Self-employment in Food and Beverage

Grade 12

What do the following establishments have in

common?

FRANCHISES

• Well-established name

• Forms part of a chain

• Individual owners = keep the profit

FRANCHISES

• The FRANCHISOR (company) gives permission to the FRANCHISEE (an individual) to use the name of the company and sells its products.

EXAMPLES OF FRANCHISES

• Spur

• Nando’s

• Wimpy

• etc

ADVANTAGES OF FRANCHISES

• Approved way of starting a business

• Umbrella advertising

• Centralised purchasing

• Staff training

• Management support

• etc

ENTREPRENEURSHIP

It all starts with an IDEA and YOUR believe in it!

ENTREPRENEURS

An entrepreneur takes the risk to starts his/her own business.

ENTREPRENEURS

ACT on your idea

The Importance of Entrepreneurship

The Importance of Entrepreneurship

• Unemployment is very high in SA

• The SA economy cannot absorb all school leavers

• Entrepreneurship gives you options

• You can become financially independent

• You can be self-reliant

Characteristics of an Entrepreneur

• Identify the gap = business opportunity

Characteristics of an Entrepreneur

• Take calculated risks

Characteristics of an Entrepreneur

• A sense of responsibility

• Love of achievement

• Future perspective

• Confidence

• Good organising and management skills

• High level of energy

• Sense of humor

But can I do it??

Everybody has the potential to be an entrepreneur

Are you ready to be an entrepreneur??

1. How comfortable are you with being uncomfortable?

2. Are you disciplined?

3. How is your health?

4. Do you love what you do and are you good at it?

5. Do you play well with others?

Financing Opportunities

Financing Opportunities

• Capital : Start up funding for 2-3 years

• How to obtain funding:

1. Develop a business plan

2. Consider the source of funding

e.g. Loan, partner, investment etc.

Entrepreneurial Support

• The Department of Labour offer small business training programs

• FET and HE offer courses

• Learner ship (CATHSSETA)

• Incubators

Entrepreneurs in Hospitality

Many big organisations in the services industry outsource functions e.g. catering, cleaning etc.

List some opportunities for entrepreneurs within the Hospitality Industry from the following

illustrations:

Entrepreneurs in Hospitality

Home Industry

Entrepreneurs in Hospitality

Birthday parties

Entrepreneurs in Hospitality

Function Catering

Entrepreneurs in Hospitality

Office Lunch

Entrepreneurs in Hospitality

Bed and Breakfast

Entrepreneurs in Hospitality

Baking

Entrepreneurs in Hospitality

Requirements:

• Kitchen

• Equipment

• Transport

• Staff to help prepare

• Staff to help clean

• Business plan for investment & financing

BUSINESS PLAN

• You need to think your business idea through and plan for all possibilities. What should you consider?

• Give an easy way/method of doing this.

= Conduct a SWOT analysis

SWOT ANALYSIS

• A SWOT analysis indicates areas where you need to improve

• All four quadrants are interrelated

• A SWOT analysis is not the all and end of your business plan

STRENGTHS WEAKNESSES

THREATS OPPORTUNITIES

SWOT Analysis

SWOT ANALYSIS

• STRENGHTS:

– Strong points

– Your strong points

– Assets

– Interpersonal skills

– Business contacts

– Anything that can be used to the business’ advantage

SWOT ANALYSIS

• WEAKNESSES:

– Weak points

– Things you are not good with

– Things that you need

– Lack of finance and assets

– Lack of skills

SWOT ANALYSIS

• OPPORTUNITIES:

– Environmental factors

– Access to culinary school training

– Gaps in the market

– Access to cheap/trained/skilled labour

SWOT ANALYSIS

• THREATS:

– Competition

– Inflation

– Rising fuel prices

– Power failures

– Anything that might have a negative impact on your business

SWOT

INTE

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FAC

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POSITIVES NEGATIVES

List your items here

WEAKNESSES

List your items here

STRENGTHS

List your items here

OPPORTUNITIES

List your items here

THREATS

RESOURCES WEEK 4 LESSON 4 Worksheet Memo Template

THE BUSINESS PLAN

• Needed by every entrepreneur to set up and run a business.

• A “living” document

• Used to obtain financing

• Consist of:

COVER PAGE

• Business Name:

• Name(s) and ID Number(s) of Owner(s):

• Address (Owners) :

• Contact numbers:

• Table of contents:

EXECUTIVE SUMMARY

In 2 pages or less summarise the most important aspect of the business

• Business Concept:

• Financial Features:

• Financial Requirements:

• Current Business Position:

• Major achievements:

BUSINESS/COMPANY DESCRIPTION

• Name of the company & Business Address (map) • Branding , logo, uniform • Type of legal entity e.g Sole Owner, Partnership • Ownership • Significant assets • Mission statement • Goals and objectives – short, medium and long term • Company strengths and core competencies • The industry

Type of Business/ Legal Entity

Sole Owner/Sole Proprietorship

• The simplest and most common form of business conducted by a single individual

• Conduct business under own name or trade name • Owner’s liability includes personal assets • Net profit is viewed as personal income and taxed as

such • No operating expenses of other legal entities • Only one owner – cannot sell shares

Type of Business/ Legal Entity

Choosing the right format of your business is key

to its success.

Type of Business/ Legal Entity

CC: Close Corporations.

• No longer possible to form a new CC in SA. • Can still buy a shelf CC but very scarce. • Audited financial statements are not required • Meetings are not compulsory – on ad hoc basis • Members may take part in the management • The members are not personally liable for the debts of

the CC • 1-10 members

Type of Business/ Legal Entity

(Pty)Ltd: Private Company Proprietary Limited

• Treated as a separate legal entity and has to register as a tax payer in its own right

• Owners are shareholders • Shareholders have limited liability • Easier to transfer ownership and to raise capital • Efficiency of management • Adaptable for both small and large businesses • Not required to file annual financial statements with the

Registrar of Companies

Type of Business/ Legal Entity

Partnership

• Less than 20 owners but more than one • = an association between 2 and 20 people who are

contractually bound to one another to operate a joint, profit-generating business.

• Each partner contributes money, goods or services • Quite cheap to set up – doesn't’t have to be legally

registered • Not taxed as a company

BRANDING

• Company name

• Public image

• Logo/slogan

• Uniforms

GOALS

• Targets that you want to reach by a set date – financially or other.

• Short term

• Medium term

• Long term

LOCATION OF BUSINESS

LOCATION OF BUSINESS

• Renting or buying?

• Explain why the location chosen will be effective for you specific business and target market.

• Describe the surrounding area

• Also note any disadvantages or possible problems presented by your location and how you will combat that

What will describe the following?

OPERATIONAL PLAN

The part of the business plan where you dig into more of the nuts and bolts of you business:

• Purchasing & Suppliers

• Stock control

• Personnel plan – Organogram

– Job descriptions

– Individual responsibilities

OPERATIONAL PLAN

Purchasing, suppliers & stock control

• One or a choice of suppliers (more bargaining power and less shortages)

• Terms of payment/credit

• Explain how you will manage inventory – include an example of program for this.

TERMS OF PAYMENT

OPERATIONAL PLAN

Personnel plan

• Organogram

• Job descriptions

• Individual responsibilities

• Also include details regarding salaries/wages

• Explain how you will abide by the employment act and other relevant rules and laws (consider unions)

PRODUCT/SERVICE DESCRIPTION The Opportunity

• Where is the gap in the market? What has given rise to this gap? How was this gap identified?

• How will the gap be filled? The Industry • What are the barriers to entry in this industry? How much power do the customers have? • How much power do the suppliers have? Are there substitute offerings for the product or

service? • Who are the competitors and how strong is the competitive rivalry? • What are the major changes affecting the industry? The Market • What is the total size of the market? How fast is the market growing? • What percentage share of the market will you have? (This is important only if you think you

will be a major factor in the market.) • What are the major trends in target market – trends in consumer preferences, demographic

shifts and product development?

MARKETING PLAN

• The product (or service) and why it is valuable to customers

• The focused and detailed description of the target market

• The positioning of the product or service – how it should be perceived by customers

• The pricing strategy with specific price points at which the product or service will be sold

• The sales and distribution channels that will be used to get the product or service to the customer

• The promotion strategy including public relations activities, specific promotions, advertising and intended viral marketing activities

FINANCIAL PLAN

• Cash flow analysis

- how much money came into the business

- Where the money came from

- How was the money used on a monthly basis

• A businesses cash-flow will determine if it will stay in business – must be liquid at all times

FINANCIAL PLAN

• Income statement (Profit/loss statement)

– Shows the profit/loss for a certain period of time

– An income statement shows a company’s revenues less their costs and expenses over a given period (e.g. a financial year or one month).

– The conclusion of an income statement shows the company’s net income (or net loss).

FINANCIAL PLAN

• Balance Sheet:

– Snapshot of a company's financial condition

– The only statement which applies to a single point in time of a business’ calendar year

– Indicates the following at the end of a financial year:

• The assets

• Liabilities

• Owner’s equity

FINANCIAL PLAN

• Break-even analysis

– The amount of units you have to sell before fixed costs (expenses) has been covered

– The point where you start making a profit

– Even after your company is up and running, it can remain helpful as a way to figure out the best pricing structure for your products.

FINANCIAL PLAN

• Budget

– Planning how money will be

utilised in the next financial

Year/over a certain period