QUESTION 3
Entrepreneurship and Business Management N4 |
QUESTION
3.1 Below is a list of products/services that serve as business ideas.
plumbing | garden services | photography | jewellery | hair care | childcare
3.1.1 Write down a product/service you have chosen. (1)
Childcare
3.1.2 Give THREE reasons why you have chosen this business idea.
I have Formal Education and Training in childcare. This formal education prepares me for the responsibilities and challenges of operating a childcare business, ensuring I can provide a safe and nurturing environment for children under my care.
I have worked with my mother’s kindergarten for six months and this has given me hands-on experience in childcare. This practical exposure has enabled me to understand the dynamics of working with children, managing their needs, and maintaining a conducive learning environment. This experience can be a valuable asset in establishing and running a successful childcare business.
There is a growing market demand for childcare professional services. Many working parents rely on childcare facilities to ensure their children are well-cared for while they are at their jobs. By offering a professional childcare service, I am meeting a significant need in the market, and this demand can lead to a steady stream of clients.
3.1.3 Make a list of equipment you will need to start your business.
Starting a childcare business requires various equipment and supplies to create a safe, nurturing, and engaging environment for children. Here is a list of essential equipment needed
Other essential daycare furniture and equipment to invest in could include:
3.1.4 Which criteria will you use to select a supplier for your business?
Pricing Structure:
The pricing structure is a fundamental consideration. A comparison of quotes from different suppliers will be done to assess the overall cost, including any bulk purchase discounts, to ensure it aligns with your budget.
Product Quality:
The quality of products is paramount, especially when it comes to children’s safety and well-being. Suppliers should provide products that meet or exceed safety and quality standards.
Punctuality:
Reliable and timely deliveries are crucial to maintaining a smooth childcare operation. Suppliers who consistently meet their delivery commitments will be considered first.
Service:
Exceptional customer service is essential. Evaluation of the supplier’s responsiveness to inquiries, willingness to address issues, and overall ease of doing business with them shall form part of the basis for selection.
Reputation:
We will check the supplier’s reputation and seek references. A supplier with a strong track record of providing quality products and reliable service is a preferred choice.
Location:
Consider the supplier’s location in relation to your childcare business. Proximity can impact shipping costs and delivery times, so choose a location that suits your needs.
Credit Facilities:
We will evaluate whether the supplier offers credit facilities or flexible payment terms. This can be particularly beneficial for managing cash flow and making purchases within budget constraints.
3.1.5 Popular marketing and advertising methods like television, radio, magazines, and newspapers are often too expensive for small businesses. List FIVE affordable advertising methods you will use to attract customers to your new enterprise.
Word of Mouth:
Will harness the power of word-of-mouth marketing within the local community. Encourage satisfied parents to share their positive experiences about our childcare services with friends, family, and neighbors as personal recommendations are highly influential in the childcare industry.
Social Media:
Our business will establish a strong online presence on popular social media platforms like Facebook, Instagram, and Twitter. Share engaging and informative content about our childcare services, showcasing happy children, and provide valuable parenting tips. we will also use social media as a cost-effective way to connect with potential customers and build an online community.
Service Giveaways:
The business will attract new clients, by offering limited-time promotions or service giveaways. For example, we plan to provide a free trial day of childcare, a discounted week, or a referral discount for current clients. These offers can entice parents to try our services and experience the benefits of our childcare facility.
Get Listed in a Popular Local Directory:
The childcare business will also list in well-known local directories, both online and in print. Many parents search for childcare options through these directories, making it easier for them to find our services.
Fliers and Community Outreach:
The business will also create visually appealing fliers or brochures and distribute them in strategic locations within the community. This approach will target areas near schools, community centers, and local businesses. Additionally, the childcare will participate in community events or host open houses to introduce parents to its childcare services.
3.1.6 Which creativity method will you use to generate business ideas?
Explain how you plan to execute this method.
The chosen method is to brainstorm business ideas in the context of childcare services and will be implemented as laid out below
Step 1: Define the Goal or Problem
The first step is to establish a clear goal or problem statement. This sets the direction for creative thinking and ensures that the ideas generated are relevant and focused on the childcare services industry. For example, an aspiring entrepreneur with a background in early childhood education and a passion for child development will aim to identify profitable business ideas that align with their skills and interests in the field of child care.
So, the Problem Statement will be: “The goal is to find profitable business ideas in the childcare services sector that leverage my skills and expertise in early childhood education and align with my passion for child development.”
Step 2: Select Participants
Effective brainstorming often involves the collaboration of others, especially those with relevant expertise. In the context of childcare services, two trusted advisors will be invited to participate in the brainstorming session. One advisor may have a background in early childhood education and curriculum development, while the other might be experienced in the management of childcare centers. Each participant brings a unique perspective, contributing to a more comprehensive list of ideas.
Step 3: Set a Time Limit
To maintain focus and productivity, a specific time frame of 45 minutes will be allocated for the brainstorming session. This duration allows for a thorough exploration of ideas without the session becoming overly lengthy.
Step 4: Create a Supportive Environment
A conducive environment is crucial for productive brainstorming. The session will take place in a quiet, well-lit space free from distractions. Necessary materials such as notebooks or digital tools will be available to record and organize ideas.
Step 5: Generate Ideas
During this phase, the participants will generate a range of business ideas in the child care services sector. These ideas should align with early childhood education and child development. Some ideas that may be generated include:
Step 6: Prioritize and Select
After generating multiple business ideas, the next step is to evaluate and prioritize them based on criteria such as market demand, feasibility, personal interest, and potential profitability. For example, the three business ideas mentioned above could be evaluated as follows:
Business Idea Selection: Educational Child Care Centers
After evaluating the ideas, the entrepreneur chooses to explore the concept of educational childcare centers further. This idea aligns well with their expertise in early childhood education and addresses a growing demand for high-quality childcare services that emphasize education.
Step 7: Plan and Execute
With the chosen business idea of educational child care centers, the next step is to develop a comprehensive business plan. This plan should include details on facility setup, curriculum development, staff hiring and training, marketing strategies, and financial projections.
Step 8: Evaluate and Refine
Once the educational childcare centers are operational, continuous monitoring and feedback collection will be essential. This information will be used to make improvements, enhance the educational programs, and ensure a high-quality child care experience.
Step 9: Expand and Diversify
As the educational childcare centers grow and succeed, there may be opportunities for expansion or diversification. For instance, the centers might consider offering additional services such as after-school programs or collaborating with schools to create seamless educational transitions for children.
Example 2
GENERATION OF HEALTH AND FITNESS BUSINESS IDEAS
Step 1: Define the Goal or Problem
The initial step in brainstorming is to establish a clear goal or problem statement. This sets the direction for your creative thinking and ensures that the ideas generated are relevant and focused. In this case, the goal is to identify profitable business ideas that align with my/your skills and interests.
For example, an aspiring entrepreneur with a background in software development and a strong interest in health and fitness will identify business opportunities that leverage his/her technical skills and passion for health and wellness.
So the Problem Statement will be: “The goal is to find profitable business ideas at the intersection of software development and the health and fitness industry, aligning with my skills and interests.”
Step 2: Select Participants
Brainstorming is more effective when you involve others, particularly trusted advisors, mentors, or individuals with relevant expertise. Two trusted advisors with experience in technology and the health and fitness industry will be invited to participate in the brainstorming session. One advisor is a software development expert with experience in creating health and fitness apps, the other is a fitness trainer and nutritionist who understands the needs of individuals in the health and fitness sector.
Each participant brings a unique perspective, contributing to a more comprehensive list of ideas. For example, the software expert might suggest tech-based solutions, while the fitness trainer could provide insights into the specific needs of potential customers.
These Advisors and mentors will offer valuable guidance and expertise, to help refine ideas and assess their feasibility based on their industry knowledge and can also bring on board a network that potentially connects to opportunities or resources related to the business ideas under consideration.
The participants will also play a crucial role in ensuring there is accountability and ensuring action is taken on the generated ideas and moving forward with the most promising ones.
Step 3: Set a Time Limit
Setting a time limit is essential to maintain focus and productivity during a brainstorming session. Allocating a specific time period will encourage the participants to generate ideas efficiently. We will set 45 minutes for the brainstorming session, This time frame will allow for a thorough exploration of ideas and prevent the session from becoming overly lengthy or unfocused.
Step 4: Create a Supportive Environment
We will set a supportive environment that is ideal for creativity and productive brainstorming by ensuring that the physical and mental space is conducive to idea generation. For example, the venue will be a quiet, comfortable, and well-lit space free from distractions with the necessary materials, such as a notebook, sticky notes, or a digital tool, to record and organize ideas.
Step 5: Generate Ideas
This step will be the core of brainstorming to generate ideas. The aspiring entrepreneur and the participants will start thinking freely and come up with a range of business ideas to identify profitable business ideas that align with the skills and interests of the aspiring entrepreneur. For example, the session may generate the following ideas
Health and Fitness App Development:
Given my background in software development and passion for health and fitness, the team brainstormed an idea to create a mobile app that provides personalized workout plans, nutrition guidance, and health-tracking features. The app could cater to individuals looking to improve their fitness and well-being.
Online Fitness Coaching Platform:
Building on the first idea, the team is considering developing an online platform where certified fitness trainers and nutritionists can provide virtual coaching and personalized health plans to clients. This platform could serve as a bridge between health experts and individuals seeking guidance.
Healthy Meal Prep Service:
Leveraging my interest in health and wellness, the team explored the idea of starting a healthy meal prep service. The service would deliver freshly prepared, nutritionally balanced meals to customers’ doors, making it convenient for busy individuals to maintain a healthy diet.
Step 6: Prioritize and Select
When the team is finished generating multiple business ideas, it’s time to evaluate and prioritize them based on specific criteria. Factors like market demand, feasibility, personal interest, and potential profitability will be considered for each idea. For example, the above three business ideas that were generated during the brainstorming session could be evaluated as follows:
Health and Fitness App Development:
While there’s demand for fitness apps, competition is fierce, and it might require a significant investment in development and marketing.
Online Fitness Coaching Platform:
This idea addresses the growing trend of online fitness coaching and has potential scalability. However, it may involve connecting with certified fitness trainers and building a robust platform.
Healthy Meal Prep Service:
Meal delivery services are popular, and this idea aligns with my passion for health and wellness. It could be a viable and profitable venture that requires resources most of which I already have and my network of contacts and friends, besides becoming the early adopters, is most likely to support the start-up process.
Business Idea Selection: Healthy Meal Prep Service
After evaluating the ideas, you choose the healthy meal prep service as it aligns well with your interests, has a clear market demand, and may require less initial investment compared to the other ideas.
Step 7: Plan and Execute
Now with a chosen business idea in hand, the next step is to create a detailed business plan. This business plan would include details on funding, management, sourcing healthy ingredients, kitchen setup, pricing strategy, marketing channels (e.g., social media, local partnerships), and financial projections (start-up costs, revenue projections, and break-even analysis).
Step 8: Evaluate and Refine
After launching the healthy meal prep service, the management of the business will continuously monitor its performance and gather feedback from customers. This information will be used to make improvements and enhance the user experience and quality of service.
Step 9: Expand and Diversify
As the business grows, the management may consider the opportunity to expand and diversify. For example, If management notices room for additional services or features that align with your core business, they will be explored. Alternatively, they can return to the brainstorming process to generate new business ideas.
They might consider adding specialized diet plans (e.g., vegan, gluten-free) to the menu or expanding the service to cater to specific events like fitness workshops or corporate wellness programs. If these expansions prove successful, the business will have successfully iterated and expanded the initial business concept.
3.2 Nomvo buys tables at an average cost of R120 and sells them for an average
price of R250. The fixed costs amount to R3 300.
3.2.1 How many tables must she sell to break even?
To calculate the number of tables Nomvo must sell to break even, you can use the following formula:
Break-Even Point (in units)= Fixed Costs / Selling Price per Table − Variable Cost per Table
In this case, Nomvo’s fixed costs amount to R3,300, the selling price per table is R250 and the variable cost per table is R120.
Now, let’s calculate the break-even point:
| Now, perform the division to find the exact number of tables Nomvo must sell to break even: 3300/130 = 25.38 Tables
Since she can’t sell a fraction of a table, Nomvo must sell at least 26 tables to break even. This means she needs to sell 26 tables to cover her fixed costs and start making a profit.
3.2.2 If she wants to make a profit of R6 500 per month, how many
tables must she sell?
Given the fixed costs of R3,300, the desired profit of R6,500, the selling price per table of R250, and the variable cost per table of R120, the calculation should be as follows:
Profit Units=3,300+6,500/ 250−120
9,800/130
Since she can’t sell a fraction of a table, Nomvo must sell at least 76 tables to make a profit of R6,500 per month. Therefore she needs to sell 76 tables to cover her fixed costs and achieve the desired profit.
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