Explain the importance of encouraging entrepreneurial skills and abilities in Caribbean schools.
Entrepreneurship is important to Caribbean economies. Businesses create jobs, add to GDP and foreign exchange earnings. They also provide revenue for government in the form of taxes. Therefore, entrepreneurship skills must be taught in schools. Our students should be prepared to enter the workplace and to also start businesses. An investment in a programme that prepares students for entrepreneurship will have long–term impact on a country’s economic growth and development.
Outline and explain the importance of two characteristics required for a successful entrepreneur.
Creativity is an important characteristic of an entrepreneur. Creativity helps entrepreneurs to innovate new products and ideas for the success of the business. Entrepreneurs must have the drive and determination to be successful. Operating a business requires a lot of effort and will to succeed.
Three of your past high school friends request your assistance in starting a small business. Advise them on three important steps that they must take.
Do a feasibility study to ascertain the viability/feasibility of a business idea. It assesses the operational costs, expected revenue flows, level of competition etc. Its main purpose is to find out if the business idea is practical. The business must be registered. This is a legal requirement. Decisions must be taken on the type of business that you wish to form i.e. either a partnership or a private limited liability company. Identify sources of capital to purchase machinery, equipment, fixtures and raw materials.
‘James & Sons’ has been operating as a partnership for five years. They have decided to expand through offering shares to the public. Outline the steps that must be taken by the owners of ‘James & Sons’ to establish a public limited liability company.
Documents that must be submitted to the registrar of companies are the memorandum and articles of association and statutory declaration. A prospectus must then be published inviting the public to subscribe for shares. Collecting the capital required as outlined in the memorandum of association, to be issued with a certificate of trading allowing the company to start trading as a public limited liability company.
Compare two advantages and two disadvantages of a sole trading business and a public liability company.
One advantage of a sole trading business is that the owner receives all the profits made. However, profits are shared among members of a public limited liability company.
The sole trader can also implement new ideas quickly as he does not have to consult anyone else concerning business decisions. However, new ideas must be ratified by the board of public limited entities and therefore may take much longer to implement.
One disadvantage is that the sole trader must find all the capital to invest into a business.
A public limited liability company raises capital from shareholders. The sole trader will lose all his personal assets if the business goes bankrupt. Shareholders in a public limited liability company have limited liability and therefore will not lose their personal assets if the company goes bankrupt.
Outline three features of a business plan.
The executive summary is a synopsis of the full business plan. It outlines information on the purpose of the business, its methods of operation and future expectations.
The mission statement conveys the overall goals and value of a business. It speaks to how a company operates. For example: providing the highest quality goods and services.
A SWOT Analysis outlines the strengths and weaknesses of the business. For example,
Strengths –low overhead costs and large market share
Weakness – difficulty in sourcing raw materials and sourcing skilled workers.
Differentiate between primary and secondary data and give two examples of each.
Primary data is originally collected data. This data will be obtained by interviewing, observing or distributing questionnaires to the sample population.
Secondary data is information that has already been collected by someone else originally. This data will be therefore obtained from books, newspapers, magazines, libraries and publications of various institutions.
Explain how government may intervene to curtail unethical and illegal practices of business.
Government uses legislation to guide business practice thus protecting consumers. Laws outlining accepted standard for manufactured goods and packaging and storing of goods protect consumers. Taxes are also charged to curb activities such as pollution as a result of production.
Explain the importance of a feasibility study to the start up of a business.
A feasibility study helps individuals to ascertain whether or not a business will be profitable, it also assesses the possibilities of future income earnings and overall operational costs.
List two forms of collateral and explain their importance to the acquisition of funds for a business.
Collateral is anything of value that is used to secure a loan. It is required by financial institutions for the approval of loans. If the loan is not repaid then the financial institution has the authority to seize the borrower’s collateral. Forms of collateral include: bank balances, motor vehicle, dwelling house, land, machinery and equipment etc.