N5 Entrepreneurship Capital requirements to start a business


Capital-intensive projects are less accessible for business people who do not have the financial means to compete. If this is combined with a saturated market and an excellent service, then the possibility is diminishing.


Product differentiation


This means offering such a comprehensive range of products and services that it would be very difficult for potential new entrants to match it.


Substitute goods and services: Generally speaking, all businesses in an industry compete indirectly with other businesses that are producing substitute products. A substitute product exists when two or more products differ in terms of characteristics, but satisfy the same basic consumer needs.


Activity 6


Dishwashing liquid versus car shampoo 1. Which of the two products mentioned above is a substitute for the other? 2. Could the reverse also be true? 3. Give a reason for this?


Name possible substitute products for the following: 1. CD Players 2. Fax machines 3. Fire lighters (Blitz)


You wouldn’t wash your dishes with car shampoo so why wash your car with dish washing liquid?


3.2.4 Government


The government (central and local) is one of the biggest consumers in the country and must not be forgotten, although most small businesses might find it difficult to obtain government tenders. The size of some contracts is the reason. Government contracts are allocated on a tender basis. Notices of these appear in a special Government Gazette or are advertised in your local newspaper.


Another function of government is to regulate business. This can mean that you have to meet certain regulations before you are allowed to do business. Projects, which the Government encourages and assists, can improve or decrease your customer base. The building industry is an example of where government intervention is creating business opportunities. The Government’s new infrastructure development plan is a huge boost for business. Government policies should therefore be followed closely to determine its effect on your business.


Consumer Protection Act (CPA The Consumer Protection Act (CPA) is an example of how Government regulates the relationship between businesses and their customers.


The Consumer Protection Act changed the way business is done in South Africa. It requires businesses to transform the way in which they interact with consumers (customers) and to ensure that all their dealings with consumers are fair, reasonable and honest.


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