N4 Entrepreneurship & Business Management


4 Changes in the business environment No business operates in isolation. A business is always located somewhere within a particular suburb, possibly in the centre of a town, CBD (Central Business District) or it might have many different branches all over the country. What is happening out there will affect the business directly (in the short term) or indirectly (in the longer term).


CASE STUDY


Most entrepreneurs use a combination of methods when controlling and managing risks. How would you apply this information on risk management to the following case study?


Jill Kearns was in her first year of college, and was running low on money. She needed to make at least R5 000 to cover her expenses. She considered getting a full-time job, but realised that she did not have enough time to do her studies and keep the job. Her solution was to start a small business venture with the members of a jazz band to which she belonged. They would hold jazz concerts and sell tickets to Jill’s performances.


Jill’s idea for this venture came from her own and a friend’s interest in jazz. As the popularity of jazz has grown, she would have seen the potential for a business venture expanding. The idea of using her interest in music to earn the money was very appealing. Currently, the group members have R5 000 in the bank. In order to give a concert, Jill anticipated that they would have the following start-up expenses: an advertising cost of printing posters, rent on a concert hall, cost of printing tickets, and incidental expenses for transportation, telephone calls, etc.


By deferring as many payments as possible and obtaining credit, she found that they needed R4 650 to hold their first concert. Jill figured their total expenses would be about R20 000. By giving two shows and multiplying the ticket price by the legal capacity of the hall, she calculated that the maximum gross receipts would be R29 000. The business venture would earn a profit of R9 000!


1. What risks are involved in this business venture? 2. How could these risks be reduced or eliminated?


Activity 5 PHUMELELE’S FAST FOOD


Phumelele lost her job as an assistant chef at the Newcastle Inn. She decided to use this opportunity to start her own business providing food for the students of Majuba College. Using R800 of her own money, she set up a stall outside the C.P.D. Campus selling meat, fish, sandwiches and other food. “On the first day I sold out my entire stock in half an hour,” she said, and she knew that this was her golden opportunity.


The money she makes supports her household adequately as her husband is also unemployed. She now employs five people from the township to assist with the cooking and in serving her customers. Phumelele now wants to start a restaurant and will call it Zaphezulu Restaurant.


1. Name two reasons why Phumelele embarked on this project. 2. How well does Phumelele fit into the entrepreneurial profile? 3. It is said that entrepreneurs possess certain personal resources in order to be successful. Do you think that Phumelele possesses these resources? Name them.


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