Entrepreneurship and business management N4- Q & A Revision 2
QUESTION 1
You intend to set up a small business selling clothes and bags and must draft
a business plan for the business. Complete each of the following parts of the business plan:
1.1.1 Trading name and form of ownership
The trading name chosen is Bags & Beyond Boutique
The form of ownership chosen is Private Company (Pty) Ltd:
1.1.2 Mission statement
Bags & Beyond Boutique is dedicated to offering affordable and exceptional clothing and bags for fashion-savvy individuals using the latest technologies. With a rich history of service, our objective is to be the go-to destination for fashion that transcends the ordinary.
1.1.3 Long-term goals
- To achieve a 20% increase in our client base through consistent superior performance.
- To establish and maintain a solid reputation as a trusted provider of high-quality clothing and bags in the fashion industry.
1.1.4 Product Description
Our collection includes a wide range of products to elevate your style such as traditional Clothes, Jeans, formal Wear, Casual Wear, and a selection of accessories, including bags, belts, scarves, and hats, all designed to add that extra touch of glamour to your style.
1.1.5 Place where the business will be conducted
The ideal location for Bags & Beyond Boutique will be in a vibrant shopping district or mall next to a main road within a well-populated urban area. This strategic placement will ensure a steady flow of foot traffic and exposure to a diverse customer base. Additionally, an online presence through a user-friendly e-commerce website will complement the physical store, providing convenience for customers who prefer to shop from the comfort of their homes. This combination of a physical storefront and an online platform will maximize the accessibility and reach of Bags & Beyond Boutique, creating a seamless shopping experience for our valued customers.
1.1.6 Target market description
Bags & Beyond Boutique’s target market primarily comprises urban individuals, both women and men, aged 18 to 45 years old. These individuals are fashion-conscious, with a strong desire to stay updated with the latest trends and styles. T They are located in urban and suburban areas, where fashion trends and a desire for stylish clothing are prevalent.
1.1.7 Sources of finance
To start Bags & Beyond Boutique, the primary source of finance will be personal savings, which will provide the initial capital for the business. Additionally, the remaining funds needed to launch the business will be obtained through a bank loan or line of credit. This combination of personal savings and external financing will ensure that the business has the necessary financial resources to cover startup costs, initial inventory purchases, and other essential expenses.
1.1.8 Competitive advantages
Competitive Advantages for Bags & Beyond Boutique:
High-Quality Merchandise :
Bags & Beyond Boutique prides itself on offering customers premium quality bags and accessories. By consistently providing products that are well-crafted, durable, and stylish, the boutique can attract and retain a loyal customer base who appreciate and value the quality of their purchases.
Prime Location – Good Location:
The boutique’s strategic location plays a significant role in its competitive advantage. Situated in a prime area with high foot traffic, it enjoys increased visibility and accessibility for shoppers. This advantageous location ensures that Bags & Beyond Boutique is top-of-mind for potential customers, helping to drive sales and brand recognition.
Unique Product Selection:
Beyond just offering high-quality bags, the boutique will differentiate itself by curating a unique and diverse selection of products. By carrying exclusive or hard-to-find items, the boutique hopes to attract customers looking for something special and distinctive that they won’t find elsewhere.
Excellent Customer Service:
Bags & Beyond Boutique plans to set itself apart from competitors by offering Exceptional customer service. Well-trained staff who are knowledgeable about the products and provide personalized assistance will create a positive shopping experience, encouraging customers to return and recommend the boutique to others.
Online Presence:
In addition to its physical store, the boutique plans to establish a strong online presence. This includes an e-commerce website and active social media profiles. An online presence can expand the boutique’s reach beyond its physical location, attracting customers from a wider geographical area.
Competitive Pricing and Discounts:
While maintaining quality, Bags & Beyond Boutique will offer competitive pricing and occasional discounts to enable shoppers to appreciate value for their money, the company will also offer promotions that can attract price-sensitive customers.
Customization Services:
Offering customization options for certain products, such as monogramming or color choices, will add a personalized touch to the shopping experience. This can be a significant draw for customers looking for unique and personalized items.
Sustainability Initiatives:
Given the growing awareness of environmental concerns, the boutique will focus on sustainable practices, such as using eco-friendly materials or promoting recycling. This can resonate with eco-conscious customers and differentiate the boutique from competitors.
Partnerships and Collaborations:
Bags & Beyond Boutique has plans to collaborate with local artisans or designers to create exclusive products that can generate buzz and attract a broader customer base. These partnerships will also contribute to the boutique’s reputation for unique and high-quality items.
Customer Loyalty Program:
Bags & Beyond Boutique will implement a customer loyalty program that can encourage repeat business. Rewarding loyal customers with discounts, early access to sales, or exclusive products can foster a sense of belonging and incentivize customers to return.
1.1.9 Trademark design
1.2 Give TWO advantages of the ownership form chosen in QUESTION 1.1.1.
Limited Liability:
One of the primary advantages of a private Pty Ltd company is that it provides limited liability protection to its owners (shareholders). This means that the personal assets of the shareholders are generally protected from the company’s debts and liabilities. In the event of financial difficulties or legal issues faced by the boutique, the shareholders’ personal assets, such as their homes or savings, are typically shielded from potential claims. This limited liability feature reduces the financial risk associated with running the business, making it an attractive ownership structure for entrepreneurs and investors.
Capital Raising Opportunities:
Private Pty Ltd companies have more options for raising capital compared to sole proprietorships or partnerships. They can issue shares to investors, allowing them to raise funds for business expansion, purchasing inventory, marketing, or other growth initiatives.
Additionally, the boutique can offer employee share schemes to attract and retain key talent. The ability to issue shares provides a flexible means of accessing capital without taking on debt, which can be beneficial for scaling the business or making strategic investments.
QUESTION 2
| YOUNG ENTREPRENEURS EYE CONSTRUCTION EMPIRE A coincidental meeting on a cold call between two young entrepreneurs from Durban has turned into a successful construction partnership which now sports three branded vehicles and employs 52 people. What makes Majozi Bros outstanding is that the owners were just 20 and 21 years old when they started the business under the watchful eye of Musa Majozi, father of co-owner Simphiwe Majozi (now 26).
Partner Sihle Ndlela shared their journey of establishing the company which showed a turnover of R5 million in the last financial year. The company started from very humble beginnings and was originally founded five years ago by Simphiwe, who later teamed up with his father Mr Musa Majozi. We met on a cold call, Simphiwe and I. I was running my own aluminium windows and doors manufacturing business which I had started at the age of 20. My main customers were building contractors. I saw Majozi Brothers’ website and I was surprised to see such a professional-looking website, especially from a black contractor. I decided to give him a call to try and get some work from him. The pair shared a common passion for entrepreneurship and business which went as far back as primary school – both engaged in a string of business ventures ranging from selling sweets, granting small loans, organising parties and selling hot dogs on street corners. When we realised we shared the same vision and professionalism to take the business to the next level, we decided that I should join Majozi Bros, said Ndlela. Instead of waiting for government tenders, the pair targeted the residential market, which lacked professional black companies. We wanted to operate in a field where we could differentiate ourselves through skill, professionalism and by being creative. We believe we also offered a fresh blend of enthusiasm and energy. Majozi Bros’ biggest stumbling block was to fight off a really bad reputation, particularly of black contractors. We were associated with inflated prices and shoddy workmanship. Ndlela and Majozi set out to be different from day one, investing heavily into branding and marketing and industry-related training. We made a conscious decision to project a consistently professional image in everything we do from our branding, our website, the manner in which we interact with our clients and the way we execute projects. We strongly believe in securing our clients solely based on merit and our ability to add value. We also believe that we are in the business of building dreams and not just houses. Through this, we have built a reputation of professionalism and consistently exceeding our clients’ expectations. Majozi Bros’ clients come from around most of KwaZulu Natal – from Ballito, Umlazi, Hillcrest, Adams Mission and Durban North. Our company has really grown in the last couple of years – our turnover in the last financial year was R5 million, we have three fully branded vehicles and we employ 52 workers, say the proud partners. They plan to aggressively grow the business in the coming year and to expand into other provinces. We see ourselves one day as big as companies like Basil Read, JT Ross, Grinaker, Liviero and WBHO, said Ndlela. We have studied these companies and they all have one thing in common: They were all started by mere men – men who had the same 24 hours we do, men who started with the same limited resources as we did. We therefore see absolutely no reason why we can’t someday be as big as they are. |
2.1 Judge Sihle and Simphiwe against the following qualities and merits of
entrepreneurship:
2.1.1 Energy
Sihle and Simphiwe clearly exhibit the quality of energy in entrepreneurship based on the following points:
The fact that both Sihle and Simphiwe engaged in various business ventures from their early years, including selling sweets, granting small loans, organizing parties, and selling hot dogs on street corners, reflects their boundless energy and enthusiasm. These activities require a proactive and energetic approach, demonstrating their passion for entrepreneurship.
Their shared passion for entrepreneurship and business began in primary school and continued throughout their lives. This long-standing commitment to entrepreneurial activities highlights their enduring energy and drive to explore new opportunities and ventures.
The case study mentions that they offered a “fresh blend of enthusiasm and energy.” This suggests that they have innovative energy and approach to their business endeavors. This innovative energy likely played a significant role in their success in the construction industry
2.1.2 Achievement
The two entrepreneurs express their ambition by outlining their plans to aggressively grow the business in the coming year. This determination to expand their business demonstrates their commitment to achieving significant milestones and success.
Their vision of becoming as large as well-established construction companies like Basil Read, JT Ross, Grinaker, Liviero, and WBHO indicates their aspiration for substantial achievement. This vision goes beyond short-term goals and reflects their long-term commitment to building a successful enterprise.
2.1.3 Feedback
Sihle and Simphiwe demonstrate the quality of feedback in entrepreneurship through the following points:
Their acknowledgment that “Our company has really grown in the last couple of years” reflects their ability to assess and recognize the positive changes and advancements in their business. This awareness of their business’s growth indicates their receptivity to feedback from the market and their adaptability to evolving circumstances.
By stating, “Our turnover in the last financial year was R5 million,” they provide quantitative feedback on their business’s financial performance. This figure serves as an objective measure of their success and is a clear indicator of their ability to track and evaluate financial feedback.
“We have three fully branded vehicles,” and “We employ 52 workers,” provides tangible evidence of their business’s expansion. The possession of branded vehicles and a growing workforce are concrete feedback indicators of their business’s development and increasing capacity.
2.1.4 Status and Recognition
Sihle and Simphiwe demonstrate the quality of status and recognition in entrepreneurship through their statement, “Through this, we have built a reputation of professionalism and consistently exceeding our clients’ expectations.” Here’s how this aligns with the entrepreneurial merit:
They have actively worked on establishing and enhancing their reputation as professionals in their industry. This is a significant aspect of entrepreneurship because a positive reputation can attract more clients, partners, and opportunities. It reflects their commitment to achieving a reputable status in their field.
By mentioning their consistent ability to exceed client expectations, they highlight their dedication to delivering exceptional value. This practice contributes to their positive status and recognition within their market, as satisfied clients are more likely to recommend their services and promote their business.
2.2 Which opportunities and threats can you identify in Sihle and Simphiwe’s
business?
Opportunities:
Investing in Branding and Marketing:
By investing heavily in branding and marketing, Sihle and Simphiwe have the opportunity to enhance their business’s visibility and attract a larger customer base. Effective branding and marketing strategies can help them reach new markets and increase their market share.
Industry-Related Training:
Their commitment to industry-related training presents an opportunity to stay updated with the latest trends, technologies, and best practices in the construction industry. This can give them a competitive edge by offering innovative solutions and maintaining high-quality standards.
Threats:
Reputation Challenges:
One of the significant threats they face is overcoming the negative perception associated with black contractors in the construction industry. The bad reputation, particularly regarding inflated prices and poor workmanship, can hinder their ability to secure contracts and clients.
2.3 What is their competitive advantage?
Sihle and Simphiwe’s competitive advantage lies in their commitment to differentiation through:
Skill:
They emphasize the importance of skill in their field, suggesting that they possess a high level of expertise and competence in the construction industry. Their skill sets them apart from competitors who may lack the same level of expertise.
Professionalism:
The duo places a strong emphasis on professionalism, projecting a consistently professional image in every aspect of their business. This commitment to professionalism can enhance customer trust and satisfaction, setting them apart from competitors who may not prioritize this aspect.
Creativity:
They seek to differentiate themselves through creativity. This indicates their willingness to explore innovative solutions and approaches in their projects, which can lead to unique and tailored outcomes for their clients.
2.4 Describe their target market.
Majozi Bros’ target market primarily includes the following segments:
Residential Market:
They have deliberately chosen to target the residential market. This segment consists of homeowners, property developers, and individuals seeking construction or renovation services for residential properties.
Geographical Scope:
Their target market is geographically diverse, covering various areas in KwaZulu Natal, including Ballito, Umlazi, Hillcrest, Adams Mission, and Durban North. This broad geographical reach suggests that they aim to serve a wide range of clients across different regions within the province.
Preference for Professionalism:
Their target market seems to value professionalism and may have previously lacked options for professional black-owned construction companies. Majozi Bros’ commitment to professionalism aligns with the preferences of their target clients.
2.5 List FOUR business ideas mentioned in the case study.
Four business ideas mentioned in the case study are:
Selling Sweets:
Sihle and Simphiwe engaged in selling sweets as one of their early business ventures during their primary school years.
Granting Small Loans:
They were involved in the business of granting small loans, which could imply micro-lending or informal lending activities.
Organizing Parties:
Another business idea they explored was organizing parties, indicating event planning or party coordination services.
Selling Hot Dogs on Street Corners:
They were also involved in selling hot dogs on street corners, which represents a street food vending business.
2.6 Ndlela said instead of waiting for government tenders, the pair targeted the
residential market, which lacked professional black companies. What is a government tender?
A government tender is a process whereby the government invites bids or proposals from individuals, businesses, or organizations for large projects or contracts. These projects or contracts can include various types of work or services, such as construction, infrastructure development, supply of goods, or provision of services. Interested parties must submit their bids or proposals within a specified and finite deadline. The government evaluates these submissions and awards the contract to the bidder who best meets the specified criteria and requirements.
2.7 Joy intends to start a catering business in her target area. There are 1 200
customers in the area. The average income per month per customer amounts
to R5 000. She estimates that each customer will spend 5% of their monthly
income on her products/service. She believes that she will enjoy a market
To calculate Joy’s potential market share, we need to follow these steps:
Step 1: Calculate the total monthly income of all customers in the target area.
Total Monthly Income = Number of Customers × Average Income per Customer Total Monthly Income = 1,200 customers × R5,000 Total Monthly Income = R6,000,000
Step 2: Determine the estimated monthly spending per customer on Joy’s products/services.
Monthly Spending per Customer = 5% of Average Income per Customer Monthly Spending per Customer = 0.05 × R5,000 Monthly Spending per Customer = R250
Step 3: Calculate the total monthly spending potential of all customers in the target area.
Total Monthly Spending Potential = Total Monthly Income × Percentage of Monthly Income Spent Total Monthly Spending Potential = R6,000,000 × 0.05 Total Monthly Spending Potential = R300,000
Step 4: Calculate Joy’s potential market share.
Market Share = Estimated Monthly Sales / Total Monthly Spending Potential Market Share = (25% of Total Monthly Spending Potential) / Total Monthly Spending Potential Market Share = (0.25 × R300,000) / R300,000 Market Share = R75,000 / R300,000 Market Share = 0.25 or 25%
Joy’s potential market share is 25%.