1. Entrepreneurship
Training
By:
Henry Clarke Kisembo

2. Training Calendar
Dec 13 – Dec 16:
9:00 am – 6:00 pm

3. Overview of Training Sessions
Monday
 What is an entrepreneur?
 How to select a viable business
Tuesday
 Market Research
 Financing Strategies

4. Overview of Training Sessions
Wednesday
 The Costs of Starting & Operating a Business
 Marketing Strategies
Thursday
 Financial Records
 Administrative Concerns
Friday
 Writing a Business Plan

5. Session #1: Outline
 What is an entrepreneur?
 What are the pros and cons of owning your
own business?
 Opportunity Recognition
 SWOT Analysis
 Case Study Discussion

6. Opportunity Recognition
Where others see problems, entrepreneurs recognize
opportunities.
Qualities of a Good Business Opportunity
 It is attractive to customers
 It will work in your business environment
 It can be executed in your “window of opportunity”
 You have the resources and skills
 You can offer the product/service at the right price

7. Five Roots of Opportunity
1. Problems
2. Changes
3. Inventions
4. Competition
5. Technological Advances

8. The Eight Rules of Building a
Successful Business
1. Recognize an opportunity
2. Evaluate the opportunity
3. Write a business plan
4. Build a team
5. Gather resources
6. Decide ownership
7. Create wealth
8. Execute your plan & satisfy consumer needs

9. Evaluating Opportunities
Market Demand
 Who is your market?
 Who are your target customers?
Competitive Advantage
 How are you different from the competition?

10. SWOT Analysis
 Strengths
 Weaknesses
 Opportunities
 Threats

11. Four Basic Business Types
1. Manufacturing (inganda)
2. Wholesale (keranguza)
3. Retail (kudandaza)
4. Service servise
Some business sell products; others sell
services.

12. Homework for next session
 Poll friends, family members or colleagues (outside from ORI) and
ask them to share things that they find frustrating or difficult in their
daily lives. Write down all of the complaints.
 Now, generate 3 possible business opportunities from the list.
 Evaluate the ideas using the Business Opportunities questions from
the Workbook (Chapter 2, Module 1).
 Based on the evaluation, choose the best idea and complete a brief
SWOT Analysis. Type up the analysis and bring it with you to the
next session.
 Invent a tentative name for your business.

13. Session #2: Outline
Morning Session 9:00 – 12:00
 Market Research
 Product Development
 Return on Investment
 Cost/Benefit Analysis
Afternoon Session 1:00 – 6:00 pm
 Financing Strategies

14. Market Research
Market research is the process and technique
of finding out who your potential customers
are and what they need/want.
Types of Market Research
 General Research
 Surveys
 Statistical Research

15. Return on Investment
How to Calculate Return on Investment (R.O.I.)
1. Take the amount you possess at the close of the
business period. This is your end wealth (A in formula)
2. Subtract the amount of your original investment. This is
your beginning wealth (B in formula)
3. Divide the resulting number by your beginning wealth.
4. Multiply by 100 to get the percentage of return on your
investment.
Formula: (A-B) x 100 = R.O.I.
B

16. Risk, Interest and Liquidity
What is risk?
The possibility that you may lose your money
What is interest?
When an investor lends money, s/he charges interest.
- The money you borrow is called the principal.
- The interest rate is the rate at which the bank (or other investor) will
charge interest. This rate is a percentage of the principal.
- When you pay back the loan, you need to pay the principal +
interest.
If you cannot pay back a loan, it is called defaulting.
What is liquidity?
The ease of getting cash in and out of an investment

17. Risk, Interest and Liquidity
Generally, the lower the risk of investment, the
lower the required rate of return.
The higher the risk of investment, the higher
the required rate of return.

18. Cost/Benefit Analysis
There are always two factors to consider when making any
decision:
Costs: The money and time you will have to invest
Benefits: The rate of return on your investment (financial
or non-financial)
Don’t forget to consider opportunity costs!
Remember, there are trade-offs involved in any decision.

19. Financing Your Business
The money needed to start a business is
referred to as start-up capital.
There are two primary ways to raise capital:
1. Debt
2. Equity

20. Debt vs. Equity
Debt
The business borrows the money from a person or
institution and pays it back over a set period of time at a
set rate of interest. The entrepreneur signs a
promissory note, promising to repay the borrowed sum
+ interest.
Equity
The business gives up a percentage of ownership of the
business in exchange for money. The investor receives a
percentage of future profits based on % ownership.

21. Debt-to-Equity Ratio
Many companies are financed by a
combination of debt and equity.
The financial strategy of a company is
expressed by its debt-to-equity ratio.
A highly leveraged company is a company
that relies heavily on debt.

22. Financing Options for Young
Entrepreneurs
 Loans from Banks
 Loans from Credit Societies
 Equity stakes for friends, family & colleagues
 Micro-loan financing
 Starting small
 Grants
 Savings and Loan groups

23. Homework for next session
 Write a plan for how you are going to conduct
market research about your business idea.
What will you do? Be sure to include both
general research and some interviews with
potential customers.
 If you plan to use a survey, write a first draft
of the questions you wish to ask.

24. Session #3: Outline
Morning Session 9:00 – 12:15
 The Costs of Starting & Operating a Business
 Types of Businesses
 Maintaining Competitive Advantage
 Maintaining Quality
Afternoon Session 1:15 pm – 6:00 pm
 Marketing Your Business

25. The Costs of
Starting/Operating a Business
Three Primary Categories of Costs (or
expenses)
 Start-up costs
 Cost of goods sold
 Operating costs (both fixed and variable)

26. Start-up Costs
A start-up cost is a one-time expense
necessary for starting a business.
These are also sometimes called the original
investment or seed money.

27. Cost of Goods Sold (COGS)
 Units of Sale
 One example of the product sold (i.e. one cup of
coffee)
 One hour of service time
 Average sale per customer, if the business sells
more than one product (i.e. average sales in a
grocery store)
 Cost of Goods Sold for one unit

28. Total Cost of Goods Sold
 Total cost of goods sold is total cost of all
goods sold in a given period
 What about if your unit of sale is a service?
 Cost of Service Sold (per unit and total)

29. Operating Costs
Operating costs are the costs necessary to run the
business (not including the cost of goods sold).
These costs typically fall into seven categories:
 Utilities (gas, electric, telephone, internet)
 Salaries
 Advertising
 Insurance
 Interest
 Rent
 Depreciation

30. Fixed vs. Variable costs
 Fixed costs are operating costs that stay the
same regardless of sales
 Also referred to as overhead
 Variable costs are operating costs that
change depending on the volume of sales
but cannot be assigned directly to the
production of one unit of sale

31. Calculating Gross Profit
 Gross profit is determined by subtracting
the total cost of goods or services sold
from the total revenue earned
 If unit of sale involves multiple ingredients,
the gross profit per unit is the cost of all
goods subtracted from the price paid by the
customer

32. Calculating Overall Profit
 Gross profit is not the same as overall profit,
because operating costs are not considered
when calculating gross profit
 How to calculate overall profit:
Gross Profit – Operating Costs = Profit

33. Calculating Profit per Unit
 Sometimes you may need to know how much
profit you make per unit of sale.
 This is calculated in the following manner:
Profits = Profit per Unit
Units Sold

34. Types of Businesses
 In order to operate in Rwanda, you will need
to register your business.
 There are three types of organizations in
Rwanda:
 For-Profit Businesses (registers with RDB)
 Non-Profit Organizations (registers with
MINALOC or Immigration)
 Cooperatives (registers with Rwanda Cooperative
Authority)

35. Business Structures
 Three primary ways to organize a business:
 Sole Proprietorship
 Owned by one person
 Owner receives all profits and suffers all losses
 Partnership
 Owned by two or more people who make business
decisions together
 Partners share profits and losses
 Corporation
 Legal entity composed of stockholders under a common
name
 Elect officers and a board of directors

36. Maintaining Competitive
Advantage
 What is the most important benefit that
customers in your market will receive from
your product/service? How will you deliver it?
 This forms the basis of your business
strategy (the tactics that you will use to
outperform your competition)

37. Creating a Business Strategy
1. Develop a Mission Statement
2. Research your Competition
3. Write your strategy
4. Revise your strategy by monitoring the
competition and making changes

38. Maintaining Quality
A business’s goal should always be quality, not
short-term profits
Businesses should always strive for
continuous improvement.
Ethics also play a role in any successful
business.

39. Tips for Improving Quality
1. Adopt a philosophy of continuous improvement
2. Be consistent
3. Do it right the first time
4. Develop long-term relationships
5. Focus on quality in products & customer service
6. Set up training programs for employees (including
yourself)
7. Get rid of fear
8. Don’t ask for perfection but improvement
9. Focus on quality, not quantity
10. Ask for comments and input

40. Marketing Your Business
What is marketing?
The development and use of strategies for getting a product or service
to the customer and generating interest in it
What are some elements of a successful marketing
strategy?
1. Location
2. Marketing Techniques
Four essential items of a marketing plan:
 Product
 Price
 Place
 Promotion

41. Marketing Your Business
The goal of your marketing plan is to bring the
right product to the right place at the right
price with the right promotion.
 Steps for developing a marketing plan
 Consumer Analysis
 Market Analysis
 Developing a marketing “mix”
 Break-even analysis

42. Consumer & Market Analysis
1. Who are your customers? What do they
want? What is your market segment?
2. Now, you can analyze your market
- Pick a sample of your population
- Conduct some research
- Compile your data and look for trends
3. How do the different components of your
marketing plan work together?

43. Branding Your Business
 A brand is a combination of name and
symbol/logo. Brands are also defined by
company culture.
 Reputation is a very important aspect of
business. Keep your reputation positive by:
 Providing high quality products/services
 Clearly defining your products/services
 Making advertising positive & informative
 Treating employees/customers with respect

44. Types of Marketing
 Advertising
 Costs money
 Typically posted in public venues, such as
newspapers/other media or billboards
 Publicity
 Free advertising
 Also considered to be more trustworthy by clients

45. Principles of Salesmanship
1. Make a good personal impression
2. View selling as teaching
3. Believe in your product or service
4. Know everything about your product/service
5. Know your field
6. Listen to and understand your customers
7. Prepare and practice your presentation
8. Think positively
9. Keep good records
10. Make appointments
11. Stay in touch and build relationships

46. Homework for next session
 Write your mission statement and basic
marketing strategy for your business. What is
your target audience?
 Then, determine what is the best legal
structure for your business.

47. Session #4: Outline
Morning Session 9:00 – Noon
 Record Keeping
 Cash Flow and Inventory
Afternoon Session 1:00 pm – 6:00 pm
 Break-Even Analysis
 Administrative Considerations

48. Record Keeping:
The Business Ledger
 Every business needs a record of all of its
income and expenses. This is the business
ledger.
 In the ledger, income sources are referred to
as credits and expenses are referred to as
debits.

49. The Business Ledger

50. Supporting Documents
 There must be a supporting document to
back up each transaction.
 For each purchase, get a receipt.
 For each sale, produce a bill or invoice and
keep a copy for yourself.
 Keep a separate record of all invoices in
numbered order.

51. Income Statements
 Businesses must also produce regular income
statements, called profit and loss statements.
 Income statements should include:
 Sales
 Total C.O.G.S.
 Gross Profit
 Operating Costs
 Profit Before Taxes
 Taxes
 Net Profit/(Loss)

52. Sample Income Statement
Description Subtotal Total
Total Sales 35,000
Total C.O.G.S. 20,000
Gross Profit 15,000
Operating Costs
- Fixed Costs 8,000
- Variable Costs 0
- Total Operating Costs 8,000
Profit Before Taxes 7,000
Taxes 3,500
Net Profit/(Loss) 3,500

53. Analyzing Income Statements
Description Subtotal Total Financial Analysis
Total Sales 35,000 100%
Total C.O.G.S. 20,000 57%
Gross Profit 15,000 43%
Operating Costs
- Fixed Costs 8,000 23%
- Variable Costs 0 0%
- Total Operating Costs 8,000 23%
Profit Before Taxes 7,000 20%
Taxes 3,500 10%
Net Profit/(Loss) 3,500 10%

54. The Balance Sheet
 A business’ balance sheet shows the assets,
liabilities and net worth of the business.
 Net worth is the difference between assets
and liabilities. This is also called the owner’s
equity.
 Businesses typically produce income
statements and balance sheets once a
month, once a quarter and once a fiscal
year.

55. Components of a
Balance Sheet
1. Assets
 All items of worth owned by the business
(cash, inventory, furniture, etc)
 “Current” could be sold for cash in one year
 “Long-term” would take more than one year to
turn into cash

56. Components Continued
2. Liabilities
 Debts owed by the business (bank loans,
mortgages, other loans)
 “Current” must be paid within the year
 “Long-term” will be paid over a period of more
than one year

57. Components Continued
3. Net Worth/Owner’s Equity
 What remains once you’ve subtracted
liabilities from assets
Assets – Liabilities = Net Worth
 If assets are greater than liabilities, net worth is
positive
 If liabilities are greater than assets, net worth is
negative

58. Sample Balance Sheet
Assets Liabilities
Cash 100,000 Loan 150,000
Tables & Chairs 100,000
Coffee Machine 150,000 Owner’s Equity 200,000
Total Assets 350,000 Total Liabilities 350,000
& Owner’s
Equity
** Both sides of the Balance Sheet must show the same total.

59. Debt Ratios
 The debt ratio describes how much of the
total money in your business was provided by
creditors (i.e. how much is debt)
Debt Ratio: Total Debt
Total Assets
 Typically banks don’t like to lend to
businesses with high debt ratios

60. Assets: Cash Flow & Inventory
Cash Flow
 The difference between the amount of money you take in
and the amount of money you spend
 Three simple rules to help maintain positive cash flow
 Collect cash as soon as possible
 Pay your bills as late as possible within the agreed-upon time
frame
 Always know your cash balance by consulting your ledger and
bank statements frequently
 Remember to account for seasonal changes

61. Cash Flow Statement
Cash Inflow
Sales 35,000
Total Cash Inflows 35,000
Cash Outflows
C.O.G.S. 20,000
Operating Costs 8,000
Total Cash Outflow 28,000
Net Cash Flow Before Taxes 7,000
Taxes 3,500
Net Cash Flow 3,500
Cash Flow = Receipts - Disbursements

62. Monthly Cash Projections
 A cash projection is an educated guess
about how much cash you will need in a
given month.
 Preparing a Cash Flow Projection
 Project your income from all available sources
 Subtract the expenses you expect to have from
the projected cash income

63. The “Burn Rate”
 Your burn rate is your negative cash flow
per month. The rate measures how quickly
you spend money.
 It is normal to have a negative cash flow for
the first few months of a business.
Cash on Hand = # Months before cash
Negative Cash Outflow per Month runs out

64. Inventory
 Inventory is everything the business owns.
This includes items used to run the business
(i.e. computers and printers) and products
bought in bulk for eventual sale.
 It can sometimes to be risky to buy inventory
in advance:
 You have to pay for storage costs
 The items may be damaged or stolen
 It may take a long time to sell the inventory

65. Break-Even Analysis
 Break-even Analysis helps you find the
point at which your business will be selling
enough units to cover its costs
 Businesses must at least break even to
survive. In the long-run, they must make
profit beyond the break-even point.

66. How to determine the
Break-Even point
1. Figure out your gross profit per unit
2. Calculate your monthly fixed costs
3. Divide gross profit per unit into monthly fixed
costs
4. This gives you the number of units you will
need to sell in order to cover fixed costs
Monthly Fixed Costs = # Break-Even Units
Gross Profit per Unit

67. Pricing: An Important Note
How do you determine the appropriate pricing
point for your product?
 Multiply the wholesale cost of the product by your mark-
up percentage (generally the same for the entire
business) to find the cost of the item (or the retail price)
Determine profit margin by dividing profits by
sales. This shows how much of overall sales
is profit.

68. Budgeting
 A budget is essentially an income statement
projected for a full fiscal year
 Budgeting is always an estimation but it is
very important guide that allows you to
monitor the financial health of your business

69. Sample Budget

70. Administrative Concerns
1. Laws and Regulations
2. Taxes
3. Legal Protections (i.e. insurance)
4. Assembling Your Team
1. Contracts
2. Tax Obligations
3. What is your hiring strategy? How will you hire
the best people?

71. Homework for next week
 Write your initial financing strategies. How
much capital will you need to start your
business? How do you plan to raise the
money?
 What is your projected budget for your first
year of operations?
 Bring all of your homework with you for
tomorrow’s session, as it will be useful when
writing your business plan.

72. Session #5: Outline
Morning Session 9:00 am – 1:00 pm
Afternoon Session 2:00pm – 6:00pm
 Writing a Business Plan
 Business Plan Writing Workshop

73. Your Business Plan
 Why do you need a business plan?
 It serves as a guide for the owner
 It forces the bsuiness owner to think through the
direction and strategy of the business in a
structured way
 It is sometimes required by banks or other
investors

74. Elements of a Successful
Business Plan
1. Business Description
2. Marketing Plan
3. Competitor Analysis
4. Economics of One Unit
5. Management and Organization
6. Start-up Costs & Financing Strategy
7. Operating Costs & Break-Even Analysis
8. Financial Statements