Workforce Development Authority Akazi Kanoze Youth Livelihoods Project TVET Complementary Modules RTQF LEVEL 3 Entrepreneurship Module AKAZI KANOZE, Phone: +250 (0) 252 580 796 / 805 / 806; Fax: +250 (0) 252 580 797; P.O. Box 2498 Kigali/Rwanda Entrepreneurship Module © Education Development Center, Inc., [2015]. All rights reserved. This work may not be reproduced, sold or otherwise disseminated without the express written consent of EDC. Please contact the Office of Legal Affairs. Entrepreneurship Module Trainer’s Manual Entrepreneurship Module “Akabando k’iminsi gacibwa kare kakabikwa kure”: Better save now what you will need in the future Entrepreneurship Module Objectives By the end of the module participants will: Analyze financial needs effectively Describe ways to decrease expenses through reuse, recycling, reduction and repair Set saving goals and work towards achieving them Do basic record-keeping Develop personal budgets Be familiar with financial institutions in their region Describe the risks associated with debt Suggest strategies to keep out of debt Make financial plans for the future Describe the basic business cycle: buying, adding value, selling for profit. Allocate income between the business, personal expenses and savings. Plan and cope with unforeseen expenses. Make informed decisions while selling on credit. Explain the importance of maintaining a positive cash flow. Explain the importance of keeping records and planning. Describe the similarities and differences between income generating activities, business and cooperatives Exhibit characteristics and traits of an entrepreneur Evaluate own characteristics, attitudes and skills related to running a business Assess business ideas Explain the relationship between the basic elements of marketing (5 P’s: product, place, promotion, price, people) Develop an annual sales plan Calculate start-up and working costs Determine if a business is making a profit or loss Evaluate different sources of capital to start an enterprise Describe the different types of basic records (receipts, cashbook, stock list…) Properly record transactions in a sample cash book Calculate depreciation Prepare a simple profit and loss statement Prepare a balance sheet Write a business plan Akazi Kanoze/WDA Complementary Modules Page 3 Module 4: Entrepreneurship Learning outcome Sessions Learning unit 1: Identify and describe entrepreneurial characteristics Session 1: Qualities and characteristics of entrepreneurs Duration 300 minutes Learning outcome Activities 1.1 Identify entrepreneurial characteristics Activity 1: Introducing entrepreneurship module L.O 1.2 Describe entrepreneurial characteristics Activity 2: Characteristics of an Entrepreneur Activity 3: Are You Ready to be an Entrepreneur? Learning unit 2: Assess business environment Session 2: Finding and Establishing a Good Business Idea 600 minutes L.O 2.1 Apply methods, principles and techniques in identification of problems related to economic environment Activity 1: Find a Business Idea L.O 2.2 Recognize business opportunities Activity 3: Visit to Businesses and Cooperatives in the Community L.O 2.3 Apply techniques to generate a business idea Activity 4: Market Analysis: Your Customers and the Environment in Which You Work Activity 2: Assess one’s business idea Is Your Business Idea a Business Opportunity? Entrepreneurship Module Trainer’s Manual L.O 2.4 Use tools and techniques to identify business requirements. Activity 5: Discuss the 5 P’s: People, Products and Services, Promotion, Place/Distribution and Price Activity 6: Set price and make annual Sales Projection Activity 7: Discuss Start-Up & Working Costs and Estimating Profit or Loss Activity 8: Discuss sources of Financing / Capital Learning unit 3: Produce a business idea proposal Session 3: Produce a business idea 600 minutes L.O 3.1 Identify business idea proposal components Activity 1: assess and discuss creativity potential L.O 3.2 Develop a business idea proposal Activity 2: discuss innovation potential L.O 3.3 Present business proposal Activity 3: generate good business idea Activity 4: Identify and assess business opportunities Activity 5: Develop and present a business idea proposal Akazi Kanoze/WDA Complementary Modules Page 5 Entrepreneurship Module Learning unit 4: Run a business Trainer’s Manual Session 4: RecordKeeping and Budgeting 400 minutes L.O 4.1 Plan business operations Activity 1: Discuss reasons of keeping records Activity 2: Perform basic record keeping Activity 3: Budgeting L.O 4.2 Classify business operations Activity 4: Discuss the use of basic record forms Activity 5: Fill up a cash book L.O 4.3 Record day to day business operations Activity 6: Discuss profit and loss statement Activity 7: Discuss elements and use of the balance sheet Activity 8: Make a business plan Session 5: Need for Finance 200 minutes Activity 1: describe needs for money Activity 2: plan for ways to access money L.O 4.4 Perform filing of documents related to business Akazi Kanoze/WDA Complementary Modules Page 6 Activity 3: describe ways of decreasing spending Entrepreneurship Module Trainer’s Manual Session 6: Managing Debt 100 minutes Activity 1: introduce the concept of Debt Activity 2: Manage Debt Activity 3: Give Advice to Others on financial fitness Session 7: Exploring Savings & Loans in Rwanda 300 minutes Activity 1: Introduce the concept of Saving Savings Goals Activity 2: Set Saving Goals Activity 3: Identify Where to Save Activity 4: Explore Financial Structures and Institutions in Rwanda Activity 5: Use ATMs Session 8: Basic Business Cycle & Unexpected Costs 250 minutes Activity 1: Practice Basic Business Activities Cycle & Unexpected Costs through a game (Part one). Session 9: Credit Risks and Running a Profitable Business, Record Keeping & Business Planning 250 minutes Activity 1: Deal with Credit Risks, Record-Keeping & Business Planning through a Game (Part two) Akazi Kanoze/WDA Complementary Modules Page 7 Documentation Requirements: Handout 4.0: Self-Assessment: Entrepreneurship Module 4.1: What I Need Money For 4.2: Different Stages of Life 4.3: Ways to Get Money 4.5: Ways We Waste Money 4.7: My Plan to Cut Cost 4.8: Saving 4.9: My Savings Goals 4.10: Where I Can Save 4.11: Things I Could Owe Money For 4.12: Avoiding Debt 4.13: Getting Out of Debt Strategies 4.14: Basic Record Keeping 4.15: Basic Budgeting 4.16: My Personal Budget 4.18: Differences Between Types of Institutions 4.19: My Personal Financial Fitness Plan 4.21: Advice to Others 4.22: Entrepreneur Profile: Ms. Tycoon 4.23: Entrepreneur Profile: Mr. Saver 4.24: Entrepreneur Profile: Mr. Greedy 4.25: Entrepreneur Profile: Ms. Wise 4.29: Lessons Learned / Session 1 4.30: Lessons Learned / Session 2 4.31: Record Keeping Sheet 4.32: Our Business Plan 4.37: Challenges 4.39: Before You Start – A Basic Checklist 4.42: My Interests, Skills and Experience 4.43: Business / Cooperative Observations 4.45: Assessing My Business Idea 4.47: Marketing Plan 4.48: Developing a Sales Plan 4.51: Start-Up and Working Costs for My Business/Cooperative 4.52: Finding Capital for my Business 4.53: The Cost of a Loan 4.56: Cash Book Exercise 4.58: Profit and Loss Statement for Bread Baking Cooperative 4.60: Business Plan Entrepreneurship Module Trainer’s Manual Handout 1.0: Self-Assessment: Entrepreneurship Module There are no right or wrong ways to answer this survey. It is for your own use during this course. The trainer will read a skill that is listed in the left column. Think about yourself: do you think you can do this? How well? Read the statements across the top. Put a check in column that best represents your situation. At the end of this module, we’ll take this survey again. My experience Knowledge, skills and abilities I don’t have any experience doing this. I know a little about this. I have some experience doing this. I have a lot of experience with this. I am confident in my ability to do this. Analyze financial needs effectively Describe ways to decrease expenses through reuse, recycling, reduction and repair Set saving goals and work towards achieving them Do basic record-keeping Develop personal budgets Be familiar with financial institutions in their region Describe the risks associated with debt Suggest strategies to keep out of debt Make financial plans for the future Describe theour business activities schedule: buying, adding value, selling for profit. Akazi Kanoze/WDA Complementary Modules Page 9 Entrepreneurship Module My experience Knowledge, skills and abilities Trainer’s Manual I don’t have any experience doing this. I know a little about this. I have some experience doing this. I have a lot of experience with this. I am confident in my ability to do this. Allocate income between the business, personal expenses and savings Plan and cope with unforeseen expenses Make informed decisions while selling on credit Explain the importance of maintaining a positive cash flow Explain the importance of keeping records and planning Describe the similarities and differences between income generating activities, business and cooperatives Assess my own characteristics, attitudes and skills related to running a business or being part of a cooperative Assess own characteristics, attitudes and skills related to running a business Identify and assess business ideas Describe the basic elements of marketing (5 P’s: product, place, promotion, price, people) Akazi Kanoze/WDA Complementary Modules Page 10 Entrepreneurship Module My experience Knowledge, skills and abilities Trainer’s Manual I don’t have any experience doing this. I know a little about this. I have some experience doing this. I have a lot of experience with this. I am confident in my ability to do this. Develop an annual sales plan Calculate start-up and working costs Determine if a business is going to make a profit or loss Identify sources of capital to start an enterprise Identify and use different types of basic records (receipts, cashbook, stock list…) Properly record transactions in a sample cash book Calculate depreciation Identify the elements and importance of a profit and loss statement Prepare a balance sheet Write a business plan Akazi Kanoze/WDA Complementary Modules Page 11 Entrepreneurship Module Learning unit 1: Identify and describe entrepreneurial characteristics Session 1: Qualities and characteristics of entrepreneurs Note: Session 1 has 300 minutes which should be allocated according to the objectives of the activities Key Topics Meaning of entrepreneurship Characteristics and traits of an entrepreneur Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 1: Introducing entrepreneurship module Entrepreneurship Module; learning unit 1; learning outcome 1.1 Objectives - By the end of the activity, participants will be able to: a. Obtain an understanding of entrepreneurship b. Share an example of an entrepreneur that they know Methodology: panel discussion, pair work, large group discussion, brainstorming Materials and Preparation: board or flipchart, markers, tape Read the story in Trainer Tool 1.1: A Successful Youth Entrepreneur to be ready to explain to participants as needed. Steps: 1. Have participants turn to the first page of the Entrepreneurship Module in the Participant Handbook and review the objectives of the module with them. Ask them what they think the relevance is between the proverb, “Akabando k’iminsi gacibwa kare kakabikwa kure (Better save now what you will need in the future)” and the module. How does it relate to real life? Explain that this session will focus on the need for finance. 2. Ask participants to do the self-assessment Handout 4.0: Self-Assessment: Entrepreneurship Module, and remind them that they will do the assessment again at the end of the module. 3. Explain that the overall goal of this session is to learn the basics of entrepreneurship. Ask participants what they think of when they hear the word “entrepreneurship” (e.g. running a business). 4. Review the proverb at the beginning of the module: “Akabando k’iminsi gacibwa kare kakabikwa kure (Better save now what you will need in the future)”. How does this proverb relate to entrepreneurship? 5. Explain that we will be introduced to some basic elements of entrepreneurship – Who are entrepreneurs in our communities? What are their characteristics and what do they do? A connection will be made between entrepreneurship and work readiness skills, such as setting goals, planning, communication skills, decision making skills, problem solving, leadership, working in a team and customer service. Lastly, we will do a self-assessment, reflecting on whether or not they are ready for entrepreneurship and identifying what we can do to become more entrepreneurial. By the end of the session, we will have developed a basic understanding of what entrepreneurship entails. 6. Ask participants to think about business people / entrepreneurs they know in their community. What do they do? How did they get started? Are they successful? What makes them successful or not? Discuss with the person sitting next to them. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 7. Next, share the story in Handout 1.1: A Successful Young Entrepreneur. Handout 1.1: A Successful Young Entrepreneur Beza 's Story Beza started her beading business while she was in school. She started it so she could help herself through school. She had the chance of learning how to make beads from her Grandmother when she was young. Since she is a business student, she knew the different aspects of how to operate a successful business. After her National Service, Beza was unemployed. She decided to resume her beading business. She had some savings from her National Service allowance. She reinvested the money to launch her business on a full scale. Since Beza knew that business was lucrative at her former university, she wrote letters to the school administration to set up a bead shop on campus. Beza stated that when students and lecturers had programs to attend, they would come to her to order beads to match their desired attires. After some time, Beza started employing less privileged students to sell her products on commission. Beza's beads were very good. As time went on, people from outside campus wanted some of her beads. This caused Beza to set up a shop in town. To better the business image, she started delivering the products to the customers. Beza also had a Facebook and Instagram page to market her products further. Beza is a motivated young lady and plans to develop a website for her business in the near future. Her dream is to export her product outside Rwanda and help less privileged young ladies in her community. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 2: Discuss the characteristics of an Entrepreneur Entrepreneurship Module; learning unit 1; learning outcome 1.2 Objectives - By the end of the activity, participants will be able to: a. Describe the characteristics of an entrepreneur b. Describe the role of an entrepreneur Methodology: panel discussion, pair work, large group discussion, brainstorming Materials and Preparation: board or flipchart, markers, tape Review Handout 1.2: Role of an Entrepreneur, and Handout 1.3: Characteristics/Traits of an Entrepreneur. A week before this session, invite 3 – 4 young entrepreneurs who have started their own businesses (find youth in different areas –agri-business, IT, hospitality services, …) to come speak about their experiences. Steps: 1. Explain that a number of entrepreneurs have been invited to the activity to discuss their experiences – what they were doing before becoming an entrepreneur, how they came up with the idea, what steps they took to implement the idea, challenges along the way, what advice they would have for others starting up their own business, etc. 2. With a partner, participants should think of other questions they might want to ask the panel. 3. Invite each panel member to talk about the above information (15 minutes per person). Allow participants to ask questions at the end of each presentation. 4. Ask participants to think about business people / entrepreneurs they know in their community. What do they do? How did they get started? Are they successful? What makes them successful or not? Discuss with the person sitting next to them. 5. Next, re-share the story in Handout 1.1: A Successful Young Entrepreneur. 6. Ask the following discussion questions: Do you know anyone like Beza who was able to start a small business? Tell us about them. What skills have you learned so far in the Entrepreneurship that will help you with running a business? What did Beza do to ensure her business would be successful? What characteristics of an entrepreneur do you seen in Beza or people you know who are entrepreneurs? 7. Review Handout 1.2: Role of an Entrepreneur and Handout 1.3: Characteristics/Traits of an Entrepreneur with the group. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 1.2: Role of an Entrepreneur What is an Entrepreneur? An entrepreneur is a person who has started a business. The business can be large or small. An entrepreneur: 1. Observes the environment. 2. Identifies opportunities in the business or non-business environment. 3. Gathers the necessary resources. 4. Implements the activity. 5. Receives financial or social rewards. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 1.3: Characteristics/Traits of an Entrepreneur 1. Hard Working: running a business requires a lot of energy and drive. This involves the ability to work for long hours when necessary. 2. Self-Confident: to succeed, entrepreneurs have to believe in themselves and in their ability to achieve the goals they have set for themselves. 3. Builds for the Future: the goal for most successful business people is to build a secure job and income for themselves which is based on their own abilities. It may take several years to build up business income. 4. Profit-Oriented: interest in generating money is a clear indicator of an entrepreneur’s suitability for being a business owner. This means recognizing that the business comes first. Once profits are generated, the entrepreneur can make decisions about how the profits can be used – to expand the enterprise or for personal use. 5. Goal-Oriented: success in business depends upon being able to set realistic goals or targets and to work with determination to achieve them. 6. Persistent: all businesses have their problems and disappointments. Being persistent in solving a problem is one of the keys to being a successful entrepreneur. 7. Copes with Failure: all business ventures inevitably contain disappointments and failures as well as successes. Coping with failures involves recognizing these failures, learning from them and seeking new opportunities. 8. Responds to Feedback: entrepreneurs obtain useful feedback and advice from others. 9. Demonstrates Initiative: research shows that successful entrepreneurs take the initiative and put themselves in positions where they are personally responsible for success or failure. 10. Willing to Listen: being able to listen to the advice of others is a key characteristic of an entrepreneur. 11. Sets Own Standards: setting standards of performance and then working to achieve them is another indicator of a successful entrepreneur. These standards can be income, quality, sales or product turnover. Most entrepreneurs want to do better each year, to set and achieve higher standards from year to year. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 12. Copes with Uncertainty: being an entrepreneur is much more uncertain than employment. This uncertainty is about sales and turnover, but it often also exists in other areas such as material delivery and prices, and bank support. An ability to cope with this uncertainty without becoming too stressed is a necessary trait of being an entrepreneur. 13. Committed: starting and running an enterprise demands total commitment by the entrepreneur in terms of time, money and lifestyle. 14. Builds on Strengths: successful business people base their work upon the strength(s) they have, such as manual skills, communication skills, selling skills, organizational skills, writing skills, knowledge of a particular product or service, knowledge of people in a trade and ability to make and use a network of contacts. 15. Reliable and Has Integrity: the qualities of honesty, fair dealing and reliability in terms of doing what one has promised to do are essential traits of an entrepreneur. 16. Manages time well: An entrepreneur is able to do things at the right time (plan ahead, keep a schedule of what has to be done and when, etc.) 17. Risk-Taker: Entrepreneurs have the ability to take measured or calculated risks. Such risks involve working out the likely costs and gains, the chance of success and the belief in oneself to make the risk pay off. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 3: Asses one’s entrepreneurial characteristics - Are You Ready to be an Entrepreneur? Entrepreneurship Module; learning unit 1; learning outcome 1.2 Objectives - By the end of the activity, participants will be able to: a. Assess if they have the characteristics and skills of an entrepreneur b. Identify areas in which they need to improve to become a successful entrepreneur Methodology: personal reflection (assessment), large group discussion Materials and Preparation: flipchart paper, markers, tape Worksheet 1.1: Assessing entrepreneurial characteristics – A Basic Checklist Steps: 1. Tell participants that now we know more about entrepreneurship, including what it is, characteristics and skills necessary to be a successful entrepreneur, etc., they are going to fill out a personal assessment form to gauge if they are “business or cooperative – ready”. 2. Ask participants to turn to Worksheet 1.1: Assessing entrepreneurial characteristics – A Basic Checklist in their Booklets and answer the questions. Emphasize that even the best entrepreneurs will not have all the skills and characteristics of a successful entrepreneur. What is important is to identify your strengths and weaknesses and to work towards improving your entrepreneurial skills, attitudes and characteristics. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 1.1: Assessing entrepreneurial characteristics – A Basic Checklist 1. Do you take initiative? yes no 2. Are you willing to work harder than you've ever worked before and for long hours without the security of as steady paycheck? yes no 3. Can you afford to work without knowing how much money - or success - you'll ultimately earn? yes no 4. Are you ready to make tough decisions on your own or with other cooperative members if you are part of a cooperative? yes no 5. Do you know when you're "in over your head" and need outside help? yes no 6. Are you willing to seek outside help? Do you know where to find it? yes no 7. Can you deal effectively with other people? yes no 8. Are you an effective leader, motivator, and communicator? yes no 9. Are you willing to delegate authority and responsibility to others? yes no 10. Do you work well in a team? yes no 11. Are you willing to admit it when you're wrong? yes no 12. Do you project a professional image to your clients and customers? yes no 13. Can people trust what you say? yes no Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 14. Can people trust you to do what you say you will do? yes no 15. Do you have managerial experience? yes no 16. Do you have the technical skills you will need to operate your particular business? yes no 17. Do you (or other cooperative members if you are starting a cooperative) have the business skills you need to run a business? yes no 18. Do you know your strengths and weaknesses? yes no 19. Do you have business partners or advisors who can compensate for your weaknesses? yes no 20. Have you worked in a business like the one you want to start? yes no 21. Have you researched your business thoroughly? yes no 22. Are you a good listener? yes no Adapted from http://www.prenhall.com/scarbzim/html/check1.html Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Learning unit 2: Assess business environment Session 2: Finding and Establishing a Good Business Idea Note: Session 2 has 600 minutes which should be allocated according to the objectives of the activities Key Topics Identifying business ideas Assessing business ideas Basic elements of marketing The 5 P’s: product, place, promotion, price, people How to develop an annual sales plan Calculating start-up and working costs How to determine profit or loss Sources of capital to start an enterprise Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 1: Find a Business Idea Entrepreneurship Module; learning unit 2; learning outcome 2.1 Objectives - By the end of the activity, participants will be able to: a. Identify sources of business ideas b. Generate business ideas based on their interests, skills, gaps in the market, identified needs, etc Methodology: case study, large group discussion, individual work, small group work Materials and Preparation: flipchart paper, markers, tape, local newspapers, magazines, advertisements, Handout 2.1: Sina Gerards’ Success in Rwanda, Handout 2.2: Identifying Business Ideas, Handout 2.3 : My Interests, Skills and experience Collect local newspapers, magazines and advertisements that participants can use to generate business ideas. Steps: Trainer Tip There are 2 ways to do this activity. One is to use the case study of Sina Gerards as described below. The other is to bring in a successful business owner to share their own local experience with the participants. 1. Explain to participants that identifying a business idea is one of the most important steps in becoming a successful business or cooperative. Have them turn to Handout 2.1: Sina Gerards’ Success in Rwanda. Ask somebody to read it out loud. 2. Ask : How did Sina Gerard come up with his business ideas? (He had personal experience and skills from working on his family’s farm, he saw a gap in the market, he did research to further his knowledge on preserving juice,…). Explain that business ideas come from many sources, including: hobbies/interests; personal skills and experience; mass media (television, newspapers, internet, magazines); surveys asking people for input about a product or service; complaints – when people are unhappy with a particular service or product, you can improve upon it; change (as discussed in the previous activity); brainstorming. 3. Ask participants if they know people in their communities who have been successful, like Sina Gerard. What do they do? What makes them successful? 4. Read Handout 2.2: Identifying Business Ideas together and discuss. -------------------------------------------------- Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Note to Trainer: The 20 minutes above should have been done at the end of the previous lesson. 5. Ask participants to turn to handout 2.3 : My Interests, Skills and Experience in their Booklets and fill it out. They will need to think about their interests/hobbies, skills, experiences, training and background they have to start a business / cooperative. Examples of skills and experience include catering, welding, computer programming, building, farming, secretarial experience, working in family boutique, etc. Have them identify what types of businesses they might consider starting.. Provide a few resources in the room that may help generate ideas – Rwandan newspapers, magazines, advertisements, etc. 6. Have participants walk around the room interviewing each other to find out if anyone else has similar interests, experiences or ideas. They should form small groups around a common area of business – construction, agri-business, food services, hotel services, IT, etc. Ask each group to choose one idea they wish to develop into a business. On flipchart, the group should describe their best business idea, including the product or service in detail as well as who the likely customers might be. 7. After 15 minutes, ask each group to present their idea to the large group. Explain that during the next activity, they are going to go out into the community to meet and interview business owners and cooperative members in their field of interest. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 1.1: Sina Gérard’s Success in Rwanda (Africa Report: Support and Guidance for Entrepreneurs in Africa) http://www.africareport.com/top-entrepreneurs/2010/04/30/sina-gerard-one-of-rwandas-most-successfulentrepreneurs/ By Africa Report Team | Apr 30, 2010 RWANDA – This entrepreneur started from next to nothing and now he owns multiple businesses. The key to his successful achievement was finding the gap in the market. Sina Gérard of Urwibutso Enterprises is Rwanda’s leading entrepreneur. Self-made; he built himself up to be a successful business owner. Self-educated; he taught himself life’s lessons through personal experience. Self-confessed; he is proud to be a big dreamer and visionary. Sina Gérard took his first steps as an entrepreneur by baking produce farmed with his parents’ bare hands. This small bakery established in 1983 was the first of many successful initiatives started by Sina Gérard as a recipe for return. He expanded his portfolio by squeezing juice from the fruits of the very trees that he grew up surrounded by. His youthful enthusiasm later researched methods to preserve this juice. The puree process in turn led to the successful commercial production of banana wine and ultimately the popularity of these refreshments grew the chain of Sina Gérard’s retail outlets. Some of these shop fronts are visible on the Main Road linking the two busiest cities in Rwanda. These cities enjoy the treats from Sina Gérard’s restaurants as well as the delicious consumables from his food and beverage factories. His factories’ large production volumes eventually required this entrepreneur to create a distribution centre in order to dispatch the supply required to quench the thirst for his products. Continued profitable turnover reinstated Sina Gérard in local soil where today he owns vast hectares of farmland and harvests his own raw ingredients. In addition he has uplifted the local farming industry by training rural farmers on international agricultural methods and standards. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Sina Gérard plans to further extend his successful empire into the export industry while continuing to give back to the local community as a private investor in education. He inaugurated the Sina Gérard School covering nursery, primary and secondary grades. Raised in the countryside with no formal study, Sina Gérard recognises academic and English language skills as assets and therefore facilitates the free schooling of all of his employees’ children at his institution. Once the pupils graduate he would like to incorporate them into his Urwibutso work force. He believes that education is as fundamental to the growth of his nation as it is to the prosperity of his national companies. Sina Gérard’s philosophy is that all entrepreneurs in Rwanda should contribute to the development of their country. This is the story of a self-sufficient industry leader who took ownership of all the little opportunities that he encountered along the way and now owns large successful enterprises that are encountered by most Rwandan people on a daily basis. Sina Gérard is a thriving example of the prosperity that an entrepreneurial approach can attain. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.2 : Identifying Business Ideas A business idea is necessary for a successful business venture / cooperative. Good business ideas are the result of effort and often creativity on the part of the entrepreneur / cooperative members. Finding a good idea is the first step in transforming the entrepreneurs’ desires and creativity into a business opportunity. There are many sources of good ideas. To be successful in finding one, the entrepreneur needs to keep his/her mind and eyes open and be alert to opportunities. An idea, however good, is only a tool. The idea needs to be developed and transformed into a viable business opportunity. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.3: My Interests, Skills and Experience My Interests and Hobbies: My Skills: My Background / Experience: Types of Businesses I can start: Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 2: Assess one’s business idea - Is Your Business Idea a Business Opportunity? Entrepreneurship Module; learning unit 2; learning outcome 2.2 Objectives - By the end of the activity, participants will be able to: a. Identify different factors to consider when deciding if a business idea is really a business opportunity b. Begin to assess if their business idea is worth pursuing Methodology: large group discussion, small group work Materials and Preparation: flipchart paper, markers, tape, Handout 2.4: Assessing a Business Idea, Handout 2.5: Assessing My Business Idea Prepare signs for each factor one needs to consider when assessing a business idea - demand, return on investment, competition, whether or not the idea meets your objectives, availability of resources and skills – and hang them around the room, creating work stations. Steps: 1. Congratulate participants on further developing their business ideas. Explain that now we want to determine if their business ideas will become business opportunities. Ask participants what they think the difference is between a business idea and a business opportunity (A business opportunity is when you think income will exceed costs and generate a profit). Ask participants what factors they think they should consider in assessing if their business idea will be a good opportunity or not. Have them think back to people they have met or Sina Gérard. (demand, return on investment- will you make a profit?, competition, Does the idea meet your objectives?, availability of resources & skills). 2. Explain that posted around the room are 5 signs representing the factors that should be considered when assessing a business idea. These factors are described in Handout 2.4 : Assessing a Business Idea. Discuss the factors further as necessary. 3. Working in their same business idea groups from the previous activity, participants will visit each station, or factor. There they will discuss the factor in depth as it relates to some of the businesses they visited in the market. They should then discuss it in relation to their own business ideas as well, using the form Handout 2.5: Assessing My Business Idea to write down their ideas. Groups should start at different stations and rotate every few minutes. For some of the factors, such as availability of resources, they might not know. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Explain that they might not be able to do a complete analysis of their own business ideas at this point but it is to get them thinking about the factors they need to consider. 4. Have a few groups briefly present their work at the end. Are they able to determine if their business idea can become a business opportunity, or not yet? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.4: Assessing a Business Idea What turns an idea into a business opportunity? A simplified answer is when income exceeds costs and generates a profit. Characteristics of a good business opportunity: To be a good business opportunity, it must fulfill, or be capable of meeting, the following criteria: Real demand: responds to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to buy Return on investment: provides acceptable returns or rewards for the risk and effort required Be competitive: be equal to or better (from the viewpoint of the customer) than other available products or services Meet objectives: meet the goals and aspirations of the person or organization taking the risk Availability of resources and skills: the entrepreneur is able to obtain the necessary resources. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.5: Assessing My Business Idea Is there a real demand? (responds to a need) Will there be a return on investment? (profit – income greater than expenses) Is it competitive? (equal or better than other products/services) Does it meet my objective? (Will this business meet my goals?) Can I get the necessary resources and skills? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 3: Visit to Businesses and Cooperatives in the Community Note to Trainer: You will need to figure out the best time to do this activity, either during school hours or after school. Entrepreneurship Module; learning unit 2; learning outcome 2.3 Objectives - By the end of the activity, participants will be able to: a. analyze small businesses and cooperatives in their community b. Identify how a business idea gets turned into a business opportunity Methodology: large group discussion, community/business visit Materials and Preparation: flipchart paper, markers, tape, Handout 2.6 : Business/Cooperative Observations Arrange for a few meetings with business owners in their place of work. They should be representative of the interests of the group – construction, Agro-business, hospitality services, IT, etc. (Include entrepreneurs who are youth). Make any necessary logistical arrangements such as transportation. Steps: 1. Explain to participants that now they are going to have the opportunity to go out into the community to talk to people working in their area of interest. They will observe business owners / cooperative members and also have the chance to interview a few. They will, using Handout 2.6 : Business/Cooperative Observations: List different types of businesses and cooperatives they see in their community. Write down the things business owners and cooperative members do to run their business – How do they attract customers? How do they manage money? How do they keep track of what is sold? How do they respond to changes in the market? etc. Find out from the business owners & cooperative members what they think is important in starting, maintaining and growing a business. Ask business owners & cooperative members what problems they had starting a business or cooperative and how they were able to deal with the problems. Trainer Tip If working in a rural area where accessing business owners and cooperative members might be difficult, plan to do this activity on the local market day. Participants can observe and talk to sellers in the market. 2. Divide participants into their area of interests (keep same groups as last activity when they brainstormed business ideas). Explain that they will have the opportunity to make informal observations of businesses along the way and meet with some entrepreneurs who have already been contacted. Each group should select a group leader. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer Tip The group leaders should be informed of the route, and which business owners and cooperative members they will meet with and when. They should make sure the participants stay on task and write their observations down. They should encourage their group members to ask a lot of questions and to have fun! 3. When everyone is back (or the next time the class meets), have each group share their experience – Was the walk/visit informative? Were they able to notice things they typically wouldn’t notice when in the community? What observations did you have about some of the businesses? What advice did some of the business owners give you? Based on your experience, do you have new ideas for your business? 4. Explain that during the next activity we are going to look more closely at our business ideas and begin to determine if they are business opportunities. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.6: Business/Cooperative Observations Types of Businesses and Cooperatives in the Community… Business owners and cooperative members do many things to run their businesses (How do they attract customers? How do they manage money? How do they keep track of what is sold? How do they respond to changes in the market? How are they creative?): In starting up and running a business or cooperative, business owners & cooperative members say it is important to… What challenges did entrepreneurs / cooperative members have to face when starting up their businesses and how did they overcome them? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 4: Market Analysis: Your Customers and the Environment in Which You Work Entrepreneurship Module; learning unit 2; learning outcome 2.4 Objective: - By the end of the activity, participants will be able to: a. Apply the basic elements of marketing Methodology: brainstorming, small group work, large group discussion Materials and Preparation: flipchart paper, markers, tape Handout 2.7: Market Analysis. Steps: 1. Explain to participants that now we are going to think about the market – what we buy and why, and from whom we buy and why. Divide participants into 3 groups and give each group a flipchart paper. They should brainstorm answers to the following questions and write their responses on the flipchart: a. What types of items do you buy in the market or shops and why? b. How do you decide where and whom to buy an item from? c. As potential IGA/business owners or cooperative members, what information would be useful to know about your customers and the environment in general before you start your business activity (and while you are running it too)? 2. Ask groups to report back. Group 1 can take the lead on the first question, with groups 2 and 3 adding any other points not mentioned by Group 1, Group 2 should take the lead on answering the next question and so on. 3. Link participants’ responses to the information found in Handout 2.7: Market Analysis. Emphasize the importance of knowing your environment and the customers in order to run a successful IGA or cooperative. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.7: Market Analysis What is a market? The market for a business is all the people within a specific geographical area who need a specific product or service and are willing and able to buy it. What should entrepreneurs know about potential customers – Who, What, Where, Why and When? Know the customers: age, sex, marital/family status, employment, income, trends… Know what different customer groups want: By grouping customers (ex. youth, girls, boys, men, women, urban, rural), it is easier to determine what products or services each group wants or needs. Know where the customer buys: Entrepreneurs need to find out where the customers in their market are presently buying, and determine what factors will cause them to switch and buy from their new businesses. Know why the customer buys: necessity, replace used goods, get the latest version of a product, etc. Know when the customer buys: Knowing when customers buy (daily, weekly, monthly, yearly, seasonally) will help entrepreneurs to determine hours of operation, when to advertise and quantity of merchandise to have on hand at specific times of the year. Where can customer information be located? Customer information can be obtained from trade associations (publications), chambers of commerce, government agencies (including local government), newspapers and magazines, and individual research by conducting a market survey in the community. What is the marketing concept? One of the greatest needs of the owners of small businesses or cooperatives is to understand and develop marketing programs for their products and services. Marketing is based on the fact that: (a) business policies and activities should be focused on satisfying customer needs, and (b) profitable sales volume is a primary goal. When applying the marketing concept, a small business should: 1. 2. 3. 4. Determine the needs of their customers; Analyze their competitive advantages; Select specific markets to serve; and Determine how to best satisfy those needs. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 5: Discuss the 5 P’s: People, Products and Services, Promotion, Place/Distribution and Price Entrepreneurship Module; learning unit 2; learning outcome 2.4 Objective: - By the end of the activity, participants will be able to: a. Apply the 5 P’s to different business situations Methodology: large group activity and discussion Materials and Preparation: flipchart paper, markers, tape, Handout 2.8: Marketing Plan, Trainer Tool 2.1: 5 P’s Scenarios Steps: 1. Explain to participants that when considering the market for their product or service, one needs to consider the “5 P’s”: people, product, place, price, promotion. They should get back into their groups to discuss and write down information for each item (Handout 2.8: Marketing Plan) as it relates to their business idea: People: What are the characteristics of the people you wish to sell the product / service to: Age, gender, education, income, and culture? Product/ Service: Why is the chosen product /service different from similar ones in the market? Place: Which locality will be the most suitable place for selling such a product or service? Why did you choose that locality? Price: What would be the most suitable price? What is the price your competitors charge? Can the price be raised if the quality is improved or there is added advantage of delivery? Can it be lowered to increase volume of sales? Promotion: What methods would you employ to sell the product? How will you attract and retain your customers? How will you advertise your product / service (radio, poster, newspaper, word of mouth…)? 2. Ask for a few volunteers to share their results. 3. Tell participants that they will now use their knowledge of the 5 P’s to answer questions to the following scenarios. You will read a situation out loud (from Trainer Tool 2.1: 5 P’s Scenarios) and pick a volunteer to answer it. The rest of the group will either remain seated if s/he thinks the answer is complete, or stand up if s/he has something else to add. Call on someone who is still standing to add their idea. Those participants standing should either sit down if they feel now the answer is complete or remain standing if they have something more to add. Continue the process until all are seated. 4. Answer any questions participants might have on marketing. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.8: Marketing Plan People: What are the characteristics of the people you wish to sell the product / service to: Age, gender, education, income, and culture? Product/ Service: Why is the chosen product /service different from similar ones in the market? Place: Which locality will be the most suitable place for selling such a product or service? Why did you choose that locality? Price: What would be the most suitable price? What is the price your competitors charge? Can the price be raised if the quality is improved or there is added advantage of delivery? Can it be lowered to increase volume of sales? Promotion: What methods would you employ to sell the product? How will you attract and retain your customers? How will you advertise your product / service (radio, poster, newspaper, word of mouth…)? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer Tool 2.1: 5 P’s Scenarios There are many possibilities for these scenarios. Some suggestions are in italics. 1. You recently started a home-building cooperative with a few other people. The jobs you have done so far have been for family or friends of the cooperative members. You have never advertised. What are some good ways to let people know about your business? (advertise at stores that sell construction materials, hang posters advertising your business, talk to your neighbors, …) 2. Several customers ask you to open your shop earlier in the morning. Other customers want you to stay open later in the evening. How do you decide? (Compare the morning and evening sales – when do you have more customers? When do you sell more? Also, interview customers to see how much earlier or later they want you to stay open and how often they would come; Consider opening earlier and closing later – Is this possible for you? Could you hire someone to cover the extra hours?…) 3. A competitor has lowered prices below yours. You cannot make a profit if you match hers. What do you do? (Figure out a way to promote the quality of your product – advertise why it is the best in the market, provide better customer service) 4. Your old customers seem to be going to other sellers. What should you do? (Re-assess your market strategy. Are your prices too high? Quality not as good? Ask customers why they are switching. Is your competitor doing something unique? Improve your customer service) 5. You are a member of a bakery cooperative that sells bread, but you would like to sell sweets also. How do you decide whether to add the new product? (Have a meeting with the other cooperative members to make sure everyone is in agreement about the idea. Do a customer survey. Find out what sweets they like and if they will be willing to buy them. Test a few out. Put them on the counter for sampling…Find out who else is selling sweets in the area and how they do it) 6. You own a bicycle repair service. Some people say you charge too much for your work. How do you decide whether to change your prices? (Find out what other bicycle repair services are charging. Determine if you lower the price, will you still make a profit. Determine if you seem to be losing customers due to high prices.) 7. A customer ordered a cold Fanta one busy day at your boutique. Some other customers were being demanding so you thought you could quickly serve them before getting the Fanta from the fridge. When you finally got to the fridge, there was no Fanta. Your customer became very annoyed, saying he would not come back again. What would you do? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module (Apologize to the customer and explain to the customer that you were busy and thought you could quickly serve the demanding customers. Tell him what other drinks are cold. Consider hiring an assistant if you are always too busy. Hang a sign that says customers who arrive first are served first so they all understand.) 8. You want to set up a table at the market to sell beauty products made from local plants. As you decide where to locate your table, what things would be important to you? (Flow or movement of customers, if it is accessible, where your potential customers typically go in the market (could set up table near somewhere they already frequent), distance from your house, cost to get things to the market…) 9. You are a member of a honey producing co-operative. You would like a local store to sell your honey. What would you say to the store owner to convince him or her? (talk about the high quality of the honey – give him or her a sample, talk about your current sales, tell the owner that you can provide a constant supply…) Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 6: Set price and make annual Sales Projection Note to Trainer: A simpler version of this activity is found at the end of the activity. Entrepreneurship Module; learning unit 2; learning outcomes 2.4 Objectives - By the end of the activity, participants will be able to: a. Determine how to set a price for their product or service b. Develop an annual sales plan Methodology: large group discussion, small group work, individual work Materials and Preparation: flipchart paper, markers, tape, Handout 2.9: Developing a Sales plan, Handout 2.10 : Bread Baking Cooperative Sales Plan, Steps: 1. Explain that one of the 5 P’s is price. Ask how one goes about determining a price for their product or service. (find out what competitors are selling at, make sure your price is high enough to cover costs, …) 2. Divide participants into their groups. Each group should discuss the prices they intend to charge for their products and services and why. (If participants think their product will be of better quality they could charge slightly above market price. If they think they might be able to produce a lot in a short period of time, they might lower the price slightly to attract the customers. The price should be high enough so they don’t operate at a loss. Prices will depend on the nature of the market too – if there is a low supply and high demand, then prices will be high; if there is a high supply and low demand, prices will be lower. Price also depends on how much it costs to produce the products/services.) 3. Have participants turn to Handout 2.9: Developing a Sales Plan and discuss. Explain what turnover is (amount of money that a business receives from its sales for a period of time that is found by multiplying the price x the quantity). Ask them to think about their product/service at different times of the year. Will there be times when sales are higher? Lower? Why? Is there inflation? Will this cause prices to go up? (Remember that prices of certain electronics such as a mobile phone or computer might actually go down as newer improved models replace old models). Give a bread baking cooperative as an example. Using the information below, ask them what they think the sales plan will look like each month for the cooperative. If the average is 1,500 loaves per month but sales will be higher and lower for particular months, what do they think production will look like for each month? When will turnover be highest? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Bread Baking Cooperative Sales Plan Members of the bread baking cooperative think they can produce, on average, 300 loaves of bread per week (or 1,200 loaves per month). They want to charge 300 Rwf per loaf and do not think the prices will fluctuate much. They know that they will do more business in December because of the Christmas holiday and when school is in session since they will sell to the nearby school. Therefore sales will be lower in April and August. Show them Handout 2.10: Bread Baking Cooperative Sales Plan and discuss. 4. Have them fill in the table in Handout 2.9: Developing a Sales Plan as best as they can for their own product/service. Recognize that they will probably need to gather more information to fill in the table accurately. Tell them that when they are not in class, they should be gathering the information discussed in the previous activities to be able to generate a marketing plan. Trainer Tip Tell participants that when starting out a business, their production will be lower in the beginning and then gradually increase as they get more customers. They should take this into account as they fill in their own sales plan. Alternative: To simplify this activity, participants could use the same price and quantity for each month, so it is an average monthly amount. They could use this to estimate the amount of money they will receive per month, per 3 months, per half a year or per year. For example: A business owner sells cloth bags. The average price is 5,000 Rwf per bag. On average she sells 10 per month. I month turnover: 5,000 Rwf x 10 = 50,000 Rwf In 3 months: 50,000 Rwf x 3 = 150,000 Rwf In 6 months: 50,000 Rwf x 6 = 300,000 Rwf In 1 year: 50,000 Rwf x 12 = 600,000 Rwf Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 2.9: Developing a Sales Plan A sales plan contains three elements: the quantity of products to be sold, the price of the product and turnover. The turnover is the amount of money that a business receives from its sales during a month (monthly turnover) or during a year (yearly turnover). Month Jan Feb March Apr May June July Product 1 Price/Unit Turnover Akazi Kanoze/WDA Complementary Modules Aug Sept Oct Nov Dec Entrepreneurship Module Trainer’s Manual Handout 2.10 : Bread Baking Cooperative Sales Plan A sales plan contains three elements: the quantity of products to be sold, the price of the product and turnover. The turnover is the amount of money that a business receives from its sales during a month (monthly turnover) or during a year (yearly turnover). Month Product 1: bread loaf Price/Unit (Rwf) Turnover Jan Feb March Apr May June July Aug Sept Oct Nov Dec 500 800 1,000 700 1,100 1,300 1,500 1,200 1,500 1,600 1,500 1,700 300 300 300 300 300 300 300 300 300 300 300 300 150,000 240,000 300,000 210,000 330,000 390,000 450,000 360,000 450,000 480,000 450,000 510,000 Akazi Kanoze/WDA Complementary Modules Page 45 Entrepreneurship Module Trainer’s Manual Activity 7: Discuss Start-Up & Working Costs and Estimating Profit or Loss Entrepreneurship Module; learning unit 2; learning outcome 2.4 Objectives - By the end of the activity, participants will be able to: a. Identify and calculate start-up and working costs b. Apply their knowledge in calculating start-up and working costs to their own businesses c. Compare turnover from the sales projection and the estimated costs to determine profit or loss Methodology: large group discussion, small group work , individual work Materials and Preparation: flipchart paper, markers, tape, Handout 2.10: Bread Baking Cooperative Sales Plan, Handout 2.11: Estimating Start-Up and Working Costs, Handout, Handout 2.12: Start-Up and Working Costs for My Business/My Cooperative Business. Worksheet 2.1: Start-Up and Working Costs for My Business/My Cooperative Business Steps: 1. Explain to participants that as they are aware, it takes some money to start up and run a small business or cooperative. Ask participants to brainstorm a list of costs they expect to have when starting up a business. Write down their responses on flipchart. Looking at the list, ask if there are some costs that occur just once or at the beginning and other costs that occur regularly. Explain that the money needed to start up a business is called start-up capital. Those expenses that occur only once at the beginning such as purchase of furniture, tools, equipment, business registration, initial hookup for water and electricity, etc. are part of start-up costs. They occur before the business gets up and running. As a general rule, 30% of the start-up capital should be from the entrepreneur’s own resources. Expenses that will occur every month or on a regular basis are working or operating costs (monthly salaries, monthly rent, transportation of goods to market, raw materials…). Some of the money earned from the sales must be used to purchase new inputs. Thus, it is essential to know the amount of money required for the working costs, and to deduct it from total sales before using the remainder to pay personal expenses. Refer participants to Handout 2.11: Estimating Start-Up and Working Costs for reference. 2. Now have participants help out the Bread Baking Cooperative estimate their start-up and working costs. Have participants turn to the bottom of Handout 2.11: Estimating Start-Up and Working Costs. In small groups, they should figure out the start-up and working costs for the bread baking cooperative. Akazi Kanoze/WDA Complementary Modules Page 46 Entrepreneurship Module Trainer’s Manual 3. Review the results together, using the answers below: Item Cost (RWF) Start-Up Costs: Wood-burning oven tables: 2 @ 20,000 each chairs: 2 @ 7,000 each cooking utensils, tools and bowls registration fee Total Start-Up Costs 300,000 40,000 14,000 75,000 10,000 439,000 Working Costs: bread ingredients (flour, salt… each month) Renting space monthly sector tax power cost (firewood) Telephone Water 7 employees @15,000 per month each Total Monthly Working Costs 150,000 25,000 10,000 15,000 3,000 5,000 115,000 313,000 Have participants think about their own businesses now. Working in their groups or as individuals, ask them to begin writing down their start-up and working costs, using the template in Worksheet 2.1: Start-Up and Working Costs for My Business/My Cooperative Business 4. What start-up capital will be needed? What will be their monthly working costs? If they do not know the price of something, they should find out before the next class. -------------------------------------------------- 5. Ask participants what a profit means (amount of money remaining after costs have been subtracted from sales). Ask what a loss means (when the costs are more than the sales). Have participants look back at handout 2.10: Bread Baking Cooperative Sales Plan and compare it to the start-up and working costs calculated above. Ask participants if, based on the sales plan and the estimated costs, the cooperative will make a profit or loss. Answer: - Calculate the annual turnover by adding up the turnover for each month: 4 320 000 Rwf over the 12 months. - Calculate the total monthly working costs: 313 000 x 12 = 3 756 000 Add the monthly working costs and the start-up costs: 3 756 000 + 439 000 = 4 195 000 Subtract the estimated sales minus the estimated costs: 4 320 000 – 4 195 000 = 125 000 The sales will be more than the costs, indicating a profit Akazi Kanoze/WDA Complementary Modules Page 47 Entrepreneurship Module Trainer’s Manual 6. Explain that when running a business or cooperative, you will want to make a profit. Ask how the Bread Baking Cooperative’s profit could be increased (raise the price of bread, increase production, reduce some of the start-up utensils or tools, …). 7. Have participants do the same calculations using their sales plan and estimated start-up and working costs to see if they will make a profit or loss (they might need more detailed prices before doing this calculation but they can estimate for now). They should do this in Handout 2.12: Start-Up and Working Costs for My Business/My Cooperative Business. Ask for volunteers to share their results with the large group. Akazi Kanoze/WDA Complementary Modules Page 48 Entrepreneurship Module Trainer’s Manual Handout 2.11: Estimating the Start-Up and Working Costs The money needed to start up a business is called start-up capital. Those expenses that occur only once at the beginning such as purchase of furniture, tools, equipment, business registration, initial hookup for water and electricity, etc. are part of start-up costs. They occur before the business gets up and running. As a general rule, 30% of the start-up capital should be from the entrepreneur’s own resources. Expenses that will occur every month or on a regular basis are working or operating costs (monthly salaries, monthly rent, transportation of goods to market, raw materials…). Some of the money earned from the sales must be used to purchase new inputs. Thus, it is essential to know the amount of money required for the working costs, and to deduct it from total sales before using the remainder to pay personal expenses. Handout 2.12: Start-Up and Working Costs for Bread Baking Cooperative Item Wood-burning oven tables: 2 @ 20,000 each chairs: 2 @ 7,000 each cooking utensils, tools and bowls bread ingredients (flour, salt… each month) Renting space monthly sector tax registration fee power cost (firewood) Telephone Water 7 employees @15,000 per month each Cost (RWF) 300,000 40,000 14,000 75,000 200,000 30,000 10,000 10,000 15,000 3,000 5,000 115,000 Divide the costs into start-up and working costs. How much will the start-up costs be? How much will the working costs be each month? Akazi Kanoze/WDA Complementary Modules Page 49 Entrepreneurship Module Trainer’s Manual Worksheet 2.1: Start-Up and Working Costs for My Business/My Cooperative Business Item Cost (RWF) Start-Up Costs: Total Start-Up Costs Working Costs: Total Monthly Working Costs Akazi Kanoze/WDA Complementary Modules Page 50 Entrepreneurship Module Trainer’s Manual Activity 8: Discuss sources of Financing / Capital Entrepreneurship Module; learning unit 4; learning outcomes 4.1 Objectives - By the end of the activity, participants will be able to: a. Identify and assess the various sources of capital to start an enterprise b. Differentiate between equity capital and credit/debt financing Methodology: large group discussion, panel discussion, small group work Materials and Preparation: flipchart paper, markers, tape, Handout 2.13: Finding Capital for my Business, Handout 2.13: The cost of a loan Make arrangements for a panel of speakers to come talk about the financing of start-up costs. There should be a combination of business owners & cooperative members who can share their experiences and representatives from institutions such as a bank, microfinance institute, cooperative, etc. Steps: 1. Participants now realize from the last activity, that start-up costs are high. Ask them to think back to the beginning of the module. Where can people go to borrow money? (friends, family, financial institutions, cooperatives, savings groups…) What were some of the sources of financing discussed? Different types of financial institutions were discussed and compared: - Large banks provide large loans and savings services to larger organizations and people who earn a lot of money. Microfinance institutions provide smaller loans to smaller organizations and people who earn less. Cooperatives provide savings and loans services to low income people. Savings groups provide savings and loans services to low-income people, and often to those that have not dealt with the financial services before. 2. Explain that money that an owner puts into his/her business is called equity capital. It is the owner’s investment in the business. Borrowing needed capital for the business is called credit or debt financing. Institutions lending money want to see that the owner is putting some of his/her own resources into the business. That shows commitment. 3. Invite a panel of guests to speak about start-up costs and borrowing money. The panel should be comprised of young business owners, cooperative members and representatives from a few different financial institutions (see above list). The cooperative members and business owners should talk about how they managed to find money to start their businesses and those from the financial institutions should talk about the processes they use in giving out loans and what they expect of the borrower. After the panelists have shared their information, there should be a question and answer period. Akazi Kanoze/WDA Complementary Modules Page 51 Entrepreneurship Module Trainer’s Manual -------------------------------------------------- 4. Ask participants to think about their own business idea. In Worksheet 2.2: Finding Capital for my Business, they should write down answers to the following questions: a. What are your startup costs calculated in the previous activity? b. Name the people and places you can go to for borrowing: - Trainer Tip It would be very helpful if any of the invited guests can stay while participants are working on their own business idea. The entrepreneurs and financial institution representatives could have some good advice for them on obtaining capital. equity capital? friends, family, your own savings, partner with someone debt financing? bank, micro-finance institution, a business cooperative, etc. c. If you have to go to a bank for a loan, how can you increase your chances of obtaining a loan? d. If you need to take out a loan, what is the cost? Is the cost and the conditions of the loan (when you have to pay back) the same at every institution? If no, is one better than the other? (you might not have the information on hand but will need to find out) 5. Explain that it costs to borrow money from a financial institution. They charge interest. Give them the information below for the bread baking cooperative and have them use Handout 2.13: The cost of a loan to do the calculations of the cost of the loan. They will calculate the cost of the loan, the amount they will need to pay over the 2 years, and the amount they will have paid back after one year. Answers are in parentheses below. Finding Capital for Bread Baking Cooperative Coop members realize that they are going to need a loan. They obtain one for 500,000 Rwf from Umerenge SACCO. They need to pay back the loan in two years at a 10% interest rate. They will pay half in 12 months. What is the cost of the loan? How much total will they owe the bank in 2 years? How much will they have to pay at the end of the first year? (cost of loan = 500,000 X .10 = 50,000 Rwf so over 24 months she will need to pay 550,000 to the bank. In 12 months she will pay back 275,000 Rwf) 6. Answer any final questions participants may have. Akazi Kanoze/WDA Complementary Modules Page 52 Entrepreneurship Module Trainer’s Manual Worksheet 2.2: Finding Capital for my Business a. What are your start-up costs and first month’s expenses calculated in the previous? b. Name the people and places you can go to for borrowing: - Equity capital? friends, family, your own savings, partner with someone - Debt financing? bank, micro-finance institution, a business cooperative, etc. c. If you have to go to a bank for a loan, how can you increase your chances of obtaining a loan? d. If you need to take out a loan, what is the cost? Is the cost and the conditions of the loan (when you have to pay back, how much etc.) the same at every institution? If no, is one better than the other? (you might not have the information on hand but will need to find out) Akazi Kanoze/WDA Complementary Modules Page 53 Entrepreneurship Module Trainer’s Manual Handout 2.13: The Cost of a Loan Loan for Bread Baking Cooperative Coop members realize that they are going to need a loan. They obtain one for 500,000 Rwf from Umerenge SACCO. They need to pay back the loan in two years at a 10% interest rate. They will pay half in 12 months. a. What is the cost of the loan? b. How much total will they owe the bank in 2 years? c. How much will they have to pay at the end of the first year? Akazi Kanoze/WDA Complementary Modules Page 54 Entrepreneurship Module Trainer’s Manual Learning unit 3: Produce a business idea Session 3: Business idea proposal - How Do I Find a Good Business Idea? Note: Session 3 has 600 minutes which should be allocated according to the objectives of the activities Key Topics Creativity and Innovation Generating Ideas Identifying and Assessing Business Opportunities Akazi Kanoze/WDA Complementary Modules Page 55 Entrepreneurship Module Trainer’s Manual Activity 1: Assess and discuss Creativity potential Entrepreneurship Module; learning unit 3; learning outcomes 3.1 Objectives - By the end of the activity, participants will be able to: a. Assess their own business creativity potential. b. Identify techniques for developing business creative ability Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Worksheet 3.1: Own creativity potential assessment, Worksheet 3.2: Three Descriptions, Handout 3.1: Creativity awareness Collect magazine pictures (optional). RATIONALE: To develop their creative ability, participants need an opportunity to assess their own creative behaviour. They can then begin to practice creative thinking. Creativity is another area where entrepreneurs have various opportunities to use their creative talents. Although employees are often not required to think creatively, they can be excellent sources of new ideas. Because the entrepreneur has such a broad range of responsibilities, creativity by both entrepreneur and employees can be extremely useful to develop ideas to solve a wide variety of business-related problems. Entrepreneurs have a great deal of freedom to implement creative ideas. One way to help participants develop their creative ability is to begin with existing ideas. These ideas may be changed in various ways to produce new and original ideas. The technique of changing existing ideas has many useful applications in work situations. Steps: 1. Have participants complete Worksheet 3.1: Own creativity potential assessment Explain to participants that the worksheet is designed to help them assess their creative potential. 2. Distribute Worksheet 3.2: Three Descriptions. Have participants read the three descriptions and decide which one best describes them. 3. The following Scoring Key will help participants score their worksheets. Read the scores for each response to each question. Instruct participants to write the number of points they scored for their responses beside each statement on the worksheet. For example, if a learner checked “Uncertain” for statement A, the learner should write “1” beside the statement; if a learner checked “yes” for statement A, the learner should write “2” beside the statement. Akazi Kanoze/WDA Complementary Modules Page 56 Entrepreneurship Module Trainer’s Manual TRUE FALSE UNCERTAIN A 2 0 1 B 2 0 1 C 0 3 1 D 0 2 1 E 0 3 1 F 3 0 1 G 0 3 1 H 0 3 1 I 2 0 1 J 3 0 1 K 2 0 1 L 3 0 1 M 2 0 1 N 3 2 1 O 2 0 1 After all statements have been scored, have participants add up the points for all statements. Have participants refer to Worksheet 1. Tell them that they may interpret their scores as follows: • • • Description I applies to persons who scored 23 points or more. Description II applies to persons who scored between 11 and 22 points. Description III applies to persons who scored 10 points or less. 4. Use the following questions to discuss the results of the scoring. Were you surprised at the results of the scoring? Why or why not? What do you like about the description from scoring the worksheet? What about the description would you like to change or improve? In what ways are the descriptions similar/different? What advantages might a person of each description have as a self-employed person? Disadvantages? 5. Have participants read and discuss Handout 3.1: Creativity awareness . Akazi Kanoze/WDA Complementary Modules Page 57 Entrepreneurship Module Trainer’s Manual Worksheet 3.1: Own creativity potential assessment Respond to each of the following statements by checking one of the boxes to the left of the statement. This is not a test. Think carefully about each statement before responding. A. B. C. D. E. F. G. H. I. J. Statements My ideas are not always easy to explain to others. I would rather work at discovering new facts than teaching others. I don’t like to waste time and energy on ideas that may not work out. I find it easier to express ideas than to think of new ideas. I prefer quick solutions to problems rather than dealing with uncertainty. My way of thinking is often considered different or unusual. I find it easy to interrupt a project when friends call or visit. I feel more comfortable with facts than with theories. I would rather be good at making up stories than good at telling them. I have difficulty giving up my ideas just to please others. K. L. M. N. O. I would rather design clothes than model clothes. I prefer to work on ideas by myself rather than with others. Unusual things appeal to me more than ordinary things. When I get an idea, I work on it, even when others think it is “far out” and impractical. I would follow up on my ideas even if it means being alone a lot. Akazi Kanoze/WDA Complementary Modules Page 58 True False Uncertain Entrepreneurship Module Worksheet 3.2: Three Descriptions Below are descriptions of three different types of people. Read all three descriptions carefully. Mark an “X” beside the description you believe most closely describes you. Description I You are not bound by ordinary ways of thinking. You can develop and recognize ways to combine ideas in new ways. You are willing to experiment even when you are not sure your work will be rewarded. Because you seldom depend on others, you can provide yourself with the time, energy and isolation that are necessary for creative activities. You are not likely to be distracted or discouraged by others once you become interested in a challenging task. Description II You can recognize and appreciate a creative idea, although you usually do not produce these ideas by yourself. You probably engage in creative activities which involve using your hands or which involve objects you can see and touch. You start creative projects sometimes, but you may lose patience and interest when a project requires you to work for a long time by yourself. Description III You are usually more interested in practical down-to-earth matters than in chasing dreams. Since you tend to be very realistic in your thinking, you may not be aware of unusual ideas that are necessary for creative problem solving. Because you prefer to work with other people, you rarely set aside time to work by yourself on your ideas. You are more likely to engage in activities which give you immediate results and which may be shared with others. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.1: Creativity awareness Most people can think of several occupations which require creativity - artist, musician, dancer, designer and scientist. However, the need for creativity is not limited to these occupations. Creative ideas are needed anywhere there are problems with unknown solutions. In the business world, entrepreneurs use creativity to solve everyday problems, promote products and services, update products and services, and make use of limited resources. Some people believe that they are not creative. They may overlook situations in which they have good ideas, or they may avoid sharing their ideas with others. By recognizing and sharing their ideas, people can begin to develop their creative ability. Because people become accustomed to thinking in certain ways, they may have difficulty thinking of original ideas. People can develop their creative potential through learning and practice. Several techniques can be used to develop more creative thinking habits. Some of these techniques are: increasing awareness of one’s environment, brainstorming and changing existing ideas. Increasing awareness of one’s environment means learning to pay attention to sights and sounds we ordinarily ignore. Most people are in the habit of blocking out certain sights and sounds in order to concentrate on one thing at a time. By paying attention to what we usually ignore, we can open our minds to new ways of thinking. Brainstorming is a technique in which persons generate a large number of ideas. Unusual ideas are encouraged. Ideas are never judged or criticized during brainstorming. Participants may combine and improve ideas during brainstorming. New and original ideas can be developed by using existing ideas as a starting point. Parts of existing ideas can be changed in many ways. They can be: made bigger, made smaller, modified in color, taste or style, rearranged, reversed, substituted or combined. Products and services are often changed to make them more attractive by using this simple technique. This method could also be used to help entrepreneurs make their working situations more pleasant and efficient. By developing and using their creativity, entrepreneurs can increase their potential for success. The appreciation of creativity has been more important for entrepreneurs in the past several years. It is increasingly accepted that intellect and credentials take a back seat to the ability to respond creatively to challenging situations. Here are seven steps to expanding your creative potential: 1. Examine how you perceive creativity and creative people. Our results-oriented culture has tended to look at those whose creativity produces a product — a book, painting or cake — as officially creative. We have been less able to recognize people who identify new ways of thinking and behaving, especially in everyday and business life, as just as creative. 2. Spend time with creative people. Observe how they act, think, relax and respond. Ask them to talk about what events in their lives influenced their creativity. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 3. Learn your own warm-up process. This warm-up process increases your ability to ready yourself to develop a creative idea and take positive risks in making changes, even small ones. What events and settings seem to encourage your creative actions? 4. Move, dance, exercise, bicycle, walk and stretch. Try yoga or tai chi. These physical activities get us out of our thinking brain and allow us to truly inhabit all of our body. As the body moves, the right and left parts of the brain; both the imaginative side and the cognitive side are able to work together more efficiently. 5. Listen to music and experiment with improvisational exercises. Notice how different types of music promote various levels of energy within you. Theater and drama exercises will help you practice different ways of responding, apart from your habitual roles. 6. Keep a notebook of interesting or creative ideas and observations. Paste a few pictures from magazines that interest or intrigue you, even if you don’t know why. Scribble and doodle. Whatever you do, don’t censor yourself. See what happens. 7. Find a mentor or coach who can help you develop your creativity to a higher level. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 2: Discuss innovation potential Entrepreneurship Module; learning unit 3; learning outcomes 3.1 Objectives - By the end of the activity, participants will be able to: a. Identify the innovative actions of a successful entrepreneur. b. Develop their innovative ability Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Worksheet 3.3: New Ideas from Old, Worksheet 3.4: Taking Innovative Action, Handout 3.2: Meaning of Creativity Collect magazine pictures (optional). Steps: 1. Discuss the technique of changing existing ideas in order to develop new and original ideas. Existing ideas give us a starting point. By changing one or more parts of an idea, we can develop useful new ideas. Discuss the following ways of changing an idea. Have participants give examples of each. • Make it bigger or add new parts. Two examples are “giant economy sizes” of products and increasing the size of a business to include more products or to serve a larger area. • Make it smaller or eliminate parts. Examples are transistor radios, pocket calculators, digital cameras etc. • Modify parts or ideas. Examples are changing colors, tastes, odors and styles. Soaps are often changed in their color and odor. Automobile styles are changed yearly. • Rearrange parts. Some examples of rearranging parts are in designing buildings, parks, and machines. • Reverse parts. One example of reversing parts is in automobiles in which the trunk and the engine are reversed in location. Another example is reversing roles of persons, such as a husband assuming homemaking responsibilities while a wife assumes the role of breadwinner. • Substitute different materials, parts, or methods. A common example is the substitution of plastic for wood and metal. Another example is the substitution of an electric motor for an internal combustion engine in a car. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module • Combine parts or ideas. One example is the “home entertainment unit,” which combines a television, radio, tape player, and record player. Another example is the motor home, which combines a home with a vehicle. 2. Have Participants complete Worksheet 3.3: New Ideas from Old • Ask all participants to share their ideas. Have them explain how their ideas can be useful in work situations. • Ask the class to consider combining two or more ideas of individual participants. • Emphasize that the technique used in this activity can be used to develop new ideas and processes as well as new objects. • Have participants apply the same technique to a service instead of an object. • Have participants imagine that the class has decided to form a company to offer a service (for example, lawn mowing or dog walking). Working as a group, have the participants use the same technique they used on the worksheet to develop a creative marketing approach which would attract customers. 3. Have participants complete Worksheet 3.4: Taking Innovative Action 4. Have the class discuss innovative entrepreneurial responses to the changes in business. 5. Show Handout 3.2: Meaning of Creativity and have the class discuss ways they can become more creative. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.3: New Ideas from Old Make it bigger or add new parts. Two examples are “giant economy sizes” of products and increasing the size of a business to include more products or to serve a larger area. Make it smaller or eliminate parts. Examples are transistor radios, pocket calculators. Modify parts or ideas. Examples are changing colors, tastes, odors and styles. Soaps are often changed in their color and odor. Automobile styles are changed yearly. Rearrange parts. Examples: rearranging parts for designing buildings, parks, and machines. Reverse parts. One example of reversing parts is in automobiles in which the trunk and the engine are reversed in location. Another example is reversing roles of persons, such as a husband assuming homemaking responsibilities while a wife assumes the role of breadwinner. Substitute different materials, parts, or methods. A common example is the substitution of plastic for wood and metal. Another example is the substitution of an electric motor for an internal combustion engine in a car. Combine parts or ideas. One example is the “home entertainment unit,” which combines a television, radio, tape player, and record player. Another example is the motor home, which combines a home with a vehicle. Practical Application 1. Think of an object used or produced in a work situation. Write the name of the object; 2. Name the basic parts of the object. 3. How could the object or part of the object: be made bigger, be made smaller, be modified? 4. How could the parts of the object: be rearranged, be reversed, be substituted or made of a different material? 5. How could your ideas be combined and be useful in making a new product? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.4: Taking Innovative Action Entrepreneurship is about taking innovative actions whenever one finds oneself in different situations of change Fill in an innovative action an entrepreneur could take to respond to the identified change CHANGE POSSIBLE ENTREPRENEURIAL RESPONSE Structure of population changes Values and lifestyles changes Incomes and purchasing power decrease Government policies on gender reviewed Natural resources getting exhausted Ownership of factors of production changing hands Banks advertise availability of loans Use of computers increases Use of mobile phones increases Use of computers and internet facilities in homes increase New advanced equipment bought by business competitor New strategies for accommodating people living with HIV Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.2: Meaning of Creativity a. Creativity is the ability to design, form, make or do something in a new or different way. b. Creativity is the ability to come up with innovative solutions to needs/problems and to market them. An entrepreneur’s creativity is often the difference between success and failure in business. c. Creativity often distinguishes high-growth or dynamic businesses from ordinary, average firms. d. To be creative, entrepreneurs need to keep their mind and eyes open to their environment. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 3: Generate a good business idea Entrepreneurship Module; learning unit 3; learning outcomes 3.1 Objectives - By the end of the activity, participants will be able to: a. Identify their own creative potential. b. Apply techniques for developing their creative ability c. Appreciate the importance of having a good business idea as a prerequisite for successful business start-up and for an existing business. d. Generate business ideas. Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Worksheet 3.5: The Nine Dots, Worksheet 3.6: Creative Squares, Worksheet 3.7: How Many Triangles In A Triangle? Handout 3.3: What is a Business Idea? Handout 3.4: Why Generate Business Ideas?, Handout 3.5: Why Should You Generate Business Ideas? Handout 3.6: Sources of Business Ideas, Handout 3.7: Generating a Business Idea, Trainer tool: 3.1: Identifying Business Ideas, Trainer tool 3.2: Mass Media: Newspapers/Magazines Collect magazine pictures (optional). RATIONALE: A good business idea is essential for starting a successful venture and for staying competitive afterwards. Good business ideas, however, do not usually just occur to an entrepreneur. Rather, they are the result of hard work, effort and often creativity on the part of the entrepreneur. Steps: 1. Using Worksheet 3.5: The Nine Dots, introduce the concept of creativity and explain its importance in generating a good business idea. Then do the nine-dot exercise. Draw nine dots on the black board like shown on the top of Worksheet 3.5: The Nine Dots and ask the participants to connect the 9 dots by means of 4 straight, continuous lines. The pencil should not be lifted off the paper.Ask each individual to write down their solution. Ask those who managed to do it to explain how before revealing the answer on the bottom half of Worksheet 3.5: The Nine Dots. Explain that the solution requires going outside the square of dots, and that we needed to stretch our imagination and mind beyond the apparent problem in order to solve the problem. 2. Do the creative squares exercise to provide another example of creativity in action. Show Worksheet 3.6: Creative Squares and ask each individual to count the total number Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module of squares in the figure. Emphasize that a square is a rectangle with sides of equal length. Discuss the answers and the process used in solving the puzzle. Highlight the need for creativity. After the exercise, in order to illustrate how to come up with all the squares there are, you may: a) number each square or box in the main diagram; (b) combine various boxes to form squares, i.e. four equal-sided boxes; (c) add up the possible combinations to arrive at a total of 30. As a follow-up activity, ask how many rectangles (different lengths of the two sides) can be identified in the same overall square (52). 3. Divide the class into small groups and have them count the number of triangles portrayed in Worksheet 3.7: How Many Triangles In A Triangle?. The correct number is 47: ACE; BFD; AEB; AED, AEH, AFC, AFH; AFD, AFB, ACH; ACD, AGF, AGB, ABH, ABD, CEB, CEF, CEH, CDH, CDF, CDB, CID, CIB, CBH, CFB, EDH; EBD, EDF, EJF; EJD, EFH; EFB; HBG; HBI; HFG; HFJ; HDI; HDJ; HFB, HDB; HFD; FIB; FID; DGB; DGF; BJD; BJF Ask participants if working in a group helped them to “see” things from different angles? Did any of the groups count the triangles originating on a single side, then multiply that by two and then add one for the overall triangle? 4. Ask the participants to define a “business idea.” Jot down their answers on the board or flipchart. Show Handout 3.3: What is a Business Idea? and discuss any aspects not covered to arrive at a common understanding of the term. 5. Ask the participants to indicate why it is important to generate ideas. List responses on a board or flipchart. Show Handout 3.4: Why Generate Business Ideas? and compare the participants’ list with the points suggested on Handout 3.4: Why Generate Business Ideas? Discuss key issues including the fact that the development of business ideas is necessary both before and after a business has been set up. Have participants read Handout 3.5: Why Should You Generate Business Ideas? 6. Have participants give examples of people or firms in their community or elsewhere that have come up with good business ideas, and explain their reasons for considering these ideas as being good. 7. Ask participants to suggest ways in which business ideas can be generated. List these on a board or flipchart. Show Handout 3.6: Sources of Business Ideas and compare it with the participants’ responses. Lead a discussion on the main points, giving examples and illustrations. Have participants read Handout 3.7: Generating a Business Idea and use it for the class discussion. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 8. Use Handout 3.4: Why Generate Business Ideas? to remind participants of the concept and principles of brainstorming. To give some practical experience of using the technique, tell participants that they have just 5 minutes to come up with at least a dozen uses for one of the following (choose one item only): old newspapers, bricks, old clothes, boxes (made of cardboard or wood), poles/sticks, any other object of your choosing. 9. Divide participants into small groups of 4 or 5 and tell them that they are going to do an exercise to give them practice in using the concepts and techniques discussed so far. Use Trainer tool 3.1: Identifying Business Ideas you may hold a competition to determine the best business idea. 10. Bring sufficient newspapers by different publishers (outdated recent newspapers) to the class. Let participants use the newspapers as they work in groups of three to four on the Trainer tool 3.2: Mass Media: Newspapers/Magazines Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.5 The Nine Dots Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.6: Creative Squares Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.7: How Many Triangles In A Triangle? Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.3: What is a Business Idea? A business idea is the response of a person or persons, or an organization to solving an identified problem or to meeting perceived needs in the environment (markets, community, etc.). Finding a good idea is the first step in transforming the entrepreneur’s desire and creativity into a business opportunity. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.4 Why Generate Business Ideas? You need a great idea to start a new business Business ideas need to respond to market needs Business ideas need to respond to changing consumer wants and needs Business ideas help entrepreneurs to stay ahead of the competition Business ideas use technology to do things better Business ideas are needed because the life cycles of products are limited Business ideas help to ensure that businesses operate effectively and efficiently Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.5 Why Should You Generate Business Ideas? There are many reasons why entrepreneurs or would-be entrepreneurs need to generate business ideas. Here are just a few: • You need an idea – and a good one at that – for business. As indicated earlier, in looking at the rationale for this topic, a good idea is essential for a successful business venture – both when starting a business and to stay competitive afterwards. • To respond to market needs. Markets are made up essentially of customers who have needs and wants waiting to be satisfied. Those people or firms that are able to satisfy these requirements are rewarded. • Changing fashions and requirements provide opportunities for entrepreneurs to respond to demand with new ideas, products and services. • To stay ahead of the competition. Remember, if you do not come up with new ideas, products and services, a competitor will. The challenge is to be different or better than others. • To exploit technology – do things better. Technology has become a major competitive tool in today’s markets, with the rate of change forcing many firms to innovate. There are several companies in the world, operating in the electronics and home appliances industries, which come up with dozens of new products every month. For these and many others in today’s global markets, generation of business ideas is crucial. • Because of product life cycle. All products have a finite life. As the product life cycle chart shows, even new products eventually become obsolete or outmoded. Thus, there is a need to plan for new products and the growth of these. The firm’s prosperity and growth depends on its ability to introduce new products and to manage their growth. • To spread risk and allow for failure. Linked to the product life cycle concept is the fact that over 80 per cent of new products fail. It is therefore necessary for firms to try to spread their risk and allow for failures that may occur from time to time by constantly generating new ideas. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.6 Sources of Business Ideas Hobbies/Personal Interests Personal Skills and Experience Franchises Mass Media (newspapers, magazines, TV, Internet) Business Exhibitions Surveys Customer Complaints Changes in Society Brainstorming Being Creative Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.7: Generating a Business Idea A good business idea is essential, or even a prerequisite, for a successful business venture. However, good business ideas do not usually just occur to an entrepreneur. Rather, they are the result of hard work and effort on the part of the entrepreneur in generating, identifying and evaluating business ideas that can be developed into a business opportunity. What is a Business Idea? A business idea is the response of a person or an organization to solving an identified problem or to meeting perceived needs in the local environment (markets, community, etc.). Finding a good idea is the first step in transforming the entrepreneur’s desire and creativity into a business opportunity. Two things should however be noted: (a) although it is a prerequisite, a business idea is only a tool; (b) an idea by itself, however good, is not sufficient for success. In other words, notwithstanding its importance, an idea is only a tool that needs to be developed and transformed into a viable business opportunity. Out of 30 business ideas, there may be only one good business opportunity. What is Creativity? Creativity is the ability to design, form, make or do something in a new or different way. The ability to come up with creative solutions to needs/problems and to market them often marks the difference between success and failure in business. It also distinguishes highgrowth or dynamic businesses from ordinary, average firms. Real, successful entrepreneurs are creative in identifying a new product, service or business idea and turning it into a business opportunity. To be creative, you need to keep your mind and eyes open as you work through the sources of business ideas explained below, and apply the techniques. Sources of Business Ideas There are millions of entrepreneurs throughout the world and their testimonies suggest that there are many potential sources of business ideas. Some of the more useful ones are outlined below. Hobbies/Interests A hobby is a favorite leisure-time activity or occupation. Many people, in pursuit of their hobbies or interests, have founded businesses. If, for example, you enjoy playing with computers, cooking, music, traveling, sport or performing (to name but a few), you may be Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module able to develop this hobby/interest into a business. To illustrate this, if you enjoy traveling, performing and/or hospitality, you may consider going into tourism, which is one of the biggest industries in the world. Personal Skills and Experience Over half of the ideas for successful businesses come from experiences in the work place. For example, a mechanic with experience in working for a large garage who eventually sets up his/her own car repair or used car business. Thus, the background of potential entrepreneurs can play a crucial role in the decision to go into business as well as the type of venture to be created. Your skills and experience are probably your most important resource, not only in generating ideas but also in capitalizing on them to develop a good business opportunity. Franchises A franchise is an arrangement whereby the manufacturer or sole distributor of a trademark, product or service gives exclusive rights for local distribution to independent retailers in return for their payment of royalties and their willingness to conform to standardized operating procedures. Franchising may take several forms, but the ones of interest to potential entrepreneurs are the types that offer a name, image and method of doing business and operating procedures. Mass Media The mass media is a great source of information, ideas and often opportunity. Newspapers, magazines, television, and the Internet are all examples of mass media. Take a careful look, for example, at the commercial advertisements in a newspaper or magazine and you may well find businesses for sale. One way to become an entrepreneur is to buy an existing business. Articles in the printed press or on the Internet or documentaries on television may report on changes in fashions or specific consumer needs. For example, you may read or hear that people are now increasingly interested in healthy eating or maintaining their physical fitness. You may also find advertisements calling for the provision of certain services based on skills, for example accounting, catering or security. Or you may discover a new business concept, but investors would be needed. Exhibitions Another way to find ideas for a business is to attend exhibitions and trade fairs. These are usually advertised on the radio or in newspapers. By visiting such events regularly, you will not only discover new products and services, but you will also meet sales representatives, manufacturers, wholesalers, distributors and franchisers. These are often excellent sources Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module of business ideas, information and help you in getting your business started. Some of them may also be looking for someone just like you to be a business partner. Surveys The focal point for a new business idea should be the customer. The needs and wants of the customer, which provide the rationale for a new product or service, can be ascertained through a survey. Such a survey might be conducted informally or formally by talking to people. Surveys may be conducted using a questionnaire, through interviews or through observation. You may start by talking to your family and friends to find out what product or service they think is needed or wanted but is not available in the market. Or, for example, whether they are dissatisfied with an existing product or service and what improvements or changes they would like to see. You can then talk to people who are part of the distribution chain, that is manufacturers, wholesalers, distributors, agents and retailers. It would be useful to prepare a set of questions which might be put on a questionnaire or used in an interview. Given their close contact with customers, these people have a good sense of what is required and what will sell and what will not sell. Finally, you should talk to as many customers as possible (both existing and potential customers). The more information you can get from them, the better. Besides talking to people, you could also get information through observation. For example, in deciding whether to open a shop on a particular street, you can observe and count the number of people going past on given days and compare these numbers to other sites. Or, if you are interested in an area frequented by tourists, you might sell products from a craft business. Or you may have noticed that there is no decent restaurant or hotel on a tourist route or in a given town. One way of ensuring that you are not negligent in identifying new business ideas is to be alert at all times to customer needs. One entrepreneur apparently went round at every cocktail party asking if anyone was using a product that did not adequately fulfil its intended purpose. Another monitored the toys of a relative’s children looking for ideas for a market niche. Complaints Complaints and frustrations on the part of customers have led to many a new product or service. Whenever consumers or customers complain bitterly about a product or service, or when you hear someone say “I wish there was .....” or “If only there were a product/service that could ....”, you have the potential for a business idea. The idea could be to set up a rival firm offering a better product or service, or it might be a new product or service which could be sold to the firm in question and/or to others. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Change The world is constantly changing. Change can be a threat; however, most entrepreneurs consider change as a challenge and opportunity to trigger new needs for products and services. An innovative entrepreneur always responds to changes in a positive manner. Brainstorming Brainstorming is a technique for creative problem solving and for generating ideas. The objective is to come up with as many ideas as possible. Brainstorming usually starts with a key question or problem statement. Each idea leads to one or more additional ideas. As a result, you will have in a good number of business ideas. FOUR RULES FOR BRAINSTORMING: Don’t criticize or judge the ideas of others Freewheeling is encouraged – ideas that seem to be wild or crazy are welcome Quantity is desirable – the greater the number of ideas, the better Try to combine and improve upon the ideas of others Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer tool 3.1: Identifying Business Ideas Introduction 1. A business idea is a prerequisite for a successful business venture. Good business ideas, however, do not usually just occur to an entrepreneur. Rather, they are the result of effort and often creativity on the part of the entrepreneur. 2. Finding a good idea is the first step in transforming the entrepreneur’s desire and creativity into a business opportunity. 3. There are numerous sources of good ideas. To be successful in generating or finding one, however, the entrepreneur needs to keep his/her mind and eyes open and be alert to opportunities. 4. An idea, however good, is only a tool. The idea needs to be developed and transformed into a viable business opportunity. Activity 1 Each learner should write down the skills, experience, training and background that they have to start a business. Examples could include: catering, welding, computer programming, secretarial experience, etc. Activity 2 Divide the class into small groups based on the common hobbies/interests listed by the group members. Each group of participants must now choose one idea they wish to develop into a business. Group members are to negotiate this themselves. On a separate sheet of paper, the group should describe their best business idea, including the product or service in detail as well as who the likely customers might be. Each group would have 15 minutes for this task, after which each group will be given 5 minutes to present their idea to the entire class. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer tool 3.2: Mass Media: Newspapers/Magazines Your group should identify 7 business ideas from the articles as well as the commercial opportunities section of a newspaper or magazine. The commercial section may contain advertisements for businesses or machines on sale whilst articles may describe new types of businesses or announce changes in fashion or consumer needs. Then, for each idea chosen, give reasons as to why you are interested in it. You have 20 minutes for this task. Business idea 1 2 3 4 5 6 7 Akazi Kanoze/WDA Complementary Modules Reason(s) for interest Entrepreneurship Module Activity 4: Identifying and Assessing Business Opportunities Entrepreneurship Module; learning unit 3; learning outcomes 3.1 Objectives - By the end of the activity, participants will be able to: a. Appreciate the importance of business opportunities b. Identify business opportunities c. Assess business opportunities Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Handout 3.8: What is a Business Opportunity? Handout 3.9: Identifying and assessing business opportunities, Handout 3.10: Identifying Business Opportunities Collect magazine pictures (optional). Transparency 1 & 2; Handout 1 RATIONALE: The recognition of a business opportunity coupled with the ability to respond effectively is the basis for starting and maintaining successful ventures. It is also a characteristic of successful entrepreneurs. It involves not only generating ideas or identifying opportunities but also screening and evaluating them to determine the most viable, attractive propositions to be selected. Steps: 1. Have the participants define the term business opportunity. Show Handout 3.8: What is a Business Opportunity? to clarify. In the process, draw a distinction between an idea and an opportunity. 2. Ask participants to list the factors involved in the identification and assessment of a business opportunity. Compare the list with Handout 3.9: Identifying and assessing business opportunities. Have participants read Handout 3.10: Identifying Business Opportunities as the basis for the discussion. 3. Invite an entrepreneur to talk to the participants about how he or she found a business idea/opportunity and transformed it into a successful venture. 4. Ask someone from the local community or a regional/national organization – such as an investment promotion center, an employers’ organization, the regional/local economic development board, a business promotion agency, the university or polytechnic, the business community or a consultancy firm – to come and talk about business opportunities. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 5. Divide the participants into groups. Ask them to draw up a simple questionnaire to use in interviewing an entrepreneur. Then, have each group visit and speak to a successful entrepreneur. The interview should focus on how the entrepreneur generated the business idea, how he or she identified or recognized the business opportunity, how he or she assessed the opportunity and how he or she transformed it into a successful business. During this interview, each group should also collect some basic background information about the entrepreneur and his/her firm, such as the type of business, number of employees, how long ago the business was established etc. Group members must negotiate and arrange the whole process by themselves, although the facilitator may provide some assistance where required. When they have completed the exercise, each group would prepare a report and presents it to the entire class. 6. Finally, draw some conclusions from the exercise and reinforce the key learning points: A. The recognition of a business opportunity coupled with the ability to respond effectively is the basis for starting and maintaining successful ventures. This involves not only generating ideas or identifying opportunities, but also screening and evaluating them to determine the most viable, attractive opportunity to be pursued. B. A business opportunity may be defined as an attractive investment idea or proposition that provides the possibility of a financial return for the person taking the risk. Such opportunities are reactions to customer needs and lead to the development of a product or service that creates added value for its buyers or end-users. C. A good idea is not necessarily a good business opportunity. Consider, for example, that over 80% of all new products fail. It is therefore important for all ideas and opportunities to be well screened and assessed. Identifying and assessing business opportunities is not an easy task. However, it is necessary to minimize the risk of failure. It involves, in essence, determining potential risks against potential rewards. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.8: What is a Business Opportunity? A business opportunity may be defined simply as an attractive investment idea or proposition that provides the possibility of a monetary return for the person taking the risk. Such opportunities are represented by customer requirements and lead to the provision of a product or service which creates or adds value for the buyers or end-users. Distinction between ideas and opportunities A good idea is not necessarily a good business opportunity. Consider, for example, that over 80% of all new products fail. So, what turns an idea into a business opportunity? To put it simply in economic terms, Income must exceed Costs to earn a Profit. The characteristics of a good business opportunity need to be carefully examined. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.9: Identifying and assessing business opportunities a. Not an easy task. Out of approximately 30 business ideas, there may only be one good business opportunity b. A good business opportunity should take into account: - Industry and market, real demand for a product or service - Length of the ‘window of opportunity’ - Personal goals and competencies of the entrepreneur - Management team (human resources) - Competition - Capital, technology and other resource requirements - Business environment (political, economic, legal, government regulations etc.) Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.10: Identifying Business Opportunities Seeing, seeking and acting on opportunities is one of the characteristics of successful entrepreneurs. It is also the basis for starting and maintaining successful ventures. It involves not only generating ideas and recognizing opportunities, but also screening and evaluating them to determine the most viable, attractive propositions to be pursued. What is a business opportunity? A business opportunity may be defined simply as an attractive idea or proposition that provides the possibility of a return for the investor or the person taking the risk. Such opportunities are determined by customer requirements and lead to the provision of a product or service which creates or adds value for its buyers or end-users. However, a good idea is not necessarily a good business opportunity. For example, you may have invented a brilliant product from a technical point of view and yet the market may not be ready for it. Or the idea may be sound, but the level of competition, and the resources required may be such that it is not worth pursuing. Sometimes there may even be a ready market for the idea, but the return on investment may not be acceptable. To underscore the point further, consider the fact that over 80% of all new products fail. Surely, to the inventors (and their backers) the idea seemed a good one, yet clearly it could not withstand the test of the market. What turns an idea into a business opportunity? A simplified answer is when income exceeds costs and generates a profit. In practice, to be comprehensive, you need to examine the factors listed below. Characteristics of a good business opportunity To be a good business opportunity, it must fulfill, or be capable of meeting, the following criteria: Real demand: responds to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to buy Return on investment, provides acceptable returns or rewards for the risk and effort required Be competitive: be equal to or better (from the viewpoint of the customer) than other available products or services Meet objectives: meet the goals and aspirations of the person or organization taking the risk Availability of resources and skills: the entrepreneur is able to obtain the necessary resources. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Assessing Business Opportunities Ideas and opportunities need to be screened and assessed for viability once they have been identified. This is not an easy task, and yet at the same time, the assessment of business opportunities is extremely important. This assessment can make the difference between success and failure, between making a fortune and losing everything. While the assessment exercise does not guarantee success, it certainly helps in minimizing the risks and reduces the odds for failure. Identifying and assessing business opportunities involves, in essence, determining risks and rewards/returns reflecting the following factors discussed below. Industry and market The key question to be answered is whether there is a market for the idea. A market in this context consists of customers – potential or actual – who have needs and wants, and who have the ability to purchase your intended product or service. There is also a need to consider whether what the customer wants can be provided at the right price, in the right place, and in a timely manner. Another important consideration is the size of the market and the growth rate of the market. The ideal situation is a market that is large and growing, where getting even a small market share can represent a significant and increasing volume of sales. For this assessment exercise, the would-be entrepreneur needs to gather information. If some potential entrepreneurs are tempted to think that it involves too much hard work, they might take some comfort from the saying that the data available about markets (size, characteristics, competitors etc.) is often inversely related to the real potential of an opportunity. In other words, if market data is readily available and if the data clearly shows significant potential, then it is likely that a large number of competitors will enter the market and the opportunity will not be as good. There are several sources of published information (also called secondary information), including libraries, chambers of commerce, investment promotion centers, government ministries, universities, foreign embassies, the Internet, newspapers, and so on. In addition to the above, there is often the need to collect information at the source (also called primary research) by interviewing key people, such as customers and suppliers. In that case, you will need to conduct survey research. Length of the ‘window of opportunity' Opportunities are said to have a ‘window of opportunity.’ That is, they do exist, but they do not remain open forever. Markets grow at different rates over time, and as a market gets bigger and more well-established, conditions for success are not as favorable. Timing is Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module therefore important. The issue then is to determine the length of time the window will be open, and whether the opportunity can be created or seized before the window closes. Personal goals and competencies of the entrepreneur An important question for anyone venturing into business is whether they want to undertake that particular venture. Personal motivation is an essential attribute of a successful entrepreneur. Unless a person really wants to do that kind of business, he or she should not venture into it. A related question is whether the potential entrepreneur has the necessary competencies (including the knowledge, skills and abilities) for the requirements of the business and, if not, whether other people could be brought in. Many small business owners/managers have entered into business based on the strengths of their own skills and ability. When the above aspects are combined, the issue then becomes one of whether there is a good fit between the requirements of the business and what the entrepreneur wants or desires. This is important, not only for success, but also for the entrepreneur’s happiness. As the saying goes, “Success is getting what you want; happiness is wanting what you get.” Management team In many ventures, particularly those involving a large amount of capital, high risk, sophisticated markets and high competition, the management team is usually the most important dimension in determining the success of a business. The experience and skills that the team possess in relation to the same or a similar industry often determine success or failure of a new business. This explains why venture capitalists, or those people who provide finance for businesses, put so much emphasis on the management factor. Investors often say that they would rather have good management with an average idea/product/service than a brilliant idea/product/service with bad management. Competition To be attractive, an opportunity must have a unique competitive advantage. For example, a business may have a competitive advantage by lowering costs in terms of production and marketing. Or better, a business may offer better quality. In addition, the availability of entry barriers – which could take the form of high amounts of capital required, protection such as patents or regulatory requirements, contractual advantage such as exclusive rights to a market or with a supplier – can make the crucial difference between a ‘go’ and a ‘no go’ investment decision. If a business cannot keep most would-be competitors out of its market, or if it faces existing entry barriers, then the opportunity may not be very attractive. Capital, technology and other resource requirements The availability and access to capital, technology and other resources such as skills determine the extent to which certain opportunities can be pursued. As a general rule, the Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module more difficult the resource requirements are to obtain, the more attractive the proposition, provided of course that there is a market for the idea/product/ service. To give an example, while marketing a breakthrough product based on a patented technology is no guarantee of success, it certainly creates a formidable competitive advantage. Business environment The environment within which the business will operate has a great influence on the attractiveness of any opportunity. By business environment, we are referring not only to the physical environment, which is important and increasingly so, but also the political, economic, geographical, legal and regulatory contexts. Political instability, for example, renders business opportunities unattractive in many countries, especially for those ventures requiring high investment with a long payback period. Similarly, inflation and exchange rate fluctuations, or a weak judiciary system, are not a good environment to start a business, even if the potential returns are high. The lack of infrastructure and services (such as roads, electricity, water supply, telecommunications, transportation, and even schools and hospitals) also affect the attractiveness of an opportunity in a given environment. Business Plan The process of examining the factors discussed above is often the initial step in developing a business plan. Investors and lenders may require these issues to be considered and set out in the form of a business plan. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 5: Develop and present a business idea proposal Entrepreneurship Module; learning unit 3; learning outcomes 3.2-3.3 Objectives - By the end of the activity, participants will be able to: a. Identify tips to develop a business idea proposal b. Develop a business idea proposal c. Present a business proposal Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Handout 2.2: identify business idea, Handout 2.3: my Interests, skills and experience, Handout 3.11 Business proposal, Worksheet 3.8 Business proposal template Collect magazine pictures (optional). Steps: 1. Ask participants to think about their own business idea reviewing Handout 2.2: Identify business idea and Handout 2.3: My Interests, skills and experience. 2. Ask participants to choose individually a business idea he /she can develop 3. Divide participants into groups of 4-6 each and ask them to share chosen business ideas and ask them how they think these ideas can be successful and discuss on how to write a business proposal. 4. Give participants the time to present their work 5. Tell participants to refer to Handout 3.11 Business proposal and start writing individual business proposals using the template of business proposal shown in Worksheet 3.8 Business proposal template 6. Ask participants to present their business proposals Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 3.11: Business Proposal A business proposal is created to offer a product or service to a buyer or client. How to Write a Business Proposal A business proposal is one of the most critical documents you need to learn how to write. It is what spells the difference between success and failure. The Basics of a Business Proposal Before you even go and start writing that business proposal, you must first understand what it is and learn the basics. A business proposal is a written document that offers a particular product or service to a potential buyer or client. There are generally two kinds of business proposals: solicited business proposals (which are submitted in response to an advertisement published by the buyer or client) and unsolicited proposals (submitted or given out to potential buyers or clients even though they are not requesting for one). 3 Ps of a Winning Business Proposal The secret behind writing a winning business proposal and one that will just be set aside is the presence of what I call the 3 Ps: problem statement, proposed solution, and pricing information. Problem Statement A successful business proposal must be one that is able to describe to the client what their needs are in a plain and simple manner. This is extremely vital because how can you expect the client to believe that you can help them solve their problems if you don’t even know are these problems? Here’s an example of a well-written problem statement of a business proposal: With the presence of social media in today’s advancing world, Puffin Media Inc. hesitated to make the leap from traditional marketing to social media marketing. Their marketing tactics seem to be losing effectiveness and the company feels as if they are missing out on a large segment of their market. In addition, their competition has began acquiring the majority of the business in the market and have brought Puffin Media’s growing revenues to a halt. Proposed Solution Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module The main objective of submitting a business proposal is to offer a solution to a problem faced by a prospective client. This part should be as detailed as possible, and able to address each and every need you have discovered. Pricing Information For many clients, the pricing information is what will make them decide whether they would offer you the contract or not. How to write this part greatly depends on the solution or solutions you included in the previous segment. If the solution proposed will only entail a short period of time, a Fee Summary will suffice. For longer projects, segment these payments to specific milestones in a Fee Schedule list. Things to Remember When Writing a Business Proposal Now that you know the essentials of a winning business proposal, it’s time to go ahead and start writing.The next part is to be able to find out what to put under the 3 Ps so that you can develop a business proposal that gets their attention and awards you that contract. Do Your Research Not all clients and buyers will give you the explicit details of their wants and needs, especially if you’re submitting an unsolicited business proposal. Extend your research to include the competitors of your potential client, and their customers as well. This will ensure that your business proposal will be as comprehensive and as detailed as possible. Put Yourself in their Shoes Another thing to remember when writing a business proposal is to always put yourself in the shoes of your potential clients. Doing this will help you provide information on things that they would most likely ask, such as “Why should we pay you this much amount for the solutions you’re offering” and “How can these changes benefit me?” Why You? If you determined that a company or client has certain needs, chances are others would have done the same. That means that there will be others that have submitted their respective proposals to the company or client. That being said, it is important to make sure to highlight your talents, experience and other qualifications to convince the client why they should choose you or your company. Writing that Business Proposal When you got all of these, then you’re finally able to start writing your business proposal. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module In addition to the stored templates, you can create your own proposal templates through these programs based on previous proposals you’ve created, making it even more convenient for you and your business. A Final Word… Although business proposals present the same information and have the same layout, it’s important to take time and make each one unique. Each project is different, even if it’s with the same company. Remember, a business proposal must show how you or your company can help a potential client. What is in a proposal? The thought of writing a proposal overwhelms many people, but the task does not have to be daunting. Proposals are written when people need to ask permission to make a purchase, do a project, or write a paper; the proposal is a formal way of putting forth an idea and asking for action to be taken on that idea. What are the main activities of a business? Business activities include any activity that is engaged in for the primary purpose of making a profit. Business activities can include things like operations, marketing, production and administration. Founder of Bidsketch: http://www.bidsketch.com Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Worksheet 3.8: Business proposal template Title Page INSTRUCTIONS: The title page should include your name, the name of your company, the name of the person to whom you’re submitting your proposal, and the date submitted Table of Contents 1.0 Executive Summary INSTRUCTIONS: Summarize the your business and the products or services you provide. Take a look at your business plan's executive summary, if you need a reminder of your USP or value proposition. 2.0 Problem Statement INSTRUCTIONS: Use this section to very loosely discuss the problem/issue the client is facing Show the client that you understand their needs and fully grasp the issue they are trying to resolve. Even if you're the one pitching for the business, you still need to show you understand their needs. 3.0 Proposed Solution INSTRUCTIONS: Use this section to clearly and concisely summarize your methodology, qualifications, and (if necessary) your schedule and benchmarks. It will be helpful to write this section AFTER you have completed the sections below. 3.1 Methodology INSTRUCTIONS: Use this section to show your potential client how you intend to tackle their problem. Lay out the steps you intend to follow in order to carry out your plan. Details are important here, as is clear, concise, jargon-free writing. Don't overdo this section; after all, you want your reader to get a very clear sense of your plan. 3.2 Qualifications INSTRUCTIONS: Brag a little in this section. You're trying to convince the potential client that you're the most qualified person for the job. Mention any relevant education, industry-specific training, certifications, years of experience, or successfully completed projects that relate to what you're offering. 3.3 Schedule and Benchmarks INSTRUCTIONS: Use this topic to explain how long you expect the proposed project to take, or when deliverables will be made. Make sure you're on the same page as the prospective client so that if you win their business, both you and the client stay positive and satisfied throughout the process. Never underestimate how long it will take you to complete the project. Note: Depending on the product or service offered, you may not need this section. The business proposal format is flexible, so omit what doesn’t fit! 4.0 Pricing Estimate INSTRUCTIONS: In this section, state the cost, payment, and schedule for delivery (again, only if necessary). Also, be sure to include any legal requirements that need to be attended to. Remind your prospective client why you're the best choice. 4.1 Cost INSTRUCTIONS: Use this section to state your costs, including optional items, which will result in the overall cost of the project. 4.2 Payment INSTRUCTIONS: If you are asking for a one time payment, you may title the section “Fee Summary.” If you are asking for ongoing payments, “Fee Schedule” might be more appropriate. If the client was the one to request the business proposal, make sure to refer back to their request, to ensure you’re including everything they asked for. 4.3 Legal Matters INSTRUCTIONS: Be sure to include any legal requirements that need to be attended to, such as permits, licensing, and so on. If there’s a lot of legal information that needs handing for this project/service, you can make this a section in its own right. 4.4 Benefits INSTRUCTIONS: This is your final sell! Don’t be afraid to tell your prospective client what they have to gain by choosing you to complete the project. Remind them why you’re the best choice, and all the ways they will benefit from choosing you and your business as their preferred solution. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Learning unit 4: Run a business Session 4: Record Keeping and Financial Management Note: Session 4 has 400 minutes which should be allocated according to the objectives of the activities Key Topics Different types of basic records (receipts, cashbook, stock list…) Use of cash book Depreciation Profit and loss Balance Sheet Business Plan Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 1: Discuss reasons of keeping records Entrepreneurship Module; learning unit 4; learning outcomes 4.1 Objectives - By the end of the activity, participants will be able to: a. Discuss the necessity of record-keeping Methodology: skit, large group discussion, brainstorming Materials and Preparation: flipchart paper, markers, tape, props for skit, Trainer Tool 4.1. Record keeping Skit, Handout 4.1: Importance of Record Keeping. The day before the session begins, ask for a few volunteers. Give them a copy of the skit description. Have a few props on hand for the skit. Steps: 1. Explain to participants that this next session is going to focus on record keeping. To get us thinking about record keeping, we are going to observe a skit. Have the volunteers perform the skit (no longer than 10 min) described in Trainer Tool 4.1. Record keeping Skit. Debrief afterwards, asking: Debriefing Questions a. What happened in the skit? (The members of the cooperative did not keep records of their buying and selling. One day there was no money in the cash box to buy the coffee beans and packaging materials. Members thought that someone must be stealing.) b. Why were the group members angry? (They thought that someone was stealing the money.) c. Why did they blame the seller for keeping money? (They assumed the seller must not have given all the money to the treasurer.) d. How could this situation have been avoided? (Better record keeping – keeping track of how many kilos of coffee are sold, recording when money is put in or taken out of the cash box, etc.) e. What type of records would be useful for this cooperative? (Receipt book, cash book, inventory book...Without any sort of records, the group cannot keep track of money coming in and money going out. The person selling the coffee should record daily sales. The person buying the coffee and materials should keep track of how much they buy, store and use. The treasurer should keep a record of when money comes in from sales and when it goes out for raw coffee beans and other expenses.) f. Has anyone had experience with records before? What type? 2. Ask participants to list reasons why record keeping is important. 3. Refer participants to Handout 4.1: Importance of Record Keeping and discuss. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer Tool 4.1. Record Keeping Skit You all belong to a cooperative that processes and sells coffee. One person is primarily responsible for buying the raw coffee beans from farmers as well as packaging material; 5 people focus on cleaning, drying hulling, roasting and packaging the beans; one is responsible for selling the coffee to wholesalers and others in the market; and there is one person who is the treasurer. Selling happens quickly at certain times of the morning so the seller does not bother recording any sales. At the end of each day she just gives the money made to the treasurer, who puts it into a cash box. The person who buys the coffee beans and packaging materials gets cash from the treasurer as needed to make the necessary purchases. The treasurer does not keep track of money coming in or going out. One day the buyer asked for cash to get some more beans and materials. There was no money in the cash box however. A meeting was called to find out where the money had gone. Group members started to blame the seller, saying she was keeping money from the sales… Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.1: Importance of Record Keeping Why keep records? 1. To know how much money is received and spent and how it has been spent. 2. To calculate whether you are making a profit or loss. 3. To inform business decisions – how and when to buy materials and sell product. 4. To keep record of buying and selling on record. 5. Keeping track of money in and out will prevent misuse of money and will avoid mistrust between group members. What will others want to know about the finances of a business? Various people will want to know about the financial conditions of a business. Banks and people you have borrowed money from will want to know about the finances. Government officials / tax collectors might want to know for taxing purposes. Suppliers might not let you buy on credit if they don’t think you will be able to pay back. Specific questions they might ask include: How much do you own, how much do you owe, and how much are you worth? What was your income last year? How much of your sales are for cash and how much are for credit? What has been your collection record? What is your total “overhead” and what percentage of gross sales does it represent? What expenses do you have? What is the present value of buildings, equipment, vehicles, fixtures and other accessories? What items of inventory are the best and worst sellers? What kinds of records should a small business keep? Payroll: The owner must know the amount paid to himself or herself and to employees. Cash Balance: The owner must know how much cash is available at any given time to determine if bills can be paid. Money comes into and goes out of the firm every day, but without records entrepreneurs would not know what they can afford. Accounts Receivable: Under certain conditions, the owner extends credit to some customers. The money owed is called accounts receivable. They are important records. Without them, how would the owner know when to bill and for how much? When to Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module discontinue credit? When to make aggressive efforts to collect overdue bills? When to charge interest, if any? Accounts Payable: The amount of money owed by a business to others (such as suppliers) is called accounts payable. These bills need to be paid on time. Inventory Records: Even in a small retail business, an owner must have control of inventory. What products are selling? What products aren’t moving? Is there a good supply on hand? Government Requirements: The owner must file financial statements for tax purposes. Taxes are calculated on the profit a business earns. Even a small retail business must file certain reports. Financial Statement: At least once a year the owner should have a comprehensive financial statement on the business prepared. How well did the business do in terms of total sales? What were its expenses? What are its profits before and after taxes? What can the owner do to improve things next year? When borrowing money, entrepreneurs must present such a statement to a banker; if they want to sell their business, they must show financial statements to prospective buyers. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 2: Perform basic Record-keeping Entrepreneurship Module; learning unit 4; learning outcomes 4.1 Objectives - By the end of the activity, participants will be able to: a. Prepare basic financial records Methodology: group work, case study Materials and Preparation: sets of Trainer Tool 4.2: Income and Expenses, Handout 4.2: Basic Record-keeping Copy and cut up Trainer Tool 4.2: Income and Expenses, one set for each small group. Steps: 1. Explain that is helpful to know how to keep basic financial records so that you know how much you actually have available to spend and how much you are paying for things. 2. Divide participants into groups of 3 – 4 people each. Give each group a set of Trainer Tool 4.2: Income and Expenses. 3. Ask groups to divide these into two piles, one for Money In and one for Money Out. Review what they have in each pile and get them to move the items into the correct piles if necessary. Ask them to add up the total amounts in each pile. They may need support doing the calculations. Show them that Money In – Money Out = Money In My Pocket. 4. For more advanced participants: Give them the additional loan scenarios provided in Trainer Tool 4.2: Income and Expenses. Ask them to add a pile called Money Owed. Show them how Money In My Pocket – Money Owed = Money I Actually Own. 5. Discuss how it could be helpful for them or their families to record their finances in this way. Discussions could include: They could compare their income and expenses each week and see how they could increase or decrease these; keep records for a specific period, maybe weekly or monthly, to see what their household spends; and calculate how much they have available to spend. For more advanced participants: Ask participants to add up subcategories of food, transport and medicine under Money Out, and to discuss why it could be useful to know what they spend in each of these areas. 6. Invite participants to make notes or do their calculations in their Booklets in Handout 4.2: Basic Record-keeping Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Trainer Tool 4.2: Income and Expenses (Cut out and give a set to each group) ----------------------------------------------------------------------------------------Moto 100 ----------------------------------------------------------------------------------------Moto 50 ----------------------------------------------------------------------------------------Cell phone card 200 ----------------------------------------------------------------------------------------Food 50 ----------------------------------------------------------------------------------------Soda 50 ----------------------------------------------------------------------------------------Medicine 100 ----------------------------------------------------------------------------------------Vegetables 50 ----------------------------------------------------------------------------------------Money from selling phone cards 400 Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module ----------------------------------------------------------------------------------------Money from selling magazines 100 ----------------------------------------------------------------------------------------Money from job fixing roads 200 ----------------------------------------------------------------------------------------Money from sister in Nairobi 200 ----------------------------------------------------------------------------------------Loan from friend 100 ----------------------------------------------------------------------------------------Need to pay store for vegetables you bought yesterday 100 ----------------------------------------------------------------------------------------- Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.2: Basic Record-keeping Money In – Money Out = Money In My Pocket Money In My Pocket – Money Owed = Money I Actually Own DATE DESCRIPTION ENTRY ( MONEY IN) EXPENSES BALANCE ( MONEY OUT) TOTAL Entry (Money in) – Expenses (money out) = balance (money you have) Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 3: Budgeting Entrepreneurship Module; learning unit 4; learning outcomes 4.1 Objectives - By the end of the activity, participants will be able to: a. Explain the concept of basic budgeting b. Prepare one’s basic budget Methodology: group work, case study Materials and Preparation: sets of Trainer Tool 4.2: Income and Expenses, Handout 4.3: Basic Budgeting Reuse or copy and cut up Trainer Tool 4.2: Income and Expenses, one set for each small group. Steps: 1. Explain that: A budget is a planning tool that helps you track the money you earn and the money you spend. Budgeting is the process of planning what you spend so that it is less than what you earn. The secret to financially fit budgeting is one simple rule: Keep Money Out less than Money In. 2. Ask participants to plan for the next week of expenses using the list of their past income and expenses as follows: a. Use the same scenarios from Trainer Tool 4.2: Income and Expenses. b. Divide participants into groups of 3 – 4 people each. c. Participants can use Handout 4.3: Basic Budgeting in their Booklets to make notes for this activity. d. Ask them to decide how much they might earn in income the next week. e. Ask them to decide how much they might spend in the next week. f. Have a discussion on why they made their choices. Discuss how they could base this on what they had earned or spent before. g. Ask them to work out Money Expected In – Money Expected Out = Money You Expect To Have for the next week. For more advanced participants: Ask them how much they might loan or owe the next week. Ask them to calculate Money Expected In – Money Expected Out – Money Expect to Owe = Money You Expect To Have the next week. Explain how they might not have to subtract the total amount owed in that week if it is only due later. 3. Ask participants to work out what they may earn or spend the following week (2 weeks later). a. Mention that this is when the heavy rains are expected and they will not make as much money selling things or working. Mention that they will have to spend more on transport as it will take longer to get to places. b. After they have made their decisions, discuss whether they decreased their expected income and increased the money that would be spent on transport. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module c. For more advanced participants: Tell them that the money that they have remaining at the end of Week 1 can be added to the Money In pile in Week 2 as they will have this to spend too. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.3: Basic Budgeting A budget is a planning tool that helps you track the money you earn and the money you spend. Budgeting is the process of planning what you spend so that it is less than what you earn. The secret to financially fit budgeting is one simple rule: Keep Money Out less than Money In. Money Expected In – Money Expected Out = Money You Expect To Have Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 4. Tell participants that they will be preparing their own personal budgets. 5. Ask them to turn to Handout 4.4: My Personal Budget in their Booklets. 6. Ask them to make a list of the things that they or their household might get money from the next week under the heading Money In. Ask them to put how many Frw they expect for each. 7. Ask them to make a list of the things they or their households might spend money on in the next week under the Heading Money Out. Ask them to put how many Frw they expect for each. 8. Ask them to calculate how much they would have remaining at the end of the week: Money In – Money Out = Money Remaining. 9. Tell them that they have just prepared their first budget! 10. For advanced participants: Get them to do this for each week for a whole month. Remember to include the amount that they have left at the end of each week in the Money In for the following week. If they do not have enough to cover their expenses each week, they need to work out where they will get the money from or how to decrease their expenses. 11. Lead a discussion on how and why budgeting might be useful for the participants to do in real life. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.4: My Personal Budget Money In – Money Out = Money Remaining. Money In: Money Out: Money remaining: _____________________ Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 4 : Discuss the use of Basic Record Forms Entrepreneurship Module; learning unit 4; learning outcome 4.1 Objectives - By the end of the activity, participants will be able to: a. Identify different types of basic record forms (receipts, cashbook, stock list….) b. Discuss the use of basic record keeping forms Methodology: large group discussion, group work Materials and Preparation: flipchart paper, markers, tape, Sample 4.1: Basic Record Keeping Samples Prepare copies of each record form for 7 stations around the room. Steps: 1. Explain to participants that now we understand the importance of record keeping, we are going to take a look at different types of records. Divide participants into 7 groups. Tell them that there are 7 stations. At each station is a form of record keeping. They will spend 5 - 10 minutes at each station. Their task is to: a. Identify the type of record at the station. What type of information does it provide? b. Determine what purpose it serves. c. Think of examples of how this type of record keeping could be used. 2. Ring a bell or make a noise every 10 minutes when it is time to shift. Tell them next class they will present the form they have ended up on. -------------------------------------------------- 3. When groups have visited all of the stations, ask each group to present the last form of record keeping they have visited. Fill in any gaps and refer participants to: Sample 4.1: Basic Record Keeping Samples. Discuss the examples given for Bazizane’s Bakery and answer any further questions. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Sample 4.1: Basic Record Keeping Samples 1. Supply Order Form: When you are buying supplies from someone you should fill out a supply order form that indicates the product, price and quantity that you need. Supply Order Form Buyer’s address: ………………………………………………………….. Supply order No: ……………………………………………………………. Address of the supplier: …………………………………………….. Date No of ordered product Type of product Quantity Price for 1 unit Total Caution Buyer’s signature: ............................. Supplier’s signature: ............................. Sample 4.1.1: Supply Order Form Buyer’s address: Bazizane’s Bakery, Kabaya, Bwiza, 0788888888 Supply order No: 053/04/2014 Address of the supplier: Patrick’s Iduka, Gasabo, 077777777777 Date No of ordered product Type of product Quantity Price for 1 unit Total Caution 05/04/2014 12 Flour 8 sacks of 50 kg each 20,000 RWF per sack 160,000 RWF 32,000 RWF Buyer’s signature: Bazizane Akazi Kanoze/WDA Complementary Modules Supplier’s signature: Patrick Entrepreneurship Module 2. Receipt Form: used to record the receipt of an item or service (you give a receipt to someone when they purchase goods or services from you or you receive a receipt when you buy something from someone else) Receipt Form RECEIPT No…….. …………..FRW (in figures) I receive from…………………………………………………………………………………………………………. Amount of money (in letters)…………………………………………………………………………………. ……………………………………………………………………………………………………………………………….. Reason ……………………………………………………………………………………………………………………………………………………… Done at ……………………………………………………………Date……….………………………………………………………………………. Cashier’s name, signature and stamp Spender’s Signature Sample 4.1.2: Receipt Receipt No 5 32 000FRW (in figures) I received from Bazizane Amount of money (in letters): thirty-two thousand RWF Reason: Caution of 20% of 160,000 RWF for 8 sacks of flour at 50 kg each Done at Kigali on 5 April, 2014 Cashier’s name, signature and stamp Patrick Akazi Kanoze/WDA Complementary Modules Spender’s Signature Bazizane Entrepreneurship Module 3. Consignment Form: This form recognizes that the supplies are received. Consignment Form Consignment No: ……………………………………………………………………………….. Name of product sender: …………………………………………………………………… Place of origin: ……………………………………………………………………………………………….. Destination: ……………………………………………………………………………………………………. Type of products Transported by: ……………………… Vehicle ……………… or other means …………………………………. Date …………………………………………. Name and signature of the transporter……………………………..…. Akazi Kanoze/WDA Complementary Modules Amount Caution I receive items in good condition: Receiver: ………………………………..……… Date: …………………………………………. Receiver’s signature: …………………. Entrepreneurship Module Sample 4.1.3: Consignment Form Consignment No: 007/04/2014 Name of product sender: Patrick Place of origin: Patrick’s Iduka Destination: Bazizane’s Bakery Type of products Amount 160,000 RWF Caution 32,000 RWF 8 sacks of flour of 50 kg each Transported by: Nsengimana I receive items in good condition: Vehicle Receiver: Bazizane RAB 956 B Date 07/04/2014 Date: 07/04/2014 Name and signature of the transporter: Receiver’s signature: Nsengimana Bazizane Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 4. Invoice: An invoice is used to request payment. You would send an invoice to a customer who bought items on credit and owes you money. Invoice Form Invoice No: …………………………..consignment: ……………………………………………………………………………………………. Date: …………………………………….No of VAT …………………………………………………………………………………………………. Mr. /Madame: ………………………No of Register of commerce ……………………………………………………………………. Amount to pay (in letter): ………………………………………………………………………………………………………………………… Items Quantity Total Total Seller’s signature: ……………………………………………………………………………………………………………. Paid cash/cheque number ……………………….at ……………………. /Other means of payment…………… Remaining to be paid: …………………………………………………………………………………………………………………………….. Date to pay the balance: ………………………………………………………………………………………………………………………… Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Sample 4.1.4: Invoice Form Invoice No: 75/04/2014 consignment: 007/04/2014 Date: 07/04/2014 No of VAT: 1222221 Mr. /Madame: Bazizane No of Register of commerce: 05220 Amount to pay (in letter): 160,000 RWF Items sacks of flour Quantity 8 Total Unit Price 20,000 RWF Total 160,000 RWF 160,000 RWF Seller’s signature: Patrick Paid cash/cheque number 32,000 RWF (Receipt No 5) /Other means of payment…………… Remaining to be paid: 128,000 RWF Date to pay the balance: 09/04/2014 Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 5. Stockbook (Inventory) Form: it is important to keep track of the items you have in store and what goes in and comes out of that stock. Stockbook Form Product/ Item : ------------------------------------------------Unit of measurement: ----------------------------------------No Date Description Price per unit Entry in stock Going out Stock balance Sample 4.1.5: Stock book Form Product/ Item : Flour Unit of measurement: Sacks (50kg/sack) No Date Description Price per unit Entry in stock Going out Stock balance 01 06/04/2014 - - - - 2 02 07/04/2014 flour from Patrick’s Iduka, Invoice No 75/04/2014 20,000 RWF 8 - 10 03 09/04/2014 flour from Patrick’s Iduka, Invoice No 75/04/2014 20,000 RWF - 1 9 04 Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 6. Accounts Receivable and Accounts Payable Forms: When the owner extends credit to some customers, the money owed is called accounts receivable. The form lets you know who owes you how much. The amount of money owed by a business to others (such as suppliers) is called accounts payable. These bills need to be paid on time. Debtor (Account Receivable) Form Debtor ‘ s name : ……………………………………………………….. Date Description No of Amount Amount Amount When Debtor’s of the receipt of debt paid remaining to be or transaction or other paid refunder’s document signature Sample 4.1.6: Debtor (Account Receivable) Form for Bazizane’s Bakery Debtor ‘ s name: Dusabe Date Description of the transaction Bought 10 loaves of 05/04/2014 bread on credit No of receipt or other document Amount of debt Amount paid Amount remaining When to be paid Debtor’s or refunder’s signature Invoice No: 19/04/2014 3,500 0 3,500 09/04 /2014 Dusabe Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Creditor (Account Payable) Form for Bazizane’s Bakery Creditor’ s name : ___________________ Date Description No of of the receipt transaction /Invoice Credit received When to pay Amount refunded Amount remaining Sample 4.1.7: Creditor (Account Payable) Form for Bazizane’s Bakery Creditor’ s name : Patrick Date Description No of of the receipt transaction /Invoice Bought 8 sacks of 05/04/2014 flour Credit When to received pay Invoice No: 160,000 75/04/2014 Akazi Kanoze/WDA Complementary Modules Amount refunded 09/04/2014 0 Amount remaining 160,000 Entrepreneurship Module 7. Cash Book: used to record cash receipts and payments (money in and money out) Entry (Money in) – Expenses (money out) = balance (money you have) Cash Book Form DATE DESCRIPTION TOTAL Akazi Kanoze/WDA Complementary Modules ENTRY ( MONEY IN) EXPENSES BALANCE ( MONEY OUT) Entrepreneurship Module Sample 4.1.8: Cash Book Form for Bazizane’s Bakery DATE 01/04/2014 02/04/2014 03/04/2014 04/04/2014 05/04/2014 05/04/2014 06/04/2014 07/04/2014 09/04/2014 09/04/2014 10/04/2014 DESCRIPTION Sold 100 loaves of bread Sold 75 loaves of bread Bought 2 kg sugar Paid caution for 8 sacks of flour Bought eggs Sold 40 cakes Sold 50 loaves of bread Withdrawal from Umurenge SACCO Paid Patrick for 8 sacks flour Sold 50 loaves of bread TOTAL Akazi Kanoze/WDA Complementary Modules ENTRY ( MONEY IN) EXPENSES BALANCE ( MONEY OUT) 35,000 26,250 1,400 32,000 2,100 4,000 14,000 160,000 160,000 14,000 100,000 135,000 161,250 159,850 127,850 125,750 129,750 143,750 303,750 143,750 157,750 157,750 Entrepreneurship Module Activity 5: Fill up a Cash Book Entrepreneurship Module; learning unit 4; learning outcomes 4.2 Objectives - By the end of the activity, participants will be able to: a. Fill Properly record transactions in a sample cash book Methodology: large group discussion, individual/partner work (cash book exercise) Materials and Preparation: flipchart paper, markers, tape, Handout 4.5: Cash Book Exercise, Trainer Tool 4.3: Cash Book Exercise (Answers) Steps: 1. Explain to participants that since cash books provide a written record for money coming in and money going out of a business, we are going to practice filling one in. Money comes into a business primarily by selling goods or services, and money goes out of a business to pay for goods, raw materials, labor, rent, electricity and other business expenses. Remind participants that financial records can help entrepreneurs to: - keep control of cash - know how well the business is doing - show others, such as the banks, how well the business is doing - plan for the future. 2. Have participants turn to Handout 4.5: Cash Book Exercise. Working in pairs, have them fill out the cash book form given the information provided. 3. Review answers together and answer any questions. Suggest to participants that as a homework assignment they create their own cashbook and fill in a few entries for this month. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.5: Cash Book Exercise John has owned a carpentry shop for the past three years and now wants to improve his production. He was able to get a bank loan on January 23. Below is a list of transactions for his business between January 23 and February 4. If John had 75,000 cash in the business on January 23, how much cash will he have on February 4? Date 23/01 23/01 24/01 24/01 24/01 25/01 25/01 28/01 28/01 28/01 31/01 31/01 2/02 2/02 3/02 3/02 4/02 4/02 4/02 Transaction Balance as of Jan 23 Receives cash loan Paid rent Purchased wood planks Sold 2 chairs Purchased 2 kg. nails Sold 2 small tables Sold 4 chairs Paid assistant Paid health insurance Sold Repaired table Paid carpentry factory for shaping pieces of wood Purchased air time Sold large table Brought cash to bank Sold 2 chairs Bought glue Sold 1 small table Ending Balance Akazi Kanoze/WDA Complementary Modules (Credit) Money In (+) (Debit) Money Out (-) Current Balance 75,000 100,000 30,000 50,000 14,000 4,000 30,000 28,000 10,000 3,000 2,000 3,000 1,000 20,000 75% of total 14,000 5,000 15,000 Entrepreneurship Module Trainer Tool 4.3: Cash Book Exercise (Answers) Date 23/01 23/01 24/01 24/01 24/01 25/01 25/01 28/01 28/01 28/01 31/01 31/01 2/02 2/02 3/02 3/02 4/02 4/02 4/02 Transaction Balance as of Jan 23 Receives cash loan Paid rent Purchased wood planks Sold 2 chairs Purchased 2 kg. nails Sold 2 small tables Sold 4 chairs Paid assistant Paid health insurance Sold Repaired table Paid carpentry factory for shaping pieces of wood Purchased air time Sold large table Brought cash to bank Sold 2 chairs Bought glue Sold 1 small table Ending Balance (Credit) Money In (+) 100,000 30,000 50,000 100,000 14,000 4,000 14,000 30,000 28,000 10,000 3,000 30,000 28,000 2,000 3,000 2,000 1,000 20,000 75% of total Akazi Kanoze/WDA Complementary Modules 14,000 5,000 15,000 (Debit) Money Out (-) 30,000 50,000 75,000 175,000 145,000 95,000 4,000 109,000 105,000 10,000 3,000 135,000 163,000 153,000 150,000 3,000 152,000 149,000 1,000 20,000 126,000 14,000 5,000 15,000 Current Balance 148,000 168,000 42,000 56,000 51,000 66,000 66,000 Entrepreneurship Module Activity 6: Discuss Profit and Loss Statement Entrepreneurship Module; learning unit 4; learning outcomes 4.2 Objectives - By the end of the activity, participants will be able to: a. Identify the elements and importance of a profit and loss statement b. Discuss profit and loss statement Time Required: Methodology: large group discussion, small group work Materials and Preparation: flipchart paper, markers, tape, Handout 4.6: Profit and Loss Statement, Handout 4.7: Profit and Loss Statement for Bread Baking Cooperative, Handout 4.8: Profit and Loss Statement for Bread Baking Cooperative (answers) For Month Ending 31 July 2011 Write the Information for Bazizane’s Profit & Loss Statement for July so all can see. Steps: 1. Explain to participants that financial statements help business owners assess their performance. One such statement is the profits and loss statement, or income statement. The profit and loss statement can be calculated for a given time period – one month, three months or a year for example. Ask participants if they have created such a statement or have heard of it. 2. Divide participants into small groups. Have them turn to Handout 4.6: Profit and Loss Statement. Ask them to go through it. 3. Discuss the Profit and Loss Statement for the ABC Flower Shop. Ask if all the categories are familiar to them. Ask them what type of financial records will help them create a Profit and Loss Statement (stock/inventory records, cash book, accounts receivable and payable, etc.). Ask why this profit and loss statement is important (tells you if you are operating at a profit or loss, can be used to obtain loans from banks, etc.) -------------------------------------------------- 4. Tell participants that in pairs they will now create a profit and loss statement for the bread baking cooperative for the month of July. Use the following information (write it so all can see) and Handout 4.7: Profit and Loss Statement for Bread Baking Cooperative. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Information for Bread Baking Cooperative’s July Profit & Loss Statement Cash Sales: 710,000 Credit Sales: 100,000 Beginning Inventory: 200,000 Rwf (flour) Purchases: 451,233 (raw materials) Ending Inventory: 100,000 Expenses - salaries: 60,000; loan repayment: 22,917; depreciation*: 6,250; power: 15,000; water: 5,000; telephone: 3,000; rent: 30,000, monthly tax: 63,000 Tax rate: 20% * Explain the concept of depreciation if learners are not familiar with it. Equipment loses its worth as time goes on. Parts wear out or need replacing, etc. There are different percentage rates of depreciation for different types of items, depending on their life span. Investment Item Buildings Basic Equipment Computer Lifespan 20 4 2 Depreciation (in %) 5 25 50 For example, a computer purchased at 560 000 Rwf would depreciate each year by 560 000 X .5 = 280 000 Rwf. 5. After 30 minutes, ask pairs to share their results with one another. Did they end up with the same net profit after tax? Go over the problem together if participants are having difficulties with the calculations. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.6: Profit and Loss Statement A profit and loss statement helps to determine whether a business is operating at a profit or a loss for a given time period of one month to one year. There are five specific steps to calculating the profit and loss statements: 1. Sales: including sales for cash and credit 2. Cost of Goods Sold: this is the price paid by the business for merchandise sold; it can be computed by adding the value of the goods purchased during the period to the initial stock, and then subtracting the value of the stock on hand at the end of the period. 3. Gross Profit: calculated by subtracting the cost of goods sold from sales 4. Expenses: this includes labor costs and other costs of operating the business 5. Net Profit: amount remaining when the expenses are deducted from the gross profit. This figure will indicate whether you are operating at a profit or a loss. Here is an example of a profit and loss statement for the ABC FLOWER SHOP for the month of July. The net profit for July is 7,000. Remember that if the business is registered, the owner will have to pay taxes on the profit. Profit and Loss Statement for ABC Flower Shop for Month Ending July 31, 20___ Sales Cash Sales Credit Sales Total Sales 60,000 20,000 Beginning Inventory Purchases Cost of Goods for Sale Less Ending Inventory Cost of Goods Sold 18,000 50,000 68,000 80,000 Cost of Goods Sold 8,000 60,000 Gross Profit 20,000 Expenses Salaries/Wages Electricity Advertising Other Expenses Total Expenses Net Profit Before Taxes Estimated Tax Estimated Net Profit After Tax Akazi Kanoze/WDA Complementary Modules 8 000 2 000 1 500 1 500 13,000 7,000 2,000 5,000 Entrepreneurship Module Handout 4.7: Profit and Loss Statement for Bread Baking Cooperative For Month Ending 31 July 2011 Sales Cash Sales Credit Sales Total Sales Cost of Goods Sold Beginning Inventory + Purchases = Cost of Goods for Sale - Less Ending Inventory = Cost of Goods Sold Gross Profit Expenses Salaries/Wages Monthly sector tax Rent Telephone Water Power (firewood) Depreciation of oven Loan payment Total Expenses Net Profit Before Taxes Estimated Tax (20%) Estimated Net Profit After Tax Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.8: Profit and Loss Statement for Bread Baking Cooperative (answers) For Month Ending 31 July 2011 Sales Cash Sales Credit Sales Total Sales 710,000 100,000 Beginning Inventory + Purchases = Cost of Goods for Sale - Less Ending Inventory = Cost of Goods Sold 200,000 451,233 651,233 100,000 810,000 Cost of Goods Sold 551,233 Gross Profit 258,767 Expenses Salaries/Wages Monthly sector tax Rent Telephone Water Power (firewood) Depreciation of oven Loan payment Total Expenses Net Profit Before Taxes Estimated Tax (20%) Estimated Net Profit After Tax Akazi Kanoze/WDA Complementary Modules 60,000 10,000 30,000 3,000 5,000 15,000 6,250 22,917 152,167 106,600 21,320 85,280 Entrepreneurship Module Activity 7: Discuss elements and use of The Balance Sheet Entrepreneurship Module; learning unit 4; learning outcomes 4.2 Objectives - By the end of the activity, participants will be able to: a. Define assets, liability and net worth of a balance sheet b. Discuss d the importance and use of the balance sheet Time Required: Methodology: large group discussion, pair work/group activity Materials and Preparation: flipchart paper, markers, tape, Handout 4.9: Balance Sheet of Arts and Crafts Cooperative, Steps: 1. Explain to participants that another financial statement that helps business owners assess their performance is the balance sheet. Ask participants if they have created such a statement or have heard of it. Explain that a profit and loss account records the flows of money coming into and out of the business over a period of time. This is a useful document for a business to see how it is performing. A balance sheet is quite different. A balance sheet records the assets and liabilities of a business at a particular point in time. 2. Explain that there are three key pieces of a balance sheet: assets, liabilities and net worth. Assets include everything a business owns, such as cash, equipment, buildings and inventory. Liabilities include anything that the business owes such as loans, credit notes, taxes and mortgages. One’s net worth is what would remain if you closed your business and paid back what you owed – the owner’s capital and the reinvested profits would make up your net worth. Assets land, building and equipment accounts receivable (customers’ debts) stocks (items to be sold, raw material…) cash (in bank, in cash box) Liabilities own money (owner’s capital) money given by friends/family/sponsor bank loans accounts payable (credit from supplier or others) 3. Go through an example together, from an arts and crafts cooperative in Handout 4.9.: Balance sheet of Arts and Craft Cooperative Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.9: Balance Sheet of Arts and Crafts Cooperative: Assets Liabilities Building 8 000 Rwf Owners’ Capital 50 000 Rwf Equipment 50 000 Rwf Money from Sponsors 30 000 Rwf Stocks (art supplies & items) 80 000 Rwf Bank Loan 100 000 Rwf Accounts Receivable 15 000 Rwf Accounts Payable (credits from suppliers) 20 000 Rwf Money in Bank 50 000 Rwf Cash in Cash Box 10 000 Rwf Reinvested Profit 13 000 Rwf Total Assets: 213 000 Rwf Total Liabilities: 213 000 Rwf The balance sheet is a financial statement which indicates what you own and what you owe on any given day in the life of a business. The financial figures on the balance sheet change from day to day because money is always coming in and going out of the business. A primary reason for preparing a balance sheet is to determine if the business is making a profit or a loss. The formula used to prepare a balance sheet is: Assets = Liabilities + Net Worth Assets: These include everything a business owns, such as cash, equipment, buildings and inventory. Liabilities: These include anything that the business owes. Liabilities might include loans, credit notes, taxes and mortgages. Net Worth: This is what is actually owned by the business after subtracting liabilities. It represents the initial investment of the owners and retained earnings. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Activity 8: Make a Business Plan Entrepreneurship Module; learning unit 3, 4; learning outcomes 4.3 Objectives - By the end of the activity, participants will be able to: a. Identify elements of a business plan b. Make their own business plans Time Required: Methodology: large group discussion, individual Materials and Preparation: flipchart paper, markers, tape, Handout 4.10: Business Plan Template, Handout 4.11: Marketing plan Steps: 1. Explain to participants that now it is time to put together their own business plan! Emphasize that many of the parts have already been written through the work they have done in the previous sessions. 2. Tell participants they will use the business plan template in Handout 4.10: Business Plan Template in their Booklets to write their own plans. They have already done a lot of the work in the previous sessions so should refer back to those activities for the information (for example, the marketing plan information will come from Handout 4.11: Marketing Plan). Read through each section with them and give them time to fill out the information. Remind them to go back to previous sessions for some of the information (and to revise it as necessary). If learners are moving at different rates, the quicker ones can move on to the next section. Move around the room to check everybody’s work and answer any questions. -------------------------------------------------- 3. Have participants share their business plan with a partner. They should exchange feedback on ways to improve the plan. Then they can revise their plans. 4. Congratulate everybody for writing their very own business plan! 5. Have participants to take the self-assessment again to see how much they have learned since the beginning of the module. 6. Give learners the end of module assessment found at the end of the module. Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.10: Business Plan Template Name of Business: Entrepreneur’s Name: Address: Mobile Phone: Date: Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 1. Business Information: Name of business: ________________________________________ Starting date: __________________________________ Business location: District __________________________________ Sector __________________________________ Cell __________________________________ Village __________________________________ 2. Entrepreneur’s Information: Name: __________________________________ District __________________________________ Sector __________________________________ Cell __________________________________ Village __________________________________ 3. Description of the business idea and market: Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Handout 4.11: Marketing plan 1. Product/Service Description: 2. Customer Description (Who will buy the product/service? How many customers might be served in a day/week/month?): 3. Demand or Need for the Product/Service: Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module 4. Competition (Who are the competitors? How does the product / service compare in quality and price to those of competitors? What is my competitive edge?): 5. Current Production of Product by Competitors (Is it possible to estimate how much of the product is currently being sold? What share or percent of the market can be captured by my business?): 6. Price (What is the selling price of the product? product/service?): Akazi Kanoze/WDA Complementary Modules At what price will my business sell the Entrepreneurship Module 7. Business Location (Where will the business be located? Is the location accessible to clients?): 8. Promotion / Advertisement (How will the product/service be promoted or advertised): Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module Start-Up Costs: N o Investment Capital (land, equipment, building…) Working capital (labor cost, transport cost, supplies, … for first month of operation) Total Akazi Kanoze/WDA Complementary Modules Quantity Unit price Total Entrepreneurship Module Sources of Capital: Source Description & Conditions Amount Equity capital (own savings, family contribution, partner) Equity Total: Loan (Family , friends, money lender, credit cooperative, government scheme, bank loan) Loan Total: Equity & Loan Total: Akazi Kanoze/WDA Complementary Modules Entrepreneurship Module SALES PLAN: No Product or Services Unit Price Quantity (1 mo) Turnover Quantity (1 mo) (3 mo) Turnover Quantity (3 mo) (6 mo) Turnover = unit price x quantity One year turnover(multiply one month turnover x 12): Cash in from other operations: ESTIMATED ANNUAL COST: Category Amount Staff Costs: Material Costs: Other Costs: Taxes Rent Telephone Water Power Total Operating Costs: Capital Costs loan (plus interest) depreciation Total Capital Costs: TOTAL COSTS (Operating + Capital) Akazi Kanoze/WDA Complementary Modules Turnover (6 mo) Entrepreneurship Module ESTIMATED PROFIT MARGIN: Cash In and Cash Out A. Cash in Cash in from sales Inventory (in store) Others Total A B. Cash out Operating cost Taxes Depreciation Loan and interest owed Other cost Total B Profit estimation : A - B Akazi Kanoze/WDA Complementary Modules Amount Entrepreneurship Module OPENING BALANCE SHEET: Balance Sheet Date:____________ 20___ Assets Items Liabilities Amount Total Assets: Akazi Kanoze/WDA Complementary Modules Items Total Liabilities: Amount Entrepreneurship Module Trainer’s Manual Learning unit 4: Run a business Session5: Financial Fitness Note: Session 5 has 200 minutes which should be allocated according to the objectives of the activities Key Topics Needing Money - We have different needs for money that change at different stages of life. Accessing Money - We need to plan how to get money for the things that we need. - We can get money by borrowing, saving and working to earn money. Becoming Financially Fit - We need to develop good habits to stay financially fit. - It is sometimes hard to tell whether people are financially fit or not. Decreasing Spending - Rich and poor people can waste money if they are not careful. - You can save money by practicing the Four Habits of Saving Money: Reduce, Reuse, Repair, Recycle. - Akazi Kanoze/WDA Complementary Modules Page 143 Entrepreneurship Module Trainer’s Manual Activity 1: Describe Needs for Money Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives: By the end of the activity, participants will be able to: c. Identify the things they need money for d. Describe how the things they need money for change as their life stages change Methodology: small group discussion, brainstorming, large group discussion Materials and Preparation: flipchart paper / board, markers, Handout 5.1: What I Need Money For, Handout 5.2: Different Stages of Life Collect magazine pictures (optional). Steps: 1.Ask participants to think of things that they personally need money for. Tell them to record their answers in their Booklets in Handout 5.1: : What I Need Money For. 3. Write the following stages of life on the board: Primary school; High school; Looking after children and a family; Running a business in town; When they are much older. Ask participants what different things are that they may need money for at each stage of life. Tell them to record their answers in their Booklets in 5.2 : Different Stages of Life. Responses could include: Primary school: Mattress, transport home, bicycles, toys, food High school: Music, school books, soccer ball, soap, blankets Looking after children and a family: School fees, medicine, furniture, food, radio, cell phone minutes, clothes, newspaper Running a business: Transport, office rental, products to sell, advertising poster When they are much older: Medicines, travel expenses to visit families. Trainer Tip Optional: You could bring in magazine pictures of different items that participants could need money for over the course of their lives and do the activity using these. 4. Ask the participants to discuss why the money they need at each stage of life is different. Make sure that participants realize that they will have different needs as they grow older, with the things they need often becoming more expensive, especially as they start to look after themselves and others and have less people looking after them. Akazi Kanoze/WDA Complementary Modules Page 144 Entrepreneurship Module Trainer’s Manual handout 5.1. What I need money for Akazi Kanoze/WDA Complementary Modules Page 145 Entrepreneurship Module Trainer’s Manual Handout 5.2: Different Stages of Life Primary school High school Looking after children and a family Running a business in Kigali Getting much older Akazi Kanoze/WDA Complementary Modules Page 146 Entrepreneurship Module Trainer’s Manual Activity 2: Plan for ways to access money Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives - By the end of the activity, participants will be able to: a. Make plans on how to get money for the things they need. b. Distinguish between the various ways of accessing money, including borrowing, saving and working to earn money. Methodology: small group discussion, brainstorming, prioritizing, role-playing (optional), large group discussion Materials and Preparation: flipchart paper / board, markers, sets of 15 blank pieces of paper per group, sets of 4 blank pieces of paper per group, Handout 5.3 Ways to Get Money, Handout 5.4: Financially Fit Person Prepare blank pieces of paper, approximately 15 per group (A4 paper divided into quarters). Prepare blank pieces of paper, 4 per group (A4 paper divided into quarters). Steps: 1. Divide participants into groups of 4 – 5 people each. 2. Give approximately 15 small blank pieces of paper to each group and ask participants to draw pictures of things they might need money for on each piece of paper, one item per paper. 3. Write these two categories on the board: Money, You Have Now Need to Save for or Borrow Ask participants to organize the things they need money for into two groups. One group is for the items that they could pay for right now as they have the money in their pocket, or somewhere safe, or are about to earn money to pay for it. The other group is for the items that they need to save or borrow for when they do not have money for it immediately. The items that they put into the “Money You Have Now” group should be the items that do not cost as much and which people generally have cash for immediately. 4. Explain that we often need something now that we do not have enough money to pay for. Ask participants what our options are in this situation. Ask for real life examples of how people get money to pay for something that they cannot afford immediately, starting with examples of Saving, then of Working, then Borrowing. This allows participants to visualize a tangible example of each of the ways to access money. Tell them to record their examples in their Booklets in section Handout 5.3 Ways to Get Money. Responses could include: - Saving: Save in a bank; Save under your mattress; Save in a community savings Akazi Kanoze/WDA Complementary Modules Page 147 Entrepreneurship Module Trainer’s Manual group - Working: Work in a job that pays a salary or wage; Earn money from part time work; Start a business - Borrowing: Borrow from family members; Take out a bank loan; Borrow from a community savings group - Other ways to access money: Buy on credit; Apply for a grant or scholarship; Receive gifts of money. 5. Give 4 blank pieces of paper to each group and ask participants to write the following words on the paper, one word per paper: Ask each group to decide which is the best way to access money, and to organize the four words in order of the best to the worst way of accessing money. This may take some discussion and debate! If they had thought of other ways to access money they can write these on other pieces of paper and add them to their discussions (do not include examples of illegal ways to get money). borrow save work other Note: There are no right and wrong answers, and the learning is not about getting the cards into a “right” order. What is most important is that participants realize that there are advantages and disadvantages of each way of accessing money, and that these depend on how much is needed, how soon it is needed, what it is needed for, etc. Have a discussion on this. Akazi Kanoze/WDA Complementary Modules Page 148 Entrepreneurship Module Trainer’s Manual Handout 5.3 Ways to Get Money Save until we have enough money Borrow money to pay for it Buy it on credit (get it now but pay for it later) Work to earn the money Akazi Kanoze/WDA Complementary Modules Page 149 Entrepreneurship Module Trainer’s Manual Handout 5.4: Financially Fit Person Physical Fitness Financial Fitness Habits of a physically unfit person: Habits of a financially unfit person: 1) Eats only unhealthy food for every meal. 1) Spends money on unnecessary things. ___ 2) __________________________________ 2) __________________________________ 3) __________________________________ 3) __________________________________ 4) __________________________________ 4) __________________________________ 5) __________________________________ 5) __________________________________ 6) __________________________________ 6) __________________________________ Habits of a physically fit person: Habits of a financially fit person: 1) Eats fruits and vegetables every day. ___ 1) Saves a set amount of money every week. _ 2) __________________________________ 2) ___________________________________ 3) __________________________________ 3) ___________________________________ 4) __________________________________ 4) ___________________________________ 5) __________________________________ 5) ___________________________________ 6) __________________________________ 6) ___________________________________ Akazi Kanoze/WDA Complementary Modules Page 150 Entrepreneurship Module Trainer’s Manual Activity 3: Describe ways of Decreasing Spending Entrepreneurship Module; learning unit 4; learning outcomes 4.3 Objectives - By the end of the activity, participants will be able to: a. Describe ways that they waste money b. Describe ways to cut costs through reducing, recycling, repairing, and reusing Methodology: large group discussion, drawing or singing (optional) Materials and Preparation: Trainer Tool 5.1: Spending Money’ Scenarios, Handout 5.5: Ways We Waste Money, Handout 5.6: Four Habits to Cut Costs flipchart paper / board, markers, materials for poster making Copy and cut out one copy of Trainer Tool 5.1: Spending Money Scenarios. Collect examples of items that can be repaired, reduced (used less of), recycled, and reused to the classroom. Organize materials needed for poster-making (paper, markers, things to stick on posters, pairs of scissors). Steps: 1. Tell participants: “It’s easy to think that only rich people waste money. After all, rich people have lots of money, so it’s easier for them to spend it on things that they do not really need. But is this really true? Can we tell whether a person is wise or wasteful with their money just by finding out how poor or how rich they are? Or is being wasteful an attitude toward money that anyone can have, no matter how rich or poor they are? Let’s find out.” 2. Ask participants to select one of the Trainer Tool 5.1: Spending Money’ Scenarios from your hand and read it to the class. After each one, ask how many participants know people who have spent money in this way. Ask participants if they think these are good ways to spend money or a waste of money? Why or why not? - Paying for transport on a moto when you could have walked. - Buying a soda when you had enough water to drink. - Buying a new pair of shoes when your old shoes are good enough. - Buying new clothes when you have enough old clothes. - Buying expensive clothes to be fashionable and popular. - Spending all your money on cell phone airtime to talk with friends. - Paying for an expensive haircut, when a cheaper haircut is as good. Note: There are no right or wrong answers. It is very important that they are encouraged to realize that no one is perfect, and that it is okay to say that we have all been wasteful in some way. The key is to realize that we need to know when we have been wasteful to know how we can then improve! The learning comes from the debates and discussions that the participants have in determining whether the items listed are wasteful and which are the most wasteful. 3. Ask participants to give other examples of ways in which they waste money and to write or draw these in their Booklets in Handout 5.5: Ways We Waste Money. Akazi Kanoze/WDA Complementary Modules Page 151 Entrepreneurship Module Trainer’s Manual Responses may include: - Buying fruit and vegetables at a store close by when a store further away may have them at a cheaper price - Buying expensive gifts for people which they do not need - Spending money on cakes that they do not need 4. Explain that one of the ways almost everyone wastes money is by not practicing the Four Habits to Cut Costs. Write the following words on the board: Reduce, Reuse, Repair, Recycle. Tell participants to turn to Handout 5.6: Four Habits to Cut Costs in their handbooks. Ask participants to think of examples of each of the money saving habits and to write these or draw pictures of them in their Booklets in Handout 5.7: My Plan to Cut Costs: Reduce (Reducing the quantity of something being used): What can you use less of to save money? Reuse (Reusing items that are still in good condition rather than buying new ones): What can you use again to save money? Repair (Fixing things that may be broken, but if given a little time and energy, can be made useful again): What can you repair to save money? Recycle (Taking old, used materials and giving them new life as a different or slightly altered product): What waste items can you make useful in order to save or make money? Responses could include: Reduce - Turn off lights or lamps in the house, or blowing out candles, to reduce energy consumption - Use only as much soap and water as you need to get clean, rather than wasting soap and water Reuse - Reuse bags to carry items at the market Trainer Tip and to carry other materials, such as school supplies or to protect papers. Bring examples of things - Reuse plastic oil jugs or water jugs to that can be recycled, carry other liquids. repaired, reused or Repair reduced (used less of) as - Sew old clothing or resole a shoe. examples for the - Repair a watch rather than buying a participants to see. new one. Recycle - Use scrap metal to make stoves or implements. 5. For more advanced participants: Discuss how much they could save in each example. See if they can estimate how much they would save over a month, and then a year. Akazi Kanoze/WDA Complementary Modules Page 152 Entrepreneurship Module Trainer’s Manual 6. Divide participants into groups of 3 – 4 participants each. Ask each group to prepare a poster that has pictures and words that tell people to use the Four Habits to Cut Costs and give examples of what some of the Habits are. Alternatively, ask participants to prepare a song about the Four Habits to Cut Costs and to sing this to the rest of the participants. If the posters or songs are particularly good, you may be able to find another way to display or perform these to a wider audience, even to the community as a whole. 7. For more advanced participants: Youth could start a project where they look at how your organization can reduce costs by implementing some of the Four Habits to Cut Costs. Akazi Kanoze/WDA Complementary Modules Page 153 Entrepreneurship Module Trainer’s Manual Trainer Tool 5.1: Spending Money’ Scenarios (Cut out and ask participants to select one) ----------------------------------------------------------------------------------------Paying for transport on a moto when you could have walked. ----------------------------------------------------------------------------------------Buying a soda when you had enough water to drink. ----------------------------------------------------------------------------------------Buying a new pair of shoes when your old shoes are good enough. ----------------------------------------------------------------------------------------Buying new clothes when you have enough old clothes. ----------------------------------------------------------------------------------------Buying expensive clothes to be fashionable and popular. ----------------------------------------------------------------------------------------Spending all your money on cell phone airtime to talk with friends. ----------------------------------------------------------------------------------------Paying for an expensive haircut, when a cheaper haircut is as good. ----------------------------------------------------------------------------------------- Akazi Kanoze/WDA Complementary Modules Page 154 Entrepreneurship Module Trainer’s Manual Handout 5.5: Ways We Waste Money Akazi Kanoze/WDA Complementary Modules Page 155 Entrepreneurship Module Trainer’s Manual Handout 5.6: Four Habits to Cut Costs RE-USE REPAIR (Reusing items that are still in good condition rather than buying new ones) (Fixing things that are broken, but if given a little time and energy, can be made useful again) What can you use again to save money? What can you fix to save money? RECYCLE REDUCE (Taking old, used materials and giving them new life as a different or slightly altered product) (Decreasing the quantity of something being used) What can you use less of to save money? What waste items can you make useful in order to save or make money? Akazi Kanoze/WDA Complementary Modules Page 156 Entrepreneurship Module Handout 5.7: Akazi Kanoze/WDA Complementary Modules Trainer’s Manual My Plan to Cut Costs Page 157 Entrepreneurship Module Trainer’s Manual Session 6: Managing Debt Key Topics Introduce the concept of debt? - Debt is the amount of money that we owe someone. - Before getting into debt, we must realize the risks that come with it. Manage debt - There are several strategies to manage debt. • Giving Advice to Others on financial fitness Key Financial Fitness messages include: Start saving; Draw up a budget so that you can plan what you spend; Be careful of taking a loan until you know how much it will actually cost; Don’t waste money; Remember to Repair, Reuse, Recycle and Reduce when possible; Keep track of your expenses. Akazi Kanoze/WDA Complementary Modules Page 158 Entrepreneurship Module Trainer’s Manual Activity 1: introduce the concept of Debt Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives - By the end of the activity, participants will be able to: a. Explain clearly the concept of debt b. Share experience on getting into debt c. Identify situations/ things they can get into a debt for Methodology: large group discussion Materials and Preparation: flipchart / board, markers Review the facilitation guidelines. Steps: 1. Explain that: ‘Debt’ is what you owe someone, or what someone owes you. You could owe them some of your time to help them to do something. An example is that you could have promised someone that you would help him or her to wash clothes or grow food. You then owe them the time to help with these tasks. You could also owe someone money. This could be because you borrowed money from them or bought something from them that you have to pay back later. The amount of money that you owe them is the amount of debt that you have. 2. Ask participants: “Do you owe anyone money? Why do you owe them money? How much do you owe them? Share examples of your “debt” with the rest of the class.” 3. Ask participants: “Are there other people that you know that owe money to someone? What are the kinds of things they owe money for?” Tell them to share these examples with the rest of the class and write or draw at least five examples in their Booklets in Handout 7.1: Things I could owe money for.” Handout 7.1: Things I could owe money for Akazi Kanoze/WDA Complementary Modules Page 159 Entrepreneurship Module Trainer’s Manual Activity 2: Manage Debt Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives - By the end of the activity, participants will be able to: a. Analyze the reasons/situations of getting into a debt b. Suggest strategies of managing a debt Methodology: group work, prioritizing, large group discussion Materials and Preparation: None Cut out the Trainer Tool 7.1: Tempted to get into Debt Scenarios and make more copies if needed for larger class sizes if small groups will be used. Copy and cut out the Trainer Tool 7.2: ‘How to Manage Debt’ Strategies, one set per small group. Steps: 1. Explain that: Not all debt is bad. If you can manage debt well, then you can use it to help you in many ways. A better question is how do you spend, do u spend wisely? The higher the price the more time you should take to decide whether to spend or not. If you take the time to think through all your financial decisions, you can avoid getting into too much debt. And if you choose to borrow money, you can do so carefully. These are some of the most important things to being financially fit. 2. The situations in Trainer Tool 7.1: Tempted to get into Debt Scenarios describe reasons that participants may be tempted to get into debt because each one would cost some money to do. a. Give these examples to the participants, either several per small group, or one to individual participants in the large group. b. Ask participants to read out the scenario to their groups or to the class as a whole and discuss each situation one at a time by asking the following questions. Ask participants to turn to Handout 7.2 : Managing Debt in their Booklets, which lists the questions and has space for writing notes. How tempting is this reason for getting into debt? Is this a good (wise) or bad (unwise) reason for getting into debt? What will you have to do to make the money to pay back this debt? How long will it take you to pay back this debt? What could you do instead or ways to avoid getting into this debt? c. You could add additional examples or ask participants for examples and write these on cards, and ask the participants to discuss these too. d. There are no right or wrong answers but it is important to look at several perspectives for each example. Responses may include: - Your friends have all bought new bicycle parts and you are feeling left out: This seems very tempting as peer pressure is involved. This might not be a good reason to get into debt as there is no long-term benefit, especially if your bicycle can work well without the new parts. Alternatively, you may decide to buy a seat for the back carrier, and can make some income by giving people lifts around the community. Akazi Kanoze/WDA Complementary Modules Page 160 Entrepreneurship Module - Trainer’s Manual You see a radio on special for a great price: This seems very tempting as it is on special and you might feel it is a good deal, but it seems less of a good reason to get into debt as you may not need a radio. You could avoid getting into debt over this by simply buying a smaller radio, obtaining an older, second-hand one at a lower price, or listening to someone else’s radio! 3. Tell participants that they are going to explore several strategies to help them to get out of debt. a. Divide participants into groups of 4 – 5 people each and give each group a full set of the Trainer Tool 7.2: ‘How to Manage Debt’ Strategies. b. Tell participants to rank the methods of getting out of debt by putting the most important method at the top of the list and the least important at the bottom. c. Ask each group to share what they decided and why. d. Note: There are no right or wrong answers. By ranking them, the participants have to try to understand what they mean. This will also help them to remember the points more easily. When debriefing simply ask the group what some of their discussion was. The ranking is not important to the learning, rather the process of understanding and evaluating the meanings of each method. e. Ask participants to make notes in their Booklets in Handout 7.3: Debt Management Strategies. Akazi Kanoze/WDA Complementary Modules Page 161 Entrepreneurship Module Trainer’s Manual Trainer Tool 7.1: ‘Tempted to get into debt’ Scenarios (Cut out and give to individual participants) ----------------------------------------------------------------------------------------My friends have bought new parts for their bicycles and I want to too. ----------------------------------------------------------------------------------------I see a radio on special for a great price. ----------------------------------------------------------------------------------------One of my sisters is very clever and wants to go to school to learn more. ----------------------------------------------------------------------------------------I’m having a party and I want to impress my friends. ----------------------------------------------------------------------------------------My home is too small for my household and I want a bigger one. ----------------------------------------------------------------------------------------I want a cell phone to help me for my small business. ----------------------------------------------------------------------------------------I want to sign up for literacy classes to help me to read and write better. ----------------------------------------------------------------------------------------I want to buy fruit and vegetables for people I live with to eat today, but I can only pay for the food later. ----------------------------------------------------------------------------------------Someone in my home is ill and needs medicine. Akazi Kanoze/WDA Complementary Modules Page 162 Entrepreneurship Module Trainer’s Manual Handout 7.2: Managing Debt How tempting is this reason for getting into debt? Is this a good (wise) or bad (unwise) reason for getting into debt? What will you have to do to make the money to pay back this debt? How long will it take you to pay back this debt? How could you avoid getting into this debt? Akazi Kanoze/WDA Complementary Modules Page 163 Entrepreneurship Module Trainer’s Manual Trainer Tool 7.2: ‘How to Manage Debt’ Strategies (Cut out and give a set to each group) ----------------------------------------------------------------------------------------- Cut back on unnecessary spending. ----------------------------------------------------------------------------------------- Do not borrow more money. ----------------------------------------------------------------------------------------- Speak to people you owe money to, to work out when you can pay them back. ----------------------------------------------------------------------------------------- Pay off any debt where people are charging you extra money (interest) on what you owe them. ----------------------------------------------------------------------------------------- Don’t buy anything else or anything expensive while you have high debt. Akazi Kanoze/WDA Complementary Modules Page 164 Entrepreneurship Module Trainer’s Manual Handout 7.3: Debt Management Strategies Cut back on unnecessary spending. Do not borrow more money. Speak to people you owe money to, to work out when you can pay them back. Pay off any debt where people are charging you extra money (interest) on what you owe them. Don’t but anything else or anything expensive while you have high debt. Other: _____________________________________________ _____________________________________________ Akazi Kanoze/WDA Complementary Modules Page 165 Entrepreneurship Module Trainer’s Manual Activity 3: Give Advice to Others on financial fitness Entrepreneurship Module; learning unit 4; learning outcomes 4.3 Objectives - By the end of the activity, participants will be able to: a. Identify messages or lessons to give others about financial fitness b. Compose songs/write poems/design posters for advising others on financial fitness c. Give constructive advice on financial fitness Methodology: brainstorming, large group discussion, role-playing, drawing, storytelling Materials and Preparation: paper and pens for making posters Review the facilitation guidelines. Steps: Trainer Tip 1. Tell participants that they will role-play You could ask the groups to role play giving advice to another group of youth or act out one or several of their in in their area on how they can develop stories. This is both a very effective a plan to be financially fit in the future. way for the participants that are The participants are being brought in to participating and those that are speak to the other youth as experts! watching to learn. a. Divide the participants into groups of 4 – 5 youth each. b. Tell them, in their groups, to think about what advice you may give to the youth. c. Ask them to brainstorm some of the main messages or lessons that they will give to the other youth. d. Discuss this with the participants as a whole so that they can get ideas on the main messages from each other, referring back to their personal financial plans. 2. Ask participants to write the main financial fitness messages on a large piece of paper and decorate it in a way that makes the messages clear and interesting for the youth. Encourage participants to use pictures and color to highlight their messages. 3. Tell participants that people always remember advice best when they hear it in stories or songs! Ask them to write a story or song that they can share with youth to convince them why it is important to be financially fit. The stories or songs could be about people who were very successful … or those who got themselves into financial Trainer Tip trouble. They do not have to be about real people; they can make them up! Put the posters up in the classroom Ask them to read their story or sing after the activity. You could look for their song to the rest of the groups. opportunities to put them up in other The length of the story and how well it parts of the community. is written or told is less important than the ‘financial fitness’ message it is trying to make. They can write their story or someone else’s in their books. Akazi Kanoze/WDA Complementary Modules Page 166 Entrepreneurship Module Trainer’s Manual The purpose of both the poster preparation and song/story is to reinforce the learning from this entire module in different ways to participants. Ask them to record the key components of their posters, songs and story-telling in their books in section Handout 7.3: Giving Advice to Others. 4. Have the participants give advice to others using their posters, songs and stories, either through role-playing or delivering advice to a real group of other youth. Akazi Kanoze/WDA Complementary Modules Page 167 Entrepreneurship Module Trainer’s Manual Handout 7.3 Giving Advice to Others Our Poster Akazi Kanoze/WDA Complementary Modules Page 168 Entrepreneurship Module Trainer’s Manual Our Song ♪ ♫ ♬ ♪ ♫ ♬ ♪ ♫ ♬ ♪ ♫ ♬ Our Story-telling Akazi Kanoze/WDA Complementary Modules Page 169 Entrepreneurship Module Trainer’s Manual Session 7: Exploring Savings and Loans in Rwanda Key Topics Introduce the concept of saving? - Saving is storing small amounts of money for emergencies, unexpected events or items you need. - You can save whether you have a lot or a little money. Set saving Goals - Savings goals are what you want to save for and how much you need to save. Identify Where to Save - Saving options outside the home are at places such as an Umurenge SACCO, at Business Development Fund (BDF), at a credit union, or in a microfinance bank. Explore Financial Structures and Institutions in Rwanda - Formal banks, microfinance institutions and cooperatives provide savings, loans and insurance products Use ATMs - Automatic teller machines (ATMs) provide quick and safe access to cash, when available in local areas. Preparing Personal Financial Fitness Plans - Preparing a personal Financial Fitness Plan helps you manage your money better. - Akazi Kanoze/WDA Complementary Modules Page 170 Entrepreneurship Module Trainer’s Manual Activity 1: Introduce the concept of Saving Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives - By the end of the activity, participants will be able to: a. Explain the concept of saving b. Identify reasons for saving c. Realize that we can all save d. Suggest ways in which people can save Methodology: brainstorming, large group discussion, role-playing, group work Materials and Preparation: sets of 10 pieces of blank paper per participant Prepare paper money (10 pieces of blank paper per participant, A4 divided into 8 pieces each - they will write ‘100’ on each one). Steps: 1. Write or read the statement: “Long before people used money and banks, farmers and villagers would save some of the seeds from their harvests”, and have participants in small groups discuss the following questions. Trainer Tip a. Why do you think farmers saved part of their harvest? b. What do you think would happen if farmers used all their You could share examples harvest? c. What do you undesrtasnd by saving? d. How do people today save? e. Why do people save today? of proverbs or sayings that relate to savings. 2. Have participants share their answers with the large group (Long before people used money and banks, farmers and villagers would save some of the seeds from their harvests to plant in their fields the following season. Farmers knew that if they ate all their seeds they would not be able to plant and raise a new crop. And if they could not harvest a new crop the following year they would have nothing to eat. So saving some of their seeds meant saving their lives. Saving means putting some things away to be used at another time. Some people save food, instead of eating it all today, they save some for a day when they might not have enough. People can save money too. They put money away in a safe place in case they need to pay for something unexpected or for emergencies) 3. Ask participants for examples of things that people save and why they save them. Responses could include: food, fuel, seeds, money. 4. Ask participants if they know of examples where people have saved money and, if so, what this was for? 5. Ask participants if only rich people can save money. Discuss whether they think people can save even if they have very little money. There are no right or wrong answers here. This discussion is simply encouraging participants to start thinking about how anyone Akazi Kanoze/WDA Complementary Modules Page 171 Entrepreneurship Module Trainer’s Manual can save money. 6. Tell participants that Francois Kanimba, the governor of National Bank of Rwanda in 2009, did not agree that some people simply earn too little to save. "Everyone can save, whatever their income; it is a question of behavior and culture.” What do you think he meant by saying this? The discussion could include that people can save very, very little, as this will slowly grow to be more. Starting the habit of saving and realizing the necessity and importance of saving are more important than the amount of money that you have. 7. Tell participants to imagine that they each receive a gift of Frw 1,000 today. Give each participant 10 circular pieces of paper, which represent bank coins of Frw 100 each, asking them to write 100 on each of the pieces. Ask: “How much would you spend and what would you spend it on? How much would you save and what would you save it for? Each decide for yourself.” Have the participants put their ‘coins’ into two separate piles, one for the amount they will spend, one for the amount they will save. Ask participants why they made the decisions they did and allow time for discussion. Responses on the amount they saved may include: They need a certain amount of money to cover expenses today and tomorrow; they want to be able to pay for food or social activities that might occur with their friends; it seemed like a good amount to save; they are afraid that if they keep the money in their pocket it may be stolen; Trainer Tip they don’t need to use the money right now and would prefer to have it all You may want to add examples of stored away. Emphasize that some money put aside for savings needs to be for unexpected events or emergencies that they cannot plan for. Only some of the money is saved for specific things. 8. unexpected events that occur into this scenario so that participants can see if they saved enough for these. Examples could include: medical expenses, unexpected travel expenses, flood damage, etc. Ask participants to make notes about what they learned about saving in their Booklet in section Handout 8.1: My lessons about Saving. Akazi Kanoze/WDA Complementary Modules Page 172 Entrepreneurship Module Trainer’s Manual Handout 8.1: My lessons about Saving Akazi Kanoze/WDA Complementary Modules Page 173 Entrepreneurship Module Trainer’s Manual Activity 2: Set Saving Goals Entrepreneurship Module; learning unit 4; learning outcomes 4.4 Objectives - By the end of the activity, participants will be able to: a. Identify things to save for b. Determine how much to save for particular things c. Develop own saving goals, Methodology: brainstorming, individual goal setting, buzz group, think pair square share Materials and Preparation: flipchart / board, markers Review the facilitation guidelines. Steps: 1. Ask participants for examples of things that they might want to save money for right now. Write down all responses, whether these are realistic or not. Responses may include both small and large items for which varying amounts of money will need to be saved. 2. Now ask participants how much they think they would need to save to be able to afford each of the things they want to save for. 3. Ask participants to forecast how long it might take to save for the things they want. 4. Ask participants to choose one or two things that they want as their saving goal and write these in their Booklets in Handout 8.2: My Saving Goals. They should choose what they want to save for, how much they want to save and how long they want to save for. Ask some of the participants to share their ideas so that others can learn from these. Trainer Tip Explain that they could decide that their goal is to save for their future education, or for a mattress, or to buy something to use to earn income – most importantly they should start small and make this as realistic as possible. Make sure that they also write how much they think they will need to save! You could ask participants to start tracking how much they save each week and start a chart that records this in the classroom. Mention to participants that they actually need to plan for specific things to save for as well as for unexpected events or emergencies. If they do not have specific things they want to save for, they still need to save for emergencies that could arise. Akazi Kanoze/WDA Complementary Modules Page 174 Entrepreneurship Module Trainer’s Manual Handout 8.1: My Savings Goals WHAT I want to save for Specific Things: Unexpected Things or Emergencies: HOW much I want to save Specific Things: Unexpected Things or Emergencies: WHEN I want to save by Akazi Kanoze/WDA Complementary Modules Page 175 Entrepreneurship Module Trainer’s Manual Activity 3: Identify Where to Save Entrepreneurship Module; learning unit 4; learning outcomes 4.3 Objectives - By the end of the activity, participants will be able to: a. Identify various saving options/financial institutions b. Distinguish between different saving options/financial institutions c. Make choices about safe places to save Methodology: guest speakers, group discussion, brainstorming, Materials and Preparation: flipchart / board, markers Research basic information on various savings institutions; review Trainer Tool 8.1: Background on Savings in Rwanda. Identify and invite guest speakers. Collect information on opening savings accounts or joining savings groups (optional). Steps: 1. Ask participants to mention where they (or people they know) keep, store or save their money. Write their responses on the board. 2. Explain: “Sometimes people save money in their homes. They hide it under the floor or under a mattress. Often people might realize that their homes were not a safe place to keep money, as the money could be stolen or lost in a fire.” Ask participants for examples of safe places where people save money when they do not save it at home? Add these to the board. Add these to the list if they are not there: SACCOs, or Microfinance bank, Commercial banks, Savings groups (SILC) and Mobile banking. Explain to participants briefly what each is and give examples. Ask them to write their answers in their Booklets Handout 8.3: Where I Can Save. 3. Invite guest speakers to talk to the participants about savings options. Speakers could include: community members who belong to a SACCO or other community savings groups; someone who has a savings account; people from institutions talking about the savings products they offer and how to Trainer Tip join or open an account (such as from a microfinance institution, commercial Besides inviting guest speakers to bank, etc.) Refer to Trainer Tool 8.2: share information, you could assist Background on Savings in Rwanda for participants in becoming members relevant context of savings in Rwanda. of a local community savings group or opening a savings account at a bank or savings institution. Akazi Kanoze/WDA Complementary Modules Page 176 Entrepreneurship Module Trainer’s Manual 4. Ask participants which they think is better: saving money at home or in financial institutions such as SACCOs, or in a microfinance institutions, bank? Ask them for reasons for their answers. If participants feel it is better to save money at home, provide challenging reasons that demonstrate the insecurity of such action. Ask participants why it might be a good idea to have assets divided in different locations. Answers might include: Your house floods and the box you store it in floats away; The house catches fire and the savings are burned up with it; Your house is robbed. 5. Tell them to write at least two of the main reasons to save their money in these types of groups or institutions in Handout 8.3: Where I Can Save of their Booklets. And depending on the area of the school, have participants identify where they can find these institutions nearby them Responses could include: money is safer away from home; you can earn interest on the savings in some cases; others cannot steal the money easily; you can easily find out how much you have Trainer Tip saved; you have evidence of the amount of money you have in case you need this to take a loan elsewhere; if Decide whether it is relevant someone robs me, I have more money stored safely in to introduce the concept of the Umurenge SACCO or in a microfinance interest (interest earned on institutions, bank that I can easily access; so that I can savings and interest paid on get a loan from the same institution as they know me loans) to the participants. If if I want to buy something I can’t immediately afford; so, ensure that you or one of so that I can put money away to save up for the guest speakers covers something and can keep myself from spending it on this. everyday things. 6. Tell participants: “Did you know that Rwanda celebrates World Savings Day on October 31st? Did anyone see posters, advertisements or billboards celebrating the importance of savings and the benefits of putting your money in a bank? If you did not see these, remember to look for these at the end of October next time!” Trainer Tip You may want to find out whether the participants can design posters promoting a culture of saving which can be displayed around the city during World Savings Day. Akazi Kanoze/WDA Complementary Modules Page 177 Entrepreneurship Module Trainer’s Manual Handout 8.3: Where I can save What are examples of places to save money? Why is it good to save at a SACCOs, or Microfinance bank, Commercial banks, Savings groups (SILC) or Mobile banking? Where can I find these places to save? Akazi Kanoze/WDA Complementary Modules Page 178 Entrepreneurship Module Trainer’s Manual Trainer Tool 8.1: Background on Savings in Rwanda The Government of Rwanda has for a long time been encouraging the culture of saving through an internal savings mobilization strategy that includes facilities such as microfinance institutions (MFI's), grassroots saving and credit schemes (Umurenge SACCOS) and decentralization of bank services to the people. Despite all these efforts, the number of people using these services is still very low. The reasons for this are both historical and cultural. Before 1994, only three commercial banks existed: Bank of Kigali (BK), Banque Commercial du Rwanda (BCR) and. Those were set up specifically for external trade purposes and for that reason located within Kigali and other major towns across the country. At the time, people saw banks as being useful for the rich, and they kept their meager earnings in a convenient hiding place at home. That situation does not seem to have changed much, in 2009 only 8% of the country's population saved while a huge amount of money was in circulation, showing that people prefer to keep their money under their mattress rather than depositing it at the bank. Banks scared people away by asking for a minimum deposit of between Frw 100,000 and 200,000 to open an account. In recent times, there have been improvements. In 2004 there were 150,000 bank accounts, while in 2009 this increased to 1.2 million (50% of them at Banque Populaire). In 2009, most banks did not charge a fee to open an account; some required a minimum amount to open an account but that amount stays with the person opening the account; anybody 16 or older could open an account by showing their identification card; those under 16 could also open an account with a parent/guardian. World Savings Day in Rwanda In 2009 Rwanda joined the celebration of World Savings Day. With the rate of saving still low, it was an occasion to sensitize people on the benefits of putting their money in the bank. The day, established by the United Nations in 1989 and celebrated on October 31, aims at informing people of the importance of saving. In this respect, the Government of Rwanda launched a "special saving week" to raise awareness in financial institutions, insurance companies, ministries as well as the general public on the importance of saving. Akazi Kanoze/WDA Complementary Modules Page 179 Entrepreneurship Module Trainer’s Manual Activity 4: Explore Financial Structures and Institutions in Rwanda Entrepreneurship Module; learning unit 4; learning outcomes 4.3 Objectives - By the end of the activity, participants will be able to: a. Identify financial institutions and structure in Rwanda b. Describe the financial institutions and structure in Rwanda Methodology: Group discussion, guest speakers, Materials and Preparation: none Review the facilitation guidelines. Research current financial institutions and how to categorize these. Read through Trainer Tool 8.2 : Background on Microfinance in Rwanda. Identify and invite guest speakers. Steps: 1. Tell participants that there are several options of places to save money or to obtain loans in Rwanda. Ask participants to turn to section Handout 8.4: Examples of Financial Institutions in their handbooks and look at the logos and names there. Ask participants: “How many of the logos or names do you recognize or how many have you seen before? “ “Have you ever been inside one of their buildings or visited their meetings?” “Do you know anyone who is a member of one of these?” 2. Provide a brief description of the differences between the types of financial institutions using the information in Trainer Tool 8.2 : Background on Microfinance in Rwanda. a. The summary below is a very basic and generalized description of the differences. - Large banks provide large loans and savings services to larger organizations and people who earn a lot of money. - Microfinance institutions provide smaller loans to smaller organizations and people who earn less. - Cooperatives provide savings and loans services to low income people. - Savings groups provide savings and loans services to low-income people, and often to those that have not dealt with the financial services before. b. Ask participants to note the differences in Handout 8.5 : Differences between Types of Institutions of their Booklets. c. Ask participants to circle, using different colored pens or differently shaped boxes, which of the organizations in the previous list are large banks, microfinance institutions, cooperatives and savings groups d. Invite guest speakers to: Akazi Kanoze/WDA Complementary Modules Page 180 Entrepreneurship Module i. ii. Talk about the basic differences between the different types of financial structures, including which ones offer services that are most appropriate to youth. Talk about how youth can connect to their specific institutions Trainer’s Manual Trainer Tip You could organize for the youth to visit some of the institutions so that they can become more familiar and comfortable with approaching them for ongoing membership and services. 3. Introduce examples of specific materials from particular institutions. For example, when opening an account at Umurenge Sacco, all clients receive a pocket-sized book in which they are asked to document their financial activities and initiate good habits such as balancing checkbooks and maintaining a budget. In addition, a booklet on financial instruments such as savings, credit and even basic accounting is provided. It could be very useful to obtain a copy of these for the participants and even to help them to open an account to start saving. Akazi Kanoze/WDA Complementary Modules Page 181 Entrepreneurship Module Trainer’s Manual Handout 8.4 : Examples of Financial Institutions 1. Commercial banks 1. Access Bank Rwanda 2. Bank of Kigali 3. Banque Populaire du Rwanda SA (BPR Part of Atlas Mara) 4. Commercial Bank of Africa (Rwanda) – In development[2] 5. Compagnie Générale de Banque (Cogebanque) 6. Crane Bank Rwanda[3][4] 7. Ecobank 8. Equity Bank (Rwanda) 9. Guaranty Trust Bank (Rwanda) 10. I&M Bank (Rwanda) - Formerly Commercial Bank of Rwanda (BCR)[5][6] 11. Development Bank of Rwanda (BRD) - Owns 100% of Housing Bank of Rwanda (Banque de l'Habitat du Rwanda) (BHR)[7] 12. Kenya Commercial Bank[8] 13. Bank of Africa former Agaseke Bank [9] 2. Microfinance banks 1. AB Bank Rwanda 2. Unguka Bank[10] 3. Urwego Opportunity Bank 4. Zigama CSS. 5. Umwalimu SACCO 6. Duterimbere Microfinance Insitution LTD 7. Bank COPEDU LTD 8. Union Des Coopecs Umutanguha 9. Umurenge SACCOS 10. Associations de Microfinance RMFI 11. Reseau Interdiocesain des Microfinances (RIM) 12. VISION FINANCE LTD Akazi Kanoze/WDA Complementary Modules Page 182 Entrepreneurship Module Trainer’s Manual Trainer Tool 8.3: Background on Microfinance in Rwanda Microfinance Institution A Microfinance Institution (MFI) is an organization that provides financial services to the poor. This very broad definition includes a wide range of providers that vary in their legal structure, mission and methodology. However, all share the common characteristic of providing financial services to clients who are poorer and more vulnerable than traditional bank clients (CGAP). In this document the term is used to refer to the different types of providers of microfinance operating in Rwanda: microfinance banks and the four categories mentioned in the Microfinance Law: 1. Informal MFIs 2. SACCOs with collected deposits of less than RWF 20 million. 3. Limited companies or SACCOs with deposits over RWF 20 million. 4. Non-deposit taking MFIs. Unlike micro-credit, which focuses solely on the provision of loans, microfinance institutions – also known as MFIs – encompass a complete set of financial and banking services targeting underserved communities who, due to poverty and stigma, tend to have little access to traditional financial tools. microfinance products and services include savings, insurance and loans. Examples of financial service providers in Rwanda (refer to Handout 8.4: Examples of Financial Institutions) Akazi Kanoze/WDA Complementary Modules Page 183 Entrepreneurship Module Trainer’s Manual Handout 8.5 Differences between Types of Institutions Banks MicroFinance Institutions Cooperatives Akazi Kanoze/WDA Complementary Modules Page 184 Entrepreneurship Module Trainer’s Manual Community Savings Groups Akazi Kanoze/WDA Complementary Modules Page 185 Entrepreneurship Module Trainer’s Manual Activity 5: Use ATMs Entrepreneurship Module; learning unit 4 Objectives - By the end of the activity, participants will be able to: a. Describe the basic ways to use ATMs b. Use an ATM in a bank Methodology: brainstorming, large group discussion, field visit Materials and Preparation: board / flipchart, handouts Prepare a field visit to a bank and ATM. Prepare one copy of the following for each participant: Trainer Tool 8.4: Using ATMs, Trainer Tool 8.5: Security Tips for Using ATMs and Trainer Tool 8.6: Advantages and Disadvantages of using ATMs. Steps: (If it is appropriate for participants to be introduced to ATMs): 1. Hand out copies of Trainer Tool 8.4: Using ATMs and work through the material and activities with the participants. Alternatively, facilitate the activities on Trainer Tool 8.4: Using ATMs without providing copies to participants and provide them with copies of Trainer Tool 8.5: Security Tips for Using ATMs and Trainer Tool 8.6: Advantages and Disadvantages of using ATMs. a. Activity 1: Students are asked to decide on their top three tips for using ATMs. The selection of the tips is far less important than having students read through the tips and understand more about how to use ATMs. b. Activity 2: Students are asked to organize six steps to using an ATM in the best order. The order itself is less important here, rather having the students start to discuss issues relating to ATM use. Responses could however include: i. Make sure the area around the ATM is safe and well-lit ii. Insert our card into the slot iii. Follow the instructions on the screen iv. Use the ATM buttons to make choices and enter amounts v. Push the cancel button if you want to start over vi. Remember to take your money, receipt, and card with you when you are finished! c. Activity 3: Responses could include those listed on Trainer Tool 8.6: Advantages and Disadvantages of using ATMs. 2. Provide Trainer Tool 8.5: Security Tips for Using ATMs and have participants in small groups read through them and decide together which they think are the three best tips. Once they’ve decided on the top three and share with their friends. 3. Split participants into small groups and spend five minutes identifying three advantages of using an ATM and three disadvantages. Then come together again as a group and share your findings. Provide Trainer Tool 8.6: Advantages and Disadvantages of using ATMs and have participants create a table in their books to summarize all the advantages and disadvantages discussed. Akazi Kanoze/WDA Complementary Modules Page 186 Entrepreneurship Module Trainer’s Manual 4. Organize a visit to bank with an ATM and get the bank to demonstrate how ATMs work. Akazi Kanoze/WDA Complementary Modules Page 187 Entrepreneurship Module Trainer’s Manual Trainer Tool 8.4: Using ATMs Why do we need ATMs? ATM stands for Automated Teller Machine. ATMs get their name because they are machines that can do some of the work of a bank clerk, or teller; which means that you can use them to withdraw money from your bank account or make deposits. Before ATMs the only way to do your banking was to visit the bank. But then you had to do your banking during working hours, and you probably had to stand in long queues waiting for service. ATMs save us time, because they allow us to do more of our banking when it suits us. They also save us money, because drawing and depositing money at an ATM is cheaper than doing it in person in the bank. Activity 1. Here are six basic steps for using an ATM. Decide together what is the best order for these six steps, then list them in your workbooks. - Push the cancel button if you want to start over - Insert your card into the card slot - Remember to take your money, receipt, and card with you when you are finished! - Use the ATM buttons to make choices and enter amounts - Follow the instructions on the screen - Make sure the area around the ATM is safe and well-lit PIN When you open a bank account, you will be given a PIN, or a Personal Information Number. You can use this number to access your bank account at an ATM. You should never tell anyone your PIN. You should memorize it and not even write it down anywhere, especially not on your card. Many people who have written their PIN on their ATM card have found their bank accounts empty after their cards went missing. Akazi Kanoze/WDA Complementary Modules Page 188 Entrepreneurship Module Trainer’s Manual Trainer Tool 8.5: Security Tips for Using ATMs a. b. c. d. e. f. g. h. i. j. Use ATMs (cash machines) where you feel most comfortable. Avoid using the ATM if there are any suspicious-looking individuals around. Have your card ready in your hand before you approach the ATM. Do not use the ATM if you notice anything unusual that shows that it may have been altered or tampered with. Be especially cautious when strangers offer to help with the transaction. Never allow anyone to distract you while you are at the ATM. Do not let anyone see you enter your PIN; you should shield the keypad with your hand when entering your PIN. Never disclose your PIN to anybody, not even to the bank or police. If you feel the ATM is not working normally, press the Cancel key and withdraw your card, and then proceed to another ATM. If your card gets jammed, retained or lost, or if you are interfered with at the ATM, report this immediately to nearest bank and police. Do not hurry during a transaction, and carefully secure your card and cash in your wallet, handbag or pocket before leaving the ATM. Akazi Kanoze/WDA Complementary Modules Page 189 Entrepreneurship Module Trainer’s Manual Trainer Tool 8.6: Advantages and Disadvantages of using ATMs Advantages: You can access your money at any time You can check your bank balance (the amount of money that you have in the bank) easily You can withdraw money without having to stand in lines inside the bank You can use your ATM card in other locations to pay for things without carrying cash around, which is safer Disadvantages: If someone sees or finds your secret PIN, they can steal all the money in your bank account Someone could steal money from you while you are withdrawing money from an ATM You sometimes have to pay fees to withdraw money from ATMs You need to be able to read to use an ATM You need to feel comfortable using a computer screen to use an ATM Akazi Kanoze/WDA Complementary Modules Page 190 Entrepreneurship Module Trainer’s Manual Session 8: Basic Business Activities Cycle and Unexpected Costs Note to Trainer: The Trainer Tools and Participant Handouts for Session 9 and Session 10 are all found at the end of Session 10. Most of the tools and handouts get used in both sessions. Key Topics Basic business activities cycle: buying, adding value, selling for profit How to allocate income between the business, personal expenses and savings (kuzigama) The importance of maintaining positive cash flow How to cope with unforeseen expenses Activity 1: Practice Basic Business activities Cycle & Unexpected Costs through a game (Part one). Objectives - By the end of the activity, participants will be able to: a. Allocate income between the business, personal expenses and savings (kuzigama b. Plan for, and deal with, unexpected financial events c. Practice the basic cycle of business: buying, adding value, selling for profit to real life business d. Maintain positive cash flow Methodology: simulation game, large group discussion Materials and Preparation: flipchart paper / board; markers; sticky stuff such as tape or prestik Raw material: Prepare raw material. (See Trainer Tool 9.1). Money: Photocopy Money templates. Make at least 20 copies of each A4 denomination page. If possible, copy each denomination onto a different color paper. (See Trainer Tool 9.2). Patrick’s Iduka: Prepare a flipchart that represents Patrick’s Iduka. (See Trainer’s Tool 9.3) Gloria’s Butiki: Prepare a flipchart that represents Gloria’s Butiki, (See Trainer’s Tool 9.4) Claire’s Iduka: Prepare a flipchart that represents Claire’s Iduka on a flipchart paper. (See Trainer Tool 9.5) Savings & Loans Bank: Prepare a flipchart that represents the Savings & Loans Bank. (See Trainer’s Tool 9.6) K.U.G. Allocation containers: Prepare a set of three containers or pieces of paper with the Akazi Kanoze/WDA Complementary Modules Page 191 Entrepreneurship Module Trainer’s Manual letters K, U and G written on them, one set per group. Entrepreneur Profiles: Photocopy each of the Entrepreneur pictures on Trainer’s Tools 9.9 , 9.10 , 9.11 ,22, 9.12 ) Entrepreneur’s Cycle Chart: Prepare a Cycle Chart on a flipchart paper, copying the example in Handout 9.13 . Make one photocopy per group on white paper, or on colored paper representing the group’s color, if possible. Make one small colored square, with the word “Today” on it, to stick on the chart to show which part you are currently working on. Life Cards: Photocopy and cut out the Life Cards templates from Trainer’s Tool 9.7 Steps: A. DIVIDE THE PARTICIPANTS INTO GROUPS Divide the participants into groups (preferably 3-6 people each), with the aim of having as few groups as possible. Assign each group a color to represent their group. When the groups receive handouts, these should be photocopied onto paper that represents their group color. Alternatively, if you do not have colored paper, draw a spot of that color on the top of white photocopied paper. B. SET THE ROOM UP The game pieces should be arranged on the walls and the groups’ tables as listed below. These pieces could be handed out or put up on the walls as each component is introduced. On the Wall: Patrick’s Iduka, Savings & Loan Bank, Gloria’s Butiki, Business activities calendar, Claire’s Iduka On the tables: K.U.G. Holders, What We Bought Sheets, Business activities calendar, (1 per group of each) C. EXPLAIN THE GAME (PART 1) Telling the Background of the game The game takes place in area somewhere near you. You take your groups as cooperatives. Now, you have decided to start cooperatives! Take a moment to say hello to each of your cooperative members. The objective of this game is that during a month, you must run your businesses while also paying for your families' personal expenses, making a profit, and repaying your loans. Introducing the components Explain the relevant components used and the financial implication of each: Akazi Kanoze/WDA Complementary Modules Page 192 Entrepreneurship Module Trainer’s Manual Business activities calendar Put up the business activities calendar and give one copy to each team (See Handout 9.7). Say: “The chart represents 4 cycles of running a business. The basic business functions are summarized into the days of the week. We are going to play through five weeks of business for this first part of the game. (The first two weeks will be the same and then something will happen in the third week.) Let’s find out what happens on each day.” The trainer controls the process of the game by moving the "Today" sticker along the poster to show the teams which "day" it is and which activity to do. Move the “Today” sticker to the relevant day as you introduce each of the components below. Photocopies of the Entrepreneur’s Cycle are used by the teams for planning and record-keeping if they decide to do this – don’t encourage this, part of the learning is to discover why record-keeping is important through not doing it at first. Patrick’s Iduka (sells raw material for RF 40 each) Put up the Patrick’s Iduka poster. (See Trainer Tool 9.3) Say: “You have been looking around your town and you have found that every Monday you can buy raw material from a wholesaler called Patrick. Patrick sells each piece of raw material for RF 40. If you run out of money and decide to return a piece to Patrick, he will buy this back from you, but because it will no longer be new, he will only refund you RF 20 for each piece.” Raw Materials Show the participants the small, white pieces of paper. (See Trainer Tool 9.1) Say: “The raw materials that you will buy from Patrick are represented by these white pieces of paper. On Tuesday, you will be adding value to the raw material by folding it or drawing on it, to make something that represents a finished product. The raw material cannot be broken into smaller pieces; one piece of raw material equals one finished product. If you do not finish producing your product during your time to produce, it will be incomplete, and you will only be able to sell it during the following week of business.” Gloria’s Butiki (buys product for RF 80 each) Put up the Gloria’s Butiki poster. (See Trainer Tool 9.4) Say: “You have done further research, and have found a retail store, Gloria’s Butiki, where you can sell your products on Wednesdays. Gloria will buy as many finished products as you have to sell to her, which she then resells to her customers. Gloria will pay RF 80 for each of your finished products, but only buys well-made, high quality products.” Thursdays Say: “On Thursdays you will be paid or repay any money that is outstanding.” You can move past Thursdays very quickly at this stage, as participants will experience later, particularly in later sessions, what happens on these days. In this session, the loan is repaid on the last Thursday of the month. K.U.G. Allocation Containers Akazi Kanoze/WDA Complementary Modules Page 193 Entrepreneurship Module Trainer’s Manual Give each group their K.U.G. Allocation containers. If you have assigned colors to them in some way, then make sure each group is given the color container that matches the color assigned to their group. Say: “On Fridays you will plan how your business will allocate your income for the next week of doing business. These are containers that will use when deciding how to allocate your income. The U (Ubucuruzi) is for Business, this is for money that you allocate to use for your business expenses the next week, in other words, how much you would spend at Patrick’s Iduka. The G (Gukoresha) is for Spending on personal needs, this is for the money that you will allocate for buying food and other things for your family for the following week, at Claire’s Iduka. The K (Kuzigama) is for Savings for yourself and others, this is where you will put the money that you will be put aside in saving for unforeseen circumstances or unexpected events during the next week.” Recognize that in real life people do not have separate bank accounts, but instead, for many small businesses, money for the family and business is all put into one pool. It is helpful for youth to get into a routine of separating their money to plan for different purposes. Claire’s Iduka Put up the Claire’s Iduka Poster. (See Trainer Tool 9.5 ) Say: “You need to look after your family members. You have found a local supermarket, Claire’s Iduka, where you can buy food, clothes, furniture, and other items for your family. You need to look after your family well, or they might become ill. If you buy food, it only lasts for 1 week or it goes bad. Claire’s Iduka is open all day of the week for window shopping, but is only open on Saturday for shopping”. Teams do their personal shopping here. Each block of food is good food but will only last for one week. Teams do not have to buy any items for their families, but you should encourage them to buy food or someone might fall ill. Assume that they already have necessary items such as clothes. If teams decide to purchase other items besides food, these are luxuries. ‘What We Bought’ Sheets Give one ‘What We Bought’ Sheet to each group. If you have used colored paper, then make sure each group is given the color assigned to them. (See Handout 9.8) Say: “These sheets are for businesses to keep track of purchases from Claire’s Iduka”. Tell participants that they will stick their purchases from Claire’s Iduka on the ’What We Bought’ sheets to keep track of what they bought. Rent (RF 100 at the end of the month) Say: “You are currently operating your business from home. You need to pay rent for your home, which is also where you are operating your business, each month. You need to have enough money to pay rent of RF 100 on the 27 th of the month.” Savings & Loans Bank (loan of RF 200, repayable with RF 50 interests) Put up the Savings & Loans poster with the Savings Account envelopes on it. (See Trainer Tool 9.6) Refer to the Savings and Loan facility by whichever name makes most sense to the participants, e.g. you may call this a “Bank” or a “Savings Group” or a “MicroFinance Institution”, etc. You may decide to tell participants that the Akazi Kanoze/WDA Complementary Modules Page 194 Entrepreneurship Module Trainer’s Manual savings accounts are ATMs, if ATMs were discussed earlier. The Trainer Manual will refer to a generic bank. Say: “Congratulations! Each of you applied to your Savings and Loan bank and was successful in obtaining a loan to start your businesses! You will each receive RF 200. You need to pay this back at the end of the month, on the 29th, with RF 50 interest.” Give each group RF 200 (3 X RF 50, 2 X RF 20, 1 X RF 10). You may have to explain the concept of interest now, showing that if you get a loan you have to pay back even more at the end as the additional price of being able to get the loan. Say: “Each team has a savings account at the bank. Money can be deposited and withdrawn at any time as the bank is open every day of the week, so you can deposit and withdraw money at any time in your savings account envelope. The bank does not pay interest or charge fees for withdrawals. Money in the savings accounts envelopes at the bank is safer than money under your bed at home!” Introducing the characters Introduce the three characters one-by-one – Ms. Tycoon, Mr. Saver, and Mr. Greedy. (See Trainers Tools 9.9, 9.10 , and 9.11.) a. Explain that the characters represent different approaches to business and some of the common challenges faced by entrepreneurs. b. As you discuss them, stick the character posters on the wall c. Ask participants how they believe each character will allocate a RF 200 bank loan between: U - Business Expenses (raw material purchases from Patrick’s Iduka) G - Personal Expenses (purchases from Claire’s Iduka) K - Savings (for unforeseen business and personal circumstances and unexpected events) d. Tell participants to write their responses in Handout 9.2 , 9.3 and 9.4 in their Booklets. Participants need to realize that amounts allocated to Business need to be in increments of RF 40 as raw materials would cost RF 40 each. There are no right or wrong answers: Ms. Tycoon would allocate much more on Business, Mr. Saver on Savings, Mr. Greedy on Personal Expenses. Then reveal Ms. Wise and explain that this character has the most successful approach to businesses and participants should try to run their businesses as a Ms. Wise. (See Trainers Tool 9.12 .) Tell participants to write their responses onto Handout 9.5 in their handbooks. D. PLAYING THE GAME To begin the game: Put the “Today” sticker on Thursday 1st. Remind teams that they must repay their loans of RF 200 plus RF 50 interest on the 29th of the month. Throughout the game: Akazi Kanoze/WDA Complementary Modules Page 195 Entrepreneurship Module Trainer’s Manual Move the “Today” sticker to start each new day. Use a timer if you want to put a limit on the days. On Mondays: Move the “Today” sticker to Monday. Say: “Patrick’s Iduka is open for business.” Invite participants to stand in line at Patrick’s Iduka to purchase raw materials at RF 40 each (cash only.) Trainer Tip: If groups run out of money, they may return previously purchased raw materials to Patrick’s for a refund of RF 20. The trainer might decide to encourage other groups to see if they might want to loan money or buy the used raw materials for a discount to assist other groups in financial trouble. Trainer Tip: Always ask groups to give you the totals of what they owe you after each purchase. This allows them to build their maths skills. At times, give them too little change. When they come back to you to complain, look innocent and ask if they can show you the receipt. Don’t let them lose more than RF 10 at a time, just enough to have the learning point come across. On Tuesdays: Move the “Today” sticker to Tuesday. Every Tuesday each team manufactures their raw materials. Say: “It is time to produce raw materials. Add value by folding or drawing on them. Do this as quickly as possible.” On Wednesdays: Move the “Today” sticker to Wednesday. Each Wednesday teams sell to Gloria’s Butiki. Buy as many as groups have to sell for RF 80 each. Say: “Gloria’s Butiki is open for business.” Invite participants to stand in line at Gloria’s Butiki to sell products to Gloria for RF 80 each (cash only). Trainer Tip: Always ask groups to give you the totals of what they owe you after each purchase. This allows them to build their Maths skills. At times, underpay them. When they come back to you to complain, look innocent and ask if they can show you the receipt. Don’t let them lose more than RF 10 at a time, just enough to have the learning point come across. On Thursdays: Move the “Today” sticker to Thursday. Teams will collect and repay bank loans on Thursdays. On Fridays: Move the “Today” sticker to Friday. Tell teams to plan what they will do with their money for the next week. Remind them to use their K.U.G. containers. Akazi Kanoze/WDA Complementary Modules Page 196 Entrepreneurship Module Trainer’s Manual On Saturdays: Move the “Today” sticker to Saturday. Say: “Claire’s Iduka is open for business.” Invite the teams to purchase from Claire’s. Teams should place the purchased items on their “What We Bought” card. On Sundays: Move the “Today” sticker to Sunday. Sunday is a rest day. Encourage teams to save at the bank and keep a running total in the savings column. E. UNEXPECTED COSTS After 2 weeks of playing, explain that we are going to continue playing for 3 more weeks. Now, however some unexpected events are going to happen. On Tuesdays: Introducing the Life Cards Say: “I am going to get each team to choose a Life Card. These Life Cards tell you about the unexpected things that happen in your business or life. You need to deal with the situation immediately”. And amounts owed on Life Cards must be paid immediately. They can deal with the Life Cards while they are producing products. Trainer Tip: Observe which team has made poor decisions and manipulate which Life Card they receive. You could for example give groups the card you want them to deal with rather than having them select one, or have them select from a very small selection which you preselect. Have teams read the life cards aloud so that other teams can learn from the scenario, although with larger class sizes you will not have time to do this, in which case just ask teams for examples of the Life Cards they received during the debriefing session later. F. ENDING THE GAME Continue on, until 5 weeks are over. Collect the RF 100 rent payment from each team at the end of the last week. Collect the repayment of RF 250 owed to the bank at the end of the last week. Remind teams to collect any money they have at the bank. Ask teams to calculate the total number of units (products) they sold this month, and their profit. Write the results on a flipchart. G. DEBRIEFING THE GAME See Trainer Tool 9.8 : Debriefing Questions for the appropriate debriefing questions for Session 1. Try to get the participants to think back to their experience playing the game, and Akazi Kanoze/WDA Complementary Modules Page 197 Entrepreneurship Module Trainer’s Manual try to identify general business lessons learned. Ask them to write these lessons learned in Handout 9.9 in their Booklets. Ask them to look at the entrepreneurs in Handout 9.6 of the Participant’s Handbook and to identify which character their group seemed to play the game like. If you believe that participants would benefit from discussing Handout 9.13 , refer them to this in the Participant’s Handbook after each session to discuss the basic Entrepreneur’s Cycle. Akazi Kanoze/WDA Complementary Modules Page 198 Entrepreneurship Module Trainer’s Manual Session 9: Credit Risks & Running a Profitable Business, Record-Keeping and Business Planning Key Topics Basic business cycle: buying, adding value, selling for profit How to allocate income between the business, personal expenses and savings How to cope with unforeseen expenses. The importance of maintaining positive cash flow The considerations of selling on credit The implications of making loans to friends and family The importance of keeping records The importance of business Activities Calendar Activity 1: Deal with Credit Risks, Record-Keeping & Business Planning through a Game (Part two) Objectives - By the end of the activity, participants will be able to further develop their initial learning from Part 1 of the game and also: a. Identify some of the main risks and potential benefits of selling to customers on credit b. Make informed decisions while extending credit to friends and family members c. Keep business records d. Prepare a business activities calendar Methodology: simulation game, large group discussion Materials and Preparation: flipchart paper / board; markers; sticky stuff such as tape or prestik The same preparation is required as for Part 1 of the game, with the following additions: Will They Pay poster: Prepare a Will They Pay poster with the cards on it. Follow instructions on Trainer’s Tool 10.1. Life cards II: Photocopy and cut out the Life Cards templates from Trainer’s Tool 10.2. Record-keeping Sheet: Copy one per group. (See Handout 9.11). Record-keeping Sheet: Make copies for each participant. (See Handout 9.11). Akazi Kanoze/WDA Complementary Modules Page 199 Entrepreneurship Module Trainer’s Manual Business activities calendar: Make copies for each group. (See Handout 9.12). Steps: Set up Set up the room in the same way as for Part 1 of the game, with addition of putting the Will They Pay poster on the wall. Introducing the new Life Cards On Tuesdays, add the life cards from Trainers Tool 10.2 to the life card set. Make sure that each group gets one of these cards close to the start of the game so they can experience having to make decisions about how much to loan to family members in need. Put pressure on groups to loan to their family. When groups are told to select a Will They Pay card to see how much they will get paid, ask them to go to the Will They Pay poster and select one of the cards. Make a note for you to remember and when and how much they need to be repaid. This teaches participants that when giving loans, there is no way to know if you will really be repaid. Even if you are repaid in full, but only much later, it means that you did not have as much money to reinvest into the business during that time. Introducing the Will They Pay poster As the game starts, say that, “There is a new store opening in town. This store will pay RF 120 for each product and will buy as many products as you have to sell to them. The store however buys on credit and so will only pay you the day after buying the products. The store will buy your products on Wednesday and pay for them on Thursday.” After the first selling day, on Thursday, when groups come to collect their money, make an excuse why you can’t pay them in full, such as “I had a flood and lost half my money so I can only pay some people”, or “Someone stole my money and I can’t afford to pay you”. Even though they will complain, be very firm and move the process along by saying they have to select a Will They Pay card or they will not get paid at all. Make a note for yourself to remember and when and how much they need to be repaid. This teaches participants that when selling on credit, there is no way to know if you will really be repaid, but if they do take the risk and get paid in full, they can make a lot of money, so it all becomes about risks and balances. Playing the Game (Play for 2 weeks) On Wednesdays: Each Wednesday teams have two selling options: 1. Sell as many products as they like to Gloria, for RF 80 cash each. 2. Sell some on credit for RF 120 each, then have them select a Will They Pay card from the poster to see when and how much teams will get paid. On Thursdays: Akazi Kanoze/WDA Complementary Modules Page 200 Entrepreneurship Module Trainer’s Manual On Thursdays, some teams may have money to collect as a result of selecting cards from the “Will they Pay?” poster. Only pay out if teams remind you. Introduce Record Keeping: After playing 2 weeks of the game with the new life cards and ‘Will they pay?’ cards, hand out a record-keeping sheet to each team (Handout 9.11). While the teams play the game, remind them that they should also fill in the record-keeping sheet, listing each transaction in the correct column. Remind groups to update the sheet each Friday as they plan. At the end of the month, help them add up all the columns, and work out how much they have left for the next month, seen as savings from the previous month. Discuss the value of keeping records for keeping track of what they have, and what they owe, and for planning ahead. Introduce Business Planning: After playing 1 week of the game with the new life cards and record keeping, allocate 20 minutes at the start of the next game for the participants to make a simple business plan for a month of running their group businesses. For this plan, each team must set a goal for the profit they want to achieve at the end of five weeks. Ask teams to make a simple business plan using handout 9.12 : Our Business activities calendar, by filling in the amounts of money they plan or expect to receive and pay out during the 5 weeks. For example: the bank loans; raw materials purchases; cash sales; credit sales; rent and savings. Now play the game with each team using their business plan as a guide for each week's decisions. Ask each team to record their actual performance every week in their copy of the handout 9.7: Our Business activities calendar. They do not have to operate according to the plan. The lesson learned is that it is important to make plans, reality change plans so they keep on needing to be updated, and you can measure how you are doing by comparing it to your plan. Give each group a copy of handout 9.11 Record-keeping Sheet to use in this session too. DEBRIEFING THE GAME At the end of the game, discuss the risks involved in selling on credit, and the importance of record keeping and business planning. See Trainer Tool 9.8: Debriefing Questions for specific debriefing questions for Part 2. Try to get the participants to think back to their experience playing the game, and try to identify general business lessons learned. Ask them to write these lessons learned in Handout 10.1 of their Booklets. Ask them to look at the entrepreneurs on 4.26 and to identify which character their group seemed to play the game like. Was it different from Part 1? Why or why not? Also, refer participants to handout 10.2: Lessons and Conclusions, which summarizes the main points from each session. Akazi Kanoze/WDA Complementary Modules Page 201 Entrepreneurship Module Trainer’s Manual Handout 9.2 : Entrepreneur Profile: Ms. Tycoon Ms. Tycoon Out of an RF 200 loan from the Savings Bank, how much do you think Ms. Tycoon puts into her business (ubucuruzi), how much for personal needs (gukoresha), and how much for savings (kuzigama)? U RF _________ G RF _________ Akazi Kanoze/WDA Complementary Modules K RF _________ Page 202 Entrepreneurship Module Trainer’s Manual Handout 9.3 : Entrepreneur Profile: Mr. Saver Mr. Saver Out of an RF 200 loan from the Savings Bank, how much do you think Mr. Saver puts into her business (ubucuruzi), how much for personal needs (gukoresha), and how much for savings (kuzigama)? U RF _________ G RF _________ Akazi Kanoze/WDA Complementary Modules K RF _________ Page 203 Entrepreneurship Module Trainer’s Manual Handout 9.4: Entrepreneur Profile: Mr. Greedy Mr. Greedy Out of an RF 200 loan from the Savings Bank, how much do you think Mr. Greedy puts into her business (ubucuruzi), how much for personal needs (gukoresha), and how much for savings (kuzigama)? U RF _________ G RF _________ Akazi Kanoze/WDA Complementary Modules K RF _________ Page 204 Entrepreneurship Module Trainer’s Manual Handout 9.5 : Entrepreneur Profile: Ms. Wise Ms. Wise Out of an RF 200 loan from the Savings Bank, how much do you think Ms. Wise puts into her business (ubucuruzi), how much for personal needs (gukoresha), and how much for savings (kuzigama)? U RF _________ G RF _________ Akazi Kanoze/WDA Complementary Modules K RF _________ Page 205 Entrepreneurship Module Trainer’s Manual Handout 9.6: What type of entrepreneur are you? Do you run your business like: Ms. Tycoon? Mr. Saver? Mr. Greedy? or Mrs. Wise? Akazi Kanoze/WDA Complementary Modules Page 206 Entrepreneurship Module Trainer’s Manual Handout 9.7: Business activities calendar Tuesday Wednesday Thursday Friday Saturday Sunday Buy Manufacture Sell Collect/Pay Plan Spend Rest Week 5 Week 4 Week 3 Week 2 Week 1 Monday 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Pay rent: RF 100 Akazi Kanoze/WDA Complementary Modules Repay the Bank Page 207 Entrepreneurship Module Trainer’s Manual Handout 9.8: “What we Bought” WHAT WE BOUGHT Week 1 Week 2 Akazi Kanoze/WDA Complementary Modules Week 3 Week 4 Week 5 Page 208 Entrepreneurship Module Trainer’s Manual Handout 9.9: Lessons Learned / Part 1 (with and without life cards) Describe some of the most important lessons from the simulation in Session 1: 1. Sales 2. Shopping (at Claire’s Iduka) 3. Bank Loan 4. Opportunities if businesses ran out of money 5. Unexpected Events and Unplanned Circumstances (Life Cards) Akazi Kanoze/WDA Complementary Modules Page 209 Entrepreneurship Module Trainer’s Manual Handout 9.10: Lessons Learned / Part 2 (selling on credit, record keeping, business planning) Describe some of the most important lessons from the simulation in Session 2: 1. Selling on Credit 2. Record-keeping 3. Business Planning Akazi Kanoze/WDA Complementary Modules Page 210 Entrepreneurship Module Trainer’s Manual Handout 9.11: Record-keeping Template DATE DESCRIPTION ENTRY EXPENSES BALANCE ( MONEY ( MONEY IN) OUT) SAVINGS Added in Total TOTAL Entry (money in) – Expenses (money out) = Balance (money you have) Akazi Kanoze/WDA Complementary Modules Page 211 Entrepreneurship Module Trainer’s Manual Handout 9.12: Our Business Activities Calendar Tuesday Wednesday Thursday Friday Saturday Sunday Buy Manufacture Sell Collect/Pay Plan Spend Rest Week 2 5 How much we will buy this week: _______________ 6 7 How much we will sell this week: _______________ Week 3 12 How much we will buy this week: _______________ 13 14 How much we will sell this week: _______________ Week 4 19 How much we will buy this week: _______________ 20 21 How much we will sell this week: _______________ Week 5 Week 1 Monday 26 27 28 How much we will How much will we How much we will buy this week: pay for rent: sell this week: _______________ _______________ _______________ Akazi Kanoze/WDA Complementary Modules 1 2 What will the size How much goes of our loan be: into saving this _______________ week: _______________ 8 9 How much goes into saving this week: _______________ 15 16 How much goes into saving this week: _______________ 22 23 How much goes into saving this week: _______________ 29 30 How much will we How much goes repay for our into saving this loan: week: ______________ _______________ 3 4 How much for personal expenses this week: _________ 10 11 How much for personal expenses this week: _________ 17 18 How much for personal expenses this week: _________ 24 25 How much for personal expenses this week: _________ 31 How much for What will our personal profit be? expenses this _______________ week: _________ Page 212 Entrepreneurship Module Trainer’s Manual Handout 9.13: Business activities schedule Secure money to start the business (your own savings, loan from a bank, loan from relatives, or money from another source) Purchase raw materials Spend money on personal expenses, deposit money into savings. Allocate earnings between business, personal expenses and savings Manufacture the product Sell the product to a retail store or buyer Akazi Kanoze/WDA Complementary Modules Page 213 Entrepreneurship Module Trainer’s Manual Handout 10.1: Lessons and Conclusions Part 1: Business activities schedule Family expenses are important, but your business cannot survive if your personal and family expenses become too large. It is important to ensure that you have enough money to keep your business running and to grow your business. Personal necessities are more important than luxuries (things you want but might not really need). Only buy luxuries when your business is making enough money all the time so that you are sure that you can afford them. People and organizations often charge interest on loans they give to you. You need to plan to repay the interest, as well as the actual loan. Your co-operation – with buyers, suppliers, lenders, and even competitors – is an important element of success. You can often negotiate a lower cost for raw materials or finished products when the seller needs money immediately. Unexpected Costs It is important for you to plan for unexpected events and costs by saving money in case these happen. It is important to spend money on important necessities (such as medical treatment) in order to prevent future problems. If you have no savings, you may not have enough money when unexpected costs arise. Part 2: Credit Risks and Running a Profitable Business Selling on credit can be risky. You are often not sure when, or if, you will be paid back. It is risky to only have a few customers as if they all stop buying your business will close. The more customers you have, the safer your business is from losing all its customers. Selling on credit means you will have less money to spend now. Even if you will receive this money later, you do not have this cash to spend on your business expenses now. Giving a loan to family and friends can be risky. Family and friends do often not feel as much of a need to pay back the loans. Akazi Kanoze/WDA Complementary Modules Page 214 Entrepreneurship Module Trainer’s Manual Record-Keeping It is important for you to keep records to see who owes you money, to assist with planning, and to see if the business is making money. Business Planning As you run your business, it is important to update your business plan with additional information about what actually happened during the business cycle. Always compare what you are doing to what you had planned to do to see how your business is doing. Akazi Kanoze/WDA Complementary Modules Page 215 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.1: ‘Raw Material’ Example (Divide at least 20 pieces of A4 paper into four quadrants, and cut or tear) ----------------------------------------------------------------------------------------- Akazi Kanoze/WDA Complementary Modules Page 216 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.2 : Money Template (Make at least 20 copies of each template. If possible, put each denomination on a different color paper. Cut out) 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 Akazi Kanoze/WDA Complementary Modules 10 10 10 10 Page 217 Entrepreneurship Module Trainer’s Manual 20 20 20 20 120 0 20 201 0 20 20 201 200 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Akazi Kanoze/WDA Complementary Modules 20 20 20 20 Page 218 Entrepreneurship Module Trainer’s Manual 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 Akazi Kanoze/WDA Complementary Modules 50 50 50 50 Page 219 Entrepreneurship Module Trainer’s Manual 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Akazi Kanoze/WDA Complementary Modules 100 100 100 100 Page 220 Entrepreneurship Module Trainer’s Manual 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Akazi Kanoze/WDA Complementary Modules 200 200 200 200 Page 221 Entrepreneurship Module Trainer’s Manual 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 Akazi Kanoze/WDA Complementary Modules 500 500 500 500 Page 222 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.3 : Patrick’s Iduka Prepare a flipchart with the heading “Patrick’s Iduka”. Draw a picture of a store on it. Make sure it has a big sign saying “RF 40 each” on it. Draw a smaller sign saying “Refunds at RF 20 each”. You might find pictures of a store in a magazine to use to stick onto the flipchart. You could cut a picture of someone that represents Patrick from a magazine and stick it on the poster, or draw a picture of Patrick on the poster. Patrick’s Iduka RF 40 RF 20 Akazi Kanoze/WDA Complementary Modules Page 223 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.4 : Gloria’s Butiki Prepare a flipchart with the heading “Gloria’s Butiki”. Draw a picture of a store on it. Make sure it has a big sign saying “RF 80 each” on it. You might find pictures of a store in a magazine to use to stick onto the flipchart. You could cut a picture of someone that represents Gloria from a magazine and stick it on the poster, or draw a picture of Gloria on the poster. Gloria’s Butiki RF 80 Akazi Kanoze/WDA Complementary Modules Page 224 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.5 : Claire’s Iduka Below is a list of items that the groups can buy at Claire’s Iduka, and their prices. For each item, prepare paper squares (about the size of the boxes on the “What we Bought” Handout) that contain the name of the item, the price of the item, and a picture of the item (from a magazine, drawing, or whatever you can find). Using prestik (or tape), stick all of these items on a flipchart paper with the heading Claire’s Iduka on it. The participants will remove the squares and take them back to their group’s as they purchase the items. The groups will take them back to their tables as they purchase the items. Food: 20 Food: 20 Food: 20 Food: 20 Food: 30 Food: 30 Food: 30 Food: 30 Food: 30 Food: 40 Food: 40 Food: 40 Food: 40 Food: 50 Food: 60 Food: 60 Food: 60 Food: 70 Food: 80 Food: 80 Food: 80 Ice Cream: 10 Ice Cream: 10 Sunglasses: 30 Radio: 150 Clothes: 40 Clothes: 40 Clothes: 70 Clothes: 70 Mobile Phone: 200 Handbag: 200 Shoes: 200 Bed: 300 Sofa: 550 Sunglasses: 30 Wrist Watch: 90 Juice: 10 Juice: 20 Ball: 20 Party: 50 Television: 600 Clothes RF30 Akazi Kanoze/WDA Complementary Modules Page 225 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.6 : Savings & Loans Bank Prepare a flipchart with a big sign saying “Savings and Loans”. Draw a picture of a bank on it. You might find pictures of a bank or of money in a magazine to use to stick onto the flipchart. Prepare an envelope for each group with the group’s color on it and stick it on the Savings & Loans Bank poster to represent their savings accounts. They should be able to easily slide money into and out of the envelope. Savings & Loans Akazi Kanoze/WDA Complementary Modules Page 226 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.7 : Life Cards SCHOOL BOOKS CHURCH DUES It is the beginning of the school year and you have to buy school books for your child. Pay RF 40 now. The minister is raising money for the church choir. Decide how much you will give now. -------------------------------------------- -------------------------------------------- FOOD TREAT YOURSELF Did you buy food last week? If not, your child is now very ill. Pay RF 30 for doctor’s fees and buy food now. It has been a very hot day and you have been working hard. Will you treat yourself to something at Claire’s Iduka? -------------------------------------------- -------------------------------------------- SISTER’S BIRTHDAY BROTHER’S BIRTHDAY It is you sister’s birthday and you want to buy her a present. Decide how much you will spend at Claire’s Iduka. Buy your brother a birthday present at Claire’s Iduka now. -------------------------------------------- -------------------------------------------- INSURANCE FOOD You have insured your stock against theft. You must pay RF 10 for each item you have in stock now. Did you spend at least RF 20 on food last week? If not, then a child has to be treated at the clinic. Pay RF 20 for medicine and buy food now. Akazi Kanoze/WDA Complementary Modules Page 227 Entrepreneurship Module Trainer’s Manual DOCTOR BILLS MOTHER’S DAY If you did not buy at least RF 30 of food last week, buy food now and pay RF 30 for doctor’s fees and medicine. Buy your mother a gift from Claire’s Iduka. -------------------------------------------- -------------------------------------------- FEED A COLD BROTHER’S BIRTHDAY A child has a cold and you need to feed her good food. Go to Claire’s Iduka now and spend at least RF 60. Buy your brother a birthday present at Claire’s Iduka now . -------------------------------------------- -------------------------------------------SISTER’S BIRTHDAY YOUR ISSUES You may want to add card ideas of your own. It is your sister’s birthday and you want to buy her a present. Decide how much you will spend at Claire’s Iduka. --------------------------------------------------------------------------------------STORM REPAIRS Your house needs urgent repairs after a storm. Pay RF 30 to fix it. Akazi Kanoze/WDA Complementary Modules YOUR ISSUES You may want to add card ideas of your own. Page 228 Entrepreneurship Module SCHOOL BOOKS It is the beginning of the school year and you have to buy school books for your child. Pay RF 40 now. -------------------------------------------- Trainer’s Manual RAIN Heavy rains have spoilt one unit of stock. You spend RF 40 repairing it now. -------------------------------------------- QUALITY FUNERAL One item you made last week has been returned because of bad quality. You spend RF 30 fixing it for the customer now. A relative has died. Your family is collecting for funeral expenses. Decide how much you will give. -------------------------------------------- -------------------------------------------- QUALITY SCHOOL CLOTHES One item you made last week has been returned because of bad quality. You spend RF 40 fixing it for the customer now. Your child needs new clothes for school. Pay RF 30. -------------------------------------------- -------------------------------------------- PARTY THEFT A whole group of friends arrived last night from a different part of Rwanda and you had to buy them some food and drinks. You spent RF 40. Any money which is not in your savings account at the Bank has been stolen. Akazi Kanoze/WDA Complementary Modules Page 229 Entrepreneurship Module Trainer’s Manual FOOD OUCH! If you did not buy food for your family last week, then your child is now very ill. Buy food now and pay RF 30 for doctor’s fees and medicine. A dog bit your leg while you were out selling. The doctor has treated you. Pay the doctor RF 30. -------------------------------------------- -------------------------------------------- THEFT TAXATION Any money which is not in your savings account at the Bank has been stolen. You are required to pay a business tax. Pay RF 10 per 2 units for all the items you have sold this month. -------------------------------------------- -------------------------------------------- FOOD FOOD Friends have come to stay. Did you buy food last week? If not, you must buy at least RF 60 worth of food from Claire’s Iduka. Did you spend at least RF 20 on food last week? If not then a child has to be treated at the clinic. Pay RF 20 for medicine and buy food now. -------------------------------------------- -------------------------------------------- FURNITURE FOOD The invoice for your furniture arrives. You must pay RF 40 now. Did you buy food last week? If not, your child is now very ill. Pay RF 30 for doctor’s fees and buy food now. Akazi Kanoze/WDA Complementary Modules Page 230 Entrepreneurship Module FOOD Friends have come to stay. Did you buy food last week? If not, you must buy at least RF 60 worth of food from Claire’s Iduka now. -------------------------------------------- Trainer’s Manual YOUR ISSUES You may want to add card ideas of your own. -------------------------------------------- FEED A COLD BROTHER’S BIRTHDAY A child has a cold and you need to feed her good food. Go to Claire’s Iduka now and spend at least RF 60. Buy your brother a birthday present at Claire’s Iduka now. -------------------------------------------- -------------------------------------------- MOTHER’S DAY Buy your mother a gift from Claire’s Iduka. YOUR ISSUES You may want to add card ideas of your own. --------------------------------------------------------------------------------------YOUR ISSUES You may want to add card ideas of your own. Akazi Kanoze/WDA Complementary Modules FOOD Did you buy food last week? If not, your child is now very ill. Pay RF 30 for doctor’s fees and buy food now. Page 231 Entrepreneurship Module Trainer’s Manual Trainer Tool 10.1: Will They Pay poster and cards Copy and cut out the cards below. Attach them on a flipchart paper so that you can’t see what they say. Write the heading “Will They Pay?” on the flipchart. Write the options on each card at the bottom of the flipchart so participants can see what potential options they could select. Pay in full at the end of the month. WILL THEY PAY? ------------------------------------------------------------------------- WILL THEY PAY? Pay in full this Thursday. --------------------------------------------------------------------------- WILL THEY PAY? Pay only half on Thursday. ------------------------------------------------------------------------- WILL THEY PAY? Pay only half at the end of the month. --------------------------------------------------------------------------- Write it off! WILL THEY PAY? Akazi Kanoze/WDA Complementary Modules Page 232 Entrepreneurship Module Trainer’s Manual Trainer Tool 10.2 : Life Cards (for after Will They Pay poster is introduced) Add these cards after you have introduced and explained the Will They Pay poster BROTHER BORROWS Your brother wants to borrow RF 100. How much will you lend him? HELP A FAMILY MEMBER A family member is in trouble and you must lend her RF 40. She promises to repay you on Thursday. Select a Will They Pay Card on Thursday to see how much and when you will be paid. Select a Will They Pay Card on Thursday to see how much and when you will be paid. -------------------------------------------- -------------------------------------------- BROTHER BORROWS Your brother wants to borrow RF 80. How much will you lend him? HELP A FAMILY MEMBER A family member is in trouble and you must lend her RF 40. She promises to repay you on Thursday. Select a Will They Pay Card on Thursday to see how much and when you will be paid. Select a Will They Pay Card on Thursday to see how much and when you will be paid. -------------------------------------------- -------------------------------------------- HELP A FAMILY MEMBER A family member is in trouble and you must lend her RF 40. She promises to repay you on Thursday. HELP A FAMILY MEMBER A family member is in trouble and you must lend him RF 30. She promises to repay you on Thursday. Select a Will They Pay Card on Thursday to see how much and when you will be paid. Select a Will They Pay Card on Thursday to see how much and when you will be paid. -------------------------------------------- -------------------------------------------- Akazi Kanoze/WDA Complementary Modules Page 233 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.8 : Debriefing Questions Part 1 Sales How many products were sold? How much profit was made? Which team made the least money and why? Relate the profit to the number of products sold. Lesson: The more you invest in the business (purchase raw materials) the more profit is made. What assets other than food (clothes, furniture, etc.) did any of the groups acquire during the month? Lesson: It is often good to buy / get assets that can help the family to survive. A business may have less profit, but have spent money on things that the household can keep long term. Income Allocation Do teams think that they played wisely? How do they think they played? Which one of the characters displayed on the wall did they play like? What poor decisions did they make and what were the results? Now that they have learnt the above lessons, how will they act in real-life situations? How did the K.U.G. system help them to separate business and family expenses? How should they treat the demands of the family? Lesson: Income needs to be allocated for family expenses as well as business expenses, or the family could become ill. Businesses may not survive if the personal expenses become too large, so it is important to ensure that money is put aside to reinvest into the business. Shopping at Claire’s Iduka How much did each team spend at Claire’s Iduka? Did they buy food each week? Did they buy necessities or luxuries? Lesson: It is important to buy personal necessitates. Luxury items are not a priority but can be considered once a business has a steady cash flow and more money can be allocated towards personal spending. Bank Loan Were businesses able to pay back their bank loans? Why did the bank charge an additional RF 50 in interest that needed to be paid on top of the initial RF 200 loaned? Lesson: People and organizations often charge interest when a loan is made. Businesses need to plan to repay this interest as well as the initial loan. Did businesses use the bank to store money? Why is it sometimes useful to store money somewhere safe? Akazi Kanoze/WDA Complementary Modules Page 234 Entrepreneurship Module Trainer’s Manual Opportunities When Businesses Ran Out of Money Did any business rut out of money? What did they do? Did any have to sell raw materials back to Patrick’s Iduka? Did a team in trouble seek assistance from other teams? Could it have helped them? Did any borrow money from other businesses? Could it be a good business opportunity for businesses to loan money to others or to buy raw materials or finished product from them at a reduced cost? How? Lesson: Co-operation is an important element for success. Lesson: There are opportunities to buy raw materials or finished products from others at a reduced cost when they need money immediately. Unexpected Events and Unplanned Circumstances How will teams cope with the realities of life, now that they have experienced the results of their actions? How much money had to be spent on the doctor because too little food was bought? Lesson: There is a need to provide for necessities in order to prevent future problems. How much money was lost because the raw materials had to be sold back to Patrick at a loss? Lesson: If you have no savings, you end up losing more money when you have unexpected expenses. How much money was lost due to theft? Lesson: To keep your money safe, keep your savings somewhere safe. Did a team in trouble seek assistance from other teams? Could it have helped them? Lesson: Co-operation is an important element for success. Part 2 Selling on Credit Did any businesses sell to the Credit Store? What were some of the results from selling on credit? How did these impact the business? Lesson: Selling on credit can be risky as you are often not sure if and when you will get paid. How did cash and credit sales influence the teams' performances? Did teams choose to spread sales to different markets? Why could it be wise to sell some things to a sure market and not to sell everything to a risky option, rather than selling everything to the credit store? Lesson: It is important to understand the associated risks. It is best to manage your risk by selling into different markets. If businesses had sold to the Credit Store at the start of the business cycle (Week 2 or 3) and were able to get paid ‘In Full‘ but only at the end of the month, was this good or bad for the business? How did this impact the cash flow the businesses had to reinvest into the business (buy more raw materials from Claire) or to pay for unexpected events (from the Life Cards)? Akazi Kanoze/WDA Complementary Modules Page 235 Entrepreneurship Module Trainer’s Manual Lesson: Selling on credit can affect your cash flow, so that even if you are receiving funds later, you do not have the money to use now – which can limit your business opportunities. How can you plan for the business to cope with these problems? Life Cards How much money was lost because the relatives did not pay back the money they borrowed? Lesson: Loans to family and friends can also be risky. If family and friends have borrowed money, the business may be starved of the money it needs to run. Record-Keeping Did businesses keep records? How did keeping records help? Can you think of good reasons for why a business needs to keep good records? Did it help to explain the team's performance? How could businesses have improved the way they kept records? Lesson: It is very important to keep records to be able to see who owes you money, assist with planning, analyze the performance of the business, draw lessons and take corrective action. Business Planning How closely were you able to follow your business plan over the course of the month? When your actions changed during the business cycle, did you update your original business plan? Did you measure progress during the business cycle against your original plan? While running your business, what happened that you think could have been incorporated in your original plan? What lessons did you learn from planning before operating your business? How was it helpful to have a plan completed before the business cycle began? Lesson: Business plans are meant to change over time and should be updated with additional information and realities over the course of the business cycle. As you operate your business, it is important to measure progress with respect Akazi Kanoze/WDA Complementary Modules Page 236 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.9 : Entrepreneur Profiles: Ms. Tycoon Akazi Kanoze/WDA Complementary Modules Page 237 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.10 : Entrepreneur Profiles: Mr. Saver Akazi Kanoze/WDA Complementary Modules Page 238 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.11 : Entrepreneur Profiles: Mr. Greedy Akazi Kanoze/WDA Complementary Modules Page 239 Entrepreneurship Module Trainer’s Manual Trainer Tool 9.12 : Entrepreneur Profiles: Mrs. Wise Akazi Kanoze/WDA Complementary Modules Page 240 Entrepreneurship Module Trainer’s Manual ENTREPRENEURSHIP Module Post Assessment Directions: A. From questions 1-9, chose the correct answer for each statement by circling the corresponding letter 1. When you need money, which is not a good way to get it: a. Asking friends or family b. Working c. Saving d. Stealing e. Borrowing 2. You can save money by: a. Turning off lights or lamps in the house. b. Walking instead of taking a moto. c. Reusing containers to carry other things. d. Fixing old clothes or shoes. e. Using things that people have thrown away to make new things. f. All of the above. 3. Record-keeping and Budgeting: a. help you to look back (to know how much you are earning, how much you have spent, and how much you owe). b. help you to look forward (planning what you spend so that it is less than what you earn). c. All of the above. d. None of the above. 4. When making a financial plan, I should consider the following questions: a. How much should I save? b. What should I spend less money on? c. How will I earn money? d. What should I do to look after myself when I get older and am no longer working? e. All of the above f. None of the above Akazi Kanoze/WDA Complementary Modules Page 241 Entrepreneurship Module Trainer’s Manual 5. To decrease what you owe to others: a. Do not borrow more money. b. Speak to people you owe money to, to work out when you can pay them back. c. Pay off any debt where people are charging you extra money on what you owe them. d. Do not buy anything else or anything expensive while you still owe a lot of money. e. All of the above. 6. Which of the following is not a very good use of business money? a. Buying additional products because you expect an increase in demand. b. Borrowing from the business to pay for a new television for your family. c. Repairing a broken light in the production space or retail shop. d. Hiring an extra person for a short while during a busy period. 7. Which of the following is a benefit of keeping good records? a. Records allow you to remember who owes you money b. Records help with general planning c. Records help to analyze how the business is doing, draw lessons, and make corrections moving forward d. All of the above 8. The safest place to save your money is: a. In the bank or savings group b. With a friend c. In a corner of the home d. Saving is for people who worry too much 9. Selling on credit is: a. Never a good idea, because people might not pay back b. Always a good idea, because you can sometimes charge higher prices c. Can be a good idea, but you should limit how often you sell on credit and do so carefully Akazi Kanoze/WDA Complementary Modules Page 242 Entrepreneurship Module Trainer’s Manual B. From questions 10 – 20, circle “true” if the statement is correct / right or circle “false” if the statement is wrong. 10. I need to try to save so that I have money for emergencies or unexpected things that happen. True False 11. True or False: When a business sees a big drop in sales, it usually also sees a big drop in profits. True False 12. True or False: Owners of small businesses do not make enough money to save for unexpected events, like medical emergencies. True False 13. You should always plan how you much you will spend on your business, how much you will save and how much you will spend on your family. True False 14. True or False: Forming partnerships with other businesses in the area is a bad idea because they are your competitors and cannot be trusted. True False 15. Places where I can save money or get loans are banks, microfinance institutions, cooperative and savings groups. True False 16. True or False: One should not put business expenses before personal necessities, but luxury items can be put off until the business has a steady cash flow and additional funds can be allocated to personal use. True False 17. True or False: A business plan can be updated as you run your business. True Akazi Kanoze/WDA Complementary Modules False Page 243 Entrepreneurship Module Trainer’s Manual 18. Even if I have a little money, I can start keeping a record of what I have and what I spend it on. True False 19. I should always spend more money than I have because I can just ask others for the extra money. True False 20. It is important to save. It is important to decide what you want to save for and how much you want to save. True False Akazi Kanoze/WDA Complementary Modules Page 244
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