Grade 8 and 9 Learner Workbook - Western Cape



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Table of Contents

How to use this workbook………………………. 2

Getting Started…………………………………… 3

Create your Business Plan……………………… 5

Cover page ………………………………………. 7

Summary of the business idea…………………. 9

Description of your business…………………… 11

Marketing plan…………………………………… 15

Management plan……………………………….. 21

Financial Plan……………………………………. 25

Record and Evaluate…………………………….. 31

Motivation and Conclusions…………………….. 37

Acknowledgements

Project Manager: Jerome Gordon, Senior Curriculum planner: GET

Economic and management Sciences Learning Area, Western Cape Education

Department

Many thanks to the following contributors:

All Economic and management Sciences Learning Area curriculum Advisers

Author: L Zeeman

Printing: Edumedia (WCED)

All Business Studies teachers who will be facilitating the booklets/material

The City of Cape Town Department of Economic Development and Tourism,

RED Door, Cape Regional Chamber of Commerce, and other partners in the

World of Business, who all participate in developing Entrepreneurial skills in school going youth.

How to use this Workbook

This Workbook provides you with a step-by-step guide to complete your Business Plan.It will help you to find a suitable business idea and provide you with practical examples of the different components that you need to complete for your Business Plan. The layout of the information provides for detailed examples and explanations of how you should go about putting the information together and then provides you with templates to complete your own business plan.

Templates for your SWOT analysis and Income Statement have been provided for two more attempts and forms part of this booklet. This will give you the opportunity to refer back to what you have done in previous rounds.

At the same time this booklet will serve as your Portfolio of evidence to show how you have reached the following Learning outcomes and Assessment standards:

Grade 8

LO 4 AS 2 Discusses different ideas for starting a business (including ideas to attract tourists, franchising

LO 4 AS 4 Evaluates the financial viability of a business (e.g. start-up costs, production costs, sales, profit).

LO 4 AS 5 Engages in a business activity that involves purchasing, production and marketing (should involve financing of business with own or borrowed capital - e.g. bank overdraft

Grade 9

LO 3 AS 1 Completes a basic income statement and balance sheet for a service and retail business.

LO 3 AS 5 Analyses financial statements for decision-making at a basic level.

LO 4 AS 1 Generates, through SWOT analysis, possible business ideas to meet the need for manufactured goods or services.

LO 4 AS 2 Develops a business plan (including a budget) for a manufacturing, service or tourism enterprise based on the best business opportunity from the ideas generated.

LO 4 AS 3 Engages in the business activity planned and discusses the reasons for choosing a particular form of ownership.

LO 4 AS 5 Conducts a marketing campaign to promote a product and discusses the self-selected advertising media.

Good luck with your Business venture!

GETTING STARTED

Many people do not start their own business because they have no idea what to produce or sell. Here are some tips that might help you to think of a business idea.

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Write your own business ideas:7

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Rank your business ideas according to what you think is the best:

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Create your Business Plan

You need to decide if your ideas are good, workable business ideas and if you can make a profits. In order to be successful, your business must always focus on the needs of customers. .

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Put your idea in writing

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PROFIT = (SELLING PRICE – COST PRICE) X VOLUME –

Why do you think it will be a success?

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Make a prediction about the money that your business will make:

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1. COVER PAGE

The Cover page is very important as it will be the first opportunity for you to create a good impression. Make sure you apply the AIDA technique:

A Attract attention – the cover must be neat, clear and if you can include an interesting visual or a logo it would immediately attract the attention of the readers

I Interest – the name of your business will be a key factor when trying to get the interest of the reader, make sure it is creative and holds a promise.

D Desire – an immediate desire to start reading the business plan can be created if you make sure that your cover page is neat , clear and well-organised

A Action – if you have all three the above principles in place, it will be easy to convince the reader to turn to the next page!

You must also include all the personal information of the owner:

• Name

• Address

• Telephone numbers

• Fax number

• E-mail address

Create your cover page here

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2 SUMMARY OF THE BUSINESS IDEA

This summary is to inform the reader of the purpose of your business plan . It is not yet a full description of the business, the focus should be on what it is that you need and how you think you will be able to repay whatever it is that you are asking for.

Read the following example to guide in you in what it is that you should include on this page. However, if you do not require assistance then you can move on to the next page.

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|My business idea is to assist elderly or sick people from the community that are unable to get their daily grocery supplies from the local shop. I |

|will collect their orders and the money in the morning before school and then deliver to their homes in the afternoon. I need to purchases a bicycle |

|with a large carrier. The bicycle will cost R800 and I will charge 10% on the total of each order that I carry out. My projected figures show that I |

|should initially make about R50 per week. If I pay back R25 per week on the R800 that I borrowed, it will take me 32 weeks to repay my loan. |

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Write your Summary here

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3. Description of your Business

This section must be very comprehensive and explain exactly how you plan to turn your business idea into a profitable business. Include all information that will impact on the potential success of your business, including what type of ownership, the reasons for your choice of ownership. A well thought through SWOT analysis, where you see the business a few years from now and a very strong motivation of why you believe your business will be successful. Read through the following example and then complete your own business description:

Business description

There are many elderly and sick people in my community who needs daily fresh supplies of milk, bread, vegetables, meat and other supplies. As they are not able to get to the local store to make these purchases, my idea is to take their orders, buy what is required and deliver the goods to their homes. For this I would use a bicycle, it might mean that I have to make more than one trip per day, but the local store is situated in the residential area and close to the homes of the people that I intend to deliver the service to. I will charge a commission of 10% on every order that I execute. The business will run on a 100% cash basis and I will collect the money upfront.

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Type of ownership

I will start the business as a sole trader, as I will at first run the operation completely on my own. I also need to pay back the loan for the bicycle. I do think that in time to come, I will consider taking in a partner, which will then change my form of ownership to a partnership.

Write your Business description here:

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Describe your form of ownership:

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SWOT analysis

|Strengths |Weaknesses |

|10% commission is very reasonable. | It is hard work and time consuming. |

|There is no such a service currently in the community. | I am not yet able to purchase bulky items, as I am using a bicycle for |

| |delivery. |

|With a partner I can extend the service and | |

|include more people. | |

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|Opportunities |Threats |

|Many people in the community that need the service. |Existing charity organisations might in future perform the service. |

|Members of the working class that are pressed for time can also use the |Family members usually look after other family members. |

|service. | |

| |Other entrepreneurs might do the same thing and cash in on my market. |

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Business Potential and Growth possibility

• I believe this business idea has a lot of growth potential as there are many people who will easily pay the commission to save them the time and effort to go to the shops themselves.

• I can easily take on a partner that also has a bicycle to help me with the deliveries and share in the commission.

• The target market can extend into more than just the sick and elderly.

• 5 years from now I see this business running with more than just a bicycle or two, but could include a deliver van. This will put the business in the position to deliver more than just the daily fresh produce, but rather weekly groceries of busy families.

• I believe my business will be a success because I am a very hardworking person with a will to succeed and grow my business.

Complete your SWOT analysis here:

|Strengths |Weaknesses |

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Write your goals and growth potential of the business here:

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4. Marketing Plan

Your marketing plan should contain a description of your target market, evidence of the market research that you have conducted, information about any competitors, how you plan to advertise your business and the cost.

Target market

|Criteria |Description |

|Average age |50 years and older |

|Gender |Male and female |

|Marital Status |Both married and unmarried |

|Home Language |isiXhosa and English |

|Average monthly income |R2000 |

|Geographical area |Within 5km of the local grocery shop |

|Lifestyle |Simple lifestyle with a need for basic foodstuffs |

|Other important information |Not able to access transport and do not have a large support structure |

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Market research

Possible questions that need to be asked to the target market could include:

Do you buy milk, bread, vegetables on a daily basis?

Where do you buy your supplies?

How often do you go to the shop?

Do you do your own shopping?

How much do you spend on average on a daily basis?

Will you be interested in having your order delivered to your home?

Are you willing to pay 10% of the total of the order for this service?

How often do you think you will make use of such a service?

Describe your target market:

|Criteria |Description |

|Average age | |

|Gender | |

|Marital Status | |

|Home Language | |

|Average monthly income | |

|Geographical area | |

|Lifestyle | |

|Other important information | |

Design your questions for the Market research questionnaire:

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| |Question |YES |NO |

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Possible demand for the product

You have to make an accurate projection of your potential income. This projection must be based on facts and the information must be obtained from actual market research. Your calculation might look like this:

Number of potential customers………………………………….20

Average weekly purchase per customer……………………...R25

Average weekly commission income…..(10% of R500)…….R50

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Competitor Analysis

Calculate your market potential:

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Complete your Competitor Analysis:

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|Criteria |Competitor 1 |Competitor 2 |

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|Price | | |

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|Promotion Strategy | | |

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Promotional Strategy

Every business must have an advertising strategy in place. You can not simply rely on word of mouth to become known in the area, especially if you are thinking of expansion in the future. Think about your target market and how best to get the information about your business to them. Think creatively and make plans for a few months in advance. Be prepared to change your plans if it does not pay off.

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SPEEDY DELIVERIES

FROM YOUR LIPS TO YOUR DOORSTEP!

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Contact: Eric

Cell: 0827755134

YOUR WISH IS MY COMMAND!

I WILL BUY WHATEVER YOU NEED AND BRING IT RIGHT TO YOUR DOOR FOR ONLY 10% OF THE TOTAL OF YOUR ORDER! EVERYDAY SERVICE, INCLUDING SUNDAYS AND PUBLIC HOLIDAYS!

Describe your advertising plans:

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Create your advertising pamphlet here:

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5. Management Plan

A business must have a leader. But unless you have chosen to run your business completely on your own, you are going to need all the help that you can get. You might have to employ people to do certain jobs within the business. Choose your team carefully. The most effective teams have people with different strengths that are essential for the success of the business. Choose your team according to the needs of your business.

Make a list of everything that needs to be done. Identify how many people will be needed to perform all the tasks within the business. Complete a short job description and a job specification for each of the tasks that the business will require.

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Look at the visual presentation of the tasks that must be performed for a business that bakes and sells cup cakes:

Make a list of all the jobs to be performed in the business:

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Complete a visual diagram of all the tasks to be performed:

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The Organogram

This is a diagram of how the business is structured, with lines showing who reports to whom and the various functions within the business. An organogram is also known as an organisational structure. Once you have created your organogram it does not have to stay static. An organogram can change if the business needs change.

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An example of an Organogram:

Create your own organogram:

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6. Financial Plan

Start up

Sometimes entrepreneurs have great business ideas, but the expense of starting up the business is simply too high. It might take years for the entrepreneur to pay back a loan that funded the start-up of the business. Businesses do not necessarily start to make money from Day 1, a month or two might go by before customers start spending money. However you will still have lots of expenses to pay, although your business is not yet showing any income. There is always some pre-operating costs, that you will not easily recover. You will have to consider your start-up requirements as well as your pre-operating costs very carefully before you make a final business decision.

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Some pre-operating costs to consider:

• Starting inventory/stock/materials

• Advertising

• License

• Telephone connection

• Electricity connection

• Cash on hand

Some fixed assets you might need:

• Cash register

• Display stands

• Shelving

• Cabinets

• Tables

• Office equipment

• Advertising sign boards

• Decoration

Calculate your total Start-up costs:

Total Finance required:

Costing and Pricing

Your costing strategy will be linked to whether you have chosen to start a service business, a trading business or a manufacturing business.

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First make a list of all your expenses, remember to include overhead expenses such as rent, electricity, wages, advertising costs, etc. If possible calculate your unit cost, so that you can work out what your price should be. For a service business you must remember that your time that you are giving to the deliver the service must also be costed in. Make sure that your price is in line with what your competitors charge. If you want to charge more, then your product will have to offer more.

Study the following example of a costing and pricing process:

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Complete your Costing and Pricing:

|List all your costs and expenses |R |

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|Total costs | |

|Calculate your unit costs: |

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|Explain your pricing strategy: |

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|Calculate your break-even point: |

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Projected Income Statement

The most difficult part of your Business Plan is to make financial predictions. However this is a very important part of your Business plan and will be one of the main considerations to go ahead with the business.

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Look at the example of a Projected Income Statement for Trading -/ Manufacturing business:

|Sales |3 000,00 |

|Less Cost of goods sold* |(1 200,00) |

|Gross Profit |1 800,00 |

|Less operating expenses |( 950,00) |

|Rent | 100,00 |

|Advertising | 300,00 |

|Wages | 500,00 |

|Stationery | 50,00 |

|Net Profit | 850,00 |

*(Cost of goods sold calculation: 800 cup cakes at R1,50 each = R1 200,00)

An example of a Projected Income Statement of Speedy Deliveries (a Service business):

|Income from services rendered |500,00 |

|Less operating expenses |( 150,00) |

|Bicycle maintenance | 60,00 |

|Advertising | 50,00 |

|Stationery | 40,00 |

|Net Profit | 350,00 |

Complete your Projected Income Statement:

Projected Income Statement of ……………………………..

for the period ended …………………………..

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Show your Cost of Sales calculation:

(Remember this figure is based on the actual products sold; make a note of your leftover stock)

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Record and Evaluate

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Income Statement of ……………………for the period ended ………………………

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Show your Cost of Sales calculation:

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Balance Sheet of………………………… as at ………………………………

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Notes to the Balance Sheet

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Business Event Number 2

Now that you have some experience in starting and running a business, you might want to change some of the aspects or change your initial business idea completely!

Briefly describe you changed business idea:

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Complete a SWOT analysis:

|Strengths |Weaknesses |

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|Opportunities |Threats |

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Reflect on Business Event Number 2

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Income Statement of ……………………for the period ended ………………………

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Show your Cost of Sales calculation:

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Business Event Number 3

You have now successfully completed two rounds of your business venture and are well on your way to becoming a great entrepreneur. Now is the time to pull out all the stops and make huge PROFITS!

Briefly describe you NEW business idea:

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Complete a SWOT analysis:

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Reflect on Business Event Number 3

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Income Statement of ……………………for the period ended ………………………

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Show your Cost of Sales calculation:

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Motivation and Conclusion

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You must first complete the business plan before you can write this page! Only once you know what you need, will you be able to summarise and explain how you are going to go about is!

Be as clear as possible and ask somebody else to read your description to make sure that an outside party will understand exactly what your business will be all about.

Think about any unique features, service hours, venue, price, quality, competitors

Think carefully about the average customer that will buy your product or service.

What makes you believe in the success of your business?

Where do you see this business 2 years or 5 years from now?

Do you have what it takes to stay committed and motivated?

The next time you go shopping, look at some of the products in the shop and ask yourself the following questions:

• How can this product/service be improved??

• Can this product be produced at a cheaper cost?

• Can the packaging be improved?

• Can the product be aimed at a different market?

• Can the delivery of service be better?

Try to get all the information you need. Ask “Why, Who, How When, Where” questions about your business.

This information is very important. Make sure that it is based on facts! And check all your calculations.

Many businesses have made mistakes that could easily have been avoided had they must spent more time examining the competition. A competitor analysis could be the most important research you do before starting your own business. You may not even need to speak to your competitors in order to get a very good idea of what they are doing right and what they are doing wrong. Visit your competitors as a customer. Experience the product or service for yourself. How would you rate that experience? Write down all the improvements that immediately came to mind. Any product or service can be improved on. Try to find out who your competitors’ suppliers are and what other costs they have in running their businesses. Examine ways in which you could cut down on these costs and still produce a quality product or service. This type of research will prevent unnecessary mistakes that could have been avoided and will help you to add value to your product or service. Competition leads to more satisfied customers who have more choices and get better quality.

Remember your competitor’s weakness can be your strength!

Look at tourism catalogues or magazines that are ten to twenty years old. You may find some products in them that are ready to make a comeback in their original form or in a changed form.

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You can often import, copy or change overseas products or services that are not yet available in your country.

If you play a sport or have a hobby, look out for products or services that are missing or can be improved

When you are on holiday do you see products or services that you cannot get at home? Which products or services are better or worse than the ones at home? Are there any products or services at your holiday town that you could introduce to people in your home town?

Visit a nursery school and watch how children play together. Can you design new toys and games?

Think about business opportunities while doing household duties like gardening, cooking, washing up, sweeping, and looking after children. These are all duties that are performed by tourism service providers. Is there a quicker, easier, safer, cheaper, more pleasant or less boring way of doing household duties?

Ask your family and friends if they have thought of any ideas for new products or services. Are there any existing products that they feel are poor quality or can be improved?

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When watching television or reading a magazine, think about the products advertised. Ask yourself if they can be improved or promoted in a better way.

At trade shows you can get good ideas about new products and ways to market them. It also gives you a chance to talk with exhibitors about their products, their customers, new technology and even about doing business together.

It is a good idea to discuss your idea with a partner or a family member and find out what they think. Just make sure it is somebody that you can trust!

Checklist for a good business idea:

Is the product or service something that people need?

Do you like doing the work to provide the product or service?

Do you have the skills to do the work required to provide the product or service?

Is the product or service different from existing products or services?

Is there enough customers who need your product or service?

A Business plan is hard work! Do not start until you know that you have a winning business idea. Think critically about your idea for a few days before you attempt the Business Plan.

Use the template provided to logically present your idea.

Ideal spending on advertising should not exceed 10% of total sales! If your income is R500 per month you should not spend more that R50 per month on advertising.

Remember the AIDA technique!

An entrepreneur is somebody who sees and uses an opportunity to fill a need in the society. They start the business, organise the money and the people to do the work.

When starting your business you will have to determine:

➢ what fixed assets you need;

➢ what your pre-operating costs will be;

➢ the total amount of money you need to start up the business

Organise and Manage

Administration and bookkeeping

Mix the ingredients

Complete the baking and icing

Complete the packaging

Marketing, advertising and selling

Buy the ingredients

Many people understand a visual diagram better than the spoken or written word. Display a copy of the organogram on a notice board for easy reference.

ENTREPRENEUR

MARKETING MANAGER

PRODUCTION MANAGER

GENERAL MANAGER

SALES REPRESENTATIVES

PRODUCTION WORKERS

FINANCIAL

STAFF

ADMINISTRATION STAFF

Sometimes a flat structure works very well in a business. Too many layers can lead to delays, which can influence the business very negatively.

Sometimes a flat structure works very well in a business. Too many layers can lead to delays, which can influence the business very negatively.

Did you know?

Many small businesses in South Africa fail in the first year due to a lack of proper financial planning?

1. PRE-OPERATING COSTS

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TOTAL PRE-OPERATING COSTS

2. FIXED ASSETS REQUIRED

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TOTAL FIXED ASSETS REQUIRED

TOTAL START-UP COSTS

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START-UP COSTS RAND VALUE

Estimated start-up costs ………………………………………………….

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TOTAL FINANCE REQUIRED

.A trading business buys products from wholesalers and sells it to customers, sometimes they repackage into smaller quantities, eg a spaza shop

A service business renders a service to customers, there is not a tangible product, eg. hairdresser

A manufacturing business makes a product using raw materials and sells it to customers, a bakery

To bake 20 cup cakes will cost R30,00. This includes the ingredients of R20,00 the remaining R10,00 is for advertising, electricity and the renting of the oven.

To recover your outlay of R30,00 you will have to sell 15 cupcakes at R2,00 each. Only once you have sold the first 15, will you start making a profit! Your maximum profit if you sell all 20 cup cakes will therefore be R10,00.

The unit cost per cup cake is therefore R1,50 each. To make a profit of 50c per cup cake, you will have to sell each cup cake for R2,00 each.

It is always a good idea to do a worst case scenario and a best case scenario and then settle for somewhere in-between.

No matter whether you have chosen a service business, a trading concern or a manufacturing business, you still have to predict your income from sales and the costs you have to incur to make the sales. Take note, if you are running a service business, you will not need a cost of sales calculation, you only have to subtract your expenses from your income!

How did it go? What will you change?

Remember to change your costing/pricing accordingly!

Explain how your changes impacted on your success in Round 2

Make the necessary adjustments to your financial forecasts, costing and pricing techniques.

What have you learnt about business? Mention the most important points.

Read through all the information that you have gathered to complete your business plan and write a comprehensive motivation on why you believe your proposed business will be a success.

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