Entrepreneurship and business management N4- Revision 1- Paper 2

Entrepreneurship and business management N4

QUESTION 1

1.1  Name  the market segments that could be attracted by Native Airways:

• Business people: Native Airways can cater to the needs of busy executives and entrepreneurs who require efficient and flexible travel options.
• Private individuals: Individuals who prefer the luxury and convenience of private air travel, whether for personal trips or special occasions, can be potential customers for Native Airways.
• Tourists: Native Airways can target tourists looking for unique travel experiences to niche destinations, both within South Africa and in exotic locations like Madagascar, Zanzibar, and Mozambique.
• Foreign embassies: Native Airways can provide transportation services for foreign embassies, diplomats, and government officials who require secure and personalized travel arrangements.
• Wealthy people: High-net-worth individuals who value privacy, exclusivity, and personalized service may choose Native Airways for their private air travel needs.

1.2 Give a detailed description of the products/services offered by Native Airways:

Native Airways offers private jet and helicopter charter flights. They provide transportation services to various destinations, including niche locations within South Africa like Parys, Sun City, and Knysna. Additionally, they cater to customers seeking more exotic destinations such as Madagascar, Zanzibar, and islands around Mozambique. The company ensures a high level of comfort, flexibility, and convenience for its clients, allowing them to tailor their travel schedule according to their specific requirements. With a fleet consisting of six private jets and six helicopters, Native Airways provides a range of options to meet different travel needs.

1.3 How did Nhlanhla Mohlauli finance his business?

Nhlanhla Mohlauli financed his business, Native Airways, with the financial assistance of the Development Bank of Southern Africa. This support enabled him to lease six private jets and six helicopters, which formed the foundation of his airline. By securing funding from the Development Bank, Mohlauli was able to establish his aviation venture and bring his vision to life.

1.4      Discuss the following characteristics of entrepreneurship with reference to the information in the case study.

1.4.1 An entrepreneur identifies a niche in the market:

• The case study mentions that Native Airways flies to niche destinations, indicating that Nhlanhla Mohlauli identified a gap in the aviation industry and recognized the demand for private jet travel to specific locations.
• Mohlauli’s initiative to design and build a golf course near ‘Sun City’ prison demonstrates his ability to identify an untapped market for golf coaching in that area.
• The revival of a golf course in Johannesburg’s Roosevelt Park further highlights his ability to identify opportunities and cater to specific market segments.
• Mohlauli’s plan to build an airport in Soweto, a township, also showcases his entrepreneurial mindset of recognizing the potential for infrastructure development in an underserved area.

1.4.2 Entrepreneurs are good organizers:

• Mohlauli’s ability to gather five pilot friends to support the launch of Native Airways shows his organizational skills in building a team and leveraging existing relationships to achieve his business goals.
• The successful launch of Native Airlines in 2012 with the financial assistance of the Development Bank of Southern Africa indicates Mohlauli’s organizational abilities in securing funding and managing the necessary paperwork and processes.
• The leasing of six private jets and six helicopters demonstrates Mohlauli’s organizational competence in arranging and managing the transportation fleet for his airline.

1.5      What are the unique features of Nhlahla’s products/services compared to big
commercial flights?

Unique Features of Nhlanhla’s Products/Services Compared to Big Commercial Flights:

1. Flexibility: Unlike big commercial flights where passengers have to adhere to fixed schedules, Nhlanhla’s private jet and helicopter charter flights offer more flexibility. Customers can plan their trips according to their own schedules, allowing for greater convenience and customization.
2. Safety: Nhlanhla emphasizes that private travel is safe. While commercial flights may have larger passenger capacities and more stringent regulations, private aviation can provide a heightened sense of security and privacy for individuals and groups.
3. Speed: Private travel is known for its efficiency and speed. Passengers can avoid long check-in queues, security procedures, and layovers associated with commercial flights. This enables them to reach their destinations more quickly, saving valuable time for busy executives and individuals.
4. Customer-centric scheduling: Native Airways ensures that travel arrangements are tailored to the customer’s schedule. Unlike commercial flights that operate on fixed departure times, private jet charters can adapt to the specific needs and preferences of the customer. This personalized approach adds convenience and enhances the overall travel experience.

Introduction: Gross profit is an important financial metric that indicates the profitability of a business. It represents the revenue generated after deducting the direct costs associated with producing or acquiring the goods or services sold. In this lesson, we will learn how to calculate gross profit per month using specific figures provided.

Key Terms:

• Market Potential Share: The portion of the market that the business is expected to capture or serve.
• Selling Price per Unit: The price at which each unit of the product or service is sold to customers.
• Cost Price per Unit: The cost incurred by the business to produce or acquire each unit of the product or service.

Calculation Steps:

• Step 1:-  Calculate Monthly Sales Revenue Monthly sales revenue = Market Potential Share * Selling Price per Unit
• Step 2: Calculate Monthly Unit Costs –  Monthly unit costs = Market Potential Share * Cost Price per Unit
• Step 3: Calculate Gross Profit per Month –  Gross profit per month = Monthly sales revenue – Monthly unit costs

Given values:

• Market Potential Share: 3700
• Selling Price per Unit: R55
• Cost Price per Unit (22 – 1.1): R20.9

Step 1: Calculate Monthly Sales Revenue Monthly sales revenue = 3700 * R55 = R203,500

Step 2: Calculate Monthly Unit Costs Monthly unit costs = 3700 * R20.9 = R77,330

Step 3: Calculate Gross Profit per Month Gross profit per month = R203,500 – R77,330 = R126,170

2.2 Describe your product/service with reference to the classification of products/services.

Bed and Breakfast – Product/Service Description

1. Definition of a Bed and Breakfast (B&B)
   • A bed and breakfast is an establishment that provides overnight accommodation and breakfast to guests.
   • It combines the comfort and ambiance of a home with the convenience of a hotel.
2. Sibongile Bed and Breakfast
   • Comfortable accommodations: Our B&B offers well-appointed bedrooms with comfortable beds, tasteful decor, and modern amenities.
   • Warm and inviting atmosphere: We strive to create a cozy and welcoming ambiance for our guests to relax and enjoy their stay.
   • Personalized service: Our friendly staff is available to assist with inquiries, provide local recommendations, and ensure a memorable stay.
   • Delicious breakfast: We serve a freshly prepared breakfast, including a variety of options to cater to different dietary preferences.
   • Intimate experience: With a limited number of sleeping rooms, a conference room, and a main hall we aim to provide a more personalized and intimate stay for our guests.
3. Benefits of Choosing Our Bed and Breakfast
   • Home-like comfort: Guests can enjoy the comfort and coziness of a home, creating a relaxed and inviting atmosphere.
   • Personalized attention: Our staff is dedicated to providing personalized service and catering to individual guest needs.
   • Locally sourced breakfast: Our breakfast menu features ingredients sourced from local suppliers, offering a taste of the region.
   • Unique and intimate experience: With a smaller number of rooms, guests can enjoy a more exclusive and personalized stay.
   • Local recommendations: We are happy to provide insights into local attractions, activities, and dining options to enhance the guest experience.

2.3  Design a trademark for your product/service. 

2.4 Describe your customer profile. 

Customer Profile of Sibongile Bed and Breakfast

1. Major Customers: Tourists seeking a cozy environment
   • Sibongile Bed and Breakfast attracts tourists who prefer the comfort and ambiance of a B&B.
   • These customers value the warm and inviting atmosphere provided by Sibongile B&B during their stay.
   • They appreciate the personalized service and attention to detail that enhances their overall experience.
2. Local Patrons for Events
   • Sibongile Bed and Breakfast caters to local patrons who require facilities for various events.
   • These customers might include individuals or organizations hosting gatherings, meetings, or celebrations.
   • Sibongile B&B provides a convenient and stylish venue for such events, offering a blend of comfort and professionalism.
3. Private and Corporate Guests seeking warmth and professionalism
   • Sibongile B&B attracts private guests who prioritize a warm and welcoming environment.
   • These customers value the personal touch and attention to detail provided by the B&B’s staff.
   • Corporate guests also choose Sibongile B&B for their accommodations, appreciating the professionalism and high-quality service.

2.5 What are your competitive strengths? 

Sibongile Bed and Breakfast possesses several competitive strengths that distinguish it from other establishments. These strengths include

1. Free Wi-Fi

• Sibongile Bed and Breakfast offers free Wi-Fi to its guests.
• This competitive strength caters to the needs of modern travelers who rely on internet connectivity for work, communication, and entertainment.

2. Good Location

• Sibongile Bed and Breakfast benefits from a favorable location.
• Its proximity to popular tourist attractions, business centers, or transportation hubs makes it convenient for guests to access various destinations.

3. Laundry Services

• Sibongile Bed and Breakfast provides laundry services for its guests.
• This competitive strength ensures that guests can maintain fresh and clean clothing during their stay, adding to their comfort and convenience.

4. Friendly Staff

• Sibongile Bed and Breakfast is known for its friendly and attentive staff.
• The staff’s warm and welcoming demeanor contributes to the overall positive experience of guests, creating a homely atmosphere.
• The staff members go above and beyond to make guests feel welcome and attended to, ensuring their needs are met throughout their stay.

5. Safe and Secure Parking

• Sibongile Bed and Breakfast offers safe and secure parking facilities.
• This competitive strength provides peace of mind to guests who have their vehicles, ensuring the safety and convenience of their transportation.

      6 Delicious Breakfast Options

• Sibongile Bed and Breakfast offers a variety of delicious breakfast options.
• Guests can start their day with a satisfying meal, prepared with care and featuring a range of choices to cater to different dietary preferences.

       7 Positive Guest Reviews and Reputation

• Sibongile Bed and Breakfast has a strong reputation built on positive guest reviews.
• The consistent delivery of exceptional service and experiences has garnered praise and loyalty from previous guests, further enhancing its competitive position

      8 Repeat Guest Programs and Loyalty Rewards

• Sibongile Bed and Breakfast values its repeat guests and offers loyalty programs or rewards to encourage their return. These initiatives build guest loyalty and create long-term relationships, contributing to the success and competitiveness of B&B.

2.6  Give a short description of where your business will be conducted. 

Description of the Business Location for  Sibongile Bed and Breakfast

1. Centrally Located

• The bed and breakfast business is situated in a central location. Its positioning offers convenience and easy access for guests to various amenities and attractions in the area.

2. Proximity to Popular Shopping Centres

• The business is within easy reach of two popular shopping centres. Guests can enjoy convenient shopping experiences, explore a variety of retail options, and indulge in dining opportunities near the bed and breakfast.

3. 20 km from International Airport

• The business is located approximately 20 km from the international airport. This proximity benefits travelers who seek accommodation near the airport, providing them with convenience and a shorter commute upon arrival or departure.

4. Close to Two Private Hospitals

• • The business is conveniently situated just 2 km away from two private hospitals. This location offers convenience for guests seeking medical services or visiting loved ones receiving treatment, ensuring they can easily access the hospitals when needed.

2.7  Why is location the most important aspect of your business?

1. Convenient Accessibility

• The strategic location of Sibongile Bed and Breakfast ensures easy accessibility for guests. The business is conveniently reachable by various modes of transportation, making it an attractive choice for travelers seeking a hassle-free stay.

2. Enhanced Visibility

• Sibongile Bed and Breakfast benefits from a prime location with high visibility. Its prominent position in a well-known area increases exposure to potential customers, attracting the attention of pedestrians and motorists passing by, leading to higher bookings and occupancy rates.

3. Ample and Secure Parking Facilities

• Sibongile Bed and Breakfast provides ample parking facilities that prioritize the comfort and security of guests. The availability of convenient and safe parking options ensures guests can easily park their vehicles, providing added convenience and peace of mind during their stay.

4. Customer and Supplier Security

• Sibongile Bed and Breakfast prioritizes the safety and security of its customers. The location was carefully chosen to provide a secure environment, not only ensuring the well-being of guests but also facilitating the reliable delivery of goods and services by suppliers.

5. Clean and Well-Maintained City Infrastructure

• Sibongile Bed and Breakfast benefits from a location with clean and well-maintained city infrastructure. The surroundings are organized and well-kept, creating a pleasant and welcoming atmosphere for guests, and contributing to the overall positive experience of their stay.

2.8 How will profits and losses be divided in your business? Give a reason for your answer. 

The business ownership for Sibongile Bed and Breakfast is sole trader, The owner / sole proprietor will receive all the profits from the business and bears all the risk when the business makes losses.

2.9 Create a job description for one of your employees.

Job Title: Receptionist

Report to: Owner/Manager

Job Summary: The receptionist at Sibongile Bed and Breakfast plays a crucial role in ensuring smooth operations and providing exceptional customer service. They are responsible for managing the front desk, attending to guests’ inquiries and needs, and supporting various administrative tasks. The receptionist is the first point of contact for guests and sets the tone for their experience at the establishment.

Duties and Responsibilities:

1. Welcoming and Assisting Guests:

• Greet and welcome guests as they arrive at the bed and breakfast in a friendly and professional manner.
• Provide information about the facilities, services, and amenities offered by Sibongile Bed and Breakfast.
• Assist guests with check-in and check-out procedures, ensuring a seamless experience.
• Respond to guests’ inquiries, requests, and complaints promptly and courteously, striving to exceed their expectations.

2. Managing Reservations:

• Handle incoming reservations, whether received via phone, email, or in-person.
• Maintain an organized reservation system, ensuring accuracy and efficiency in managing guest bookings.
• Coordinate with other staff members to ensure a smooth transition for guests during their stay.

3. Front Desk Operations:

• Maintain a neat and organized front desk area, ensuring it is presentable and welcoming for guests.
• Manage incoming and outgoing phone calls, emails, and postal mail, forwarding messages and inquiries to the appropriate departments.
• Process payments and maintain accurate records of financial transactions, adhering to established procedures.

4. Administrative Support:

• Assist with various administrative tasks, including data entry, filing, and documentation.
• Support the owner/manager with daily operations, such as managing schedules, coordinating appointments, and preparing reports.

5. Customer Service:

• Ensure outstanding customer service by addressing guests’ needs and concerns promptly and professionally.
• Provide recommendations and information about local attractions, restaurants, and events to enhance guests’ experience.
• Handle guest feedback and complaints effectively, striving to resolve issues and maintain guest satisfaction.

Qualifications and Skills:

• High school diploma or equivalent.
• Previous experience in a customer service role, preferably in the hospitality industry.
• Excellent communication and interpersonal skills.
• Strong organizational and multitasking abilities.
• Proficient in using computer systems, including reservation software and Microsoft Office Suite.
• Ability to work in a fast-paced environment and remain calm under pressure.
• Attention to detail and accuracy in handling guest information and financial transactions.
• Professional and friendly demeanor.

QUESTION 3
3.1 Study the picture below and answer the questions.

3.1.1  You are planning to start a business, but you are unsure of what
business to start. Your mentor advised you to carry out a mind-mapping activity. You are required to use the picture presented above as a central idea. 

Mind Mapping Activity: Business Ideas with “Baby” as the Central Idea

1. Baby Clothing and Accessories:

• Design and sell a range of trendy and comfortable baby clothes, including onesies, rompers, and dresses. Offer a selection of accessories such as hats, bibs, socks, and shoes specifically designed for babies.

2. Baby Care Products:

• Create a line of organic and natural baby care products, including baby shampoo, lotion, diaper cream, and baby wipes. Develop a brand that focuses on gentle and safe ingredients for the delicate skin of babies.

3. Baby Toys and Developmental Products:

• Design and manufacture educational and developmental toys for babies, such as rattles, sensory toys, and interactive plush toys. Develop products that stimulate sensory exploration, fine motor skills, and cognitive development in infants.

4. Baby Photography Services:

• Provide professional photography services specializing in capturing beautiful moments of newborns and young babies. Offer unique and creative photo shoots that parents can cherish as lifelong memories.

5. Baby Food and Nutrition:

• Develop a line of homemade, organic baby food options with different flavors and nutritional profiles. Create meal plans and delivery services that cater to the specific dietary needs of infants and toddlers.

6. Baby Shower and Gift Services:

• Offer comprehensive baby shower planning and organizing services, including venue selection, decorations, and catering. organise and sell personalized baby gift boxes or baskets containing essential items and thoughtful gifts for new parents.

7. Baby Gear Rental:

• Provide rental services for baby gear such as strollers, cribs, high chairs, and car seats, catering to traveling families or short-term needs. Ensure high-quality, clean, and safe equipment for the convenience of parents and caregivers.

8. Baby Care Consulting:

• Start a consultancy service where experienced professionals provide guidance and advice to new parents on various aspects of baby care, including feeding, sleep routines, and developmental milestones.

3.1.2  Children represent an important market segment because they influence their parents’ buying decisions. List FIVE businesses that cater for babies and children. (5)

• Daycare Center: Provides professional care and supervision for infants and young children in a safe and stimulating environment under trained caregivers.
• Nursery Furniture Store: Specializes in selling furniture and decor designed for nurseries and children’s bedrooms, including cribs, changing tables, dressers, rocking chairs, and storage solutions.
• Baby Body Care Products: Produces and sells body care products formulated for babies and young children, such as gentle shampoos, moisturizers, diaper creams, bath products, and skincare essentials.
• Jumping Castle Rental Service: Provides inflatable jumping castles and play structures for children’s parties, events, or recreational purposes, promoting physical activity and active play.
• Children’s Clothing and Accessories Store: Offers a wide selection of clothing and accessories for babies and children, including age-appropriate clothing, footwear, hats, and accessories for different styles, occasions, and seasons.

3.1.3 Identify one business from the list you wrote in QUESTION 3.1.2 that you would consider as an idea for your business plan. 

Daycare Center:

3.1.4  What will be your unique selling proposition if you turn this business idea into an opportunity? 

Our unique selling proposition for our daycare center includes:

1. Safety and Security: We prioritize the safety and security of every child in our care. Our facility is equipped with advanced security measures, including surveillance cameras, secure entrances, and strict access control. We maintain a safe environment that ensures the well-being of every child.
2. Extended Hours: We understand the demands of modern lifestyles, so we offer extended hours to accommodate working parents. Our daycare center opens early and closes late, providing flexible options for drop-off and pick-up times.
3. Experienced Staff: Our team consists of highly trained and experienced caregivers who are passionate about early childhood development. They have the expertise to nurture and guide children in their growth, providing personalized attention and support.
4. Engaging and Educational Activities: We believe in providing a stimulating environment where children can learn, play, and explore. Our daycare center offers a wide range of engaging and educational activities tailored to different age groups, promoting cognitive, social, and physical development.
5. Nutritious Meals and Snacks: We understand the importance of healthy nutrition for growing children. Our daycare center offers nutritious meals and snacks prepared by our qualified staff. We prioritize balanced and age-appropriate menus, accommodating dietary restrictions and allergies.
6. Open Communication with Parents: We believe in fostering strong partnerships with parents. We maintain open lines of communication, providing regular updates on their child’s progress, activities, and milestones. We welcome parental involvement and encourage collaboration for the best interest of each child.

3.1.5 Complete a SWOT analysis for this business idea. 

SWOT Analysis for Daycare Center:

Strengths:

• Well-qualified staff: The daycare center has a team of highly skilled and knowledgeable caregivers who are trained in early childhood development and provide professional care and supervision for children.

Weaknesses:

• Expensive maintenance costs: The daycare center faces the challenge of high maintenance costs, which can impact the overall budget and financial stability of the center.

Opportunities:

• Expansion: There is an opportunity for the daycare center to expand its operations, potentially opening additional branches or increasing the capacity of the existing facility to accommodate more children and serve a larger market.

Threats:

• Competition: The daycare center faces competition from other childcare providers in the area, which could potentially impact enrollment rates and market share. It is important for the center to differentiate itself and offer unique value propositions to stay competitive.

3.1.6 Create an eye-catching flyer for the business you have selected. 

3.2 You are given the following information:

• 80% of every R1,00 sales is a contribution towards fixed costs.
• Fixed costs amount to R5 500 per month.

3.2.1 Calculate the break-even point in rand value

Calculating the Break-Even Point in Rand Value: To calculate the break-even point in rand value, we divide the fixed costs by the contribution margin percentage.

Break-even point (in rand value) = Fixed costs / Contribution margin percentage

Contribution margin percentage = 80% = 0.80

Break-even point (in rand value) = R5,500 / 0.80 = R6,875

Therefore, the break-even point in rand value is R6,875.

3.2.2  Calculate the break-even point, in units, if the business has a product with a selling price of R350 and a variable cost of R120. The profit goal is R4 500.

3.2.2 Calculating the Break-Even Point in Units: To calculate the break-even point in units, we divide the fixed costs plus the desired profit by the contribution per unit.

Break-even point (in units) = (Fixed costs + Desired profit) / Contribution per unit

Selling price per unit = R350 Variable cost per unit = R120 Contribution per unit = Selling price per unit – Variable cost per unit

Contribution per unit = R350 – R120 = R230

Desired profit = R4,500

Break-even point (in units) = (R5,500 + R4,500) / R230 = R10,000 / R230 ≈ 43.48

Therefore, the break-even point in units is approximately 43.48 units.

QUESTION 4
4.1 Jack Smith is the sole owner of JS Garden Services. Jack, a civil engineer by trade, realised that with all the new developments in South Africa, a huge potential exists for a landscaping and gardening business. Jack employs two teams of 10 people and each team is headed by an expert gardener. Jack manages the business and brings in new contracts.

4.1.1 Draw an organogram for JS Garden Services.

4.1.2 Complete an after-sales questionnaire for a garden service business.

4.1.3 Name FIVE types of equipment Jack will need for his business.

Based on the information provided, here are five types of office equipment that Jack will need for his landscaping and gardening business:

1. Computers and Laptops: These are essential for managing administrative tasks, such as creating contracts, handling finances, maintaining customer records, and communicating with clients via email or other digital platforms.
2. Printers and Scanners: Jack will need printers and scanners to generate hard copies of important documents, such as contracts, invoices, and client proposals. Scanners will help in digitizing paper documents for efficient record-keeping.
3. Telecommunication Equipment: This includes phones, mobile devices, and a reliable internet connection. These tools are crucial for communicating with clients, suppliers, and team members, as well as handling customer inquiries and scheduling appointments.
4. Filing and Organization Systems: To maintain organized records and documents, Jack will need filing cabinets, folders, binders, and other storage solutions. This will enable easy access to important paperwork, such as contracts, invoices, receipts, and employee records.
5. Lawnmowers: Lawnmowers are essential for maintaining and trimming lawns in various sizes. They come in different types such as push mowers, self-propelled mowers, or ride-on mowers, depending on the scale of the projects.
6. Hedge Trimmers: Hedge trimmers are used for shaping and trimming hedges, shrubs, and bushes. They help in maintaining clean and neat edges, giving the landscape a well-manicured look.
7. Leaf Blowers: Leaf blowers are used to clear leaves, debris, and grass clippings from lawns, gardens, and other outdoor areas. They make the cleaning process more efficient and save time.
8. Garden Sprayers: Garden sprayers are necessary for applying fertilizers, pesticides, herbicides, and other treatments to plants, trees, and lawns. They help ensure proper and controlled application for optimal plant health.
9. Garden Hand Tools: Various hand tools such as shovels, rakes, pruning shears, garden gloves, and wheelbarrows are essential for daily gardening tasks. These tools assist in planting, weeding, pruning, and maintaining the overall landscape

4.2 Complete the projected income statement using the following information:
Sales: R420 000
Purchases: R165 000
Opening stock: R92 000
Closing stock: R105 000
Salaries: R40 200
Stationery: R5 100
Telephone: R8 400
Printing: R1 020
Advertising: R10 000

Projected Income Statement:

Explanation of Calculations:

1. Cost of Goods Sold:
   • Opening Stock: The value of the inventory at the beginning of the period is R92,000.
   • Purchases: The total purchases made during the period amount to R165,000.
   • Closing Stock: The value of the inventory at the end of the period is R105,000.
   • Total Cost of Goods Sold: Calculated as Opening Stock + Purchases – Closing Stock, which is R152,000.
2. Gross Profit:
   • Calculated as Sales – Cost of Goods Sold, which is R268,000.
3. Operating Expenses:
   • Salaries: The total salary expenses incurred amount to R40,200.
   • Stationery: The expenses for stationery amount to R5,100.
   • Telephone: The expenses for telephone usage amount to R8,400.
   • Printing: The expenses for printing materials amount to R1,020.
   • Advertising: The expenses for advertising activities amount to R10,000.
   • Total Operating Expenses: The sum of all individual operating expenses, which is R64,720.
4. Net Profit:
   • Calculated as Gross Profit – Total Operating Expenses, which is R203,280.

Therefore, the projected income statement shows a projected net profit of R203,280 based on the given information.