(SWOT strengths, weaknesses, opportunities and threats), What is the difference between strength and an opportunity? Expected Responses
Strength is within (internal) the business and opportunity is outside (external to) the business. 112

Weakness is within the business, and Threat is outside to the business.

Tell participants that SWOT analysis is a technique most business use to understand their position and to start to develop a strategy. The instructor describes that SWOT analysis will enable them to evaluate their business idea and decide: if they are going to continue with this business idea and make a full business plan. if they are going to make changes to the business idea. if they are going to give up this business idea completely.

Tell participants that now they will look at a model, which has the above four components.

CREATE THE SWOT MATRIX

The instructor creates a SWOT matrix on a flip chart (See Handout 2). Use a participants business as an example, using the same throughout the whole demonstration.

a)

Draw a line down to the middle of the flip chart. Explain to participants: Each business has some positive and some negative characteristics. Ask participants, what are some of the positive aspects of your business? Write down the answers on the left-hand side of the page.

b) Ask participants what are some negative characteristics? Write these on the right side of the page. c) Explain to participants: Here we have some positive and negative characteristics. Some of these are directly under your control and some are not. Ask participants: Lets start with the positive. Can you see some items here for which you are directly responsible? (for example, many customers, good quality product, good relationship with customers, large variety of products, etc). Mark the responses on the list with S (for Strength) Explain to participants? The items just marked with S are what we call

strengths. These are positive aspects of our business, which we can control, which we are directly responsible for. Opportunities are aspects of the external environment which affect our business positively (These might include more
113

available

income,

consumer

demanding

more

variety,

more

goods

consumption, etc) since they are external to our business we can not control them, we can not make them happen, but we can increases our success by being aware of them and developing strengths to take advantages of them. d.Ask participants we will now look at the negative aspects, which of these are under your control? Make the responses with a W for weakness. Explain to participants: These are called weaknesses: They are the negative aspects of our business, which fall under our control. This means that we have the power to change them, if we want to. These might include poor marketing, no market research, untrained workers, poor quality products, etc. The rest of the negative items are called threats; they are aspects of the external environment, which negatively affect our business. in consumer tastes, etc). e. Show transparency and distribute handout 1. Explain how to put each item into the appropriate box. On the left-hand side of the box, we have all the positive aspects: (These might include seasonal raw materials, poor infrastructure, difficult access to markets, change

strengths and opportunities. On the right hand side of the box, we have all negative aspects:

weaknesses and threats; At the top of the page, we have internal factors controlled by

strengths, weaknesses and us. At the bottom of the page, we have all external factors out of our

control opportunities and threats. PRACTICE WITH SWOT ANALYSIS Distribute Handout 2. (Blank SWOT Matrix) working in pairs using the They should spend 30 minutes per participant on these

interview technique, participants will complete the SWOT Analysis for their own business. exercises. When they have finished, ask participants to give a few
114

examples of each aspect. Write them on a flip chart with a blank SWOT matrix on it. Make note of any examples, which are mentioned by several participants. Discuss these using the following format. Strengths ask, how can we build on these? How can the strengths help us? Weakness asks, how can we address that? solutions? Opportunities ask., how can we take advantage of these? How will these opportunities help us? Threats ask, how can they hurt us? How can we avoid them? What are some possible

CONCLUSION Ask participants: why is it important to do this sort of analysis? session helped you? Have you understood new aspects of your business? How has this

115

HANDOUT 5 - 1A

Planning (Source: K. Bond Stuart et. al: Building Wealth in Our Villages, Part 3 1988).

Planning: A Good Planning Process should follow these steps.

9.

Monitor and evaluate activities.

8. 7.

Carry out the plan.

Write up the results of the discussions in a business plan?

6.

When will we evaluate our progress?

5.

Who will be responsible for these tasks? Who will do what, when and where?

4.

What talks must we do to move towards? Our goal in this way?

3.

Which way do we all accept? Is it possible? Do we have the resource we need?

2.

What are the different ways to reach our goal? What are the advantages and disadvantages of each way?

1.

What is Our Goal?

116

HANDOUT 5 - 1B

SHORT STORY
W/ro Azeb goes to another town to visit her sister-in-law. This relative tells Azeb that she is engaged in hairdressing and makes money in this way. She returns to her town and calls her friend and tells her about her visit and says that she wants to do the same. Her friend Zeritu agrees and lends to her Birr 1,000. The next day, Azeb and Zeritu go to market to buy hairdressing equipment and furniture. When they arrive in the market, they find the price of the equipment too expensive, they can only buy one drier (cask), two chairs, washing bowl and two big mirrors. When they get back home, they realize that they did not buy, conditioner, shampoo, hair rolling materials and curling machine. W/ro Azebs daughter is assigned to clean the hairdressing saloon, while the women go to buy the materials from the expensive nearby shop. After three days the hairdressing saloon starts operations. Azeb hires somebody to do the job. In the next few weeks only one or two women come to the hair saloon per day, everybody has a permanent place to go because there are three hairdressing houses in the village. After some time, Azeb and her family decide to sell the equipment and furniture and agree to think some other businesse in the future. What went wrong in W/Ro Azeb business? List her business strength, weakness, opportunity and threat?

117

HANDOUT 5 - 1C

SWOT ANALYSIS MODEL

ADVANTAGE S
Within the control of the entrepreneur

Strengths

Weaknesses

DISADVANTAG ES
Within the control of the entrepreneur

Organizational & Management Factors Marketing Factors Technical Factors Financial Factors

INTERNAL ENVIRONMENT (use as assets) EXTERNAL ENVIRONMENT Beyond control of entrepreneur (take advantage of) (overcome) Political Environment Economic Environment Social and Cultural Environment Technical Environment Population Environment (exclude)

INTERNAL ENVIRONEMENT

EXTERNAL ENVIRONMENT

Beyond control of entrepreneur

Opportunities
ADVANTAGES

Threats
DISADVANTAGES

Strengths and Weaknesses relate to internal controllable environment, while opportunities and threats relate to external environment beyond individual control. The entrepreneur should look at the current external environment as well as anticipate possible changes in the external environment.
118

HANDOUT 5 - 1D

BLANK SWOT MATRIX

ADVANTAGES

DISADVANTAGES

Strengths

Weakness

INTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT

OPPORTUNITIES

THREATS

ADVANTAGES

DISADVANTAGES

119

Module 5 Session 2

GOAL SETTING
OBJECTIVES:
At the end of the session, participants should be able to: Use a technique for setting goals, and Identify specific goals for their own business.

TRAINING MATERIALS:
Overhead projector, screen and color pens Flip Chart board, paper and markers

HANDOUTS Condition for effective formulation of goals Business planning for the small business How to set goals for your business Business Plan From present to future situation

Session Guide
INTRODUCTION Introduce the session and explain objectives.
Tell participants: In this session, we will look at a technique for setting goals for your business. This overall training objective of developing your skill in business management is related to goals: How you manage, and how you make the decisions, depends on what it is you want to achieve.

WHAT DO WE MEAN BY GOALS

Ask participants: What do we mean by goals? Have you ever set goals for your future? Small or big goals? Gather participants' responses and write them on a flip chart. Include the idea of dreams.

120

Expected Responses
Target Expected results of a plan Where we would like to be in the future.

Tell participants: we set goals all the time. If this (draw a box on a flip chart) is where we are today, this (draw future box) where would like to be in the future the second box is our goal (complete the diagram as on a flip chart, from present to future situation) Summarize the Discussion A goal is a situation that you want to experience in the future. In order to be useful to you, your goals must be specific, measurable, achievable, realistic and bounded by time (Time Bound ) (SMART)

PESIFIC

M EASURABLE
A R T CHIEVABLE EALISTIC IME BOUND

The instructor gives example of a SMART goal. WHY ARE GOALS IMPORTANT? Ask participants: Why do you think it is important to have specific goals for your business? Using transparency or flip chart of handout 2. Explain: Goals are the foundation of business planning - without goals, we

cannot plan for the future of our business. Goals help to motivate us and point us in the right direction. Successful business always has specific goals. Remember definition of an entrepreneur: someone committed to the achievement of goals. A TECHNIQUE FOR SETTING GOALS
121

Instructor explains to participants: the technique, which has been used by many entrepreneurs trainers to help them in setting goals. This technique is based on a series of questions they should answer regarding the situation they want to experience in the future. Goal setting starts with imagining a desired situation in the future. would like to happen. This is

actually something we do naturally, we are always dreaming of what we In order to make this an effective part of their business plan, you need to be more systematic show flip chart of Handout 3. Condition for effective formulation of goals.

Role Playing Setting Goals

Tell the participants - you will demonstrate this goal setting technique by role-playing. Ask for a volunteer to take part in role-playing. Ask the volunteer questions on personal goals: a pretty dress, a very good car, a visit to America. Encourage her to be as specific and descriptive as possible. Write down the answers on a flip chart as in Handout 3. When she has answered all questions, summarize her answers. Try to point a vivid picture of her future situation, bring it to life with her own words.

PRACTICE WITH GOAL SETTING Ask each participant to set a goal that she thinks can be achieved in two minutes in the classroom, and tries to accomplish it in the given time

Task
Distribute a half page paper to each participant. Ask the participants to write their name on the upper left side of the paper they received. Ask them to think for five minutes and write down a mini goal they think they can achieve in two minutes inside the classroom. Ask each of them to read out her goal and attach the paper on the soft board or on a flip chart board. (At the same time the facilitators think and prepare some obstacles.) Divide the group into two. Ask one group to act as observers and give those in the other group the signal to accomplish the goal within the time frame of two minutes. Repeat the process changing the roles of each group. After all the participants performed their mini goal, have a look at one and check with the observers if they are " SMART" and if they are accomplished or not. 122

Key questions from the task

Instructor asks participants how they feel with the results and what they consider in setting their mini goal

Expected responses
Difficulties in setting goals. Conflict among goals Lack of competencies or skills Being afraid of failures or of taking risks Environmental obstacles (Social, legal, cultural, technological, etc) The need to operate with goals of different time frame.

Highlight attitudes of creativity, risk taking, information seeking, and persistence among participants.

(This exercise is taken from CEFE training package) CONCLUSION Show Transparency 5 2C. Summarize main points.
Ask Participants: How has this helped you to plan for the future? What do you think the next step is? Encourage participants to reflect on their existing strengths, which will help them achieve their goals, and identify others that they want to build. Tell participants: Now we are just identifying goals, later we will develop the skills and identify the steps (business plans and action plans) necessary to achieve them. Draw steps on the flip chart. The first question is where do I want to go? The next question is How do I get there 123

Distribute Handouts.

124

HANDOUT 5 1A

SESSION - SETTING GOALS BUSINESS PLANNING FOR SMALL BUSINESSES

Often planning in small businesses seems unnecessary. It is time consuming and it means we have to stop running the business for a while to think about where we are going. Yet lack of planning is a key reason for business failure and is very common in small businesses. Business planning helps guide our daily business activities. When the organization knows where its wants to go, the plan can help it get there. A plan is about determining where we are today and where we want to be in the future and developing strategies to get there. It usually starts with a review of the environment looking at all the things that can impact on the business project. The SWOT analysis, of strengths, weaknesses, opportunities and threats is a widely used approach for assessing the conditions impacting a company. It basically identifies the priorities and constraints in a business. Then objectives are identified - what is it we want to achieve? Then we develop the strategies of "how" we intend to get there. These objectives and strategies need to be supported by action plans to be implemented. The action plans need to be monitored regularly. To be effective, the planning process should result in a written plan, not just because it gives you something to refer to constantly but because the writing process forces us to thing through our goals and objectives more carefully. The Pacific Island Business Development Trust - Stop Press 1996. Business Goals Family Goals

Harmony and Balance

125

FLIPCHART HANDOUT 5 2B

SESSION - SETTING GOALS

FROM PRESENT TO FUTURE SITUATION

FROM PRESENT TO FUTURE SITUATION

Steps

PRESENT SITUATION

Future Situation

126

HANDOUT 5 2C (Transparency)

BUSINESS PLAN

TODAY
What do we do? What is our business? Who for? Who are our customers? How do we do it? What makes it different? How sustainable is it?

FUTURE
What do we want to do? Business Plan Who do we want to do it for? How will we do it? Strategies and Action Plan

127

HANDOUT5 2D

CONDITIONS FOR EFFECTIVE FORMULATION OF GOALS

It must be positive and specific. What do I want? What do I want to see, hear and feel specifically? It must be measurable: specific indicators How will I know that I have reached my goal? When will I have reached it? It must be important and motivating for you. What makes this goal important to me? It must take into account the other people in your life. Does this goal fit in with all aspects of my life (social life, family,...)? It must be under your control: What can you do to achieve it? What can I do to achieve this goal? What action can I take?

128

HANDOUT 5 2E

HOW TO SET GOALS FOR YOUR BUSINESS

Think about what you want to achieve in two years' time: in two years from now, how do you want your business to be? Think about all aspects of your business, as you want it to be in this future time frame: Your product: What different products would you like to produce and sell? What will they look like, taste, smell, etc? Who would you like to sell to?

Your Market: who will your customers be for each product in two years time? How much will they be they buying?

The Competition: Who do you think they will be, how does your product compete?

The area: in which regions do you want to sell your product? Your revenue: how much money do you hope to make at that time?

Your equipment: What equipment would you like to use? Your infrastructure: How would you like your premises (shop, workshop) to look, how would you like the layout to be? Your staff: how many workers would you like to have, and what jobs would they be doing? Your Responsibility: What would you like your job to be?

129

HANDOUT 5 - 2F

GOALS

An entrepreneur is someone committed to the achievement of goals. Definition: A goal is a situation that you want to experience in the future. Goal setting starts with imagining a desired situation in the future. Effective goal setting is something we do naturally. Goal setting is a technique we can use to help our business grow and develop. Goals are necessary in order to move in the right direction. There are conditions for the effective formulation of a goal: It must be positive and specific It must be measurable: specific indicators. It must be important and motivating for you. It must take into account the other people in your life. It must be under your control: what can you do to achieve it?

130

MODULE 5 SESSION 3

MAKING A SALES AND COST PLAN

OBJECTIVES:
By the end of this session, the Participants will be able: To explain the importance and principles of business planning, To make a sales and costs plan for their business.

TRAINING MATERIALS:
Flip chart and marker pens Overhead projector, transparency. (OHP)

Handout:
Business planning When to make a sales and costs plan The four steps of forecasting:

SESSION GUIDE
INTRODUCTION
Explain session's objectives Introduce the topic by outlining its content and purpose.

Ask participants:
What is business planning? What is forecasting? and Is planning necessary?

131

EXPECTED RESPONSES
Business planning is: To decide now for the future Thinking about what to do in the future A path for future activity.

Forecasting is: What is expected to happen in the future To know what is likely to happen in the future.

IMPORTANCE OF BUSINESS PLANNING

Form three groups and ask each group to list (identify) the importance of business planning. The groups are given 10 minutes to discuss and present the group work. After each group presents the assignment, summarize the answers on one flip chart and put it on the wall.

EXPECTED RESPONSES
The plan shows, if the business can be expected to make profit in the future; Indicates the part of the business which can be improved; The plan shows the bank how well the business is expected to do in the future. The plan indicates the amount of money and its source expected to come into and go out of the business;

SALES AND COST PLAN

Explain step-by-step when and how to make a sales and cost plan. Sales and cost plan shows the sales, costs and profit which the business is likely to have in the future. The sales and cost plan show that the business can expect to make profit that is high enough to allow something to go wrong. For example:

The sales may be lower than expected A machine break down...etc.

Ask participants to describe types of costs to forecast and steps to make sales and costs plan.

132

EXPECTED RESPONSES Types of costs to forecast: A forecast of indirect costs A forecast of sales A forecast of total direct material costs A forecast of total direct labor costs. Four steps to make sales and costs plan (See Handout 2).

INDIVIDUAL EXERCISE
Ask participants to work out the exercise in Handout 3. Look at the exercises worked out by each participant and ask volunteers to explain how they have worked out the exercise. Encourage discussion and facilitate getting the right answers.

STEP BY STEP EXPLANATION

Explain, step-by-step with the help of prepared transparencies How to forecast direct material costs How to forecast direct labor costs How forecast sales, etc.

CONCLUSION
Summarize the learning points of the session by using a flipchart.

133

Handout 5 - 3A

WHEN TO MAKE A SALES AND COSTS PLAN

Make a Sales and Costs Plan to meet the needs of your business. If costs and prices for your products change often, you may need to make Sales and Costs plan every six months. Many businesses make Sales and Costs Plan every year. It is often a good idea to plan one year ahead for your business. Make your Sales and Costs Plan before you need to use it. Don't wait until the old plan is outdated before you make your next plan. A forecast of indirect costs A forecast of sales A forecast of total direct material costs A forecast of total direct labor costs.

Framework to fill in Sales and Costs Plan.

SALES AND COSTS PLAN DETAILS Sales Direct Material Costs Direct Labour Costs Gross Profit Indirect Costs Net Profit
JAN FE B MAR APR MAY JUNE JULY AUG SEP T OCT NOV DEC 20-TOTAL

Handout 5 - 3B

STEPS TO PLAN SALES AND COSTS

To make a Sales and Costs Plan for your business: 1. 2. 3. 4. 5. 6. 7. Forecast indirect costs for each month of next year Forecast direct material costs per item Forecast direct labor costs per item Forecast sales for each month of next year Calculate total direct material costs for each month of next year. Calculate total direct labor costs for each month of next year. Complete your Sales and Costs Plan.

1. FORECAST INDIRECT COSTS

Business has many different kinds of indirect costs. Here are some examples:

Rent Transport Stationery Electricity and water Indirect labor

Licenses Insurance Maintenance of equipment Depreciation.

Make a list of the different kinds of indirect costs you have in your business. For your Sales and Costs Plan, make a forecast for each different indirect cost. Make sure that you include all the indirect costs for your business. It takes some time to work it out but it is necessary to do.

135

Handout 5 - 3C

The Process of Forecasting:

Step 1 Get information about last year

To make a plan you need information about what happened in the past. You can get this information from your business records. For example, there is information about last year in your Record Book, your vouchers, invoices and receipts.

Step 2

Analyze the past

Think carefully about each indirect cost your business had last year. Were there ways you could have reduced those costs? Look at each indirect cost and try to learn from the past. Work out ways to improve.
Step 3 Get information about next year

Think of anything that will affect your indirect costs in the future. Get information about any changes in your indirect costs next year.
Step 4 Make the forecast for next year

Use the information that you get from Steps 1, 2 and 3. out for next year.

Make a

month-by-month plan and put in the amounts that you have worked

136

Handout 5 - 3D

EXERCISE
Here are records and information for Wubit Bakery. Make a forecast of their indirect costs for next year on the blank form below. Forecasted bread sales for next year will be Birr 5,000 per month. Salary of baker, dough maker, two guard each, cleaner, manager last year was Birr 500, 250, 200, 120, 600 respectively. Rent last year was Birr 300 per month. Electricity last year was Birr 300 per month. Stationery last year was Birr 50 per month. Water last year was Birr 18 per month. Electricity charges will go up by Birr 75 in May next year. Rent will go up by Birr 50 in April next year. Stationery costs will be the same next year. In January, Wubit bakery will put in another baking stove. It will increase electricity bill by Birr 25 and water bill by Birr 7 per month next year.

1.

FORECAST OF INDIRECT COSTS

JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DE C TOTAL

DETAILS

Rent Electricity Water Stationary

2.

What is the forecast of total indirect costs for Beauty Hair Salon next year? _________________________________________________________________________________________ _________________________________________________________________________________________ __________________

137

Handout 5 - 3D

Answer to the exercise

1. FORECAST OF INDIRECT COSTS
JAN FEB MAR APR MAY JUNE JULY AUG SEP T OCT NOV DEC TOTA L

DETAILS

Rent Electricity Water Stationery

30 0 32 5 25 50

30 0 32 5 25 50

300 325 25 50

350 325 25 50

350 400 25 50

350 400 25 50 Total

350 400 25 50

350 400 25 50

350 400 25 50

350 400 25 50

350 400 25 50

350 400 25 50

405 0 450 0 300 600 9,45 0

138

Module 5 Session 4

Preparing Cash Flow Forecast

OBJECTIVES:
By the end of the session, participants will be able to: Prepare a cash flow forecast for their own business.

TRAINING MATERIALS:
Handouts: Blank Family Budget. Blank Cash flow for business Case Study: Cash Flow Forecast 1 Case Study: Cash Flow Forecast 2 Flipchart and markers OHP and transparencies

Session Guide INTRODUCTION

Introduce session and explain objectives. developing your business. Explain: In the previous finance sessions we have been looking at how to record and analyze financial transactions in the past. In this session, we will look at recording and analyzing financial transactions, which we think, will happen in the future. Relate this session to the overall training objective of

139

What is Cash Flow

Ask participants what cash flow forecast is? How they know how much cash they need to run and/or expand their business?

Expected Responses
Cash flow forecast is recording future financial transactions of a business We know how much cash we need to run or expand our business: By forecasting By searching previous experience By gathering information concerning my future expense.

The instructor summarizes that the only way to know is to do a cash flow forecast. It is necessary to analyze how to finance any plans for expansion (increase production, purchase new equipment, diversify, etc). This is a very important part of the business plan because it shows whether the plans are financially feasible. The bank usually requires a cash flow forecast if you want a loan. WHY IS CASH FLOW FORECAST IMPORTANT? Ask participants: Have you ever thought about what will happen in your business in the future? Have you ever planned your business? What different factors did you consider?

Elicit ideas and write them on flip chart. Explain that a cash flow forecast is the estimate of how much money will be coming into a business (from loans, payments of sales, etc) and how much will be going out of a business (expenses, loan repayments, etc) every month for a given period of time, cash flow forecasts are a useful way of understanding how much money the business will need to operate in the future. In simple terms, managing the finance of small business is like handling the household budget. A familys monthly earnings must cover their expenses. Enough money must be saved every month to pay for these items, and remaining cash can be saved, or

140

invested in new items (clothes, oven, household utensils, etc) or education, or health matters. Just as parents save for childrens education to ensure a good future, a manager must save to reinvest in the business to ensure growth. Ask participants: think about your family budget. examples of expenses? Elicit ideas and write them on a flipchart, in a list along the left-hand side, leaving some space at the top. (See Handout 5 - 4A). Items might include food, rent, transportation, utilities, medicines, etc. Ask participants: How much would a family spend on each item of food every month? Write down the numbers next to the items. Calculate the total. Ask participants: How much a typical family earns? Write this next to Income at the top of the page. After we have paid all the expenses, how much do we have left? Write this next to balance at the bottom of the page. Explain: In a business you have money coming in and money going out, just as in a family. The income is the money coming from sales, and the expenses are similar to your variable and fixed costs. HOW DO YOU DO A CASH FLOW FORECAST? Explain: The cash flow forecast only reflects the actual cash coming in and going out of the business: we do not record credit sales or purchases until they are actually paid for, we do not include depreciation. No cash flow forecast can be 100% correct, because you are guessing what will happen in the future. However, by comparing actual amounts with projected figures, the manager can have a better picture of the future. On a monthly basis, what are

141

Prepare a flipchart and explain: for each month, you need to:
Start with beginning balance

(PLUS +) Estimate all cash receipt (cash in from loans, sales, etc)
(MINUS -) Estimate all cash payments (Cash out) (raw materials, new equipment, expenses, loan repayments, tax, etc) (EQUALS =)

Closing balance (If this is negative) Project the amount of extra cash necessary to ensure positive cash balance every month. SPECIFIC ITEMS NEEDED TO BE INCLUDED IN THE CASH FLOW
Ask participants: what are the sources of cash for the business? Elicit ideas and write them under cash receipts, these should include owners investment, bank loan, other loans, and sales. Ask Participants: How do we know how much cash receipts from sales are going to be in the future? Explain: we need to guess what our future monthly sales are going to be, based on a number of factors demand for our product in previous months, seasonal fluctuations, market research, our production capacity, the average delay in payment for credit sales. Ask participants: what is the cash expenditure for your business? Refer to the expenses transactions table. Elicit ideas and write them under expenses, this should include equipment, raw materials, packaging, wages, utilities, tax, loan repayment, interest, etc. We need to consider when we are planning to pay for these items if we have bought them on credit. DEMONSTRATE WITH AN EXAMPLE, THE SUPER DRIED BEEF CASE STUDY Distribute Handout 5 - 4C The Case Study and Handout 5- 4B the blank cash flow table, go through the case study together. Ask the participants to work in pairs. Read out each item and ask the group where they think it should go. Use a flip chart or transparency of Handout 5 - 4B to fill out as you explain where each item is recorded, when the demonstration is finished, distribute Handout 5 - 4C Case Study: cash flow.

142

PRACTICE WITH CASH FLOW FORECAST

Have participants complete a cash flow forecast for their own business for 6 months, using Handout 5 4B. They should practice estimating the figures, using the information from the previous sessions. When they have completed their cash flow tables, ask them to consider how this analysis helps them. Why is it important to do a cash flow? What can we do to make it more accurate?

Have the participants do a cash flow forecast for 12 months using Handout 6. Before they start, discuss how to estimate future fluctuations in demand. Brainstorm some of the factors contributing to this fluctuation and how to plan for it. Once they have finished their cash flow tables, ask participants to think of their plans for expansion (increased production capacity, diversification of products, expanding to new markets, etc). Have them revise their cash flow tables to incorporate their plans, distribute another blank table, Handout 2. Discuss: has this analysis changed your plans? Are your plans financially feasible? Is there anything you can do to make them more realistic? Explain: you can increase accuracy of future cash flow forecasts by using a more complex table which allows you to compare forecast and actual figures.

Conclusion:
Ask participants why it is important to do a cash flow forecast and summarize learning points of the session by using a transparency.

143

Handout 5 - 4A

FAMILY BUDGET
Months A) Opening Balance B) Cash in: Salary C) Total Cash in C=A+B D) Cash out Expenses Rent Food Utilities Etc. D = Total Cash out E) Balance E=C-D 1 2 3 4 5 6

E1

E2

E3

E4

E5

E1

E2

E3

E4

E5

E6

144

Handout 5 - 4B

CASH FLOW FOR BUSINESS

Months A) Opening Balance B) Cash in: Balance (A) Cash receipt (B) 1 2 3 4 5 6

E1

E2

E3

E4

E5

C) Total Cash in C=A+B D) Cash out Expenses (D)

D) Total Cash out (D) E) Balance E=C-D

E1

E2

E3

E4

E5

E6

Note: The opening balance for each month is the same as the closing balance of the previous balance.

145

HANDOUT 5 - 4C

FRESH BREAD CASE STUDY CASHFLOW FORECAST

Cash in
Almaz starts her business in September; she invests 20,000 Birr of her own cash and borrows 5,000 Birr from her sister. She estimates that her monthly sales will be Birr 40,000 starting in the first month, and that she will pay within the same month.

Cash out In September she buys one baking stove (machine) which costs Birr 15,000, she pays Birr 7,000 and must pay the rest Birr 8,000 in installments every month for four months. Regular monthly expenses are: Stock: Owner salary Dough and bread maker alary Electricity bill: Water bill Tax: Transportation: Miscellaneous expenses Birr 600 Birr 1,200 Birr 25 Birr 150 Birr 200 Birr 150 Birr 15,000 Birr 1,000

Complete the table and calculate the closing balance for each month. Analysis Her sister wants to be repaid, when can she start to repay her? How much can she repay each month and for how long?

146

HANDOUT 5 4D

FRESH BREAD CASE STUDY

Complete the following tables: cashbook, sales, expenses, accounts receivable and accounts payable. She makes on average 200-kg wheat flour for a day; she sells it for Birr 700/kg. MONDAY She counts her cash and her stock in the morning. She has an opening balance of Birr 300/kg./raw materials 100 pieces of packaging). Her opening stock is 3,000 Birr. She buys 400 kg wheat flour from Petram Company for Birr 1,600 on credit. She buys Birr 300 worth of yeast from Shoa supermarket in cash.

TUESDAY She buys 200 kg wheat flour from Petram Company for Birr 800 on credit. W/ro Alemitus Caf buys 25 kg.bread for (25 kg x Birr 7/kg) 350 Birr on credit.

WEDNESDAY She buys 200 kg wheat flour from Petram Company for Birr 800 on credit. She buys 24 Birr worth of packaging from Ato Kebede, in cash. W/rt Almaz's retail shop buys 40 kg bread for (40 kg x Birr 7/kg) Birr 280 in cash. Ato Alemu shop buys 100kg bread for (100kg x 7Birr/kg) Birr 700

THURSDAY She buys 100 kg wheat floor from Petram for 400 Birr in cash. She buys 450 Birr worth of sugar and 100 Birr worth of Salt from Star Business Group.

147

She buys 150 Birr worth of detergents and cleaning equipment from W/ro Konjit Shop in cash.

W/ro Alemitus Caf buys 30 kg bread (30 kg x 7/kg) Birr 210 on credit. Universal College buys 250kg bread for Birr 1750

FRIDAY She buys 200 kg Wheat flour from Petram Company for 800 Birr on credit. W/ro Almazs Retail Shop buys (25 kg Bread (25 kg x 7 = 175 Birr) in cash She goes to the market and sells 50 kg bread ( 50 kg x 7 = Birr 350) in cash. She pays monthly electricity bill worth Birr 1,000 in cash. W/ro Alemitu pays her balance of Birr 560 in cash. Almaz pays her balance of Birr 175 in cash.

SATURDAY She buys 100 kg wheat flour from Petram Company in cash for 400 Birr and pays Petram her balance for the week (1,000 kg x 4 = Birr 4,000) W/rt Chaltus Pub buys 40 kg bread x 7 Birr = 280 Birr on credit. She pays herself a salary of Birr 500 and for her two employees 270 Birr each (540 Birr). Street Children feeding center buys 200 kg bread by birr 1440 She pays house rent Birr 500

Question 1. How much cash should she has in the business? ___________________

148

2. How much is her account Receivable? ___________________________ 3. How much is her account Payable? _____________________________

149

BUSINESS PLAN

WORK BOOK

Name

Address

Name of Business

Date

150

THE ENTREPRENEUR AND HER BSINESS

1.Name and address of owner and her present occupation.

2. Summary of owner's educational qualification.

3. Summary of owners previous employment or self-employment, including those aspects which are relevant to the proposed business.

4. Brief statement of why owner is particularly qualified to run this business.

5. What will each owner do in the business? (if more than one owner)

6. Brief description of present operations of the business, location, products, sales, profit last year, number of employees.

151

7. Name and description of other business owned by the owner.

8. The most important achievement of the business so far. Brief description of what the owner has already done towards starting the business.

9. The most important challenges now facing the business.

10. What are some potential opportunities ( socio -economic, technological, etc...) for the business.

11. It is proposed that the business should be expanded and changed during the next 2 years as follows:

152

MARKET

1. The present and potential customers and target market of the business

a) Other business, distributors: name, location, region covered, etc.

b) Consumers: age, occupation, income level, where do they live / work / shop, consumption patterns, etc.

3. Why do/ should customers buy from you rather than the What is your competitive advantage?

competitor?

153

4. What market research have you carried out so far? What are the (consumption patterns and trends)?

results

5. What market research do you need to carry out? What information do you need? How will you get it?

154