1. Chapter four (4)
Starting up a business

2. Learning outcomes
After studying this chapter, learners should be able to:
 Different routes to business ownership
 Identify a business ideas and opportunities
 Evaluate business ideas and opportunities
 Describe the process of starting up a business
 Develop a business plan
 Be able to do a viability study
 Determine the feasibility of an identified business
opportunity

3. Introduction
This lesson will be focusing on how to start up a
business. First of all, if someone wants to start up a
business it is important to know a background routes to
business ownership of starting up a new business.
Secondly it will be focusing on starting up a business
process.

4. Different routes to business
ownership
There are many ways in which business ownership can
be achieved. There are common methods that a person
can use to establish a business. Other methods include:
 Buying an existing business,
 Taking over a family business or
 Buying a franchise.
The following slide will discuss more about the routes to
business ownership:

5. Starting a new business
There are different options a person must consider when
starting a new business:
 First option: to start very small business and remain
small
 Second option: it might be small due to limited start-
up funds but a business can grow up through the
investment of the business profit.
 Third option: a person must decide to start a business
at an advance level with sufficient funds.

6. Buying or taking over an existing
business.
A person can run a business from taking over from
his/her family business or bought from another owner.
The business continue to exist as it was when it was
owned by the previous owner.
For example if a son or a daughter is owning maybe a
family company that was owned by his or her father
before.

7. Buying a franchise
Franchise is the guidelines that are set down by a
franchisor (person who controls the right to the
franchisee to sell organization's product or service).
Thus franchising is granting of certain rights by a
franchisor to other parties, franchisee.

8. Starting-up a business process
Step 1: Identifying a business opportunity or ideas.
 The entrepreneurs must identify ideas by considering their
skills and expertise.
 Must know what their personal strengths, knowledge and
experience are.
 Business ideas are also generated through the problem
identification.

9. Step 2: Evaluate feasibility of the
business opportunity and idea
 You must identify a possible business idea and
determine whether there would be a need for what he
or she is thinking(for instance, who their market will
be)
 Must identify whether he or she has necessary skills,
knowledge and resources to do what is implied by the
business idea.
 The feasibility study include evaluation of the business
idea and identification of the market.

10. Step3: Viability study
The most important thing about viability study is to
determine the size of the potential market
 Establish the market and the need of the market.
 Develop the mission statement of your business.
 Formulate goals and objective of your business.
 Determine the market share of the market
 Estimate the income of the organization (by
considering the fixed and variable cost)
 Calculate the break-even point (point where there is
no profit and loss)

11. Step 4: Developing a business plan
Business plan assist the business to focus in all its
activities on reaching the objectives in an organized
manner.
When developing a business plan there are key
elements of a business plan that you need to
consider, here are as follows:
 Cover letter: addresses a person whom the business
plan is addressed, it a very brief summary (one page)
must attract the attention of a reader to read the rest of
the business plan.

12. Key elements continues…
 Table of content: it includes the headings and sub-
headings of a business plan.
 Executive summary: it includes two or three pages of
management summary of a business plan.
 Description of the business: it explain exactly what
type of business is planned

13. Key elements continues…
 The vision, mission, goals, objectives and strategy
of the business: it provides a clear indication of the
business intention.
 Product or service plan: the product and services
must be explained

14. Key elements continues…
 Marketing plan: it explain how the product and
services will be brought to the attention of the
consumers.
 Financial plan: it explain how much money is needed
to start and operate the business.

15. Conclusion
Starting up a business is a complicated process which
require an extensive analyses of business ideas,
evaluation of opportunities and planning.

16. References
Nieuwenhuizen, C. & Oosthuizen, TFJ. (2012). Business
Management: a contemporary compilation. Roodepoort:
Future Vision Business Consultants (FVBC).
Nieman, G. (1998). The Franchise option: How to
Franchise your Business. Cape Town: Juta.