Principles of Business: Sample P Ages

Oxford excellence for the Caribbean
Principles
of Business
SECOND EDITION
FOR THE
®
NEW
CSEC
SYLLABUS
pa g e s
pl e
Sam
Robert Dransfield
Sandrea Butcher
with online support
Jaqueline Peters-
Richardson
Conrad Valentine
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the final examination and business cognate Principles
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of Business
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SECOND EDITION
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®
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SYLLABUS
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Robert Dransfield
Sandrea Butcher
with online support
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Richardson
Conrad Valentine
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3 Establishing a business
3.1
Define the term “entrepreneur”
An entrepreneur is someone who shows vision and creativity, and who
takes risks by creating a business venture. Entrepreneurs can identify
business opportunities, niches and gaps in the market. Many of the
world’s best-known enterprises started out from the idea of one person
or a small number of people. Grace Foods was created by
Dr John J Grace and Mr Fred William Kennedy; Microsoft was set up
by Bill Gates and Paul Allen; and Madam CJ Walker (Sarah Breedlove)
created Walker’s Scalp Conditioning Company, which laid the
foundations for the Walker Manufacturing Company.
One of the inspirations for Madam CJ Walker was that she personally
Bill Gates, who was one of the
‘Now try these’ questions suffered from a scalp condition, which led her to explore ways of
co-founders of Microsoft, is one of
enriching the scalp. The founders of Grace Foods, Microsoft and Walker
and activities consolidate the most famous entrepreneurs in
Manufacturing all had the courage to set up businesses to develop their
the world
knowledge and ask students to ideas and introduce their products to a wider market.
Today, there are thousands of small enterprises across the Caribbean
reflect on what they have learnt that are being set up by entrepreneurs who have no guarantee of
success. Many of these will succeed, but many will fail. An entrepreneur
is therefore a risk-taker, who has to invest a lot of time and hard work
into making their business a success. They have to bring together
production resources (such as machinery, labour and land – even if this
is in their own study or bedroom), and they may also have to borrow
money to get started. The reward that the enterprise hopefully receives
is a profit. Profits will rarely be made in the first year that an enterprise
is set up, but they need to be made over time if the enterprise is to be
a success.
Now try these
Who will definitely have to invest a lot
1. Do you consider yourself to be an entrepreneurial person An entrepreneur is
of time and effort to turn the business
(someone who is prepared to take a risk, and has creative ideas a risk-taker
idea into a success
coupled with energy)?
2. Do you think that being an entrepreneur would be harder than
working for someone else? Explain the reason for your answer. The reward for the Who will often have Who brings together
enterprise is profit to raise finance factors of production
3. Business in action: Identify an entrepreneur in your
neighbourhood who has set up a small enterprise from scratch.
What was the business idea? To what extent has the business
grown and changed since it first set up? Perhaps you could
interview the entrepreneur to find out what it was like to set up
a new enterprise. Ask whether the entrepreneur was worried Madam CJ Walker recognised
about the risk, from where he or she got the idea, and whether that there was a market for hair
there are any plans for expansion. treatments
4. Why do you think entrepreneurs set up in business despite the
risk of making a loss? 82
3.2 843735_Chapter_3.indd 82 05/04/19 11:39 AM
Explain the functions of an entrepreneur

What does an entrepreneur do? The table of functions below shows
that there are a number of complex tasks involved in being an effective
entrepreneur.
Function Description
Conceptualising Creating a product concept is an important first step for any entrepreneur.
Madam CJ Walker recognised that there was a market for hair treatments. She had some scalp
issues herself, and talked to people about their own hair and scalp problems, and the solutions
that they had tried. She also tried out a range of treatments herself, and the concept of her
products began to take shape. The creation of a product concept has many stages, involving
research to find the best solutions and products.
There is a lot more to creating an enterprise than just coming up with a good idea for a product
or service. An entrepreneur has also got to conceptualise what the business will look like. For
example, will it be a small, local business servicing local needs, or one that will grow into a
larger business? An entrepreneur also needs to conceptualise a name for the business and its
products. The product that enabled Walker Manufacturing to take off in the early days was Clear explanations and diagrams
Madam Walker’s Wonderful Hair Grower.
Conceptualisation also involves developing a picture of who your customers are. For example, to illustrate terms
people who may be worried about hair loss or thinning hair, and what they are looking for in
their hair products, so that the products can directly match their wants.
Planning Planning is a key aspect of enterprise. A successful entrepreneur will only succeed if they
can create well-structured plans, setting out goals and objectives, and the steps required to
achieve these objectives. This often takes the form of a business plan (see Unit 9 below on
page xx), which sets out clear plans on paper or in a computer-generated document.
83
Sample not final pages from Principles of Business for CSEC®, chapter 3
843735_Chapter_3.indd 83 05/04/19 11:39 AM
Please note that this sample material is taken from an early draft of the revised edition. Content may change prior to publication.
Contents
Contents
Contents
Contents
Introduction
Introduction viivii
Introduction
Introduction viivii
1.1.TheThe nature
nature ofofbusiness
business 88
1.1.TheThe nature
nature ofofbusiness
business 88
1.1
1.1 Explain
Explainthethedevelopment
development of ofbarter
barter 1010
1.1
1.1 Explain
Explainthethedevelopment
development of ofbarter
barter 1010
1.2
1.2 Describe
Describe thetherole
role
of ofmoney
money 1111
1.2
1.2 Describe
Describe thetherole
role
of ofmoney
money 1111
1.3
1.3 Identify
Identify
thetheinstruments
instruments of ofexchange
exchange 1212
1.3
1.3 Identify
Identify
thetheinstruments
instruments of ofexchange
exchange 1212
1.4
1.4 Interpret
Interpretinformation
information onon various
various instruments
instruments of of
payment
payment 1616
1.4
1.4 Interpret
Interpretinformation
information onon various
various instruments
instruments of of
payment
payment 1616
1.5
1.5 Differentiate
Differentiate between
between private
private and
and public
publicsectors
sectors 2020
1.5
1.5 Differentiate
between private
private and
and public
publicsectors
sectors 2020
1.6
1.6 Describe
Describe thethevarious
various forms
forms of ofbusiness
business organisation
organisation and and
arrangements
arrangements
1.6
1.6 (formation,
Describe
Describe thethe
(formation, various
various
management
management forms
forms ofand
and of
business
business organisation
characteristics)organisation
characteristics) and and
arrangements
arrangements 2121
(formation,
(formation, management
management and and characteristics)
characteristics) 2121
1.7
1.7 Differentiate
Differentiate among
among thethe types
types of of
economic
economic systems
systems 2727
1.7
1.7 Differentiate
Differentiate among
among thethe types
types of of
economic
economic systems
systems 2727
1.8
1.8 Describe
Describe thethefunctional
functional areas
areas of of
a business
a business 2929
1.8
1.8 Describe
Describe thethefunctional
functional areas
areas of of
a business
a business 2929
1.9
1.9 Identify
Identify
thethestakeholders
stakeholders involved
involved in in
business
business activities
activities 3131
1.9
1.9 Identify
Identify
thethestakeholders
involved in in
business
business activities
activities 3131
1.10
1.10Discuss
Discussthetherole
roleandand functions
functions of of
thethestakeholders
involved in in
business
business
1.10
1.10Discuss
Discuss
activitiesthethe
activities role
roleandand functions
functions of of
thethestakeholders
involved in in
business
business 3434
activities
activities 3434
1.11
1.11Explain
Explainthetheethical
ethical and and legal
legal issues
issues in in
thetheestablishment
establishment andandoperation
operation
of of
1.11
1.11Explain
Explain
a businessthethe
a business ethical
ethical and and legal
legal issues
issues in in
thetheestablishment
establishment andandoperation
operation
of of 3636
a business
a business 3636
1.12
1.12Explain
Explainthetheprinciples
principles that thatmustmust bebe adopted
adopted in in
thethe
establishment
establishment
1.12
1.12Explain
andExplain
and thethe
operation principles
operation principles
of of that
a business
a businessthatmustmust bebe adopted
adopted in in
thethe
establishment
establishment 3838
andandoperation
operation of of
a business
a business 3838
1.13
1.13Explain
Explainthetheconsequences
consequences of ofunethical
unethical andandillegal
illegalpractices
practices in in
business
business 3939
1.13
1.13Explain
Explainthetheconsequences
consequences of ofunethical
unethical andandillegal
illegalpractices
practices in in
business
business 3939
1.14
1.14Describe
Describe thethecareers
careers in in
thethe field
field
of of
business
business 4141
1.14
1.14Describe
Describe thethecareers
careers in in
thethe field
field
of of
business
business 4141
2.2.Internal
Internal organisational
organisational environment
environment 4646
2.2.Internal
Internal organisational
organisational environment
environment 4646
2.1
2.1 Describe
Describe thethefunctions
functions of ofmanagement
management 4848
2.1
2.1 Describe
functions of ofmanagement
management 4848
2.2
2.2 Outline
Outlinethetheresponsibilities
responsibilities of of
management
management 5151
2.2
2.2 Outline
Outlinethetheresponsibilities
management
management 5151
2.3
2.3 Construct
Construct simple
simple organisational
organisational charts
charts 5353
2.3
2.3 Construct
Construct simple
charts 5353
2.4
2.4 Interpret
Interpretsimple
charts 5656
2.4
2.4 Interpret
Interpretsimple
charts 5656
2.5
2.5 Outline
Outlinethetheessential
essential characteristics
characteristics of of
a good
a good leader
leader 5858
2.5
2.5 Outline
essential characteristics
a good
a good leader
leader 5858
2.6
2.6 Discuss
Discussthethedifferent
different leadership
leadership styles
styles 5959
2.6
2.6 Discuss
Discussthethedifferent
different leadership
leadership styles
styles 5959
2.7
2.7 Identify
Identify
potential
potential sources
sources of of
conflict
conflict within
withinanan organisation
organisation 6161
2.7
2.7 Identify
Identify
potential
potential sources
sources of of
conflict
conflict within
withinanan organisation
organisation 6161
2.8
2.8 Outline
Outlinestrategies
strategies used used byby employers
employers andandemployees
employees toto
gain
gainananupper
upper
hand
hand
2.8
2.8 Outline
Outline
during
during strategies
strategies
periods
periods used
of of used
conflict byby
conflict employers
employers andandemployees
employees toto
gain
gainananupper
upper
hand
hand 6262
during
duringperiods
periods of of
conflict
conflict 6262
2.9
2.9 Describe
Describe strategies
strategies forforthethe resolution
resolution of of
conflict
conflict within
withinananorganisation
organisation 6565
2.9
2.9 Describe
Describe strategies
strategies forforthethe resolution
resolution of of
conflict
conflict within
organisation 6565
2.10
2.10Establish
Establish guidelines
guidelines forfor thethe conduct
conduct of of
good
good management
management andand
2.10
2.10Establish
Establish
staff
staff guidelines
relations guidelines
relations in in
thethe forworkplace
forthethe
workplace conduct
conduct of of
good
good management
management andand 6868
staff
staff
relations
relations in in
thethe workplace
workplace 6868
2.11
2.11Identify
Identify
strategies
strategies forformotivating
motivating employees
employees in in
a business
a business 7070
2.11
2.11Identify
Identify
strategies
strategies forformotivating
motivating employees
employees in in
a business
a business 7070
2.12
2.12Evaluate
Evaluate thetherole
role
of ofteamwork
teamwork in in
thethe success
success of of
ananorganisation
organisation 7373
2.12
2.12Evaluate
Evaluate thetherole
role
of ofteamwork
teamwork in in
thethe success
success of of
ananorganisation
organisation 7373
2.13
2.13Outline
Outlinestrategies
strategies forfor effective
effective communication
communication within
organisation 7575
2.13
2.13Outline
Outlinestrategies
strategies forfor effective
effective communication
communication within
organisation 7575
3.3.Establishing
Establishing a business
a business 8080
3.3.Establishing
Establishing a business
a business 8080
3.1
3.1 Define
Definethethe
term
term “entrepreneur”
“entrepreneur” 8282
3.1
3.1 Define
Definethethe
term
term “entrepreneur”
“entrepreneur” 8282
3.2
3.2 Explain
Explainthethefunctions
functions of ofanan entrepreneur
entrepreneur 8383
3.2
3.2 Explain
Explainthethefunctions
functions of ofanan entrepreneur
entrepreneur 8383
33
33
Contents
Contents
Contents
Contents
3.3
3.3 Identify
Identify
thethecharacteristics
thethetypical
typical entrepreneur
entrepreneur 8585
3.3
3.3 Identify
Identify
thethecharacteristics
thethetypical
typical entrepreneur
entrepreneur 8585
3.4
3.4 Describe
Describe thetherole
role
of of
thetheentrepreneur
entrepreneur in inthethe decision-making
decision-making process
process 8888
3.4
3.4 Describe
Describe thetherole
role
of of
thetheentrepreneur
entrepreneur in inthethe decision-making
process 8888
3.5
3.5 Outline
Outlinethetherole
role
of of
thethe entrepreneur
entrepreneur in in
economic
economic development
development 9090
3.5
3.5 Outline
Outlinethetherole
role
of of
thethe entrepreneur
entrepreneur in in
economic
economic development
development 9090
3.6
3.6 Outline
Outlinereasons
reasons whywhy anan individual
individual may may wantwant totoestablish
establish a business
a business 9292
3.6
3.6 Outline
Outlinereasons
reasons whywhy anan individual
individual may may wantwant totoestablish
a business 9292
3.7
3.7 Outline
essential steps
steps that
that should
should bebe taken
taken in in
establishing
establishing a business
a business 9494
3.7
3.7 Outline
essential steps
steps that
that should
should bebe taken
taken in in
establishing
a business 9494
3.8
3.8 Identify
Identify
thethereasons
reasons forforpreparing
preparing a business
a business planplan 9696
3.8
3.8 Identify
Identify
thethereasons
reasons forforpreparing
preparing a business
a business planplan 9696
3.9
3.9 Describe
Describe thetheelements
elements of of
a business
a business plan
plan 9898
3.9
3.9 Describe
Describe thetheelements
elements of of
a business
a business plan
plan 9898
3.10
3.10Identify
Identify
sources
sources of of
information
information forfor
conducting
conducting research
research into
into
thethe
3.10
3.10Identify
Identify
sources
sources
establishment
establishment ofof
ofof
information
information
businesses
businesses forfor
conducting
conducting research
research into
into
thethe 101
101
establishment
establishment of of
businesses
businesses 101
101
3.11
3.11Discuss
Discussthethesignificance
significance of of
conducting
conducting a feasibility
a feasibility study
studyinto
into
thethe
3.11
3.11Discuss
Discussthethe
establishment
establishmentsignificance
significance
of of
a business of of
a business conducting
conducting a feasibility
a feasibility study
studyinto
into
thethe 103
103
establishment
establishment of of
a business
a business 103
103
3.12
3.12Explain
Explainthetherelationship
relationship between
between planning
planning andand thethe operation
operation of of
a business
a business 104
104
3.12
3.12Explain
Explainthetherelationship
between planning
planning andand thethe operation
operation of of
a business
a business 104
104
3.13
3.13Identify
Identify
regulatory
regulatory practices
practices instituted
instituted byby governments
governments forfor
thethe
3.13
3.13Identify
Identify
regulatory
regulatory
establishment
establishment andandpractices
practices
conduct
conduct instituted
of instituted
of
different
different by by
typesgovernments
governments
typesof of
businesses forfor
businesses thethe 105
105
establishment
establishment andand conduct
conduct of ofdifferent
different typestypesof of
businesses
businesses 105
105
3.14
3.14Outline
Outlinethethefactors
factorsthatthatdetermine
determine thethe location
location of ofa business
a business 107
107
3.14
3.14Outline
Outlinethethefactors
factorsthatthatdetermine
determine thethe location
location of ofa business
a business 107
107
3.15
3.15Explain
Explainthethesignificance
significance of of
collateral
collateral in inaccessing
accessing capital
capitaltotoestablish
establish
3.15
3.15Explain
Explainthethe
a business
a business significance
significance of of
collateral
collateral in inaccessing
accessing capital
capitaltotoestablish
establish 111
111
a business
a business 111
111
4.4.Legal
Legalaspects
aspects ofof
business
business 115
115
4.4.Legal
Legalaspects
aspects ofof
business
business 115
115
4.1
4.1 Explain
Explainthetheconcept
concept of of
a contract
a contract 117
117
4.1
4.1 Explain
Explainthetheconcept
concept of of
a contract
a contract 117
117
4.2
4.2 Identify
Identify
thethetypes
typesof of
contract
contract 118
118
4.2
4.2 Identify
Identify
thethetypes
typesof of
contract
contract 118
118
4.3
4.3 Describe
Describe thethecharacteristics
a simple
a simple contract
contract 120
120
4.3
4.3 Describe
a simple
a simple contract
contract 120
120
4.4
4.4 Describe
a specialty
a specialty contract
contract 123
123
4.4
4.4 Describe
a specialty
a specialty contract
contract 123
123
4.5
4.5 Explain
Explainthetheconditions
conditions under
under which
which offer
offer and andacceptance
acceptance arearecommunicated
communicated123 123
4.5
4.5 Explain
Explainthetheconditions
conditions under
under which
which offer
offer and andacceptance
acceptance arearecommunicated
communicated123 123
4.6
4.6 Explain
Explainways
ways bybywhich
which contracts
contracts maymay bebe terminated
terminated oror
discharged
discharged 126
126
4.6
4.6 Explain
Explainways
ways bybywhich
which contracts
contracts maymay bebe terminated
terminated oror
discharged
discharged 126
126
4.7
4.7 Apply
Applythethe
principles
principles of of
a simple
a simple contract
contract toto cases
cases 129
129
4.7
4.7 Apply
Applythethe
principles
principles of of
a simple
a simple contract
contract toto cases
cases 129
129
4.8
4.8 Explain
Explainwhywhy documentation
documentation is necessary
is necessary in in
business
business transactions
transactions 131
131
4.8
4.8 Explain
Explainwhywhy documentation
documentation is necessary
is necessary in in
business
business transactions
transactions 131
131
4.9
4.9 Prepare
Prepare business
business documents
documents forforvarious
various purposes
purposes 133
133
4.9
4.9 Prepare
Prepare business
business documents
documents forforvarious
various purposes
purposes 133
133
4.10
4.10Evaluate
Evaluate thetheprinciples
principles upon
upon which
which insurance
insurance is based
is based 137
137
4.10
4.10Evaluate
Evaluate thetheprinciples
principles upon
upon which
which insurance
insurance is based
is based 137
137
4.11
4.11Explain
Explainthethevarious
various types
typesof of
insurance
insurance policies
policies 141
141
4.11
4.11Explain
Explainthethevarious
various types
typesof of
insurance
insurance policies
policies 141
141
4.12
4.12Explain
Explainhowhow insurance
insurance facilitates
facilitates trade
trade 143
143
4.12
4.12Explain
Explainhowhow insurance
insurance facilitates
facilitates trade
trade 143
143
5.5.Production
Production 148
148
5.5.Production
Production 148
148
5.1
5.1 Identify
Identify
factors
factors in in
thethe production
production of of
goods
goods andand services
services 150
150
5.1
5.1 Identify
Identify
factors
factors in in
thethe production
production of of
goods
goods andand services
services 150
150
5.2
5.2 Identify
Identify
industries
industries developed
developed fromfrom thethe natural
natural resources
resources of of
5.2
5.2 Identify
Identify
Caribbeanindustries
Caribbean industries
territoriesdeveloped
territoriesdeveloped fromfrom thethe natural
natural resources
resources of of 151
151
Caribbean
Caribbean territories
territories 151
151
5.3
5.3 Differentiate
between production
production and and productivity
productivity 154
154
5.3
5.3 Differentiate
between production
production and and productivity
productivity 154
154
5.4
5.4 Explain
Explainthetheimportance
importance of of
productivity
productivity 156
156
5.4
5.4 Explain
Explainthetheimportance
importance of of
productivity
productivity 156
156
5.5
5.5 Explain
Explainthetherole
role
of of
capital
capital in in
production
production 159
159
5.5
5.5 Explain
Explainthetherole
role
of of
capital
capital in in
production
production 159
159
5.6
5.6 Differentiate
Differentiate among
among types
types of of
capital
capital 160
160
5.6
5.6 Differentiate
Differentiate among
among types
types of of
capital
capital 160
160
5.7
5.7 Classify
Classify
thethedifferent
different types
types andand levels
levels of ofproduction
production 162
162
5.7
5.7 Classify
Classify
thethedifferent
different types
types andand levels
levels of ofproduction
production 162
162
5.8
5.8 Describe
cottage
cottage industries
industries 170
170
5.8
5.8 Describe
cottage
cottage industries
industries 170
170
5.9
5.9 Outline
Outlinethethefunctions
functions of of
small
small businesses
businesses 171
171
5.9
5.9 Outline
Outlinethethefunctions
functions of of
small
small businesses
businesses 171
171
44
44
Contents
Contents
Contents
Contents
5.10
5.10Discuss
Discuss thetheadvantages
advantages and anddisadvantages
disadvantages of of
small
small business
business 173
173
5.10
5.10Discuss
Discuss thetheadvantages
advantages and anddisadvantages
disadvantages of of
small
small business
business 173
173
5.11
5.11Explain
Explain howhow a business
a business grows
grows internally
internally andandexternally
externally 177
177
5.11
5.11Explain
Explain howhow a business
a business grows
grows internally
internally andandexternally
externally 177
177
5.12
5.12Outline
Outline thetheopportunities
opportunities forforandandbenefits
benefits of of
developing
developing linkage
linkageindustries
industries 180
180
5.12
5.12Outline
Outline thetheopportunities
opportunities forforandandbenefits
benefits of of
developing
developing linkage
linkageindustries
industries 180
180
5.13
5.13Explain
Explain thetheeffects
effects of of
growth
growth onon a business
a business 181
181
5.13
5.13Explain
Explain thetheeffects
effects of of
growth
growth onon a business
a business 181
181
6.6.Marketing
Marketing 186
186
6.6.Marketing
Marketing 186
186
6.1
6.1 Explain
Explain thetheconcepts
concepts of of
markets
markets andandmarketing
marketing 188
188
6.1
6.1 Explain
concepts of of
markets
markets andandmarketing
marketing 188
188
6.2
6.2 Explain
Explain marketing
marketing activities
activities 190
190
6.2
6.2 Explain
Explain marketing
marketing activities
activities 190
190
6.3
6.3 Describe
Describe thethe“marketing
“marketing mix”mix” 193
193
6.3
6.3 Describe
Describe thethe“marketing
“marketing mix”mix” 193
193
6.4
6.4 Describe
Describe thethefactors
factors thatthatinfluence
influence consumer
consumer behaviour
behaviour 200
200
6.4
6.4 Describe
Describe thethefactors
factors thatthatinfluence
influence consumer
consumer behaviour
behaviour 200
200
6.5
6.5 Identify
Identifyfactors
factors affecting
affecting packaging
packaging and and presentation
presentation of of
goods
goods 203
203
6.5
6.5 Identify
Identifyfactors
factors affecting
affecting packaging
packaging and and presentation
presentation of of
goods
goods 203
203
6.6
6.6 Describe
Describe methods
methods of of
promoting
promoting sales
sales 204
204
6.6
6.6 Describe
Describe methods
methods of of
promoting
promoting sales
sales 204
204
6.7
6.7 Identify
Identifythethetechniques
techniques of ofselling
selling 210
210
6.7
6.7 Identify
Identifythethetechniques
techniques of ofselling
selling 210
210
6.8
6.8 Explain
Explain thethevarious
various terms
terms of of
sales
sales 214
214
6.8
6.8 Explain
Explain thethevarious
various terms
terms of of
sales
sales 214
214
6.9
6.9 List
List
thethe
functions
functions of of
consumer
consumer organisations
organisations 217
217
6.9
6.9 List
List
thethe
functions
functions of of
consumer
consumer organisations
organisations 217
217
6.10
6.10Outline
Outline thetherole
roleof of
customer
customer service
service 219
219
6.10
6.10Outline
Outline thetherole
roleof of
customer
customer service
service 219
219
6.11
6.11Describe
Describe forms
forms of of
customer
customer service
service 220
220
6.11
6.11Describe
Describe forms
forms of of
customer
customer service
service 220
220
6.12
6.12Explain
Explain thetheconcept
concept of of
intellectual
intellectual property
property rights
rights 222
222
6.12
6.12Explain
concept of of
intellectual
intellectual property
property rights
rights 222
222
7.7.Logistics
Logistics andand supply
supply chains
chains 226
226
7.7.Logistics
Logistics andand supply
supply chains
chains 226
226
7.1
7.1 Explain
Explain thetheterms
terms “logistics”
“logistics” and and“supply
“supply chain
chain operations”
operations” 228
228
7.1
7.1 Explain
Explain thetheterms
terms “logistics”
“logistics” and and“supply
“supply chain
chain operations”
operations” 228
228
7.2
7.2 Describe
Describe thethelinks
linksin in
thethechain
chain of of
distribution
distribution 232
232
7.2
7.2 Describe
Describe thethelinks
linksin in
thethechain
chain of of
distribution
distribution 232
232
7.3
7.3 Distinguish
Distinguish between
between multimodal
multimodal andand intermodal
intermodal transport
transport 234
234
7.3
7.3 Distinguish
Distinguish between
between multimodal
multimodal andand intermodal
intermodal transport
transport 234
234
7.4
7.4 Interpret
Interpret information
information onon transport
transport documents
documents 240
240
7.4
7.4 Interpret
Interpret information
information onon transport
transport documents
documents 240
240
7.5
7.5 Explain
Explain thetherole
roleof of
transport
transport in in
marketing
marketing 243
243
7.5
7.5 Explain
Explain thetherole
roleof of
transport
transport in in
marketing
marketing 243
243
7.6
7.6 Identify
Identifyadvantages
advantages and andchallenges
challenges of of
supply
supply chain
chain operations
operations 245
245
7.6
7.6 Identify
Identifyadvantages
advantages and andchallenges
challenges of of
supply
supply chain
chain operations
operations 245
245
7.7
7.7 Explain
Explain thetheimpact
impact of of
logistics
logistics andandsupply
supply chain
chainoperations
operations onon
thethe
7.7
7.7 Explain
Explain thethe
competitiveness impact
competitiveness impact of
of of of
logistics
logistics
business
business andandsupply
supply chain
chainoperations
operations onon
thethe 248
248
competitiveness
competitiveness of of
business
business 248
248
7.8
7.8 Identify
Identifythetheproblems
problems likely
likelytotobebe encountered
encountered in in
distribution
distribution 250
250
7.8
7.8 Identify
Identifythetheproblems
problems likely
likelytotobebe encountered
encountered in in
distribution
distribution 250
250
7.9
7.9 Outline
Outline measures
measures totomitigate
mitigate problems
problems in indistribution
distribution 252
252
7.9
7.9 Outline
Outline measures
measures totomitigate
mitigate problems
problems in indistribution
distribution 252
252
7.10
7.10Outline
Outline thetheimpact
impact of of
information
information technology
technology onon logistics
logistics andand
supply
supplychain
chain
7.10
7.10Outline
Outline
operationsthethe
operations impact
impact of of
information
information technology
technology onon logistics
logistics andand
supply
supplychain
chain 254
254
operations
operations 254
254
8.8.Business
Business finance
finance 260
260
8.8.Business
Business finance
finance 260
260
8.1
8.1 Identify
Identifyvarious
various financial
financial institutions
institutions 262
262
8.1
8.1 Identify
Identifyvarious
various financial
institutions 262
262
8.2
8.2 Describe
functions andand services
services offered
offered byby financial
institutions 265
265
8.2
8.2 Describe
functions andand services
services offered
offered byby financial
institutions 265
265
8.3
8.3 Describe
Describe thetherole
role
and and functions
functions of of
financial
financial regulatory
regulatory bodies
bodies 268
268
8.3
8.3 Describe
Describe thetherole
role
and and functions
functions of of
financial
financial regulatory
regulatory bodies
bodies 268
268
8.4
8.4 Describe
Describe thetherelationship
between financial
institutions and and
8.4
8.4 Describe
Describe
regulatory
regulatorythetherelationship
bodies relationship
bodies between
between financial
institutions and and 270
270
regulatory
regulatory bodies
bodies 270
270
8.5
8.5 Outline
Outline ways
ways used
used bybyindividuals
individuals totomanage
manage personal
personal income
income 272
272
8.5
8.5 Outline
Outline ways
ways used
used bybyindividuals
individuals totomanage
manage personal
personal income
income 272
272
8.6
8.6 Differentiate
between savings
savings andandinvestments
investments 275
275
8.6
8.6 Differentiate
between savings
savings andandinvestments
investments 275
275
8.7
8.7 Explain
concepts of of
short-term
short-term and and long-term
long-term financing
financing 279
279
8.7
8.7 Explain
concepts of of
short-term
short-term and and long-term
long-term financing
financing 279
279
8.8
8.8 Identify
Identifypersonal
personal sources
sources of of
capital
capital forforsetting
setting upup a business
a business 283
283
8.8
8.8 Identify
Identifypersonal
personal sources
sources of of
capital
capital forforsetting
setting upup a business
a business 283
283
8.9
8.9 Identify
Identifythethepurposes
purposes of ofbasic
basic financial
financial records
records forfor
sole
sole
traders
traders 286
286
8.9
8.9 Identify
Identifythethepurposes
purposes of ofbasic
basic financial
financial records
records forfor
sole
sole
traders
traders 286
286
55
55
Contents
Contents
Contents
Contents
9.9.The
Therole
roleofof
government
government ininananeconomy
economy 296
296
9.9.The
Therole
roleofof
government
government ininananeconomy
economy 296
296
9.1
9.1 Outline
Outline thetheresponsibilities
government
government in in
ananeconomy
economy 298
298
9.1
9.1 Outline
Outline thetheresponsibilities
government
government in in
ananeconomy
economy 298
298
9.2
9.2 Describe
Describe howhow government
government cancan influence
influence businesses
businesses toto
protect
protect thethe
9.2
9.2 Describe
Describe
environment how
environment how government
government cancan influence
influence businesses
businesses toto
protect
protect thethe 303
303
environment
environment 303
303
9.3
9.3 State
Statethethe
purposes
purposes of of
taxation
taxation 309
309
9.3
9.3 State
Statethethe
purposes
purposes of of
taxation
taxation 309
309
9.4
9.4 Distinguish
Distinguish between
between direct
directandand indirect
indirect taxes
taxes 312
312
9.4
9.4 Distinguish
Distinguish between
between direct
directandand indirect
indirect taxes
taxes 312
312
9.5
9.5 Describe
Describe thethe forms
forms of of
assistance
assistance offered
offered bybygovernments
governments totobusinesses
businesses 317
317
9.5
9.5 Describe
Describe thethe forms
forms of of
assistance
assistance offered
offered bybygovernments
governments totobusinesses
businesses 317
317
9.6
9.6 Discuss
Discuss thethesocial
socialservices
services provided
provided bybygovernment
government 321
321
9.6
9.6 Discuss
Discuss thethesocial
socialservices
services provided
provided bybygovernment
government 321
321
10.
10.
Technology
Technology and and thetheglobal
global business
business environment
environment 328
328
10.
10.
Technology
Technology and and thetheglobal
global business
business environment
environment 328
328
10.1
10.1 Explain
concept of ofbusiness
business technology
technology 330
330
10.1
10.1 Explain
concept of ofbusiness
business technology
technology 330
330
10.2
10.2 Explain
Explain thetheroleroleof of
information
information and and communications
communications technology
technology (ICT)
(ICT)
10.2
10.2 Explain
in Explain
in
businessthethe
business roleroleof of
information
information and and communications
communications technology
technology (ICT)
(ICT) 330
330
in in
business
business 330
330
10.3
10.3 Describe
Describe thethe types
types of of
ICTICTused
used in inbusiness
business 332
332
10.3
10.3 Describe
Describe thethe types
types of of
ICTICTused
used in inbusiness
business 332
332
10.4
10.4 Distinguish
Distinguish between
between e-commerce
e-commerce andande-business
e-business 335
335
10.4
10.4 Distinguish
Distinguish between
between e-commerce
e-commerce andande-business
e-business 335
335
10.5
10.5 Identify
Identifyways
ways in in
which
which ICTICTcancanbebe usedused toto
improve
improve thethe
efficiency
efficiency of of
business
business
10.5
10.5 Identify
Identify
operations ways
operations ways in in
which
which ICTICTcancanbebe usedused toto
improve
improve thethe
efficiency
efficiency of of
business
business 337
337
operations
operations 337
337
10.6
10.6 Discuss
Discuss thetheethical
ethical implications
implications of of
thetheuseuseof of
ICTICT
in in
business
business 341
341
10.6
10.6 Discuss
Discuss thetheethical
ethical implications
implications of of
thetheuseuseof of
ICTICT
in in
business
business 341
341
10.7
10.7 Outline
Outline thethefactors
factors thatthat determine
determine a country’s
a country’s standard
standard of of
living
living
andanditsits
10.7
10.7 Outline
Outline
quality
quality the
of the
of factors
lifelifefactors thatthat determine
determine a country’s
a country’s standard
standard of of
living
living
andanditsits 343
343
quality
qualityof of
lifelife 343
343
10.8
10.8 Explain
Explain national
national income
income andanditsits variations:
variations: gross
grossnational
nationalproduct,
product,
10.8
10.8 Explain
Explain
gross
gross national
national
domestic
domestic income
income
product,
product, and
perand
peritscapita
capitaits
variations:
variations:
income
income gross
grossnational
nationalproduct,
product, 347
347
gross
grossdomestic
domestic product,
product, perper
capita
capita income
income 347
347
10.9
10.9 Describe
Describe thethe rolerole
of ofeducation
education in ineconomic
economic growth
growth and
anddevelopment
development 350
350
10.9
10.9 Describe
Describe thethe rolerole
of ofeducation
education in ineconomic
economic growth
growth and
anddevelopment
development 350
350
10.10
10.10Outline
Outline thethereasons
reasons forforinternational
international trade
trade 352
352
10.10
10.10Outline
Outline thethereasons
reasons forforinternational
international trade
trade 352
352
10.11
10.11Identify
Identifythethefunctions
functions of of
major
major economic
economic institutions
institutions and
andsystems
systems 353
353
10.11
10.11Identify
Identifythethefunctions
functions of of
major
major economic
institutions and
andsystems
systems 353
353
10.12
10.12Explain
Explain howhow economic
institutions orortrade
tradeagreements
agreements impact
impact
10.12
10.12Explain
theExplain
the how
Caribbeanhow
Caribbean economic
institutions orortrade
tradeagreements
agreements impact
impact 357
357
thethe
Caribbean
Caribbean 357
357
10.13
10.13Identify
Identifymajor
major economic
economic problems
problems of of
thethe
Caribbean
Caribbean 360
360
10.13
10.13Identify
Identifymajor
major economic
economic problems
problems of of
thethe
Caribbean
Caribbean 360
360
10.14
10.14Outline
Outline appropriate
appropriate solutions
solutions toto thethemajor
major economic
economic problems
problems
10.14
10.14Outline
of Outline
of
thethe appropriate
appropriate
Caribbean
Caribbean solutions
solutions toto thethemajor
major economic
economic problems
problems 363
363
of of
thethe
Caribbean
Caribbean 363
363
10.15
10.15Explain
Explain thetherole,
role,benefits
benefits andand impact
impact of of
foreign
foreigninvestment
investment 365
365
10.15
10.15Explain
Explain thetherole,
role,benefits
benefits andand impact
impact of of
foreign
foreigninvestment
investment 365
365
The
The
importance
importance ofof the theschool-based
school-based assessment
assessment (SBA)
(SBA) 371
371
The
The
importance
importance ofof the theschool-based
school-based assessment
assessment (SBA)
(SBA) 371
371
Glossary
Glossary 375
375
Glossary
Glossary 375
375
Index
Index 391
391
Index
Index 391
391
66
66
Setting the scene

Establishing Maria’s business through planning
Maria Haines has always had a passion for art and design, so when she went to
college she studied graphic design. It was during a work placement on her course
that she produced a portfolio of shop signs for businesses in Bridgetown. When
she showed these to some local business owners to get their feedback, a number
of them commissioned her to produce shop signs and business signs for them.
She decided to charge per hour worked and added material costs on to this. The
money she received helped to pay for her university accommodation costs and
food bills, as well as books and other important living costs.
Maria enjoyed the work and realised that, because of her skills, she had a
viable business proposition which would make a useful sole-trader business.
However, she knew that if the business was to be successful, she needed to
produce a business plan to make sure that she had clear objectives and a
unique selling proposition that would differentiate her from other signwriters,
and she needed to check whether the profit she would make would provide
her with a good standard of living.
Before she left college, Maria completed a 10-page business plan setting out
the details of the business, with references from shops to which she had sold
signs, an outline of her typical customers, and details of the equipment and
materials she needed, as well as the rental charges for her premises. She
worked out the costs of all of these things and identified the finances she
would need to start up. She created a profit and loss account, setting out costs,
receipts and estimated profits for the first two years of trading.
Maria took the business plan to a local bank in order to arrange to borrow some
capital to start up her business. Maria recognised that she would be taking a risk in
setting up her enterprise, but felt that the rewards would easily outweigh the
risk taken.
1. To what extent was Maria taking a risk in setting up her enterprise?

2. How would the creation of the business plan have helped Maria to take
some of the risk out of setting up her business?
3. For whom was the business plan made? Who else might have wanted to
take a look at Maria’s business plan?
4. Can you think of any other details that should have been included in the
business plan?
5. What sources of information do you think Maria could have used to help
her form her plan?
80
Objectives
After reading this chapter, you should be able to:
1. Define the term “entrepreneur” XX
2. Explain the functions of an entrepreneur XX
3. Identify the characteristics of the typical entrepreneur XX
4. Describe the role of the entrepreneur in the decision-making process XX
5. Outline the role of the entrepreneur in economic development XX
6. Outline reasons why an individual may want to establish a business XX
7. Outline the essential steps that should be taken in establishing a business XX
8. Identify the reasons for preparing a business plan XX
9. Describe the elements of a business plan XX
10. Identify sources of information for conducting research into the establishment of
a business XX
11. Discuss the significance of conducting a feasibility study into the establishment of
a business XX
12. Explain the relationship between planning and the operation of a business XX
13. Identify regulatory practices instituted by governments for the establishment and
conduct of different types of business XX
14. Outline the factors that determine the location of a business XX
15. Explain the significance of collateral in accessing capital to establish a business XX
Tip
Once you have
completed questions
you can check your
answers online at:
www.oxfordsecondary.
com/9780198437352.
81
3.1
Define the term “entrepreneur”
An entrepreneur is someone who shows vision and creativity, and who
takes risks by creating a business venture. Entrepreneurs can identify
business opportunities, niches and gaps in the market. Many of the
world’s best-known enterprises started out from the idea of one person
or a small number of people. Grace Foods was created by
Dr John J Grace and Mr Fred William Kennedy; Microsoft was set up
by Bill Gates and Paul Allen; and Madam CJ Walker (Sarah Breedlove)
created Walker’s Scalp Conditioning Company, which laid the
foundations for the Walker Manufacturing Company.
One of the inspirations for Madam CJ Walker was that she personally
Bill Gates, who was one of the
suffered from a scalp condition, which led her to explore ways of
co-founders of Microsoft, is one of
enriching the scalp. The founders of Grace Foods, Microsoft and Walker
the most famous entrepreneurs in
Manufacturing all had the courage to set up businesses to develop their
the world
ideas and introduce their products to a wider market.
Today, there are thousands of small enterprises across the Caribbean
that are being set up by entrepreneurs who have no guarantee of
success. Many of these will succeed, but many will fail. An entrepreneur
is therefore a risk-taker, who has to invest a lot of time and hard work
into making their business a success. They have to bring together
production resources (such as machinery, labour and land – even if this
is in their own study or bedroom), and they may also have to borrow
money to get started. The reward that the enterprise hopefully receives
is a profit. Profits will rarely be made in the first year that an enterprise
is set up, but they need to be made over time if the enterprise is to be
a success.
Who will definitely have to invest a lot

An entrepreneur is
of time and effort to turn the business
a risk-taker
idea into a success
The reward for the Who will often have Who brings together
enterprise is profit to raise finance factors of production
82
Now try these

1. Do you consider yourself to be an entrepreneurial person
(someone who is prepared to take a risk, and has creative ideas
coupled with energy)?
2. Do you think that being an entrepreneur would be harder than
working for someone else? Explain the reason for your answer.
3. Business in action: Identify an entrepreneur in your
neighbourhood who has set up a small enterprise from scratch.
What was the business idea? To what extent has the business
grown and changed since it first set up? Perhaps you could
interview the entrepreneur to find out what it was like to set up
a new enterprise. Ask whether the entrepreneur was worried Madam CJ Walker recognised
about the risk, from where he or she got the idea, and whether that there was a market for hair
there are any plans for expansion. treatments
4. Why do you think entrepreneurs set up in business despite the
risk of making a loss?
3.2
Explain the functions of an entrepreneur
What does an entrepreneur do? The table of functions below shows
that there are a number of complex tasks involved in being an effective
entrepreneur.
Function Description
Conceptualising Creating a product concept is an important first step for any entrepreneur.
Madam CJ Walker recognised that there was a market for hair treatments. She had some scalp
issues herself, and talked to people about their own hair and scalp problems, and the solutions
that they had tried. She also tried out a range of treatments herself, and the concept of her
products began to take shape. The creation of a product concept has many stages, involving
research to find the best solutions and products.
There is a lot more to creating an enterprise than just coming up with a good idea for a product
or service. An entrepreneur has also got to conceptualise what the business will look like. For
example, will it be a small, local business servicing local needs, or one that will grow into a
larger business? An entrepreneur also needs to conceptualise a name for the business and its
products. The product that enabled Walker Manufacturing to take off in the early days was
Madam Walker’s Wonderful Hair Grower.
Conceptualisation also involves developing a picture of who your customers are. For example,
people who may be worried about hair loss or thinning hair, and what they are looking for in
their hair products, so that the products can directly match their wants.
Planning Planning is a key aspect of enterprise. A successful entrepreneur will only succeed if they
can create well-structured plans, setting out goals and objectives, and the steps required to
achieve these objectives. This often takes the form of a business plan (see Unit 9 below on
page xx), which sets out clear plans on paper or in a computer-generated document.
83
Planning in an effective way requires research. Before setting up her own enterprise, Madam
CJ Walker learned about the hairdressing business from her brothers, who were hairdressers.
She also worked as a sales representative for a company selling hair-care products. She was
therefore able to learn how to plan effectively to create a business that made use of mail-order
selling, beauty parlours, and retail outlets selling hair-care products.
Accessing funds An entrepreneur will need funds to test and develop new products, to carry out marketing
activities, and to invest in plant and equipment.
Madam CJ Walker built up a pool of capital through her own hard work. As people began to
hear about her products, she was able to sell larger quantities, and to employ women to work
as sales agents in the United States and Caribbean areas. Eventually, she had raised enough
capital to invest in a factory in Indianapolis.
Many entrepreneurs will borrow start-up capital from banks, as well as from friends and family.
Others will use their own personal savings as a source of funding.
Organising An entrepreneur needs to be organised. Alternatively, he or she needs to hire someone who is
organised to manage the details of their business. In a business, you need to provide products
that meet customer expectations, which are safe and delivered on time. You need to build a
reputation for reliability, and you will only be able to do this by being organised.
Organisation involves establishing patterns, procedures and deadlines. Even in the creative
industries such as music and film, it is essential to be organised. For example, a recording artist will
need to be at a recording studio at certain times, and to provide input or feedback on time to meet
the requirements of the industry.
Operating a The operations of a business are the activities that it carries out to produce a product or service. For
business example, the operations of a small hotel will include booking in the guests, making sure their rooms
are clean and ready for them on time, attending to their needs, managing any servicing issues (for
example when showers break down), serving them food on time, dealing with complaints, etc.
An entrepreneur needs to identify the essential operations of a business and make sure that
these are run effectively. As part of operating a business, they will often need to take risks (which
is a common characteristic of an entrepreneur).
Evaluating the Finally, the entrepreneur needs to evaluate “how effectively am I/is the business doing”.
performance of a Performance indicators are required to judge performance, for example room occupancy and
business customer satisfaction in a hotel. Madam CJ Walker would have kept details of repeat purchases
by customers, orders received, sales made in different locations, etc.
Evaluating performance makes it possible to identify what is working well and what is going less
well, in order to make ongoing improvements.
Key term
Goals: the destination of a business activity. A goal is what you
want to achieve in the end.
Objectives: these are specific and measurable results that a
business wants to achieve in a specific time frame.
Funds: a sum of money made available for a specific purpose. Funds
can be built up by saving or borrowing.
Start-up capital: money required to launch a new business.
Evaluate: to consider something in order to make a judgment,
for example to consider what a business has achieved in order to
judge how well it is doing.
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Now try these Tip

1. Why is conceptualising so important when starting to develop In explaining the
an enterprise, and how is it much more than just having a functions of an
business idea? entrepreneur, make sure
2. In your opinion, what is the most important stage when you pay attention to
transforming an enterprise concept into an operating business? the bearing of risks, and
Explain your answer. the entitlement to the
profits and losses of the
3. If you were going to set up a small enterprise of your own, what
business.
sources would you use to acquire start-up capital?
4. Business in action: Set out a concept for a new enterprise that
could be successful in your neighbourhood. Write it in the form
of a flow chart or a spider diagram.
3.3
Identify the characteristics of the typical
entrepreneur
Certain personal qualities and skills are needed if a new business
venture is to be a success. We have seen that Madam CJ Walker was an Key term
entrepreneur who was tremendously hard-working; she had an idea
Personal trait: a
and stuck to developing her business in a creative way. She was also
characteristic that
able to build her business over time.
is personal to an
Madam CJ Walker therefore had many personal traits and leadership individual, for example
qualities associated with being a successful entrepreneur. Below are an outgoing personality.
some of the characteristics that successful entrepreneurs tend to have.
Optimistic
Propensity
to take Resourceful
calculated
risks
Creative Characteristics Persevering

of a typical
entrepreneur
Goal-
Innovative
oriented
Flexible Persistent
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Creative
Key term
Entrepreneurs may not be ‘inventors’ in the traditional sense, but
Creative: having they all have a creative streak, in that they come up with great
imaginative or original ideas. For example, Eddy Grant set up Ice Records in Barbados after
ideas. a successful career as a musician and singer. Ice Records has a
recording studio that can be hired by music producers. In addition,
Grant combined this with the idea of buying the rights to a vast
catalogue of Caribbean music.
Innovative
Creativity is the process of coming up with new ideas, and innovation
is the process of turning these ideas into reality. For example,
entrepreneur Satyan Sagramsingh is from Trinidad and Tobago, and
showed showed great innovation as he built up his very successful
woodworking company, SLS Woodworking. He combined his interests
in woodworking with his knowledge and research of information
technology, sophisticated tools and equipment to build up his
successful business.
Flexible
The business environment is always changing. This environment
consists of factors that lie outside of the business itself, including
customers, competitors, rules and regulations, and the actions of
suppliers. An entrepreneur will constantly want to check on what
is happening in this wider environment in order to make a suitable
response. What do you do if a competitor alters its price or brings out a
new product? What do you do if your customers change their habits or
buying patterns? What do you do if you lose a supplier?
The answer to all of these questions is that you need to be flexible.

An entrepreneur needs to come up with a suitable response swiftly.
For example, if you are a recording studio, you need to identify new
trends in music, because if you stay stuck in the same groove then you
might find that people quickly lose interest in what you have to offer.
Gordon ‘Butch’ Stewart is a good example of a flexible entrepreneur; his
Jamaican business has sold everything from air conditioning units to
hotel holidays.
Goal oriented
An entrepreneur needs to have clear goals to work towards so that
he or she has a sense of direction. For example, Patrick Mitchell
established Quashi surfboards in Jamaica. His goal was to provide
custom-built surfboards using the best-quality materials. To meet
86
these goals, the boards were designed specifically for conditions

in the Caribbean and the challenges of competing in surfing
Tip
competitions worldwide. The boards were then built in Jamaica and Make sure you
tested all over the world. can identify the
characteristics of
Persistent
an effective/typical
To persist means to keep on going in the face of discouragement entrepreneur. When you
or adversity. Success very rarely comes quickly or easily, therefore do so, it may be helpful
entrepreneurs need to be persistent if they want to succeed. Madam to use examples of well-
CJ Walker was born into a large family; she did menial jobs at the known entrepreneurs
beginning of her career but she kept going, working hard and persisting to highlight how
in order to become more successful. She is famously quoted as saying, these characteristics
“I got my start by giving myself a start”. contribute to someone
Persevering being enterprising.
To persevere means to stick at it. Another saying of Madam CJ Walker
was, “xPerseverance is my motto”. She stuck at the task of building
a business empire around her hair products. She also persevered to
achieve more than simply setting up her own business. Madam CJ
Walker was also able to empower lots of other women in her business.
She hired them to sell her products, and she provided education for
them to learn how to run their own businesses. She developed national
conference structures including the National Beauty Culturists and
Benevolent Association. Her legacy has therefore gone well beyond the Key term
creation of a powerful enterprise.
Propensity: a tendency
Propensity to take calculated risks to behave in a certain
Propensity means a tendency to behave or act in a certain way. way, e.g. a propensity to
Someone who is ‘entrepreneurial’ will be willing to take calculated take risks.
risks. A calculated risk is one where the risk-taker makes a realistic Calculated risk: a
estimation of the likelihood of the venture being a success. situation where there
is a possibility that
Profit is clearly an incentive to set up a business, but there is always the outcome may be
a risk that the original idea will not succeed. Different people have undesirable, but where
differing attitudes to risk. Some are risk averse (reluctant to take a the risk-taker is willing
risk). In contrast, others will be risk tolerant (willing to take a risk). to take the risk because
Of course, there are also some who are “risk lovers”, who are too he or she has made
inclined towards risk-taking and fail to calculate the risks clearly. A a calculation of the
successful entrepreneur needs to take risks that have been clearly likelihood of success or
calculated. One example is Appleton Rum from Jamaica, which has failure and believes that
invested in building a new visitors’ centre, weighing up the risk of there is more chance of
spending money with the plan that the centre will in turn bring in success.
more profits.
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Now try these

1. If you were going to set up an enterprise, what field would it
be in? Do you think that you have the qualities to make the
enterprise a success? To what extent do you have the following
characteristics?
(a) Creativity.
(b) Innovation.
(c) Flexibility.
(d) Goal-orientation.
(e) Persistence.
(f) Ability to persevere.
(g) The propensity to take calculated risks.
2. Would you describe yourself as a risk-averse or risk-tolerant
person? Give an example to illustrate your approach to risk, for
example something you have done that illustrates whether you
are risk averse or risk tolerant.
3. Business in action: Identify an entrepreneur who has been
successful in your country. Carry out some research on the
Internet to find out about his or her personal story. What does
this tell you about the extent to which this person has been
creative, innovative, flexible, goal-oriented, persistent and able
to persevere?
3.4
Describe the role of the entrepreneur in the
Entrepreneurs need to have good
Conceptualising organisational and decision-making
skills in order to put in place an effective
decision-making process. These skills
Planning
relate to being able to develop business
concepts through planning, organising
and operating an enterprise, and
Evaluation include the evaluation of how effective
Accessing finance the enterprise is. The decision-making
process is described below.
Conceptualising
Operating the business Organising the factors
A business concept is the idea for a
The role of the entrepreneur in the enterprise process business. It includes basic information
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such as what the service/product will be, the target market (to whom
the service/product will be sold), and the unique selling proposition
Key term
(USP) that will enable the company and product to be successful. USP: a unique selling
The USP should differentiate the company and its products from point that distinguishes
its rivals. a product or service from
The starting point for an entrepreneur is to do lots of research and gain others of a similar nature
plenty of experience, so they can develop the business and product e.g. coffee that gives a
concepts from the outset. smoother and richer
taste than rival products.
Planning
The planning process is the next stage, and goes much further than the
original concept. The starting point should always be to assess whether
the plan will succeed or not. If the plan is assessed as not being able
to succeed, changes can be made and more research can be done to
amend the plan so it is more likely to succeed.
The next stage is to establish a set of objectives for the business, so
that the plan can be aligned with achieving these objectives. The
plan should set out what needs to be done in order to achieve the
objectives.
Plans need to have a time sequence of long-, medium- and short-term
goals and activities associated with them. The term “planning horizon”
refers to the time period for which a plan is constructed. The plan
should set out the resources required and the personnel needed to
meet each of the planning objectives.
Accessing financing
Once the entrepreneur has decided on the business idea or
opportunity, the next task is to raise the necessary capital. In terms of
securing finance for the business, the entrepreneur will need to find
answers to a number of questions. The most important questions are
as follows. Tip
• How much finance is required? (In the short, medium and long Make sure you can
term.) identify the sequence
• From where will this finance be accessed? (E.g. personal funds, of activities involved in
shares, borrowing from a bank, etc.) the enterprise process –
from conceptualisation
Organising the factors of production
through to operating
An entrepreneur needs to decide how to organise the factors of
the business – and
production. This involves identifying suitable combinations of land,
that you understand
machinery, equipment, materials and people. People may need to
how evaluation feeds
be trained to learn new skills, and the entrepreneur has important
back into making
decisions to make about whether to purchase large, expensive units
improvements to the
of capital (which will stretch business resources but may reap more
process.
benefits in the long term), or less-expensive ones.
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Operating the business

Now try these All of the roles outlined above can be put into place prior to setting up
1. In the diagram on and running the business (although things such as planning will need
page xx showing to be adjusted on an ongoing basis).
the role of the Once the business is ready to run, the next set of decisions that the
entrepreneur in the entrepreneur needs to make revolves around operating the business.
enterprise process, Everything that happens within a company to keep it running and
there is a feedback earning money is referred to collectively as business operations. Running
loop from evaluation a business is a true test of the entrepreneur’s ability as a business person.
to each of the other This will involve winning orders for products, meeting these orders on
roles. How and why time, maintaining the quality of products, interacting with customers,
is it important for creating payment systems, and keeping on top of finances and all other
the entrepreneur to operations required to make the business profitable.
evaluate on a regular
Evaluating
basis the way in
The entrepreneur needs to monitor and evaluate how effective business
which he or she is
performance is on a regular basis. Questions to consider are as follows.
performing the other
roles? • How well are we doing?
• How are we performing against our original objectives?
2. How might a failure
• Are we keeping to plan?
in one of the roles
• What could we be doing better?
shown in the diagram
• What are the major risks that we face?
on page xx lead to
• Do we need to adjust our objectives and plans?
the failure of the
business? Give an One key way of evaluating business performance is to use metrics
example to show (numbers) to measure it. Obvious metrics relate to sales levels, sales
how this failure might revenue, profit figures, output levels, etc. Entrepreneurs must constantly
come about. evaluate these numbers as they take the important decisions that will
3. Business in action: drive their new business forward.
A friend has come up Risk-bearing
with the business idea
Fundamental to the role of the entrepreneur is the taking and
of setting up a surf
management of risk. Bearing risks is inevitable for any entrepreneur,
school during school
but by taking decisions based on detailed research and by planning for
vacation times using
unforeseen events – such as new competitors entering the market – the
a small collection of
risks should become manageable and the business will have a greater
surfboards that she
chance of success.
already owns. Explain
to her what roles she
3.5
will need to perform if
she is to convert this Outline the role of the entrepreneur in economic
idea into a successful development
enterprise. What In 2016, Trinidad and Tobago published a national strategy document
are likely to be the for the period 2016–2030. Included in this strategy was a long-term
biggest hurdles? goal to create a “diversely educated, innovative and entrepreneurial
population”. The document recognised that a lack of a sufficiently
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entrepreneurial approach was holding back economic development.

Therefore, what part can enterprise and entrepreneurs play in
economic development and nation building?
Collaborating
Entrepreneurs bring people together to work collaboratively to achieve
shared objectives. The entrepreneur also brings resources together to
achieve shared project objectives. For example, the owner of a small
restaurant will work closely with chefs and the waiting staff to create a
positive atmosphere that will encourage diners to visit. The restaurant
owner will collaborate with suppliers to create a suitable supply chain
of fresh products (such as meat and vegetables) to the restaurant. Other
contributions will also be required, for example decorators, signwriters,
creators and publishers of menus, etc. Groups of entrepreneurs may
collaborate together, for example in organising markets and carnivals,
as well as conferences to share ideas, and to discuss enterprise and the
contribution that it can make to society.
Providing goods and services to satisfy citizens

Enterprise provides society with the products and services it needs.
Where an entrepreneurial culture is widespread, citizens will benefit
from the development of new and exciting products, such as new
music acts, foodstuffs, cosmetics and many other new products. An
entrepreneur listens carefully to the thoughts and feelings of consumers
in order to provide the products and services that they want, and more
choice and variety in what they can buy.
Creating jobs
As most new businesses start to grow they create job vacancies,
and this offers more employment opportunities for citizens. A 2016
survey on the state of small businesses in Barbados by the Small
Business Association found that 92 per cent of all formal enterprises
employed between 5 and 25 employees. These enterprises are
particularly important in retail, real estate (property management)
and manufacturing, as well as in agriculture. There were over 10 000
businesses that could be classified as small- or medium-sized
enterprises, providing most of the private sector jobs in the economy.
Contributing to nation building

Since 2007, the National Commerce Bank in Jamaica has been
giving awards to small enterprises that contribute significantly to the
development of the Jamaican community. These awards are called the
Nation Builder Awards.
Enterprise contributes to the development of a nation in many ways, not
just by providing products and creating jobs. In addition, nation-building
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enterprises prioritise solutions that are kind to the environment, provide

sponsorship and employee time for charitable events and causes, and
get involved in the life of the community for example by offering school
projects, helping the homeless and destitute.
The output produced and sold by new businesses increases gross
domestic product (GDP) and helps to increase living standards (GDP per
capita). Businesses that supply materials and services to entrepreneurs
will gain increased trade, allowing them to provide more jobs and incomes
too. Some new businesses will also sell their products to other countries,
and this will improve the country’s balance of trade and foreign currency
reserves. All of these gains help to build the strength of the nation.
Earning foreign exchange

Much of the Caribbean economy relies on foreign exchange. This comes
in a variety of ways, such as international business ties, tourism, etc.
The opportunity to earn foreign exchange is therefore a very important
role in development of business in the Caribbean.
Now try these

1. Identify an entrepreneur in your neighbourhood and make
a list of the practical ways in which he or she is contributing
to nation building. For example, how many people does the
entrepreneur employ? Who are the customers and how are
those customers being served? Are any of the goods or services
exported?
2. The Caribbean is full of examples of successful entrepreneurs.
Do some Internet research to find out about one or more of the
following: Michael Lee-Chin, Sandra Marie Packer, Toni Thorne,
William Andrew Boyle, Chadia Mathurin and Vince Cate.
3. Business in action: Can you identify an entrepreneur in your
country who has made a major contribution to nation building
by setting up an enterprise? Find out more about this person
by talking to members of your community and researching on
the Internet. Create a poster highlighting the achievements of
this person as an entrepreneur.
3.6
Outline reasons why an individual may want to
Individuals set up businesses for many different reasons. For example,
Madam CJ Walker saw an opportunity to create specific types of hair
treatment to help others with scalp conditions like her own. She
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wanted to build an enterprise out of her own efforts, and to give women
opportunities to flourish in business. Someone else might set up an
enterprise simply to earn a good living for themselves and their family.
Some of the main reasons for setting up an enterprise are outlined below.
Financial independence
If you create a successful business then you do not have to work
for anyone else. You operate your own business, and you are not
dependent on anyone else for a wage or salary. You also have
autonomy over the profit earned by the business. Success will also
hopefully bring a healthy bank balance. Increased income leads to
wealth creation, which is a motivator to most entrepreneurs.
Self-fulfilment
Self-fulfilment means doing something that makes you happy. This is
particularly the case when entrepreneurs can turn an activity that they
enjoy into a business proposition, for example the signwriter in the Key term
case study at the start of this unit, self-employed hairdressers who have
always wanted to style hair, personal trainers who have always loved Self-actualisation:
fitness and sports, etc. social psychologists
use this term to refer
Self-actualisation to the achievement
Self-actualisation goes beyond self-fulfilment. This term is used by of one’s full potential
psychologists to define a personal state of doing something that meets through creativity and
the highest level of human needs. You will recognise the feeling when independence.
you do something or are involved in an activity that makes you feel
on top of the world because you are able to express your innermost
feelings and reach your full potential. This can be true for people Now try these
in the creative fields, for example a music-based or design-based 1. Can you identify a
entrepreneur, but it also applies to people who love running a really business opportunity
effective business enterprise such as a successful restaurant or shop. that you could
Increased income carry out to help
Really successful enterprises yield high incomes for their owners. When you achieve self-
they are successful, entrepreneurs will typically make more income than actualisation?
they would being employed by someone else. They can also create 2. Many entrepreneurs
employment for others through their business, including friends and family say they “like being
members as well as regular citizens. Increased income is an enabler for their own boss”.
economic growth and development, providing revenue through taxation. Would you like to be
your own boss and
Increased control why?
A lot of entrepreneurs use the statement, “I like to be my own boss”. There 3. Identify some of the
are many different aspects to this simple statement, including the following. sacrifices that would
• I make my own decisions. be involved in setting
• I can choose to take one course of action rather than another. up an enterprise.
• I can work my own hours.
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• I can take holidays when I want them.

• I can choose to work harder, and the rewards are mine.
Of course, it is important to recognise that entrepreneurs make
concessions if they want to be successful.
• They may have to work longer and harder.
• They may not be able to take holidays.
• The decisions they make will be limited by what other stakeholders
want, for example suppliers, customers, etc.
Therefore, entrepreneurs often have increased control over their
working life, but they rarely retain full control.
3.7
Outline the essential steps that should be taken in
If you are going to set up a new enterprise, it is helpful to have a clear
picture of the essential steps that need to be taken. Although some of
these steps can take place at the same time, they follow a logical order
that can help when creating a plan to get a business up and running.
The six essential steps in establishing a business are as follows.
Operation of business
Acquisition of funds
e Creation of business plan

Tim
Identification of resources
Research (market probe)
Conceptualisation
1: Conceptualisation
As discussed on page xx, the first step will be to come up with a
business concept. This is the idea for the new business, with details
such as what the business will look like initially (the size and type of
business), the nature of products or services, a potential name and
location for the business, etc.
2: Research (market probe)

Market research needs to be undertaken to identify customers and what
they want, and to answer some important questions.
• What features of the product or service are customers looking for?
• Where do they want the product?
94
• How much are they prepared to pay?

• How strong is the competition and what are competitors offering
Tip
that is similar? Make sure that you
3: Identification of resources (financial, human, material) can see the logical
progression from one
An entrepreneur needs to identify the key resources that will be
step to the next in setting
required for the business. Financial resources may come in the form
up a new business.
of shares, loans or cash, and an entrepreneur needs to decide from
Learn the order of the
where this finance will come. There may also be financial implications
steps, i.e. concept,
with regard to how much cash and profit will need to be generated.
market research, identify
For human resources, there are many questions that an entrepreneur
resources, create
needs to ask.
business plan, acquire
• What type of people do we need? funds and finally start to
• How many people do we need? operate.
• What skills and attributes should they have?
• Are we going to have to train them?
Details for material resources also need to be decided by a business
owner, such as the type and quantity of materials needed, and the
amount of capital items required (including buildings, machinery,
fixtures and fittings). For these items, some entrepreneurs would want Now try these
to purchase them outright, whereas others may prefer to acquire
1. Why is a market
them on credit terms. Other resources needed may also include legal
probe essential
requirements such as licences, registrations, taxation, insurance, etc.
when setting up
4: Creation of a business plan a business? What
Units 8 and 9 below outline the nature and purpose of a business would be the dangers
plan. Planning helps to improve the chances of business success. of not engaging with
The business plan will therefore include facts and research about the a market probe?
proposed business. An entrepreneur can share the plan with others who 2. The six steps outlined
may contribute to the business, such as shareholders and providers of in this section all
finance. Steps 1 to 3 above should be taken as part of the process of take time. Which of
creating a detailed business plan. the activities do you
The creation of a business plan should not be rushed. All the details of think you would have
the plan need to be thoroughly worked out and researched, because the to allocate the most
enterprise will need to make clear and well-planned decisions based on time to in setting up a
this plan. The details therefore need to be accurate. The plan should also business, and why?
give outside readers the view that this is a credible business. 3. Find an entrepreneur
that you know, or one
5: Acquisition of funds that your business
Once a detailed business plan has been created, the entrepreneur can teacher has invited
try to acquire the necessary finance. This will consist of short-term to talk to you, and
finance (to pay for start-up costs such as the purchase of premises and ask him or her which
equipment), as well as longer-term finance to expand the business. of the steps took the
The business will only be well placed to secure finance once it can longest and why.
present a convincing business plan. The business plan can be shown
95
to banks and credit unions, and to potential partners, investors and

even suppliers in order to secure the essential funds. Funds may also
be obtained by borrowing from friends and family, or even from the
owner’s savings.
6: Operation of the business

Once the five steps outlined above have been effectively completed,
then the business can start to operate. Of course, the initial phase may
include equipping the business, employing staff, acquiring vehicles,
doing up the premises, advertising the business and creating the
production schedules. Once the set-up stages have been completed,
the business can start to operate on an ongoing basis.
3.8
Identify the reasons for preparing a business plan
A business plan is a complete description of a business and its plans
for the next one to three years. It explains what the business does (or
what it will do if it is a new business), and describes the ideal customer
(who will buy the product or service and why). The plan also provides
financial forecasts and therefore demonstrates the overall viability of
Key term the business. It explains the finance available, and the future financial
requirements. The reasons for producing a business plan are as
Business plan: a formal follows.
written document
setting out the objectives To research the business idea
of a business, and key It is important to ensure that careful research is conducted into the
details of the marketing, feasibility of the business. There is no point in starting a business
financing, structure, if the plan shows that it will fail. Producing research and sets of
personnel, and other key financial predictions is therefore very helpful. Some businesses will
aspects of the intended never make a profit, and this can be revealed by the forecasts in the
future running of the business plan.
business. It is written for The business plan will help to identify all of the costs of running the
the owners and other business, and to ensure that the costs do not prove to be more in
stakeholders such as reality than the entrepreneur had anticipated. Careful research helps
lenders. to reveal from the outset some of the unexpected problems that may
Financial forecast: be encountered. For example, it may not be possible to get planning
a projection of the permission for a business, the cost of premises and raw materials may
expected financial be greater than expected, or it may not be possible to get a business
position of a business loan.
in the future, and the
To attract potential investors
results of operations
In order to set up a business, it may be necessary to attract investors.
and cash flows based on
An investor is someone who provides funds in return for a given share
expected conditions.
of the profits. The investor will typically become a part owner of the
96
business. Investors often invest in more than one business, therefore

they will be used to appraising the effectiveness of a business and will
Tip
know how to read a business plan. Investors may ask questions such as You should be able
the following. to demonstrate that
• How big is the market? a business plan is
• What share of the market do you expect to gain? fundamental to making a
• What are your expected sales (this year, next year and in business a success, and
two years’ time)? be able to identify the
• What are your main costs? key ingredients of such
• How much profit do your forecast? a plan.
All of these and other details should be set out in a clear way in the
business plan.
Now try these
To source financing 1. In this unit, we have
In addition to investors, the business may also want to access funds seen that a business
from banks and other lenders, for example in the form of a business plan is a “complete
loan or mortgage. Lenders want to know details. plan” covering a
• How much do you want to borrow? period of one to
• Over what time period will you be making repayments? three years. Why do
• What other borrowing do you have? you think that it is
• How much income do you expect to make in the short, medium and necessary to plan
long term? so far ahead? What
would be the pitfalls
Lenders are usually able to calculate using a computer program
associated with not
whether the borrower can afford to repay any loans granted
taking this forward
(by inputting figures for borrowing/repayments and other cash
view?
outflows). A lender will also look at other aspects of the business
plan to make sure that it gives a positive view of the business and its 2. What do you think
prospects. potential investors
and lenders might
To guide decision-making particularly be
There is a well-known saying which states “to fail to plan is to plan looking to examine
to fail”. A plan provides a business owner with the guidelines needed in a business plan?
when making business decisions. For example, a business plan might What might dissuade
state that a new business intends to borrow $50 000 from a particular them from investing?
bank for start-up costs, that it will source raw materials from a 3. Some entrepreneurs
particular supplier, that it will charge $x amount, and that it will use are over-optimistic in
particular marketing channels. These are clear guidelines that give setting out a business
the business a sense of direction and show what needs to be done. plan. Which aspects
Entrepreneurs and managers should therefore follow this guidance in of the business plan
planning out the operations of the business. Of course there should do you think they
be flexibility within this, but the business plan provides a clear outline are most likely to
of what to do. exaggerate?
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Key term 3.9

Executive summary: Describe the elements of a business plan
this is also called a A well-structured business plan will include the following elements.
management summary,
and it is a short part 1. Executive summary:
5. Financial forecast: an overview of the
of a longer document business
sources of finance,
that summarises the sales, cash flow, profit
key content of the main and loss forecasts
document. 2. Operational plan:
The details of the business
Operational plan: this business including its structure,
sets out the day-to-day plan aims, objectives and
tasks that are required to 4. Marketing plan: operational details
a description of
run a business. potential customers
and competitors – size 3. The business
of the market opportunity: a description
of the product or service
A business plan set out in this way starts with a brief overview, then
gives details of how the business will be structured. It then highlights
the business idea before moving on to the marketing and financial
aspects. (In some business plans, the ‘operational plan’ and the
‘business opportunity’ may be presented the other way round.)
The different aspects of a business
plan are discussed in more detail
Sunshine Fashion below.
Executive summary
Sunshine Fashion is a small, innovative fashion design and retail
company operating from offices at 22a Arcadia Towers, Port of Spain. The executive summary is a very
Sunshine Fashion has a small manufacturing and design studio important element of the business
based at Arcadia Towers and a retail outlet situated in Main Street. plan. It is a brief overview of the key
The company was set up by Lavinia Porteus, and is now a registered features within the business plan. This
limited company with four key shareholders each with $10 000 of section should give some information
investment in the company. Lavinia Porteus is responsible for the about the owner(s), including their
design and manufacturing aspects of the business, while Josh educational background and their
Wilman manages the retail operations and online sales. previous work experience. It should
also include the name and addresses of
The aims and objectives of the business are to: two referees. It is usually the last section
• Be the leading small fashion design and trend-setting women’s of the plan to be written, even though it
clothes manufacturer in the Caribbean. is presented at the start of the plan.
• Expand production facilities in order to upscale manufacturing
Operational plan
to three key markets in the Caribbean over the next five years.
• Expand the number of retail outlets to three and build a strong The operational plan contains
online presence. important details about the business
and its objectives. These details give
98
readers a clear picture of the proposed business and how

it will run.
The plan will include details such as the name of the business and the
address of its company offices. The legal structure of the business should also
be set out, for example whether it is a partnership or a registered company,
and whether the company has limited liability. If the company is a registered
limited company, some details about the directors and their responsibilities
will be helpful. There should also be a list of the aims and objectives of the
company, as well as the personnel, suppliers and equipment necessary.
This section of the business plan might be set out as shown in the
Sunshine Fashion example here.
The operational plan will also contain information about:
• personnel (the number of employees and their particular
specialisms)
• who the key suppliers are to the business, and how well Key term
relationships are developed with these suppliers SWOT: stands for
• any equipment used by the firm, and any additional equipment that strengths, weaknesses
is currently desired as part of the development plan. (of a business and/
or its products) and
The business opportunity
the opportunities
Whereas the previous sections of the plan focused on broader aspects of
and threats that the
the business, this section will focus on the specific products or services
business faces. For
that the business offers. Readers of the business plan (such as those
example a strength of
providing finance) need to have a clear picture of what the product or
a business might be
service has that makes it special and therefore worth financing. This
its detailed marketing,
section needs to explain what the product or service is and what makes
while a weakness might
it stand out. It needs to answer questions such as the following.
be limited finance.
• What were the origins of the product idea? An opportunity might
• What are the features of the product? be that the demand
• How will it be packaged? for the product which
• How will the product be developed? the business makes is
• Does it need further development before it goes to market? growing rapidly, while
Some photographs or illustrations may be helpful in this section. a threat may be the
activities of a competitor
Marketing plan in the same market.
This section will describe the market research that has been carried Demographic
out and what it has revealed. It should also give details of prospective characteristics:
customers, such as how many there are, how much they would be related to the market
prepared to pay, what distribution strategies will be used to reach population, e.g. whether
them, etc. Owners should also include details of the competition in customers are young or
this section (who they are, how their product offering compares, how old, male or female, and
their prices compare, how they distribute their products), as well as the whether they live in cities
pricing strategies that will be employed, demographic characteristics or rural areas.
of the target market and a SWOT analysis of competitors.
99
Details should also be set out here showing how the business proposes
to advertise and promote the product/service, as well as giving
details of the likely costs to do this, so that a marketing budget can be
estimated.
It is helpful if the marketing plan indicates what share of the market the
company hopes to secure. For example, if a business hopes to win a
10 per cent share of the market within the first year, this would indicate
that it is hoping to secure 10 per cent of all sales made in a particular
market. By calculating the total sales value of a market, e.g. $1 000 000,
Now try these
this would mean that expected sales would be $100 000.
1. Why do you think a
Financial forecast
business plan starts
with an executive The financial forecast should give an in-depth description of the
summary, rather than finances predicted for the business, including:
going into the more • Sources of finance: this should give details of how the finance
detailed aspects for the business is going to be raised. How much will come
straight away? from savings/from the owners? How much will need to be
2. What overall borrowed?
impression do • Sales: what are the expected sales, both in terms of numbers of
you think a reader sales and revenues received from sales?
would want to gain • Costings: what are the expected costs of producing the product or
from reading the service?
operational plan of a • Profit and loss forecasts: comparing expected sales revenues and
business? expected costs will make it possible to forecast profit and/or loss
levels.
3. What do you think
• Cash-flow forecasts: a cash-flow forecast shows the starting
is the purpose of a
balance of cash, any receipts of cash (inflows), any payments of cash
marketing plan? As a
(outflows), and closing balances of cash. The cash-flow forecast
reader of a marketing
helps to identify periods when the firm may need to borrow in order
plan, what details in
to manage cash-flow imbalances.
particular would you
want to see? Documents found in this section of the business plan may include sales
4. Business in action: forecast statements, sample cash-flow statements, income statements, etc.
Ask your business Expansion
teacher to obtain
Finally, the business plan should give an indication of future plans. Does
a real business
the owner want to keep on producing a steady output or is a dramatic
plan from an
expansion possible? Does the business intend to add to its product
entrepreneur. Identify
range? What kind of new competition is likely to emerge, and how will
the key headings that
the business deal with it?
have gone into this
plan. The first page of a typical business plan will look something
like this.
100
Spicy Foods
Seafront Avenue
Anguilla
31 January 2019
Executive Summary
The owners
The company will be structured as a limited partnership, owned by
Ezekiel and Martha Williams. Ezekiel and Martha both have chartered
accountancy qualifications and previously owned their own seafood
restaurant.
The management
Spicy Foods will employ a professional kitchen manager and a chef to
work under the direct supervision of Martha Williams. The business has
already taken the steps to appoint Chris Chan to the position of chef.
He is one of Anguilla’s leading chefs.
Goals and objectives
• To become known as Anguilla’s number one spice kitchen and
restaurant, as well as training new chefs to give Anguilla a leading
edge in the Caribbean for spicy chicken and other flavours.
• To break even in the first year and then to increase sales by
10 per cent year on year, leading to an incremental improvement
in profits and cash flow year on year until 2024.
The product
• A restaurant which serves spicy jerk chicken with ‘flavoursome’
rice and peas.
• A training school for new chefs to create the ‘authentic
Anguillan taste’.
3.10
Identify sources of information for conducting
research into the establishment of businesses
Gathering information from primary sources involves using your own
sources and carrying out your own research. Secondary information is
taken from someone else’s existing research.
The advantage of primary research is that the entrepreneur is
personally aware of the reasons for gathering the data, and has direct
experience of the actual gathering of the data. The data is also likely to
be fresh (very recently collected). The advantage of secondary research
is that it can be broader in extent, particularly if it has been collected by
a large research company using large samples.
When people want to set up a business, they can draw on the following
primary sources of information:
• Their own experience of doing something similar, for example
working in someone else’s business.
101
• Talking to someone who is already in business.

• Creating their own market-research questionnaires to find out about
the market.
• Approaching financial institutions to enquire about borrowing
finance.
• Creating their own ‘pilot enterprise’ to see how successful it is, for
example by selling a product at a fair or carnival.
In addition, they can draw on the following sources of secondary
information:
• Books and leaflets about starting up your own enterprise (for
example Doing Business in Barbados, produced by the Barbados
Chamber of Commerce and Industry).
• Government publications and information about starting up and
running a business (for example Starting a Business, produced by
the government of Barbados).
Tip • Published market-research information about specific markets, produced
Make sure you can by marketing agencies (although this can be expensive to acquire).
explain the main sources • Brochures and online information provided by financial institutions
of information that an (such as banks) about setting up a business and how to borrow
entrepreneur would use finance (for example leaflets produced by First Caribbean
to create a business plan. International Bank on how to get a business loan).
• Research published by the Scientific Research Council in Jamaica.
Now try these

1. Identify secondary sources of information that would be
particularly helpful for new entrepreneurs in your country.
Research this information by searching for local private
websites, such as those produced by the chamber of
commerce in your country, as well as government web pages
that are relevant to establishing enterprises in your country.
2. Sonia has created a small enterprise providing sandwiches and
cakes for special occasions. She is hoping to build her business
into one that serves local functions and conferences in Kingston,
Jamaica. What types of primary research could Sonia use to
explore the possibility of expanding her business in this way?
3. Sonia is also considering using existing published research
about the catering industry in Jamaica. What will be the
benefits and drawbacks of using these secondary sources
compared with doing primary research?
4. Business in action: Carry out some research in your library
and online to identify sources of secondary information about
the hotel industry in your country. List these sources.
102
3.11 Key term

Discuss the significance of conducting a feasibility Feasibility: capable of
study into the establishment of a business being done.
A feasibility study is a piece of research to find out whether a business Viability: currently
or project will work. It aims to identify the strengths and weaknesses of succeeding (making
a proposal to see if it should go ahead. Therefore, if you have a business a profit) and likely to
idea and a business plan, the next step is to carry out a feasibility study continue to be a success.
to establish whether your business is viable.
There are a number of reasons for carrying out a feasibility study, as
outlined below.
To ascertain the viability

The feasibility study should enable entrepreneurs to ascertain whether
they should go ahead with launching a business, or in producing a
product or service. If the study produces the result that a project is not
viable at the current time then it should not go ahead. There are many
reasons why an enterprise may not be viable:
• It is the wrong time, for example because the economy or the market
is in a bad state.
• The entrepreneur has insufficient experience to make the enterprise
a success.
• Insufficient finance is available to make the project work, and the
business may soon run out of funds.
To identify the possible costs

One reason why many projects fail is because insufficient attention has
been paid to identifying the costs. There are many types of business costs,
and most new entrepreneurs are not aware of all of these, including:
• costs of materials
• costs of equipment
• costs of transport
• costs of power
• costs of borrowing (interest charges)
• costs of marketing
• seller costs
• costs of labour and other factors of production
• government costs (for example in the form of taxes).
A project may prove to be unfeasible not because of the overall level of

costs, but because of the timing of the costs. For example, payments
out may come earlier than expected, while payments in may come later
than expected. A viability study therefore needs to identify how great
each of the costs will be, and when these costs will be due for payment.
103
To identify possible sources of finance

Now try these New entrepreneurs often assume that finance for their business will be
1. Meenum is hoping easy to acquire, but this is not usually the case. Finance will only become
to set up a business available if financiers such as banks are able to see a detailed business
offering a sound plan which proves that repayments on loans can be made on time.
system that can be A feasibility study is therefore important because it clearly identifies proven
used for all-night sources of finance, how much finance will be available, when it will be
parties. The sound available, and when repayments can be made. If any of these details are not
system will cost viable then an entrepreneur will know that their business is not feasible.
$20 000. She will hire
out the sound system 3.12
for $1 000 per event.
However, she carried Explain the relationship between planning
out some further and the operation of a business
research and found Businesses need short-, medium- and long-term plans so that they know
out that licensing what needs to be done, and can think ahead to prepare the business
laws prohibit music for future events. Planning creates guidance for the future and provides
after 1 a.m. Meenum something to compare actual performance against. Planning also helps
was only able to raise an enterprise to chart the route it needs to take to achieve its goals.
$10 000 of finance Successful enterprise is built around creating these three types of plans.
for her business, and If a company only has a short-term plan, it will be constantly firefighting
her market research because there will be no clear sense of the direction for the business,
indicated that users and no plans for tackling future problems.
would only be
prepared to pay $500 Short-term planning
per night. Explain A short-term plan typically relates to what needs to be done within one
why her original idea year. It is concerned with creating the operating guidelines that will
is neither viable nor enable the business to achieve the results it wants to achieve within
feasible. that year. It answers the question “How do we do it?” (for example,
2. If Meenum is to create “How do we achieve the desired results?”).
a viable financial plan A short-term plan enables the business to make the best use of the
for her business, what limited resources it currently has available. It also enables the business
aspects of the plan to manage the risks with which it is faced (for example risks resulting
might she need to alter? from new competitor activity and changing customer perceptions).
3. Business in action: Short-term planning is often easier than long-term planning, as shorter
Interview someone periods are often more predictable.
who created a
Medium-term planning
business plan
that proved to be A medium-term plan will be for a period of more than a year, and will seek to
successful. How was he find more permanent solutions to short-term problems. It will provide actions
or she able to ensure that will take more than a year to implement, which will help to achieve
that the business plan longer-term plans. For example, whereas a short-term plan may involve
was viable? making the best use of the finance that is currently available, a medium-term
plan will seek to identify ways of acquiring new sources of finance.
104
Long-term planning
A long-term plan will cover periods of four to five years and longer,
and will involve ways of achieving the medium-term plans. The long-
term plan will help to steer the company forwards in the direction that
entrepreneurs and owners desire. This plan goes beyond setting up a
business and starting out its operations, to look at creating a bigger
picture and the means to achieve this picture in the longer term.
For example, there are many companies today in the Caribbean that The long-term plans of solar-panel
supply and fit solar panels. These businesses are able to create long-term companies benefit from a growing
market for renewable energy
plans which show that there is a growing market, as renewable energy
sources increasingly replace declining fossil fuels. While solar panels
involve an outlay for installation, they prove to be very cost-effective in
Caribbean countries that receive large amounts of sunshine. Solar panel
companies are therefore able to create long-term plans that are highly
persuasive, showing ongoing demand that increases over time.
Now try these

1. Why do businesses need to create short-, medium- and long-
term plans?
2. Is each of the following likely to be found in a short-, medium-
or long-term plan?
(a) Details of the product promotion required to launch a new Tip
product.
Make sure you can
(b) An outline of how the business will expand over a period of explain the differences
ten years. between short-, medium-
(c) The business has already created an outline of how finance and long-term plans, and
will be secured to set up the business but has created an give examples of what
additional plan for the period which goes beyond the first should be included in
year and into the second year. each of these plans. You
3. Business in action: For a local retail business, identify one should also be able to
detail that you think should be included in a short-term plan, show that there is some
one detail for a medium-term plan, and one detail for a overlap between these
long-term plan. plans.
3.13
Identify regulatory practices instituted by
governments for the establishment and
conduct of different types of businesses
Businesses operate within a framework of rules made by governments.
Governments operate at a number of levels, as illustrated in the table
below.
105
Level of government Examples

rule-making
Local rules Made by local government, for example the governments of Barbuda and Antigua
Regional rules Made by the region head of government. For example the heads of government of the
OECS makes rules and polices to guide the OECS countries.
Global rules Made by groups of governments working together, for example the Rio Convention on
Climate Change rules made by many governments
Local rules will cover issues such as the management of waste at a local
level (for example regarding refuse collections from businesses), parking
regulations for vehicles and zones where business activity is permitted,
etc. Municipal rules are created by the municipal council in a large urban
area, whereas village rules govern rural villages. In the Caribbean, the
parish is an important local government division, and the parish council
will be responsible for levying local business taxes and providing local
services such as street cleaning. Although most Caribbean Countries
have parishes, not all have parish councils. Normally, the government
makes the rules that governs the entire country.
National rules affecting business will be created at parliament level in a
specific country, such as Barbados or Antigua and Barbuda etc. Regional
rules govern the movement of labour within the Caribbean. Because of the
various rules and treaties signed by the regional heads of government, it
is difficult to refuse permission for nationals of other countries to live and
work in other countries. The following section looks at some of the most
significant national government policies and laws that impact on enterprise.
Monetary and fiscal policies

A country’s central bank provides financial and banking services for
Key term its country’s government and commercial banking system, as well as
Central bank: the implementing the government’s monetary policy and issuing currency.
government’s bank. It The Central Bank of Barbados will lend money to other banks, and the
oversees the running of interest rate it charges becomes the key interest rate in the economy;
the financial system in a other banks set their interest rates similar to this rate. The CBB and
particular country, and other banks can support business by making more money available
licences other banks to in Barbados, for example by circulating more money, and by reducing
operate in that country. interest rates so that businesses and individuals can borrow money
at a lower cost. Of course, the CBB should not increase the amount
of money by too much or too quickly, otherwise people will lose
confidence in the value of the national currency.
The government also impacts on business through fiscal (monetary)
policy. Fiscal policy relates to government spending and government
taxation. The government collects taxes from business in the form
of sales taxes (a tax that has to be paid on the sale of certain goods),
and businesses also collect income tax on behalf of the government
(taxes on employee wages). High taxes can act as a discouragement
106 to business because taxes can be seen as an additional business cost.
Businesses might complain that a chunk of their profits has to be paid

to the government in taxes. Now try these
The other side of fiscal policy is the government’s expenditure on 1. Regulations are rules
services which businesses benefit from, such as road and railway links, created at a local,
bridges and ferries, street lighting and healthcare. Businesses also regional and national
benefit when governments purchase their products/services, such as level. Why do there
new pipes for water systems. need to be rules
governing business
Consumer protection agencies
behaviour?
The government sets up consumer protection agencies to protect
2. Business in action:
consumers against unfair business practices. Such practices might
Can you identify any
include providing inaccurate weights and measures of goods, offering
additional rules that
goods that are unfit for sale, selling products that are harmful to
are made at a local or
consumers, unfair advertising, and so on.
national level which
For example, in Guyana, the Consumer Affairs Division (CAD) is a impact on business
government department specifically set up for the protection of and are not explained
consumers. Businesses benefit from such agencies in that they create in this unit? What are
standards and rules to be followed so that consumers can have these rules, and what
confidence in legitimate traders, and businesses that break the rules aspects of business
can be punished in the courts. behaviour do they
Environmental policies seek to regulate?
National governments establish environment agencies that are
responsible for creating rules relating to the environment, and
then monitoring how effectively these rules are being applied. The
environment agency will prosecute businesses and individuals who
flout these environmental regulations.
For example, in Jamaica, the national environment and planning
agency regularly creates reports on the state of the environment in the
country, as well as creating rules governing issues such as water and air In Jamaica, there is very tight
pollution. There are very tight regulations about how businesses can regulation over what liquids are
create, manage and get rid of waste. allowed to flow into rivers, the sea
and other waterways
Intergovernmental agreements
Intergovernmental agreements between groups of countries are
particularly important in the Caribbean, including the creation of
policies and rules on fishing, the environment and the use of ocean
resources, as well as in the creation of rules on trading.
3.14
Outline the factors that determine the
location of a business
One important consideration for a new business is its location, i.e.
where the business should be situated. Considerations may involve
being close to the market, building on sites where costs are low, or 107
perhaps choosing an area where labour is plentiful and wages are

cheap. Later on, a firm may choose to relocate, often because costs
have become too high at the original location.
Factors affecting the location of a business are outlined below.
Transport links
Power and
water supplies Telecommunications
Health facilities Supply of labour

Factors affecting
business location
Government
regulations for
Geography
where businesses
can set up
Availability and
location of raw
Infrastructure materials and
supplies
Geography
Key geographical features that dictate whether a location is good for a
business include the following:
• Natural features (the terrain of the land, the availability of water
supplies, etc.).
• Population (the size of the local population, the age structure of the
local population, and other demographic factors).
• The industries that already exist in a region (suppliers,
competitors, etc.).
Many businesses need to be located close to their market and their
customers. For example, many manufacturing industries locate close to
their market, particularly if they produce bulky or fragile items that are
expensive to transport.
Service industries such as hairdressers, restaurants and entertainment
need to be near to customers because customers will be travelling to
108
them. Other services such as banking and insurance also sometimes

need to be near to customers, although many transactions are now
carried out online. Another significant geographical factor is the climate,
particularly if it is very hot or cold or frequently windy, or there is a lot
of rain or snow, as this can affect the production and movement of
resources.
Availability and location of raw materials and supplies

Some manufacturing businesses use a lot of heavy, bulky raw materials
to make their products, even though the end product is smaller and
lighter. For example, finished steel is a lot lighter than the ore, limestone
and other materials of which it consists. If the raw materials are bulky
and expensive to transport, it makes sense to locate near their source.
Infrastructure
Infrastructure refers to the key physical and organisational structures
and facilities (such as buildings, power supplies and roads) needed for
the operation of a business. Businesses require access to electricity
supplies for lighting and heating, and good transport links for
employees to get to work, for supplies to reach the company and for
goods to get to market. In addition, businesses will either need to buy
premises or rent them, so the availability of suitable buildings in an area
is very important.
Tip
Power and water supplies
A business must consider five standard utilities: gas, electricity, Make sure you can give
water, waste disposal and drainage. Power is particularly important regional examples of
in manufacturing, but it can also be important for large service how various factors
organisations such as banks and insurance companies. Industries such have impacted on the
as food preparation and paper production use large quantities of water. location of an industry.
Food processing creates waste, and the cost of waste disposal will For example, eco-tourism
affect the choice of location. in the Caribbean requires
unspoiled seas and
Telecommunications beaches and simple
Businesses need a strong communication system. This is particularly accommodation, whereas
important in the Caribbean, where many companies trade and communicate mass tourism requires
globally. It is therefore important to set up in areas where communications airports and large hotels.
are clear and reliable. This might exclude some mountainous or highland The oil industry in Trinidad
areas, or countries where the telecommunication links do not exist. Cities is located offshore, as this
with excellent wireless and broadband facilities can be attractive for new is where oil reserves can
businesses. be found. IT businesses
have developed in
Transport links
countries with good
Two major influences on transport costs are the type of raw materials telecommunications, such
used by the business, and how near the business is to its market. as Barbados.
Transport costs will also be affected by whether the industry is “bulk
109
increasing” or “bulk decreasing” (i.e. whether the goods become larger

and heavier or smaller and lighter as they are assembled). Businesses
that use heavy and bulky raw materials – such as steel-making and
sugar-refining – will incur high transport costs if suppliers are a long
way from the steel plant or sugar refinery. Many businesses (such as
hotels and factories) set up close to good transport links, for example
near a major road junction, rail station or airport, as this means they are
conveniently located for customers.
Health facilities
A health facility is any location where healthcare is provided, for
example a doctor’s surgery or hospital. Good healthcare facilities are an
Now try these important aspect of business, particularly for industries that are more
1. Which three factors likely to result in accidents and injury (for example mining and farming).
do you think are Employers also benefit from having easy access to health facilities to
most important in keep a workforce healthy and capable of effective work. For example,
choosing a location if employees need to visit a clinic then it is helpful if they can visit the
for each of the doctor quickly and then return to work.
following businesses?
Supply of labour
In each case justify
your answer. Labour and skills are more readily available in some areas than others,
and this will be an important factor for most businesses when they
(a) Gypsum mining/
choose their location. If businesses want a large pool of cheap labour,
quarrying
they might set up in areas where there are not many existing employers.
(b) An international If they want skilled labour, they will need to set up where they are most
call centre (for likely to find those skills.
taking phone
calls) Government regulations
(c) A hotel Government regulation can have a major impact on a business’s
(d) A fish restaurant location. For example, in some areas of the Caribbean, there is relatively
little regulation (rules, laws and taxes), and some businesses locate to
2. What factors do you
these areas as a result, for example offshore financial institutions. A
think a supermarket
lack of regulation helps to reduce business costs, as less paperwork is
business should
required to carry out business.
consider before
deciding to branch Governments also provide financial support, such as grants and tax
out into a new incentives, to attract new businesses to set up in some regions. These
country? will usually be areas of higher unemployment, where a new business
will provide jobs and therefore help to improve the economy.
3. Explain why a US
company might There are also legal factors involved in choosing a location, such as
choose to locate not being able to locate industrial premises in residential areas. Local
one of its processing and central government planning authorities have a duty to serve the
plants in a Caribbean interests of their populations. On the one hand, they want business and
country. industry because they provide employment. However, they also want to
protect the environment of the towns and villages.
110
3.15
Explain the significance of collateral in accessing
capital to establish a business
The concept of collateral
Collateral is an asset (such as property or something else of value) that
a borrower provides as security in order to get a loan from a lender. If a
borrower fails to pay back the loan, the lender can use the borrower’s
collateral as payment instead. The lender wants to feel secure that
it will not lose out from making a loan, and in many instances will
therefore ask for some form of collateral before giving a loan.
Many different valuable assets will be accepted as collateral, including
property and financial securities, and even motor vehicles and
company assets such as machinery and equipment.
Evaluation of different types of collateral

Virtually any asset can be offered to a lender as collateral. The following
are some of the common types of collateral usually accepted by
commercial lenders.
Property: An entrepreneur might use the title deeds to a property

that they own as collateral for a loan to finance a business. This only Key term
becomes relevant when the entrepreneur owns the property outright. Collateral: an asset
It might be a risk to offer property as collateral where the buildings (such as property or
concerned are essential to running the business, or form part of the something else of value)
home of the entrepreneur. For the lender, property might be attractive that a borrower provides
as collateral because it often retains its value over time. However, if the as security in order to get
property has to be sold to repay the loan, this may take some time. a loan from a lender.
Stocks: ‘Loan stock’ refers to shares in a business that are used to
secure a loan. The loan stock earns a fixed rate of interest (just like an
ordinary loan). Lenders will have physical control of the shares until
the borrower pays off the loan. Therefore, if entrepreneurs want to
raise loan finance, they can simply issue loan stock, which is bought by
lenders and held until the enterprises choose to repay the loan.
Bonds: A bond is a long-term loan where an investor (or the government)

loans money to a business for a fixed period of time at a set or variable
interest rate. Owners of bonds are creditors of the issuer. There is a date
set for the repayment of the loan, for example when the bond matures.
Money: A cash-secured loan is a way for an entrepreneur to borrow

for their business using their cash savings account as collateral. If the
entrepreneur defaults on the loan then the borrower can have some or
all of the funds that are in the entrepreneur’s savings account.
111
Cash surrender on life insurance policies: Lenders are often willing

Key term to accept a borrower’s life insurance policy as collateral. Should the
Market value: the price borrower die during the period he or she is borrowing money, then the
of an item or value of an lender is able to claim the money due on the life insurance. Each year,
item in terms of what you those insured are updated about the cash surrender value of their policy.
would be able to receive The borrower continues to pay the premiums on the life insurance, as
for it at a particular well as any interest on the money lent by the lender. Once the borrower
moment in time, if you has paid off the loan, then he or she becomes the owner of the life
sold it immediately in insurance policy again.
the relevant market for
Motor vehicles: Here, a borrower hands over the title deeds to
that item. For example,
company or personal vehicles (such as a company van) to act as
the market value of
collateral for a loan. Should the borrower default on payment, then the
property is the price that
lender can seize the vehicles.
an estate agent would
currently be able to gain Appliances: Appliances and other forms of equipment can also serve
from the highest bidder as collateral. For example, a business may finance the purchase of
in the housing market. machinery and equipment on a hire purchase arrangement, whereby
it only owns the items when the last payment (from a number of
instalments) has been made. The company providing the finance
for the hire purchase can reclaim the items (its collateral) should the
purchaser default. Another way to secure machinery and equipment
is to lease it (for example by paying a regular charge) so that the hirer
never actually owns the equipment.
The value of collateral

The value of collateral is the estimated fair market value of the asset
that is being used as collateral. Lenders base the value of collateral on
the asset’s liquidation value rather than the value of the item when it
was initially purchased, or the value that could be realised if sold to
the highest bidder. In order to protect itself, the lender will only use a
collateral value that is the market estimated value if it has to sell the
item quickly in order to raise funds.
Now try these

1. Why do you think a lender asks for collateral?
2. If you were going to provide collateral for a loan, what items do
you have that could serve as collateral?
3. Business in action: For a business that is local to you, see if
you can identify items that the owner could use as collateral,
e.g. vehicles. (The business may not actually own the vehicle
outright, but for the sake of this exercise, assume that it owns
the items it has in its possession).
112
33 Establishing
Establishingabusiness
business
Develop your exam skills
PAPER 1 C Increase the size of the funds that can be

1. Which of the following would you not borrowed
associate with being enterprising? D Provide the lender with confidence that
A Being prepared to take risks it has security to cover its loan
B Being willing to work hard for long hours 6. Monetary and fiscal policy is associated with
C Being imaginative and flexible policies made by:
D Looking for predictable and certain A A parish council
outcomes B A municipal council
2. For which of the following groups would a C An intergovernmental committee
business plan most likely be prepared? D A national government
A Customers 7. A feasibility study will enable an
B Employees entrepreneur to:
C Lenders A Decide whether to start up a new
D The local community enterprise
3. The best argument for small enterprises B Borrow money in order to buy start-up
contributing to development is that: equipment
A It is in fact large enterprises that employ C Choose how to market the products
most people in an economy D Identify a business name for a new
B Small enterprises generate less income business
and wealth than large businesses 8. A business is most likely to locate close to
C Small enterprises create jobs for the source of its raw materials when:
employees and products for customers A The market for the product is a long way
D Small enterprises tend to be more away
common in smaller countries than in B The raw materials are heavy and bulky,
larger ones and reduce in the production process
4. An executive summary in a business plan: C It is essential to locate close to the
A Is the name used to describe the available labour supply
business plan in its entirety D Only a few raw materials are required for
B Sets out in a succinct way the key the production process
aspects of the plan 9. Self-actualisation is most likely to be
C Outlines the key decisions that business achieved when:
managers will make in an enterprise A An entrepreneur sets up a new enterprise
D Focuses on the business market and the B An entrepreneur works long hours with
management team few breaks
5. The function of collateral is to: C An entrepreneur is able to be creative
A Provide funds to a borrower and fulfilled
B Enable the lender to take interest from D An entrepreneur is able to make a profit
the borrower from the enterprise
113
3 Establishing business
10. A primary source of information that would C An entrepreneur’s previous experience of

help in creating a business plan would be: running a similar business
A Government statistics about market D Pamphlets about starting a business
trends from the chamber of commerce
B Existing published material from a
market-research company
PAPER 2 3. (a) List four (4) types of collateral. (2 marks)
1. (a) Who is an entrepreneur? (2 marks) (b) What is the significance of collateral in
(b) Explain the role of an entrepreneur in raising business capital? (4 marks)
economic development. (4 marks) (c) Describe one government policy to
(c) Discuss two (2) roles of an entrepreneur regulate business practices. (4 marks)
in the decision-making process. 4. (a) Outline the steps for establishing a
(4 marks) business. (6 marks)
2. (a) List two (2) factors that determine the (b) Explain why a feasibility study is
location of a business. (2 marks) important. (4 marks)
(b) Outline the reasons for a business plan.
(4 marks) Tip
(c) Describe the two (2) main sources of Once you have completed these questions
information for conducting business you can check your answers online at: www.
research. (4 marks) oxfordsecondary.com/9780198437352.
114
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Detailed illustrations demonstrate theory in

practice
Contemporary examples provide learners

with a clear understanding of fundamental
concepts
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Oxford excellence for the Caribbean

syllabus, with clear references throughout to

constructed practice and exam-style questions FOR THE

 Engage your students with the fundamentals of

 Introduce key theory through real-life,

educators and examiners

3.2 843735_Chapter_3.indd 82 05/04/19 11:39 AM

Explain the functions of an entrepreneur

Setting the scene

1. To what extent was Maria taking a risk in setting up her enterprise?

Who will definitely have to invest a lot

Now try these

Now try these Tip

Creative Characteristics Persevering

The answer to all of these questions is that you need to be flexible.

these goals, the boards were designed specifically for conditions

Now try these

Operating the business

entrepreneurial approach was holding back economic development.

Providing goods and services to satisfy citizens

Contributing to nation building

enterprises prioritise solutions that are kind to the environment, provide

Earning foreign exchange

Now try these

• I can take holidays when I want them.

e Creation of business plan

Research (market probe)

2: Research (market probe)

• How much are they prepared to pay?

to banks and credit unions, and to potential partners, investors and

6: Operation of the business

business. Investors often invest in more than one business, therefore

Key term 3.9

readers a clear picture of the proposed business and how

• Talking to someone who is already in business.

Now try these

3.11 Key term

To ascertain the viability

To identify the possible costs

A project may prove to be unfeasible not because of the overall level of

To identify possible sources of finance

Now try these

Level of government Examples

Monetary and fiscal policies

Businesses might complain that a chunk of their profits has to be paid

perhaps choosing an area where labour is plentiful and wages are

Health facilities Supply of labour

them. Other services such as banking and insurance also sometimes

Availability and location of raw materials and supplies

increasing” or “bulk decreasing” (i.e. whether the goods become larger

Evaluation of different types of collateral

Property: An entrepreneur might use the title deeds to a property

Bonds: A bond is a long-term loan where an investor (or the government)

Money: A cash-secured loan is a way for an entrepreneur to borrow

Cash surrender on life insurance policies: Lenders are often willing

The value of collateral

Now try these

Develop your exam skills

PAPER 1 C Increase the size of the funds that can be

Engage your students with the fundamentals of

Introduce key theory through real-life,

Improve exam performance with sample answers and feedback

Detailed illustrations demonstrate theory in

Contemporary examples provide learners