PRINCIPLES OF ENTREPRENEURSHIP _ II

A GUIDE FOR ENTREPRENEURSHIP EDUCATION AND TRAINING STUDENTS.

Fifth edition

SHADRACK PAULO MWALUBANDA

@2024

1
ABOUT AUTHOR:

MR. SHADRACK PAUL P. MWALUBANDA

Mr. Shadrack P. Mwalubanda is a teacher and instructor for Business courses in the field of
ENTREPRENEURSHIP, BASIC PRINCIPLES OF ACCOUNTING, COMMERCIAL
ARITHMETICS and other cross cutting issues (course) like MANUAL FOR LIFE SKILLS
and SWAHILI-ENGLISH language learning. He held the bachelor degree of commerce in
Accounting from the most reputable university of Dar es salaam and has acquired the
competitive training for entrepreneurship from UDSM as well. He has been working as a
teacher in the areas of Entrepreneurship, Bookkeeping and Commercial Arithmetics for
Secretarials as well as Manual for life skills at VETA institute, Chang’ombe Dar es salaam.
Mr. Shadrack PM has been writing many books within his area of profession as a guide for
Vocational and training students as well as for Secondary level. For instance, Entrepreneurship,
Basic principles OF Accounting, Commercial Arithmetics, Manual for life skills, Ujasiriamali
(Swahili), Books for learning English, Swahili and Korean. This Fifth edition book is given for
vocational students, secondary students, College (Uni) and all youth to learn the basic
principles and training of Entrepreneurship II. WELCOME…….!!!!!
ACKNOWLEDGEMENTS
I would like to acknowledge all entrepreneurs’ masters and students at VETA who have
encouraged me more and more to this book production, their inputs over the years have been
invaluable.
DEDICATION
Dedicated to all College and Vocational students
INTRODUCTION
Principles of Entrepreneurship for level two present special concepts, terms and knowledge
that must be identified and addressed. Issues, problems and challenges that are commonly
encountered in business life and in different organizations. Managing business resources,
recruitment of staff, time management, Keeping records, financial statements, managing sales,
Costs and costing, rice and pricing, Application of technology to SMEs as well as preparation
of business plan.The target audiences for this training manual are students at Colleges,
Institutes and vocational students as well. The notes are heavily based on the book for
Harmonized notes from DRVTS Entrepreneurship from the guidance of Mr. Aliko Mmongele,
book from Christopher M. Mbagwa and the Manual power points from University of Dar es
salaam by Dr. Winnie Nguni. The instructors are highly recommending that students should get
the textbook copy for a through and clear understanding of this very important and Compulsory
course. NOTE: This is the continuation of the Principles of ENTREPRENEURSHIP _ I.

2
 COURSE CONTENTS
MODULE ONE: MANAGING BUSINESS …………………………………………….04
I. Introduction to managing business resources
II. Managing employees and staff
III. Staff recruitment
IV. Managing and planning time effectively
V. Time wasters
VI. Keeping records, both financial and non-financial
VII. Cash flow projection
VIII. Profit or loss statement
IX. Balance sheet
X. Managing sales
XI. Customer and customer care
XII. Cost and costing
XIII. Price and pricing
XIV. Break Even point and depreciation
XV. Application of Technology to SMEs
MODULE TWO: GETTING INTO A BUSINESS ……………………………………..47
I. Preparing a business plan
II. Users and uses of business plan
III. Developing a business plan

CBA – STRUCTURED (FINAL EXAMINATIONS) 1 & 2 .............................................52

3
MODULE ONE: MANAGING BUSINESS RESOURCES
INTRODUCTION
 Dear Learner, welcome to the Module One of Entrepreneurship Education and
Training (Level Two)! In this module, you will learn how to Manage your business
including a wide range of activities, from day-to-day operations to long-term
planning. It is very important for you to understand what you are responsible for, and
what you can do to make your business run efficiently.
Do you remember the Business key concepts? Check Principles of Entrepreneurship
level one.
 Business is an organization or economic system where goods and services are exchanged
for one another or for money

 Business is the purchase and sale of goods in an attempt to make a profit. A business, also
known as an enterprise or a firm, is an organization involved in the trade of goods or
services, or both to consumers

 Business is an economic activity, which is related with continuous and regular production
and distribution of goods and services for satisfying human wants.
Then, we must be aware with meanings of GOODS and SERVICES…..! Come on….

GOODS: Refers to the Physical things and useful tangible assets that can be bought and
possessed to reach to certain goal. For example; pen, artists, food, house, car etc.

SERVICES: Refers to the sum of all activities and actions of helping or doing work for
exchanging with money. For example, teaching, cutting hair, hospital services etc!

DISTINCTIVE CHARACTERISTICS BETWEEN SERVICES AND GOODS

SERVICES GOODS
 Intangibility  Tangibility
 Inseparability  Separability
 Keep on change as environment  Does not change as environment
 Heterogeneous  Homogeneous
 Perishability  Imperishability
What are the important resources for businesspersons?
I. Money
II. Equipment
III. Energy
IV. Skills
V. Knowledge
VI. Time

4
1.1: MANAGING EMPLOYEES OR STAFF
Hello learner, this is Element 1.1! In this element you will learn about managing employees or
staff in your business. This is how to manage energy resources as the important people to
occupy your business.

What is staff management?

Staff management refers to the act of ensuring that staff fully deploy their skills and make
optimal use of their time at the work place. It involves monitoring them so that they perform
the right function as required at the right time.

It involves your leadership style, how you motivate your team, how you guide the work to be
done, creating a "people plan," firing techniques, how you address absenteeism, the work
environment itself, and the safety and productivity of your people. It involves monitoring them
so that they perform the right function as required at right time.

Managers
Are the people who ensure the activities of the company and the business run smoothly and for
growth. Managers are people who get results through people.

Main functions of MANAGERS

Managers can get better results from their employees and make more profitable business if they
will do the following to their employees:
 Motivation eg; pay slary, give incentives
 Direction eg: show what are the goals of the business, vision and mission to accomplish.
 Leading eg; make the workers to follow the correct and right path.
 Organizing eg; solving conflicts, uniting workers, bring oneness.

PROCEDURES OF RECRUITING STAFF!

Staff recruitment is the process of allowing new people to come and work with an organization.
This involves the procedures of recruiting new employees to the organization and managing
them by maintaining employee consideration.

Every business requires the help of qualified people. Business owners should plan how and
when to select the people they need. The procedures are;

1. Identify your need: Before hiring, one must determine what needs to be done. Just like
effective marketing, hiring begins with identifying the available need.
2. Develop a job description: after you have identified the attitude, kills, and knowledge
required for a given job, you can complete a description of you are trying to fill.
3. Interviewing candidates: You can find out more details about attitudes, skills and
knowledge through written tests and face-to-face interviews.

5
 4. Contacting referees: these are the people who know the candidate and can verify their
background and uncover other issues that interviewees do not reveal. Ask what
interaction they had with the applicant and listen to their feedback.
5. Selecting the right candidate: In selecting the right candidate for the job, you need to
sit down and ask yourself these questions:
a) Which person best matches the attitudes, skills and knowledge in the job description?
b) Which person shows the greatest potential-through interest and motivation of meeting
the job requirement?
c) Which person was recommended by other people?
After you select the candidate, consider hiring the person for a probationary period. This
gives you both a chance to see if you are the right fit.

Appropriate ways of managing employees in an organization.

Training employees to do their jobs better
Every training program starts with a “needs assessment”:
 Who needs it?
 What is needed?
 How is it needed?
 When is it needed?
 Why is it needed?
It is very important to question who, what, how, when and why, before committing your
resources to training.
Does this employee need this particular training?

When should you train the employee? . This plan shows how training is ongoing, and profits
both your business and your employees.

1. Orientation program: should be given as soon as employees start their jobs so

employees know what you expect of them.
2. Development programs: require some experience and should be given later.
3. Advanced programs: should be offered when higher levels of performance justify the
expense and time.
Who conducts the training?
Can you find a simpler, faster and better way to train your staff?

Linking pay with performance to improve results

Employees who produce the best results for your business must get the best rewards. That
is how they feel motivated and become role models for other employees.

6
Instead of thinking of salary and benefits, think about rewards. Consider that what you pay
rewards your employees for what they do to increase your business success. When you reward
performance, performance and results go up.

Decide what a job is worth: The worth or value of a job depends on more than one factor. You
can give the job a value based on the three criteria:

1. skills and background required

2. challenge of tasks to be performed
3. financial impact of performance
Setting performance goals: These performance objectives must be SMART (Specific,
Measurable, Attainable, Results-oriented and Time-bound).

Reviewing performance: Reviewing performance is meant to reinforce good work and to

identify areas which need improvement. After a performance review, you should link pay to
the employee’s actual performance and achievement of their objectives.

Paying for performance:. Employees feel motivated as they know there is a clear and direct
relationship between what is done and how much they are paid to do.
To do this in your business, you need to have:

1. A pay structure for each type of job

2. A scoring process to assess an employee’s performance on a regular basis.
By paying people according to their performance, you improve your business’s profit. When
everyone is motivated to perform better, your business will benefit the most.

Other employee considerations

Pay plans: If entrepreneurs want to attract and keep good workers, they must take into
consideration the rate paid by the other firms for a similar job.

Fringe Benefit: Off all fringe benefits, those for sick leave, holidays and vacations are the most
widely accepted by employees.

Employee Relations: Good pay and fringe benefits aren’t all it takes to make employees happy.
Job satisfaction means much more to them. Entrepreneurs have a responsibility to provide the
best kind of physical surroundings and to be certain that there always is two-way
communication with the staff.

Working conditions: The health, comfort and safety of employees should be of the genuine
concern to entrepreneurs. A good environment can do much to encourage efficiently and good
attitudes in addition to preventing accidents. The premises should have good ventilations,
sufficient heating and cooling, good lighting and proper sanitation and safety facilities.

7
IMPORTANCE OF HUMAN RESOURCES IN THE BUSINESS
 Recruiting and hiring
 Onboarding
 To improve employee performance
 Training and development
 Payroll activities
 Employment law compliance
 Ensuring staff safety
 Improving employee engagement and productivity
 Shaping company culture
 Employee benefits and vacation management
 Ensure the business run smoothly and efficiency
THE PRINCIPLES OF MANAGING STAFF
A common sense of purpose: Often the reason for staff being there is not discussed and they
are not regularly reminded of the history and accomplishments of the organization.
Well thought-out values, such as honesty, respect and so on: These are discussed with
staff and used as the foundation for any actions or reactions of management.
Simple rules or policies: Are accessible and provide the information about actions and
behavior that are required and those that are not.
Clear sign that staff members are valued; including reasonable working conditions, market
rates of pay, respectful, client focused and staff supportive management.
Trust: This is developed in each staff member and in turn each staff member can have trust
in the leadership – honesty and integrity at the Centre of all relationships in the organization.
Clarity: Explains in what is negotiable and what is not negotiable for staff as a whole.
Giving Clear goals: objectives for what the organization wants from its staff as a whole, each
team and each individual.
Solving problems: Problems are dealt effectively and immediately.
IMPORTANCE OF MANAGING STAFF
 Builds an atmosphere of open communication
 Lead to rise of trustiness
 Create an environment that motivates employees
 Leads to a genuine interest in workers as individuals
 Helps each employee reach their potential
 Gives feedback

8
1.2: MANAGING AND PLANNING TIME EFFECTIVELY

Dear Learner, this is Element 1.2! This element is about planning time effectively. You will
learn about the concept of effective time management; the importance of effective time
management, techniques of time management, key time wasters, and how to plan time in
running business activity.
Ask yourself these questions
 Have you ever been aligned with time because of some priorities?
 Have you ever managed the time effectively?
 Have you made the plans accordingly with the time?
What is time management?
Time management is the process of organizing and planning how to divide your time between
different activities. In other simple way, “it is the ability to use one’s time effectively or
productively, especially at work.
» Scholars have a say here “Time management is the key to efficient working”.

Hence, Time management is similar to having good work habits that involve achieving the
maximum output in the time available.

Time is the continued sequence of existence and events that occurs in an apparently irreversible
succession from the past through current to the future.
Additionally, Mr. Shadrack use to say that “time is an indefinite continued of events from past,
present to the future as a whole”.

Time is something that cannot be saved you simply loses more and more of it as the day
progresses. All entrepreneurs need to manage time effectively, through better time
management. By budgeting time, entrepreneurs will achieve better results.

IMPORTANCE OF EFFECTIVE TIME MANAGEMENT

 Clear daily goals

 Decreased stress

 Increased productivity

 Improved focus in the business

 Reaching goals faster

 Better workplace relationships

 Effectivity of work

9
How to plan time effective?
A general complaint you often hear is: “I don’t have enough time; time is too short, etc”. Those
who keep on blaming time isn’t enough do not know how to plan and make their time
effectively. In reality, this is not a problem but much more a symptom!
A symptom of:

 lack of clear goals

 lack of setting priorities and/or
 bad planning
 poor discipline in time
 No time budget

Therefore, we should not talk about “managing time” but more about “setting goals”
and “determining priorities”.

But the term time management is more generally accepted although it is a contradiction in
terms, because: you cannot manage time; time passes at a fixed rhythm whatever you do, the
only thing you can try to manage is YOURSELF!

So, we should talk much more about self-management and not about time-management or in
other words: time management is not concerned with time or speed but with efficiency and
personal time-management, so it relates essentially to auto discipline.

The keyword therefore should not be time management but (self-) discipline!
WHAT ARE IMPORTANT TIPS FOR GOOD TIME MANAGEMENT?
 List goals
 Set priorities
 Make a daily “To-do” list
 Start with A’s….not C’s
A: Urgent and important to do.
B: Important but not urgent to do.
C: Neither urgent nor important to do.
 What is the best use of my time right now?
 Handle each piece of paper only once
 Do it now!

SETTING PRIORITIES
Priorities are the set of things and activities that should be conducted first before the
accomplishment of other subsidiary activities. For example, In house construction, it is good
to buy bricks first than buying a tin cover.
Setting priorities is the way of undertaking things and activities seem to be important over
another one.

10
IMPORTANCE OF SETTING PRIORITIES
Setting priorities is important because:

 Work is done in a planned manner.

 Urgent work is completed on time.
 Interruptions are controlled.
 Urgency is checked.
 Alternatives are identified (e.g. by multiple choice questions).
 If necessary, work is delegated "upwards" or "downwards".
 Schedules are maintained.
 The sequence and results of work become more satisfying.
 Colleagues, staff and superiors are more satisfied.
 Conflicts are avoided.
 You yourself become happier.

WHAT ARE THE FIVE STEPS TOWARDS SYSTEMATIC TIME PLANNING?

The five steps are as follows:
1. List your activities: jobs - schedules - jobs for the day - unfinished work.
2. Estimate the length of the activities.
3. Reserve buffer periods for unpredictable events (60:40 rule).
4. Take decisions on priorities, shortcuts and delegation.

5. Re-check  Enter unfinished work under a new day (time table book).

THE CONCEPTS OF TIME WASTING.

Time wasting refers to the actions that involve doing human activities and make slowing down
toward reaching your goal.

 It can therefore be the activities and the things that human does and keep on wating
time. Eg; reading news, gossiping, worrying, stress, mass media etc.

What are the time wasters?

 Talking with people about personal matters unconnected with work; Gossiping
 Unnecessary or extra-long group meetings,
 Allowing too many interruptions,
 Disorganization,
 Little or no delegating,
 Being indecisive, and
 Being late or absent.
 Being in mass media networks
 Reading the news. etc

11
1.3: KEEPING RECORDS IN BUSINESS
Dear Learner, I warmly welcome you to this unit, the very best unit (1.3) of learning how to
keep records in your business.! You will strongly learn about keeping both non financial
records and financial records. And the, the book will bring you to learn how to prepare cash
flow projection, preparing a profit and loss statement, and preparing a balance sheet.
Do you know that, Most of small business owners oversee the function of record keeping.
This is an important aspect in any business, project, institution and programs.

Reminding you to the term business, Simply, Business is defined as any activity that involves
an exchange of goods and services through monetary terms for profit making.

 Those who are doing business must involve the exchange of goods/ services to money
between two or more parts for earning benefit expected.

 Thus, those events of exchanging goods and services to money can simply be called
transactions. In doing business, transactions may be stored and well kept for future use
or some near time to come.
 For example 10 yrs are used to keep Bank transactions etc.

RECORD KEEPING
This is the art of recording all information and disclosing financial transactions. It requires
expertise and tactics to help maintain the records. Also, is the process of caring and maintaining
all the written information of your business which is known as book-keeping.
 Record keeping is a process of documenting business information relating to business.

Formats of keeping records

Business records can be kept in different formats;

 Memorize in heads: this is very risk since it does not give the realistic function of the
project. And information can be lost very easily

 Written: records maintained in texts provides the evidence and easy to use when
improvement is needed for the enterprise.

Importance of keeping records

 Helps to know the trend of the business
 To enable the entrepreneur to identify the fast moving items and stock them as per
demand
 Helps to track every transaction in business
 Provides the references

12
  Helps to plan for the future
 Helps in creation
 Helps in making good business decisions. For example
the financial statement will show what your business has been doing in the past
 Helps to monitor the progress of the business
 Keep track of the daily activities. etc
 Helps in management activities like organizing, leading, etc.
TYPES OF RECORD KEEPING
1. Non-Financial records
2. Financial records
1: NON-FINANCIAL RECORDS KEEPING
These are the records that document other matters which are not related to finance, but keeps
important matters pertaining to business events.
Non-financial records refer to information that falls outside the scope of mainstream
financial statements. It is a basis of recording all other information rather than financial
aspects eg. providing direction. It does not have direct financial impact.
 Example list of suppliers, stock, names and number of employees etc
Different documents can be used to keep the records depending on the nature and type of
non-financial records itself, example;
 Corporate Social Responsibility (CSR)
 Environmental reports
 Employment reports
 Names of customers and suppliers as well as employees
 Human rights
 Culture
TYPES OF NON-FINANCIAL RECORDS
What are the important types of non-financial records?
a) Personnel record keeping
There are many reasons to maintain accurate, reliable personnel records. Personnel records
are also needed for potential workers' compensation or unemployment claims; employee
appraisal, promotion, or dismissal actions; and insurance information.
Classification of personnel records
Personnel records can be classified in four ways: present, recent past, past, and future.
Categories commonly used for personnel records are:
 pay related,

13
  performance related,
 developmental, other personnel actions, and
 non-confidential medical records.
b) Supplier records
Maintaining records on suppliers is important for ensuring the adequate supply of appropriate
merchandise in a timely, cost effective manner. Supplier records should include the supplier's
name, address, telephone number, and Fax number.
c) Customer records
There are several reasons to maintain customer records, the most obvious being to maintain
billing information for credit customers. Even if credit sales are not involved, however,
information on customers can be helpful for advertising, pricing, and deliveries
d) Inventory-related record keeping
Inventory records are vital for ensuring that adequate quantities and types of merchandise are
available for sale. There are two basic methods. The first, the perpetual method, keeps track
of each item available for sale. As each item is sold, the inventory is reduced
2: FINANCIAL RECORDS KEEPING
Introduction
 Financial records are information that is related to finance resource.
 Financial Record keeping is the practice of documenting transaction of money by
writing all financial information in your business.
The proper record keeping system can provide the information necessary to solve
management problems and to make sound business decision.
 Importance of financial record keeping

 Helps to know How much profit/loss is the business making

 Helps to know How much worth is your business (all money your business has)
 Determines costs in the business
 Helps to realize how much do customers owe you (Debtors).
 Help to know how much does your business owe the suppliers (creditors)
 How many surplus funds does the business have for expansion or improving
E.g. if there is enough money o buy new tools, construct or maintain your
building etc.
 Helps in making good business decisions. For example
the financial statement will show what your business has been doing in the past
 Helps to monitor the progress of the business
 Keep track of the daily activities. etc

14
MEANING OF TRANSACTION IN RELATION TO BUSINESS
 What is a Business Transaction?
A business transaction is an event which is expressed in monetary terms, and that is
capable of being recorded in the books of accounts.
 Examples of a business transaction are buying goods, paying wages, paying rent and
selling goods.
 Accounting Definition
• Recording
• Classifying
• Summarizing
• Analyzing
• Interpreting
• Communicating
Transactions & Events in Monetary Terms
 Examples of Events/Transactions
o Received Loan from Uncle of Rs.8,00,000 through Cheque
o Opened Bank Account & deposited Cheque
o Purchased Land for Rs.4,00,000
o Given Advance for purchase of Godown Building Rs.75,000
o Bought a Motorcycle for Rs.50000
o Given loan to friend Rs.1,00,000
o Started small business by investing Rs.50000 for Tables/
Chairs/Furniture
o Purchased Goods for Rs.1,00,000
 In business transactions, Two or more sides of recording them may be affected.
We have seen that every transaction affects two sides. We need to show these effects when we
first record each transaction. That is, when we enter the data relating to the transaction in the
accounting books, we need to ensure that the items that were affected by the transaction, and
only those items, are shown as having changed. This is the bookkeeping stage of accounting
and the process we use is called double entry. You will often hear it referred to as double
entry bookkeeping. Either term is correct.
• A double-entry bookkeeping system is a set of rules for recording financial
information in a financial accounting system in which every transaction or event
changes at least two different nominal ledgers.
 Normally, we do have DEBIT SIDE(DR) and CREDIT SIDE (CR).
 Debit side means the accounts that are coming in, WHILE
 Credit side means the accounts that are going out.
DR. TITLE OF ACCOUNT CR

15
 • Did you see how the shape resembles a ‘T’? Not surprisingly, these are commonly
referred to as T-accounts:
Do you remember that transactions increase or decrease assets, liabilities or capital. In terms
of the assets, liabilities, and capital:
 to increase an asset we make a DEBIT entry
 to decrease an asset we make a CREDIT entry
 to increase a liability/capital account we make a CREDIT entry
 to decrease a liability/capital account we make a DEBIT entry
TYPES OF BOOKS USED IN KEEPING RECORD
 There are many types of books used to keep records. Collectively, these books are
known as subsidiary books. These subsidiary books that are used differ from one
business to the other.
 The following sets of books may be necessary for recording the information of your
business
· Order book
· Purchase book
· Cash book
· Sales book
· Debtors book
· Creditors book
1. ORDER BOOK
This is a book used where you record all the information of the orders you have
received from your customers.
Make sure that you record all that you have agreed up on your customer about the product to
be made in the order book.

ODER BOOK

16
Example; i) On 1st Jan 2023, Mwalubanda co. received an order from Mr. Mbagwa about
buying five cartons of water @ Tshs.2,500 that will be taken on 3rd jan with full payment.
ii) On 5th Jan, an order from Mr. Ambele was received about buying 4 gallons of sugar @
56,000 while only 70% of the total was paid through electronic networks, the remainder will
be given on the following date when delivery is done.
Solution: MWALUBANDA CO.
ORDER BOOK
Date Order Client’s Item
No. Total Deposit Date of Date of
no. name of price delivery collection
items
1st 1 MBAGWA Cartons 5 12,500 12,500 3rd jan 3rd jan
jan of
2023 water
5th 2 AMBELE Sugar 4 224,000 156,800 6th jan 6th jan
jan (67,200)
31st Closing TOTAL 9 236,500 169,300
jan

2. PURCHASE BOOK
This is the book that records all merchandise of goods either on credit or on cash in the
business. All the purchases of materials, tools, goods bought etc are recorded in the purchase
book. Keep the records for every purchase you make immediately.
NB: Only goods bought for resale are then recorded in this book and not the assets.
3. CASH BOOK
Refers to the book that records all day-to-day transactions involving cash payments and
receipts. This book involves cash in hand, cash purchases, cash payments and cash receipts.
Note that: When you take money out you SUBTRACT while when money comes in you
ADD.

17
 4. SALES BOOK
This book records, all the information about what you sell on cash and on credit.
Having detailed sales information allows you to monitor sales performance over time.
 Note that: For every sales transaction you should record the amount you received in
cash and the amount that is still remaining (credit), the correspondence goes to sales
a/c.
5. DEBTORS BOOK
This is the book used to record all customers who took goods/services on credit and promised
to pay in the near future.
Sometimes your customers will only pay you the full amount at later date. In such case, the
customer owes you money. This money which the customer owes to you is called a debt.
6. CREDITORS BOOK
This is the book used to record all suppliers who have given you goods on credit and you
promised to pay them in the near future.
In this book you should record all the debts you have with your suppliers. When you get a
loan or credit from someone you have a separate page for each creditor.
Note: Use a separate page for each creditor.
SIMPLE EXAMPLE
• Example:
• The following are the details of the business’ transactions of Ms. Kasembe co.
Information of the transactions conducted Amount
Jan. 1 Ms. Kasembe started a business with a cash in
15,000
hand
" 6 Purchased goods for cash 2,000
" 16 Received from Akbar 3,000
" 18 Paid to Babar 1,000
" 20 Cash sales 4,000
" 25 Paid for stationary 60

" 30 Paid for salaries 1,000

" 31 Purchased office furniture 2,000

REQUIRED: Write up the above transactions into their necessary books.

18
 SOLUTION: FORMAT
DR. TITLE OF ACCOUNT CR.
DATE DETAILS FOLIO AMOUNT DATE DETAILS FOLIO AMOUNT

Cash Book
Date Particulars L.F. Amount Date Particulars L.F. Amount

2023
Jan. 1 Balance b/d 15,000 Jan. 6 Purchases a/c 2,000
16 Akbar 3,000 18 Babar 1,000
20 To sales a/c 4,000 25 stationary 60

30 Salaries a/c 1,000

Furniture a/c 2,000
31
15,940
31/1/23
Balance c/d

22,000

1/2/23 To balance b/d 15,940

22,000

AKBAR A/C
1991 Rs 3,000
Jan. 16 By Cash

DR. SALES A/C CR.

19
 1991 Rs 4,000
Jan. 2 By Cash

Purchases Account
1991 Rs 2,000
Jan. 6 To Cash

Babar Account
1991 Rs 1,000
Jan. 18 To Cash

Stationary Account
1991 Rs 60
Jan. 25 To Cash

Salaries Account
1991 Rs 1,000
Jan. 30 To Cash

Furniture Account
1991 Jan. Rs 2,000
31 To Cash

QUESTION 1: Madam Mwanarabu started a business with Tshs. 16,000 in the bank during
1st june.
== 2 Bought van paying by cheque Tshs. 6,400.
== 5 Bought office fixtures Tshs. 900 on credit from Wadhifa co.
== 8 Bought van on credit from Adonia Ltd at Tshs. 7,100.
== 15 Bought goods paying by cash Tshs. 120.
== 19 Paid Adonia Ltd a cheque for Tshs. 7,100.
== 21 A loan of Tshs. 500 cash is received from Ms. Janeth.
== 25 Paid Tshs. 400 of the cash in hand into the bank account.
== 28 Made cash sales at Tshs. 6,300
== 29 Sold goods on credit to Ms. Safira and Seko cooperation for Tshs. 3,400

20
== 30 Received all the money demanded from Ms. Safira and seko cooperation.
== 30 Bought more office fixtures paying by cheque £480
• REQUIRED: Record the above transactions into their necessary books of accounts
for Madam Mwanarabu’s business.

1.3.1: PREPARING CASH FLOW PROJECTION

Cash flow projection is an estimate of the timing and amounts of cash inflows and outflows
over a specific period (usually one year). A cash flow forecast shows if a firm needs to borrow,
how much, when, and how it will repay the loan.

Why is cash flow important?

 A cash flow forecast shows if a firm needs to borrow, how much, when, and how it will
repay the loan.
 Determines what comes in and what goes out
 Help to know how worthy the firm is
 Determines the liquidity of the firm
 Handle the financial outlook of the company
 Helps to know different sources of revenue to the business
 Helps to know what factors reduce our cash and make cost minimization
 Helps in doing decisions
Cash inflows; Cash comes into the business mostly through sales of goods or services.

Cash outflows; Cash flows out to pay for costs such as raw materials,
transport, labour, and power.

 The difference between the two is called the net cash

flow. This is either positive or negative.
 A positive cash flow occurs when a business receives more money than it is spending.
This enables it to pay its bills on time.
 A negative cash flow means the business is receiving less cash than it is spending. It
may struggle to pay immediate bills and need to borrow money to cover the shortfall.
The distinction between cash flow and profit is shown in the example. In accounting,
negative figures are shown in brackets

THE BASIC ELEMENTS OF CASH FLOW

 Cash at the beginning (of the period) = this is your starting balance - what you have
on hand at the beginning of each month.
 Cash in = this is all cash received during the period, including sales, receivables paid
by debtors, interest or cash from sales of assets or stock.

21
  Cash out = this is all cash paid during the period, Including purchase of equipment,
raw material, office supplies, wages, rent, interest on loans, debt payments, etc.
 Cash at the end = this is your ending balance. Add starting cash to cash in for total
cash, and then subtract cash out.

Formula for cash flow projections/budgeting:

Beginning Cash Balance
(+) Cash Inflows
(=) Cash Available
(-) Cash Outflows

(=) Ending Cash Balance

NOTE: Cash flow projection may be prepared daily, weekly, monthly, quarterly or annually as
depending to the nature of the firm.
Structural of weekly cash flow projection
Part Description Day 1 Day 2 Day 3 Day 4 Day 5
Beginning Cash
1
Cash In
2 Cash sales
Cash from credit sales
Others
Total cash inflow
Cash Out
3 Cash purchases
Cash for credit
purchases
Wages
Equipment
Other payments
Total cash outflow
4
Ending balance

Part Description Day 1 Day 2 Day 3 Day 4

1 Beginning Cash Balance 200,000 150,000 165,000 180,000

2 Cash In

Cash sales - 65,000 65,000 65,000

22
 Cash from credit sales (receivables) - - - -

Others - - - -

Total cash inflow 200,000 215,000 230,000 245,000

3 Cash Out

Cash purchases 35,000 35,000 35,000 35,000

Cash for credit purchases - - - -

(payables)

Wages 10,000 10,000 10,000 10,000

Equipment - - - -

Other payments 5,000 5,000 5,000 5,000

Total cash outflow 50,000 50,000 50,000 50,000

4 Ending Cash Balance

150,000 165,000 180,000 195,000

1.3.2: PREPARING A PROFIT AND LOSS STATEMENT.

Profit and Loss statement (P&L) is a financial statement that summarizes the revenues, costs
and expenses incurred during a specific period of time - usually a fiscal quarter or year.
Trading, profit and loss statements are financial statements that are prepared after the trial
balance. They are collectively known as income statements. The trading statement shows the
gross profit or gross loss to the business. While, the profit and loss statement shows the net
profit or what remains after all other costs used up in the
period are deducted from the gross profit.
Before we look at each statement in detail, let us define the terms revenue, income and profit.

COMPONENTS OF TRADING, P & L STATEMENT (INCOME STATEMENT)

1) Revenues (sales)
2) Gross profit or gross loss brought forward from the Trading account.
3) All indirect incomes
4) All indirect expenditures
5) Net profit.
 REVENUES

Revenue is the money that a business makes from selling goods or services to its customers.
For example, if your business sells fish, then the money you receive from the sale of fish is
your revenue.

23
  INCOME
Income refers to net profit or what remains after expenses and taxes are deducted from revenue.
 PROFIT

This is the ending balance after the expenses being deducted.

One of the main objectives of a new business is to make profit. If a business is able to sell its
goods and services for more than it cost to produce them in the same period, then it makes a
profit. In business terms therefore, profit is simply defined as income minus expenses.

 There are two kinds of profit in a business:

· Gross Profit or trading profit, and Net profit.

(I) GROSS PROFIT is the profit available after the Cost of sales being deducted from the
amount of net sales. NB: If Cost of sales exceed net sales amount, then it results into GROSS
LOSS

(II) Net Profit or operating profit, which is recorded in a profit and loss account. NET
PROFIT is the total amount of profit available after the total expenses being deducted from
the gross profit. NB: If Total expenses exceed the gross profit there result into a NET LOSS.
 EXPENSES

This refers to the all costs incurred by the business for something like spending money for
advertising, rent, wages, transport, salary, insurance etc.
These expenses can be direct expenses or indirect expenses!

(i) Direct expenses are the expenses that the costs are directly attributed to the start and
running of business, the necessary costs like material costs and labour costs.
(ii) Indirect expenses are the expenses that do assist the running of the business, simply
because the costs are not directly coming from the production of the business. Eg;
rent, wages, electricity bills

Example of Profit and Loss statement

The following is the trial balance for Mr. Aliko Mmongele during his trade for the year 2024,
dec 31st.

Details DR “000” CR. “000”

Sales 67,000
Purchases 42,600
Lighting expenses 1,900
Rent 2,400
Wages 5,200
General expenses 700
Carriage outward 1,100
Buildings 20,000
Fixtures and fittings 7,500

24
 Debtors and creditors 12,000 9,000
Bank 1,200
Cash 400
Drawings 9,000
Capital 31,000
Stock at 1st January 2024 3,000
TOTAL 107,000 107,000

Solution:
Mmongele COMPANY LIMITED:
Trading and profit and loss account for the year ended 31 December 2024.

Opening stock………………………. .. 3,000 Sales 67,000

Add: purchases……………………… 42,600

45,600
Less: closing stock ………………….. 5,500

Cost of goods sold………………….. 40,100

Gross profit c/d …………………… 26,900

67,000 67,000
Gross profit b/d 26,900
Wages………………………………… 5,200
Lighting expenses…………………….. 1,900
Rent………………………………….. 2,400
General expenses………………………. 700
Carriage outwards…………………… 1,100
Net profit…………………………… 15,600

What are the advantages and disadvantages of profit and loss statement?

ADVANTAGES OF PROFIT/ LOSS STATEMENT

 It is included in a standard business plan to the ways of getting profit to be given
finance.

25
  The profit and loss table informs potential investors and credit sources about how a
business generates its income and manages its costs.

 The statement furnishes information about a company's income, costs, overhead and,
most importantly, its net profit.
 It gives the worthy of the business
 Help to understand how the costs of sales affect the income
 Help to minimize costs and maximize profits
 It shows the investors how much have been found as profit/loss

DISADVANTAGES OF PROFIT/ LOSS STATEMENT

 It may have effects in the balance sheet
 The expenses to be included do interfere themselves like where to be deducted.
 Difficult to find the attachments
 Takes time
 It may show incoveniences to balance sheet

1.3.3: PREPARING A BALANCE SHEET

A balance sheet is a financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time.

It is a financial statement that lists the assets, liabilities and equity of a company at a specific
point in time and is used to calculate the net worth of a business. ]
IMPORTANCE OF BALANCE SHEET

 The balance sheet provides a picture of the financial health of a business at a given
moment in time — usually the end of a month or financial year.
 It can tell you if you owe more money than what you currently have, the current
value of your assets
 Determines the overall value of your business.
 Provide warning signs so you can solve any problems
 The balance sheet is a vital financial statement since it deliver everything at the end of
the business.
 It helps to know what are the assets and liabilities of the business.
 Used in making critical decisions
 Shows assets and liabilities of the company.

COMPONENTS OF BALANCE SHEET

A) Assets:

These are the useful things that a business owns and uses to generate cash or sustainable
profit. There are 3 types of assets

26
 1. Current assets: these are items such as cash, accounts receivable (debtors), inventory
(or stock), and prepayments. They are current because they can be converted into cash
within a short period of time.

2. Fixed assets: these are assets that are used in the normal operation of a business to
produce and sell goods or perform services for its clients. Examples are buildings,
equipment, land, vehicles, etc.

3. Intangible assets: these are assets that provide benefits to a business entity for many
years, but have no physical substance. Examples are good will, patents, trade name, etc.

B) Liabilities
These are the debts a business owes to its creditors for goods or services it has received.

 If a business borrows money, it becomes a debtor and the person or business to whom
it owes is called a creditor. If a business fails to pay its debts when they are due, the
creditor can claim against the assets of the business as a whole. It has two types as well;
1. Current liabilities: These are short term liabilities that the business use to settle them
within a year. Example, accounts payable, tax payable, accrued revenues etc

2. Long-term liabilities: These are the long-term liabilities that the firm use to pay them for a
long time, usually more than one year of the business.
Example, bank loans, mortagages etc.

C) Owner’s Equity
When a business starts, it has no money of its own. The owner puts in his or her own money
or borrows money in order to start it off. This money is known as owner’s equity.

It is that part of the business that belongs to the owner. In a partnership, it is

called partnership equity, in a company it is called shareholders equity. Other terms such as
proprietorship, net worth or present worth are sometimes used to mean the same thing.

Principally, a balance sheet must balance, as the basic equation portrays, as such:-
Assets (A) = Liability (L) + Equity (E).
QUIZ!!!!!!!!!!!!!! QUIZ!!!!!!!!!!!!!!!!!! QUIZ!!!!!!!!!!!!!!!!!! QUIZ!!!!!!!!!!!!!!!!!!!!!!!!
Write next to the following list of items whether they are an Asset, Liability or
Equity
Cash in the Bank (__ASSET__)
1. Money from a business owner (___________)
2. Furniture in a business (____________)
3. Money owed to creditors (_____________)
4. Business loan from the bank (________)
5. Business trade name (_________)

27
Example of the Balance sheet;

1 2
ASSETS TSH. LIABILITIES TSH.

Current assets Amount Current liabilities

Cash Xxx Accounts payable Xxx

Accounts receivable Xxx Interest payable Xxx

Inventory Xxx Taxes payable Xxx

Temporary investment Xxx Total current liabilities Xxxx

Prepaid expenses Xxx Long-term liabilities

Total current assets Xxxx Mortgage Xxx

Other long-term liabilities Xxx

Fixed assets Total Long-term liabilities Xxxxx

Land Xxx
3
Buildings Xxx SHAREHOLDER’S EQUITY

Plant and equipment Xxx Owner’s capital Xxx

Furniture and fixtures Xxx ADD: Net profit

Or LESS: Net loss
Less: Drawings Xxx

Total fixed assets Xxxx Total shareholder’s equity Xxxxx

TOTAL ASSETS xxxxxxx TOTAL LIABILITIES & xxxxxxx

EQUITY

Example; From the illustration of Mr. Aliko Mmongele there above, the following is how the
balance sheet is prepared:

28
 MMONGELE COMPANY
A BALANCE SHEET AS AT 31st DECEMBER 2024

ASSETS AMOUNT LIABILITIES AMOUNT

FIXED ASSETS LONG TERM LIABILITIES
Buildings 20,000 XXXX
Fixtures and fittings 7,500
TOTAL F. ASSETS 27,500 SHORT TERM LIABILITIES
Creditors 9,000
CURRENT ASSETS TOTAL 9,000
Stock 5,500 FINANCED BY OR EQUITY:
Debtors 12,000 Capital 31,000
Bank 1,200 Add: Net Profit 15,600
Cash 400 46,600
TOTAL C. ASSETS 19,100 Less: Drawings 9,000
Net capital 37,600
TOTAL ASSETS 46,600 TOTAL LIABILITIES 46,600

29
 INDIVIDUAL TAKE HOME ASSIGNMENT
QUESTION ONE: Circle the most correct answer from the given alternatives per each
question as listed hereunder;
1. Entrepreneurship can be simply defined as:
A) Act of starting a profitable business by managing it for profit
B) Doing opportunity around for making profit
C) Act of identifying an opportunity and run it successfully for profit making
D) All of the above
E) C is the best answer not A and B.
2. Entrepreneurs are best characterized as
A) Dynamic leader
B) Good managers
C) All of the above
D) B is answer not A
E) Hard to get along with
3. Managing staff can be explained as:
A) Act of ensuring that staff do employ their skills at work places
B) Monitoring, guiding and motivating workers to perform right functions as
required
C) Train, encourage and advice employees for productivity
D) All of the above
E) A is the best answer and not the rests.
4. The following is the correct set of the manager’s main functions:
F) Motivating, Directing, Leading and Paying
G) Leading, Motivating, Complaining and Organizing
H) Organizing, Following, Maintaining and Directing
I) My answer is.....................
J) I don’t understand it so well
5. Using a variety of tests to check candidates against each job developed:
a. Identify your need
b. Develop a job description
c. Interviewing candidates
d. Contacting referees
e. Selecting the right candidate
6. Record keeping can be correctly defined as:
a. Process of documenting and maintaining all non- financial information to business
books
b. Process of documenting and maintaining all financial information to business
books.
c. Process of documenting and maintaining all business related information.
d. Process of caring and maintaining all financial transactions occurred to
business.
e. Process of caring and maintaining all non - financial transactions occurred to
business.
30
 7. Mr. Abdulatif sold his two bucket of oranges at TZs.30,000/= that he bought from Ms.
Ester at Tzs 10,000/= per each. Then Mr. Abdulatif incurred a cost of 3,000 for
transportation and other expenses. How much profit he made after his sales?
a. 7,000
b. 34,000
c. 17,000
d. 4,000
e. None of the above
8. Tr. Shadrack PM co. That is dealing with clothes and dressing design Received a
suddenly order from Mr. Meshack about making a wedding suit at an agreed costs of
250,000. Mr. Meshack paid only 46% as advance to assure of the business until 30th
April when she comes for it. Five (5) days back excluding the last day she ordered to the
company.
a. In order book: deposit will be 115000 (135,000) while the date of order is 30th
April
b. In order book: deposit will be 135,000 (115,000) while the date of order will be 25th
April
c. In order book: deposit will be 115,000 (135,000) while the date of order will be 25th
April
d. In order book: deposit will be 250,000 (135,000) while the date of order will be
30th April
e. In order book: deposit will be 135,000 (250,000) while the date of order will be
26th
9. Which of the following is incorrect?
Assets + Liabilities = Capital
A) 7,850 1,250 6,600
B) 8,200 2,800 5,400
C) 9,550 1,150 8,200
D) 6,540 1,120 5,420
10. Which of the following is correct?
A) Profit does not alter capital
B) Profit reduces capital
C) Capital can only come from profit
D) Profit increases capital
E) Profit has nothing to do with capital

QUESTION TWO: Fill in the blanks by writing the correct answers

11. …………………………….. are the records that document other matters which are not
related to finance, but keeps important matters pertaining to business events.
12. Describe the concepts from the following explanations: …………………………………
AND ………………………………….
 Make the workers to follow the correct and right path.
 Solving conflicts, uniting workers, bring oneness.
13. Business is an organization or economic system where ……………………………… are
exchanged for one another or for money.

31
 14. What are the major books used to keep financial records? ……………………,
….………………., …………………….., ………………………., ……………………
15. A balance sheet can be defined as
……………………………………………………………………………………………
……………………………………………………………………………………………
……

QUESTION THREE: MATCHING ITEMS: Match the items by reading the questions
from list A and finding the suitable answer from list B.
LIST A LIST B
16. Staff recruitment i. A financial statement showing cash inflows and outflows over a period.
17. Staff management ii. Exhange of goods and or services for money
18. Manager iii. Prepaid expenses, stock and debtors
19. Priorities iv. Accrued revenues, loans and creditors
20. Business v. Capital and profit
21. Non - financial records vi. Are the people who run the activities of the company and the business
for their own benefits
22. Financial records vii. Are the people who ensure the activities of the company and the
business run smooth
23. Cash flow prejections viii. Costs exceed the sales
24. Sales ix. The difference between sales and costs
25. Purchases x. Undertaking things and acyivities seem to be good over another one
26. Assets
xi. Undertaking things and activities seem to be important over another
one.
27. Liabilities xii. Process of allowing new people to come and work with an organization.
28. Equity xiii. Act of ensuring that staff fully deploy their skills and make optimal use
of their time at the work place.
29. Profit xiv. Sales exceed the costs
30. Loss xv. A transaction of taking goods or services from the supplier at an
agreeable price
xvi. A transaction of giving customers goods or services at an agreeable
price
xvii. All records apart fom financial ones
xviii. All records relating to money
Fill your answers here below;

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

32
QUESTION FOUR: Write T for all correct sentences to mean they are very TRUE and F for
all incorrect sentences to mean they are very FALSE, DO NEITHER write TRUE NOR
FALSE.

1. A business plan is key to entrepreneurial success ………………..

2. To be an entrepreneur you have to work long hours and be a self-starter …………..
3. Entrepreneurs seek opportunities that other people do not seem to care about
…………
4. To be an entrepreneur you do not need to worry about good writing or verbal skills
…........
5. Marketing is the act or process of tracking business records, maintaining a budget,
and ensuring profit…………….
6. If an entrepreneur made a total sales of Tzs.40 and incurred expenses of Tzs.11.6 with
a cost of sales of 15.6. His gross profit will be 14.4? ………….
7. If you are given: Capital Tzs 100, Debtors Tzs. 12.6, Prepaid rent Tzs. 30, Stock Tzs.
32, Creditors Tzs. 15.1, Premises Tzs. 42.6, Cash 17.8, Drawings Tzs. 9.5 and a profit
of 29.4. A total assets to liabilities will be 135? ……………..
8. The balance sheet totals should always agree ……………..
9. Check on the treatment of the transaction: Received refund of insurance by cheque
Dr.Insurance Cr.Bank ………….
10. Access to entrepreneurial role models can be a significant factor in determining
whether or not someone will become an entrepreneur. …………

QUESTION FIVE: Write up a case study of yourself as a successful an entrepreneur, then

prepare a brief report on your business life, relating your experience, challenges, how you
solved them and became prosper in the business by comparing various theories and concepts
covered in the class.

33
1.4: MANAGING SALES
Dear learner, In this element you will learn about the meaning of the term sales, skills
required in selling products or services, characteristics of successful sales person, customer
care and different strategies used to increase sales.
A sale is a transaction between two parties where the buyer receives goods (tangible or
intangible, services and/or assets in exchange for money. It can also refer to an agreement
between a buyer and seller on the price of a security.
A sale functions as a contract between the buyer and seller of the selected good or service.

A sales technique is a method by which a person involved in sales makes contact with a
potential customer and demonstrates how a product would benefit that customer, resulting in
a sale. There are many different techniques and methods that can be used in sales, and many
people find that practice and trying out different ways to make out sales.
THE SKILLS REQUIRED IN SELLING PRODUCTS/SERVICES

Anyone can learn to be an effective salesperson, and good salespeople can become great ones
by honing the following sales skills;
 Maintaining self-confidence
 Good listening
 Persuasiveness
 Building strong relationships
 Self-motivating
 Persuasion
 Committed
 Good communication

CHARACTERISTICS OF SUCCESSFUL SALES PERSON

 Good physical attributes
 Positive attitude toward sales
 Self confident
 Optimistic
 Self motivating
 Self committed
 Persuasion

34
  Goal setting
 Builds on relationships
 Hardworker
 Creative
 innovative

STEPS IN DOING SALES

What are important steps in the sales process? So which step in the sales process is the most
important step and how can we justify that, relative to the importance of the other steps?
Let’s look at them one-by-one using AIDA Process, which stands for the words

 A: Attention,

 I: Interest and Desire

 D: Dealing with objections

 A: Action (Closing a sale)

1. Attention; Usually begins with an opening that seeks to gain the attention of a
potential e.g. a salesperson shaking hands with a customer and introducing him/her.
2. Interest and Desire; Building interest and desire to a customer for your product. E.g.
showing ways in which it can save someone money or time.
3. Dealing with objections; A customer may start voicing some objections which may
be strong or maybe just thinking out loud on your offer, this indicates that the client
has an interest in your products/service also sometimes objections present an
opportunity.
4. Action (closing a sale); Usually closing ranging from soft to hard closes, a soft close
is fairly passive and may involve allowing a customer to express further interest and
the customer asking to buy a product While hard close pushes a product more
aggressively (forcefully) and actively makes a sale happen.

THE CONCEPTS OF CUSTOMER AND CUSTOMER CARE

who is a customer???
A customer is….

 an end user of our products/services.

Alternatively,
 a person or organization that buys something from our shops or business.
QN: Can you make judgements on which side you think the meaning of customer would fit?
Do you think a customer is only an end-user or the one who buys product or service……make
a small timed- debate!

35
Categories of customers
1. Internal customers: These are colleagues (customers) that you work with in that
organization. They become customers when they come to your office to seek a
service/product.
2. External customers: These are customers coming out of your organization for
service/product.

THE CONCEPT OF CUSTOMER CARE

Definition;
Customer care is…
-ability to provide product or services in the way promised. The commitment to providing
value added services to external and internal customers, including attitude knowledge,
technical support and quality of service in a timely manner
Customer care means making customer want to come back for more, and getting them
recommend products and services to others. Customer care is not only about meeting
customer expectations but satisfying the customer by focusing staff energies on offering
value, getting it right first time, and improving it in the future.

Customer care has impact on organization through:

- Increased success
- Developing and satisfied work force

Tips on good customer care

1. Smile when meeting customers: This is the easiest thing to do. Anybody can do it. A
Chinese proverb says “If you don’t have a smiling face do not open a shop”
2. Don’t lean backwards, be forthcoming!
3. Say:“Hello! You are welcome!”
4. Say: “Good morning, can I help you?”
5. Say: “Would you like a drink? Or may be a bite?” (in a restaurant)
6. And of course: “Please, sit down…”

How can you attract customers?

There are three parts in which you can attract customers:-

Part 1: Identifying your customers

1. Understand your customer.
2. Analyze yourself and your business.
3. Perform a SWOT Analysis.

36
  Part 2: Attracting New Customers
1. Create your brand..
2. Utilize traditional marketing techniques.
3. Adopt non-traditional marketing techniques.
4. Employ online marketing strategies.
5. Utilize social networks/media.
6. Understand the effectiveness of your marketing
campaigns.
7. Get referrals from existing customers.

 Part 3: Keeping existing customers

1. Get to know your customers well
2. Provide your customers with valuable information.
3. Offer a way for customers to provide feedback.
4. Analyze customer feedback.

1.5: PERFORMING COSTING AND PRICING

Dear Learner, welcome to Unit.The unit has two elements. In element you will learn about
costing of products and services, while in element you will learn about pricing of products
and services. In the last element, you will learn about break-even point.

A: COSTING OF PRODUCTS AND SERVICES

Costs are …..

 the money you give out to produce your items for business.
 all the expenses you make in running your business.
Costing…..
…is the way you calculate how much is spent on producing and selling a product or a service.

You need to know in detail what it costs to make a product, sell a product or provide a service.
Many small or large businesses get into trouble because they do not know their costs.

IMPORTANCE OF COSTING
What If you know your costs, then you will be able to:
 set your selling prices so that you can attract customers,
 know if you are making a profit or a loss, (profit = money in - money out),

37
  find out which items are most costly in running your business so that you can reduce
the costs.
 See what effect improvements in your business have on your costs.
 Help to minimize the unnecessary costs to attract returns
 Help to assign the costs to their specific unit of activity.

THE MAIN TYPES OF COSTS

In any business there are two types of costs:
1. Direct costs
2. Indirect costs
The formula for the costs in a business is:

Total costs = Direct costs + Indirect costs

(TC = DC + IC)

1. Direct costs: direct costs are the costs which form part of the final product or service which you
produce. These costs are direct related to the production of an item. The direct costs are:

Direct Costs =
The costs that are directly related to the product or service that you produce

The direct costs can also be divided into two, namely:

 Direct material costs: these are costs of materials which are used to produce a product
 Direct labour costs: these are costs of labour paid to the workers for the time they spend
on making the product
Because the direct costs are direct related to a product or service, they also change according to
the number of products/services you make. E.g. to make 1 pair of trousers you need 2 meters of
cloth material, for 2 pair of trousers you need 4 meters.
2. Indirect costs: indirect costs are all the other costs which you make in running your business
and which are not direct related to the production of the items.

38
 Indirect Costs =

The costs that are made in running the business but which have no direct connection to the
final product.

The indirect costs are for example:

 Rent of building
 Depreciation on tools, building, machines, equipment
 Maintenance and repair of tools, machines etc.
 Water and electricity
 Office costs such as stationery, postage, telephone
 Transport
 Salaries paid to everyone who is not directly involved in making the product
 Selling costs (e.g. posters, advertisements)
 Financial costs such as interest on loans
The total indirect costs do not change with the level of production! E.g. the rent of your building
will be the same, no matter is you make 1 pair of trousers or 5 pair of trousers in a day. But by
increasing the production, the indirect costs per item will be less!

FORMAT FOR CALCULATING COSTS

 CALCULATION OF COSTS

DETAILS AMOUNT
A) DIRECT COSTS
DIRECT MATERIALS
XXXXXXXXXXXXXX xxxxxxxx
DIRECT LABOUR
XXXXXXXXXXXXXX xxxxxxxx
TOTAL DIRECT COSTS xxxxxxx
B) INDIRECT COSTS
Rents xxxxxxxx
Wages xxxxxxxx
Bills xxxxxxxx
Other expenses xxxxxxxxx XXXXXXXXXXX
TOTAL COSTS XXXXXXXXXXXX

39
Simple example: Q. ONE: Ms. Tadhikrath got a big tender from Mr. R. Nguche to making,
repairing and maintaining FRIDGES for him. Ms. Tadhikrath took the following
requirements;
New two Packages of metal and plastic at a cost of 2,000,000. A discount of 6%.
Two Used charging line value at 500,000 plus favored carriage expenses at 10%
Two Digital Multimeters @40,000 and a screw driver @3,000.
Four adjusts spanner @ 5,000, a vacuum pump @150,000 and gas (R600A), (R22)
@200,000
Two timed workers for carrying fridges @5,000 per hour while they worked for 12hrs
within three days
Water and electricity bills @20,000 and 15,000 respectively.
Supervisor was being paid 10,000 per hour. He worked for three days by 8 hrs. until
accomplishment.
REQUIRED: Find the Total DIRECT MATERIAL COSTS, LABOUR COSTS, INDIRECT
COSTS, and TOTAL COSTS.
SOLUTION:
MS. TADHIKRATH CO.
COST CALCULATION

A: DIRECT COSTS
DIRECT MATERIALS:

 Packages of metal and plastic (2,000,000-6% of 2,000,000) 1,880,000

 Charging line value (500,000-10% of 500,000) 450,000
 Digital multimeters (40,000 * 2) 80,000
 Screw driver 3,000
 Adjusts spanner (4 * 5,000) 20,000
 A vacuum pump 150,000
 Gas; R600A and R22 (200,000 *2) 400,000
TOTAL DIRECT MATERIAL COSTS 2,983,000
DIRECT LABOUR:

 Two workers (5,000*12hrs*3days*2) 360,000

TOTAL DIRECT LABOUR 360,000
TOTAL DIRECT COSTS 3,343,000
B: INDIRECT COSTS
 Water 20,000
 Electricity 15,000
 Supervisor (10,000*8*3) 240,000
TOTAL INDIRECT COSTS 275,000
TOTAL COSTS 3,618,000

40
 DMC=2,983,000
DLC=360,000
IDC=275,000
TC=3,618,000

Comprehensive example:
Talick Gole co. LTD is dealing with designing and sewing cloth by technology at Keko street,
they got a tender of making TR. Shadrack’s school uniforms, Gole entered the following costs
when making the tender;

 Four new sewing machines sold @100,000, a discount of 5%.

 Colored school fabric per meter @ 6,000. 900 Meters were bought including 10 %
per fabric.
 Two measuring ape fissures @15,000.
 Three packages of needles were bought @1,000
 750 Zippers @ 250, and 750 Buttons @ 100.
 30 Bundles of fibers (Yarns), where by each bundle contains 50 Fibers (Yarns) @
10,000.
 After a couple of 18 months, Madam Subira maintained all Machines that deteriorated
by 12,000 per each.
 Four Tailors (executors) were working for Tshs. 10,000/10 hours per day, SIX (6)
days used until then.
 Two trainees were paid 2,000 per day within those SIX (6) days.
 Stationary costs were 10,000
 Water and Electricity, 5,000 and 15,000 respectively.
 Rent at 5,000
 Transport costs at 16,000
REQUIRED: From the above information, find
I. Direct material Costs
II. Direct Labour Costs
III. Indirect Costs
IV. Total Costs
Do you know their difference?
 When comparing the direct costs of manufacturers and traders, we can notice that the
main difference lies in the labour. We calculated labour as a direct cost for
manufacturers but not for traders. This is because of the difference between wages
andsalaries.

 Wages: these are labour costs that are direct related to producing a product/service,
e.g. labour for producing a table, labour for repairing a vehicle. Hence, wages are
direct costs.

41
  Salaries: these are labour costs that are indirect related to a product, e.g. office work,
labour from a trader etc. Salaries are indirect costs

We have seen that one of the indirect costs in a business is the depreciation of tools, shelter,
building etc.

What is depreciation?
 Take for example a carpentry workshop. In the workshop you use tools like a hammer, a
saw, chisels, a plane etc. to produce your items. After some time these tools will be old
and will need replacement. Also the building or shelter that is being used needs to be
renewed after some time.
 Depreciation …is the money which you have put aside to be able to replace your
equipment and other assets after some years.

To calculate the depreciation of your equipment you should take the following steps:
 Step 1: Make a list of all the equipment that you have in possession
 Step 2: Calculate the current prices of the equipment
 Step 3: Calculate after how many years replacement of the equipment is needed
 Step 4: Calculate the depreciation per year.
 Step 5: Calculate the depreciation per month

Formula: DEPRECIATION=COST X SALVAGE VALUE %

TIME USAGE
Example, A machine that was bought at 2,000,000 for repairing fridges was maintained at
25% after 18 months. Find depreciation.
D= COST * SALVAGE VALUE%
TIME USAGE
NB: SALVAGE VALUE = 25%, COST = 2M, TIME = 18months
Then, D= (2,000,000 * 0.25) / 18 = 27,778.

‘Please use that depreciation to add the indirect costs upon the simple example’.
What is reducing cost?
If you know the costs that you make in running your business then you can also find out if it is
possible to reduce the costs.
Why should you reduce your costs?

 To make more profit

 To be able to lower your selling price so that more customers will buy from you and
so that you can better compete with your competitors.

42
How can you reduce your costs? You can reduce your costs by:

1. Cutting the costs of (raw) materials:

2. Cutting the labour costs:
3. Cutting the indirect costs:
1.6: PRICING OF PRODUCTS OR SERVICE
 What do you understand by the terms price and pricing?
Price
 Price is the final cost of your product including a profit that you will charge a
customer to pay.
 It is what you ask people to pay for your product.

Pricing
 Pricing is the way you find out how much you should charge a customer for your
products
 the way you decide on the prices that you should charge for your products.

WHAT IS THE IMPORTANCE OF PRICING?

 You have to price your products in order to know whether you are making a profit or a
loss in your business.
 Therefore, it is important to know that the costs of making your product
 Helps to attract customers
 Help to determine the market situations
 Increase the buying and selling pressure

 Selling price: the price at which you sell your product after putting a profit on
top of your cost price.

What do you need to know when setting your prices?

In order to set prices, look at the following:

1) You need to know your costs of production: that is, how much did you spend on making
your product (e.g. raw materials, labour). Your prices should cover:
 The direct costs
 The indirect costs

2) You need to decide on your profit mark up: which % do you want to put on top of the price
as your profit?
 The money which comes from the sales should provide a reasonable profit

43
3) You need to find out the prices that your competitors charge for the same or similar
product. This information comes from your market research.

4) You need to know what customers are prepared to pay for your product/service. This
information comes from your market research.

How can you know if your pricing is wrong?

You can sometimes tell when your pricing is wrong by checking on the following factors:
1. Prices may be too high if:

- You do not reach your sales target

- You lose some big orders
- Sales of some of your products are low compared to other products
- Stocks pile up
- You receive complaints from customers
2. Prices may be too low if:

- There are more orders than you can fill

- You run out of stocks all the time
- Sales are good but the overall profits are low

IMPORTANT METHODS OF PRICING

1) The cost-plus method: that portion or % that you add to the costs of producing the
product/service to get the selling price is known as the profit mark up. Most entrepreneurs take
20-30 % as their mark up but it also depends on what is happening on the market.

Example: Pricing of a pair of leather shoes:

Total production costs shoes = Tsh. 3,000
+/+ Profit mark up 30% x Tsh. 3,000 = 900

Selling price = Tsh. 3,900

It should be clear that in this example the manufacturer does not make 30% profit on the sale.
His profit margin = Tsh 900/3,900 x 100
= 23% on sales
In conclusion, there is a difference between profit mark up and profit margin:
Profit mark up = a percentage of the cost price (in the example 30%)
Profit margin = a percentage of the selling price (in the example 23%)

44
The price that has been calculated is the price at which the entrepreneur wants to sell his/her
product or service. But it might not be the price (s)he can get! This depends on what is actually
happening on the market.

2) The comparative method: In this method you compare your product/service to others on the
market. Depending on its quality and on the cost price, you can fix the price cheaper, more
expensive or exactly the same price as your competitors.

3) The what-the-market-can-pay method: This method is based on the supply and demand concept
(needs and wants). For instance, if the product is not available on the market, then the price could
be higher than the one calculated with the cost-plus method. Or, if there are already many similar
products available on the market, then the price must be lower than the one calculated with the
cost-plus method. But never lower than the cost price, otherwise you will make a loss!

1.6.1: CALCULATING BREAK-EVEN POINT

It is about calculating break-even point, an important aspect in the components of costing and
pricing. In this element, you will learn about the meaning of break-even point, understanding
components of break-even point, importance of calculating break-even point and how to
calculat Break-even point (BEP) ----

....is the point at which total revenues equal total costs. At this point, a business begins to earn
a profit.
What are the important components of BEP?

 Companies tend to look at the break -even point in terms of sales volume. For
example: "Business A will break even after selling 500 tables."
 Companies also look at the break-even point in terms of time. For example:
"Business B will break even after 2 years."
No matter how companies refer to the break-even point, they always begin with the BEP
formula:
Indirect costs
Break Even Point = --------------------
(Price per Unit – Direct costs per Unit)

A break-even analysis depends on the following variables:

1) The indirect production costs for a product.

2) The direct production costs for a product.
3) The product's unit price.
4) The products expected unit sales [sometimes called projected sales.]

45
 KEY TERMS
Indirect (fixed) costs: the sum of all costs required to produce the first unit of a product. This
amount does not vary as production increases or decreases, until new capital expenditures are
needed.
Direct (variable) costs: costs that vary directly with the production of one additional unit.

Expected unit sales: number of units of the product projected to be sold over a specific period
of time.
Unit price: the amount of money charged to the customer for each unit of a product or service.

Total costs: the sum of the fixed cost and total variable cost for any given level of production,
(Fixed Cost + Total Variable Cost)

Total Revenues: the product of expected unit sales and unit price, (Expected Unit Sales * Unit
Price)

Profit (or loss): the monetary gain (or loss) resulting from revenues after subtracting all
associated costs, (Total Revenue - Total Costs).

Break-even point: Number of units that must be sold in order to produce a profit of zero (but
will recover all associated costs).
(Break Even = Fixed Cost / (Unit Price - Variable Unit Cost))

What is the importance of calculating BEP?

 Used in Analysis to solve managerial problems
 Setting price levels
 Targeting optimal variable/ fixed cost combinations
 Determining the financial attractiveness of different strategic options for your
company
 Calculate at which sales volume the direct and indirect costs of producing your
product will be recovered

1.7: APPLYING TECHNOLOGY TO SMEs

The unit has only one element which is about employing appropriate technology to SMEs.

 What is technology?
Technology is the making, modification, usage and knowledge of tools, machines,
techniques, crafts, systems, and methods of organization, in order to solve a problem,
improve a pre-existing solution to a problem, achieve a goal, handle an applied input/output
relation or perform a specific function.

It can also refer to the collection of such tools, including machinery, modifications,
arrangements and procedures. Technologies significantly affect human as well as other animal
species' ability to control and adapt to their natural environments. The term may be applied

46
either generally or to specific areas: examples include construction technology, medical
technology, and information and communication technology (ICT).
 The word "technology" may also be used to refer to a collection of techniques.

Appropriate technology ….refers to technology that takes into account environmental, ethical,
cultural, social, political and economic factors of the community.
IMPORTANCE OF APPROPRIATE TECHNOLOGY IN SMES
Below are the benefits of new and appropriate technology to small businesses.
 Technology Helps Improve Communication
 Technology Improves Efficiency
 Protection Against Attacks
 Technology Helps Improve Communication
 Technology Improves Efficiency
 . Protection Against Attacks
 . Employees Need Technology to Work Efficiently
 . Explore New Markets for Growth
 . Technology in Business is Necessary for Expansion
 . Technology Increases the Capacity of the Business
 . Increased Employee Engagement
 . Technology Brings Cryptocurrency into Being
 . Unlimited Supply of Knowledge
 Employees Need Technology to Work Efficiently
 Explore New Markets for Growth
 Technology in Business is Necessary for Expansion
 Technology Increases the Capacity of the Business
 Help to simplify the machines and work properly
 Increase the productivity of the business
 Help in doing improvements of outputs to inputs
 Ensure the work to run smoothly and for growth

47
Factors to consider when choosing technology for business……..
There are several factors to consider when choosing output technology;
 Who needs the output?
 How many people need the output?
 Where is the output needed?
 Distribution
 Logistics
 The speed of the output
 Storing factors
 What are the initial and ongoing costs of maintenance and supplies?
 Human factors
 Environmental requirements for output technologies

FREEZE YOUR HEAD NOW

QN: The existence of technology have improved the development of small business.
Agree or go against the statement by six points

REVISION ONE:
1. A) What is staff management?
B) In details, show five procedures used to recruit staff
C) What are the Principles of managing staff?
2. A) What is time management?

B) All entrepreneurs need to manage time effectively, through better time management.
By budgeting time, entrepreneurs will achieve better results. Discuss with six points

3. “But the term time management is more generally accepted although it is a

contradiction in terms, because: you cannot manage time; time passes at a fixed rhythm
whatever you do, the only thing you can try to manage is YOURSELF. Thus, The
keyword therefore should not be time management but (self-) discipline!” Substantiate
the statement by seven points.
4. A) What are priorities? Do you think is important to set priorities? Why?
B) What are the five specific steps toward systematic time planning?

5. “The issue of wasting time has seriously been criticized” However the results have been
in vain. Prove this statement with any six examples.

48
 REVISION TWO:
Q. ONE. Given below is a list of costs. Identify the direct and indirect costs from the list.
I. Labor cost
II. Salary
III. Electricity bills
IV. Depreciation
V. Stationary
VI. Loan interest
VII. Material costs
VIII. Transport
IX. Rent
X. Maintenance costs
PART B: ‘’Managing an enterprise includes preparing financial statements’’. Said the
former VETA president of students, Mr. Gaston. What do you understand these
terms?
I. Profit and loss statement
II. Balance sheet
III. Cash flow projections
 Narrate one fruit of each of the above in doing business
Q. TWO: A) Discuss the difference of the pricing methods that entrepreneurs must use..
B) Mention three things to consider when pricing.
Q. THREE: What is appropriate technology? Show any 8 importance of having them to
SMEs in Tanzania.
Q. FOUR: Classify record keeping system with its branches in detail
Q. FIVE: A) Write down five importance of having balance sheet
B) Write any five reasons why we should keep on touch upon cash flow projection?

49
 MODULE TWO: GETTING INTO BUSINESS
PREPARING BUSINESS PLAN
Describing a business plan
 What is a business plan?

A business plan is a document prepared by somebody who intend to start a business or who is
already in business.

This document will involve all information that will occur to that man’s business, is simply
the budget book for an entrepreneur,,,,,it is like his/her map.
In short, a business plan is a statement, prepared by people intending to start a business.

A business plan is like a map. If a traveller like David Livingstone started off his journey
without a map, he would probably have got lost. That is the same for an entrepreneur: if he/she
will be running a business without a plan s/he will likely to fail in running it properly.

USES OF BUSINESS PLAN

A business plan has two uses.
 It can be used internally or externally in one`s business.
a) Internal use

This is when a business plan is used as a working document in the business to enable the
owner to see how the business is progressing and to spot problems or opportunities as they
arise. Internal useers are only managers and board of directors that use to assess and use the
business plan for analysis before giving it to the investors or owners to see the progression of
the business.
INTERNAL USERS: Managers, and directors.
b) External use

This is when the business plan is used by different users who affect that organization.
Shareholders, creditors, etc

When a business plan is used to get a loan from any lending institution, it has been used
externally.
EXTERNAL USERS:
 End Consumers
 household
 commercial & industrial
 Key Customer groups, if not direct to end consumer

50
  Distributors, retailers, product transporters etc.
 Employees
 Stockholders (owners)
 Financial community
 Suppliers
 Interest groups
 Public organizations
 Children (school projects)

IMPORTANCE OF PREPARING A BUSINESS PLAN

» Used as direction in running a business.
» It will help you steer your business in starting and growing.
» Used in making decisions.
» Help in getting some sources of capital (Help in getting funds).
» Used as strategic focus.
» Help to increase efficiency and effectivity.
» Develop accountability.
» Manage change.
» Manage cash.
» It will help in reaching business goals.
WHAT ARE THE MAIN PARTS OF A BUSINESS PLAN?

1. Executive summary:
 Your business name and location
 The products and/or services offered
 Your company's mission statement
 The purpose of your plan (to secure investors, set strategies, etc.)
. 2. Company description:
 The legal form of your business (corporation, sole proprietorship, etc.)
 The nature of your business, and the needs you plan to satisfy
 A brief history
 An overview of your products/services, customers and suppliers
 A summary of company growth, including financial or market highlights

51
 3. Products/services:
 Clearly describe what you are selling, focusing on the customer benefits.
Incorporate details about suppliers, product or service costs and the net
revenue expected from the sale of those products or services.

4. Market analysis:
 Show your industry knowledge, and present conclusions based on market
research

5. Strategy and implementation:

 Summarize your sales and marketing strategy and your operating plan.

7. Organization and management team:

Outline your company's organizational structure, and identify the company owners,
management team and board of directors.

7. Financial plan and projections:

8. This last section of your business plan should be developed with a professional
accountant after you've completed a market analysis and set goals for your company.

DEVELOPING A BUSINESS PLAN

THE PROCEDURES OF PREPARING A BUSINESS PLAN?
A business plan consists of a different number of elements. This however depends on the nature
and position of a business or the type of business. If you are starting up a business, your plan
will usually have to show the following:
1. Details of the business: Some background information on your business. This includes:

 The name of the proposed business

 The type of products you intend to deal in, e.g. Making chairs and beds
 The date you intend to start operating your business, e.g. 1 september 2006
 Your name(s) as the owner(s) of the business, e.g. Marion and Jack
 Your experience in running a business, e.g. 2 years experience as a carpenter
2. Location: The location is the place where you intend to run your business. It should include
some information such as:

 Are the premises owned or rented?

 Does the place have any water and/or electricity?
 Is the business located near the source of (raw) materials or near the customers or
competitors?

3. Product: Explain the type of product(s) your business will deal in.

52
Under this element you can explain whether your product needs government approval which
is normally required if your business deals in manufacturing cosmetics (Vaseline, hair creams
etc.), processing foods and fruit (jams, wines etc.) as this may be harmful to consumers and
users if they are not made properly.

4. Marketing plan: In a business plan a detailed report on the market is very important. To get
this information you can do a market research and ask yourself the following questions:

 Are you sure that there will be people who will buy from you?
 Why will people buy from you? Is it because your product will be cheaper or is it not
available locally, or is your product of better quality?
 How will you let people know about your product? Are you going to place posters at
markets or are you going to visit people at their homes and introduce the product?
 How will you sell the product? Will you sell directly to the end users or will you sell
through a middleman?
 Who will be your competitors and what are their products, prices etc.?
5. Production plan: Here you should clearly show that you fully understand the process of
producing your product(s).

Also make clear how much it will cost to produce/sell the products and what will be your
pricing.

In addition, you should indicate what capacity you intend to operate on (production forecast):
how much do you think you can produce/sell in e.g. one month?

6. Management and organization: Here you have to write down how many people you will
need to run your business. That is, you may be starting alone but as time goes on you will
probably need assistance.
You should also give an estimate of how much you are going to pay yourself and your workers.

7. Supply of (raw) materials: Here you should write down:

 Where you will get your (raw) materials
 How much you will need
 What will be the costs

8. Plant and equipment: A plant is the place you are working from.
Here you have to write down:

 What equipment you will use,

 What you will need for your plant (building, shelter, stand etc.)
 Where you will get the equipment etc. and how much it will cost.

53
9. Investment and finance plan: Here you need to give a summary of how much money you
will need to start your business and where you intend to get it from:

1. How much money do you need (= investment) and how do you intend to spend it (e.g on
tools, materials, building)
2. How much of your own money are you going to put in your business (= owners investment)
3. How much money do you need to borrow?

10. Cash flow forecast: Last but by no means the least you must prepare a cash flow forecast.
That is, you should show for a period of e.g. 1 year:

 How much money you expect from sales in each month

 How you intend to spend the money, clearly stating the items on which the money is to be
spent and the month at which it will take place
 How you are going to repay the loan(s), showing the loan and interest repayments in each
month

THE MAIN STAKEHOLDERS OF A BUSINESS PLAN?

The strategic plan impacts many, both outside as well as inside the organization. To varying
degrees these relationships must be recognized during various planning phases, including the
communication of the plan. Some of the possible stakeholders are:
a) End Consumers
 household
- demographic segments
- psychographic segments
- purchasing behavior segments
 commercial & industrial
- product use
- alternative products
- purchasing behavior segments
- industry classification
b) Key Customer groups, if not direct to end consumer
 distributors
 retailers
 product transporters
 intermediary storage
c) Employees
 internal, specify level
 sales force
 support personnel for outside relationships
 contractors (not really employees, but still impacted)
d) Stockholders (owners)
 Board of Directors
e) Financial community

54
  lenders (long & short term)
 banks
f) Suppliers
g) Interest groups
 community (local residents)
 environmental
 social advocates
 industry trade groups
 other (specify)
h) Public organizations
 governmental (specify)
 media
 non-profit (local, regional, national, world)
 schools
 public service & other charities
i) Children school projects

REVISION THREE:
1. What is business plan? What are the uses?
2. Show the main parts of the business plan
3. Write down the complete set of procedures for business plan
4. Who are the stakeholders? List any 8 ones
5. Explain why a business plan is termed as a map to the business man.

FINAL EXAM 1: (CBA – STRUCTURED) LEVEL II. Answer any five questions. Each
question carries 20 marks
1. A) Define the term self - employment
B)List five reasons for self – employment
C) Outline two advantages and disadvantages of self employment.
2. Explain why is it important for an entrepreneur to prepare a balance sheet
3. What is capital? Explain the 6 C’s used to be considered when ask loan from banks.
4. A) List five sources of business idea
B) Make 4 differences between business idea and business opportunity
5. Explain any seven reasons for doing market survey
6. A) What is time management? Explain importance of effective time management
B) List any 5 time wasters
7. Why is it important to reduce costs? (3 reasons) Show three ways of reducing it.

55
FINAL EXAM 2: CBA – STRUCTURED. Answer 5 questions out of 7 questions.
1. A) List down four types of useful business information that every entrepreneur should
possess when starting a business
B) For each type of useful information you have mentioned above, state two sources
of it.

2. What do you understand by the term “marketing mix”?. Write short notes on the
common tools that should be used in marketing activities
3. A) What do you understand by the term time management?
B) List any four importance of time management
C) Mention any five techniques used in time management

4. A) Define business plan

B) List down any 7 stakeholders for using a business plan
C) Show 5 importance of preparing a business plan

5. Explain the following terms:

A) Price
B) Costing
C) Profit or loss statement
D) Break even point
E) Record keeping
F) Balance sheet
G) Cash flow projection
H) Cash book
I) Financial record keeping
J) Non- Financial record keeping
6. A) What is the meaning of the term “Sales"?
B) Mention any 6 required skills for doing sales
C) Highlight any 6 tips for managing sales

7. A) There are three clusters for entrepreneurial behaviours. Name the three clusters
with one example from each.
C) Mention any 6 sources of capital you know.

END OF ENTREPRENEURSHIP EDUCATION AND TRAINING FOR LEVEL TWO

PREPARED BY MR. SHADRACK PAULO MWALUBANDA
BCOM (ACC-HONS, UDSM), EET (C) & HGK (EXC).
0656 158658
[email protected]

56