Description
During in this such a detailed explanation in relation to entrepreneurship skills training manual for scientists.
Lntrepreneurship Skills
1raining Manual íor Scientists
Lntrepreneurship Skills
1raining Manual íor Scientists
Published by the Aírican 1echnology Policy Studies Network
P O Box 10081, 00100 GPO Nairobi Kenya
2012 Published by the Aírican 1echnology Policy Studies Network
ISBN: 9¯8-9966-030-45-0
1he Aírican 1echnology Policy Studies Network ,A1PS, is a
multi-disciplinary network oí researchers, pri·ate sector actors and
policy makers promoting the generation, dissemination, use and
mastery oí science, technology and inno·ation ,S1&I, íor Aírican
de·elopment, en·ironmental sustainability and global inclusion.
A1PS intends to achie·e its mandate through research, capacity
building and training, science communication,dissemination and
sensitization, participatory multi-stakeholder dialogue,
knowledge brokerage, and policy ad·ocacy.
1able oí Contents
Acknowledgment ii
List oí 1ables iii
List oí ligures i·
List oí Acronyms ·
1. Introduction 1
2. Lstablishing a Successíul Lnterprise 5
3. Identiíying an Inno·ation that can be Commercialized 15
4. Managing a Small Business 26
5. lrom leasibility Plan to Business Plan 36
6. Lthics in Running a Small Business 63
¯. 1echnology Licensing 68
8. Intellectual Property ,IP, Law ¯6
Reíerences 83
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Acknowledgement
1his training manual is produced as part oí the implementation oí the A1PS mandates under
the Biosciences Inno·ation Policy Consortium íor Lastern Aírica ,BIPCLA, Partnership
Project. \e are grateíul to the Swedish International De·elopment Agency ,SIDA, íor
pro·iding the íunds íor the implementation oí Bio Inno·ate Projects in Lastern Aírica. \e
acknowledge the supports írom our BIPCLA partners including the Kenya National Council
íor Science and 1echnology ,KNCS1,, the 1anzania Commission íor Science and
1echnology ,COS1LCl,, the Uganda National Council íor Science and 1echnology
,UNCS1,, the Ministry oí Science and 1echnology ,MoS1, and the Addis Ababa Uni·ersity
,AAU,, Lthiopia, the Directorate oí Science, 1echnology and Research ,DS1R,, Rwanda, the
International Li·estock Research Institute ,ILRI,, the Stockholm Ln·ironment Institute
,SLI,, and the International Ser·ice íor the Acquisition oí Agri-biotech Applications
,ISAAA,.
I would like to express my gratitude to all the A1PS Secretariat staíí members. In particular,
the A1PS Senior Research Oííicer, Dr. Nicholas Ozor's dedicated eííort has íacilitated the
eííecti·e coordination oí the BIPCLA project within the A1PS including the de·elopment oí
this manual. linally, we are grateíul to Proí. Atieno Ndede-Amadi íor pro·iding useíul
resources íor the implementation oí this Project. I hope that the content oí this training
manual will stimulate passions and pro·ide ·aluable tips to promote and nurture
entrepreneurship skills among bio-scientists that will ultimately contribute to sustainable
de·elopment in Aírica.
Prof. Kevin C. Urama
í·ecvtire Director
1be .fricav 1ecbvotog, Potic, ´tvaie. ^etror/ ;.1P´)
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List oí 1ables
1able 1: 1echnology Readiness Le·els in the National Aeronautics 1¯
and Space Administration ,NASA,
1able 2: 1echnology Readiness Le·els in the Luropean Space Agency ,LSA, 19
1able 3: Questionnaire íor Ranking Inno·ations 21
1able 4: Commercializability criteria íor e·aluating a technological in·ention 21
1able 5: Sources oí Value and Con·ersion Mechanisms 24
1able 6: Commercialization Strategy 26
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List oí ligures
ligure 1: Path to entrepreneurship in liíe sciences 3
ligure 2: 1echnology Readiness Le·els in the NASA 18
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List oí Acronyms
AAU Addis Ababa Uni·ersity
A1M Automatic 1eller Machine
A1PS Aírican 1echnology Policy Studies Network
BIPCLA Biosciences Inno·ation Policy Consortium íor Lastern Aírica
CLSCR Committee on Lconomic, Social and Cultural Rights
CSR Corporate Social Responsibility
CSV Creating Shared Value
DS1R Directorate oí Science, 1echnology and Research, Rwanda
LSA Luropean Space Agency
IMP Intellectual Monopoly Pri·ilege
ILRI International Li·estock Research Institute
IP Intellectual Property
IPR Industrial Property Right
ISAAA International Ser·ice íor the Acquisition oí Agri-biotech Applications
KLMRI Kenya Medical Research Institute
KLPlIS Kenya Plant lealth Inspectorate Ser·ice
KIPI Kenya Industrial Property Institute
KIPO Kenya Industrial Property Oííice
KNCS1 Kenya National Council íor Science and 1echnology
MoS1 Ministry oí Science and 1echnology, Lthiopia
NASA National Aeronautical and Space Administration
PC Personal Computer
RlP Request íor Proposal
R&D Research and De·elopment
SLI Stockholm Ln·ironment Institute
SLO Search Lngine Optimization
SIDA Swedish International De·elopment Agency
SML Small and Medium Lnterprises
1CS1 1anzania Commission íor Science and 1echnology
1RL 1echnology Readiness Le·el
1M 1rade Mark
UK United Kingdom
UNCS1 Uganda National Council íor Science and 1echnology
USA United States oí America
VC Venture Capital
\IPO \orld Intellectual Property Organization
1. Introduction
1his training manual is a booklet oí instructions, designed to impro·e the quality oí
entrepreneurship in bio-sciences inno·ations. It íorms an important part oí the íormal
training program. lor example, it helps ensure consistency in presentation oí content in
addition to ascertaining that pertinent iníormation on processes, procedures, skills, and
knowledge related to the training objecti·es are all together in one place. It is particularly
useíul as:
· an introduction to the subject matter oí entrepreneurship prior to the training
· an outline to be íollowed during the training
· a reíerence to the entrepreneurship subject matter aíter training
· a general reíerence document
J.J. Innovation and entrepreneurship in the biosciences
1he world is currently witnessing a transíormation beginning that is being dri·en by new
science and proceeding by way oí technology and markets to a new society. 1he success oí
science has led to radical modiíications oí social beha·ior, íor example ad·ances in
reproducti·e health ha·e challenged traditional norms. Moreo·er, science and technology
appear to be compromising the integrity and uniqueness oí human liíe, íor instance, gene
sequencing and cloning. In this regard, the impact oí new technologies is seen as
undermining the meaningíulness oí industrial-age social constructions. L·idently, the íield
oí bioscience which has its emphasis on biotechnology has both positi·e and negati·e
ramiíications on society.
1he rapid de·elopment and application oí digital and genetic technologies in a globalizing
world shows the imminent shiít írom an industrial era to a network era. In the network era,
producti·ity and competition are increasingly determined by knowledge and iníormation as
well as by technologies. Networks ha·e thus become the typical current íorm oí producti·e
cooperation. In the networks, the íorm oí cooperation is no longer guided just by the
'entrepreneur' but by the scientist,researcher who creates the products. 1he
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scientist's,researcher's role has e·ol·ed to include more creation oí cooperati·e links,
maintenance oí communication channels, exchange, appropriation and injection oí
appropriate iníormation into new products. 1his is to say that scientists,researchers are
increasingly being transíormed into Sciento-preneurs.`
Sciento-preneurs` need to possess certain characteristics which will enable them to harness
and prosper in the network era. 1hey include their ability to:
· build up networks ,networking skills,
· accept people and their ideas and to exchange iníormation ,socialization skills,
· learn to adapt to diííerent networks ,ílexibility and adaptability,
· integrate input írom diííerent disciplines ,multi-disciplinarity,
· get used to mobility and communicate in the language oí the target audience beyond the
peer community ,e.g. policy-makers, markets, users,
In order to achie·e success in bio-entrepreneurship, it is important to íocus on its three pillars,
which are: management, capital and technology.
Management: 1here can be no transíormation oí technological opportunities into product
sales without the in·ol·ement oí skilled management. 1he skill sets required are wide ranging
and e·ol·e with the liíe oí the company. lor example:
· at start-up stage: critical skill sets needed include the ability to direct R&D and
communicate the company's promise to the íinancial community
· at commercialization stage: this stage requires manuíacturing and commercialization
capabilities and collaborations
· as it approaches the market: marketing and sales skills are needed gi·en that sales
agreements ha·e a bearing on proíit and loss
· good managerial skills are need to help the company transition well írom a R&D dri·en
culture to a market dri·en culture
Capital: Access to íinancing, especially long-term íinancing, is a big challenge to many
Aírican companies. 1he challenge is e·en bigger íor R&D, inno·ation and science-based
companies due to the inherent risks in inno·ation ,no guarantee íor success in the market,.
Technology: Most companies still rely on the academia íor sources oí new technologies. 1he
uni·ersities pro·ide íertile grounds íor har·esting new in·entions and disco·ery which makes
technology licencing,transíer and other íorms oí IP critical. Moreo·er, e·ery biotech
industry must ha·e a well-deíined and well-articulated product,ser·ice íocus.
1o be successíul in the bioscience íield, it is mandatory íor the entrepreneurs to ha·e a clear
·ision oí e·ery step they will take towards their goal. lor example, they need to identiíy the
particular challenge the company,technology,inno·ation will address, which essentially
means being clear about the opportunity. It is also important to ha·e a clear ·ision oí sources
oí íuture re·enues. Some oí the areas entrepreneurs need to íocus on in order to be íruitíul in
their endea·ours are shown in ligure 1 below.
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Founder =
Na||el
Pe|ce|ve|
ûpporIun|Iy
|ecogu|l|ou
InIe||ecIua|
ProperIy ß|ghIs
Fund
aud bu||d leam
aud compauy
ûeve|op
lechuo|ogy lowa|d p|oducl
8urv|ve
by add|l|oua| luud|ug, se|||ug
assels (lP ||ceus|ug) o|
sp|uu|ug oul app||cal|ous
Nar|eI
p|oducl
Founder =
luveulo| ol
Techuo|ogy
Figure 1: Path to entrepreneurship in life sciences
In order to build successíul enterprises in the biosciences, prospecti·e entrepreneurs need to
íollow the tips below:
Timing - the entrepreneur needs to predict íuture changes in society and markets - timing can
be a real determinant oí success
· 1here is need to take a macro ·iew and predict how the industry or a particular sector will
de·elop and how it will look in 5 - 10 years time
· Aspiring entrepreneurs must ne·er think the market is static - rele·ant competitors are
those in the íuture
1he competiti·e space will change down the line and aspiring entrepreneurs must be prepared
Location - clustering leads to positi·e externalities and this connotes the saying that birds oí
the same íeathers ílock together:
· Clustering enables companies to be tuned into the industries strategic shiíts and become
successíul together
· Clustering pro·ides an en·ironment that will attract world-class talent, knowing that ií
things don't work with one company, there are others nearby
· Clustering allows mixing oí skill sets, and the con·ergence oí many disciplines and
cultures
1here are some challenges that an entrepreneur in this current dispensation íaces. Some oí
them include:
· in the network era, new products and ser·ices are the results oí social organizations oí
knowledge networks
· appropriation oí such products through patenting and other íorms oí IPR could be
challenged
· open source inno·ation models are opening up and íreeing knowledge which other
íirms could patent, thus changing the inno·ation landscape
· there is a shiít oí power oí regulation írom the domain oí politics to production means
· social and policy organizations are becoming hostile and deíensi·e towards
biotechnology
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2. Lstablishing a Successíul Lnterprise
According to Ramsey & \indhaus ,2009,, there are certain things - attributes, beha·iors,
attitudes, and practices that must be íully de·eloped, implemented, and managed by a small
business owner in order to start, operate and grow a proíitable small business. Among these
are: doing what you enjoy, taking what you do seriously, planning e·erything, managing
money wisely, asking íor the sale, remembering it's all about the customer, becoming a
shameless selí-promoter ,without being obnoxious,, projecting a positi·e business image,
getting to know your customers, le·eling the playing íield with technology, building a top-
notch business team, becoming known as an expert, creating a competiti·e ad·antage,
in·esting in yourselí, being accessible, being knowledgeable, building a rock-solid reputation,
selling beneíits, getting in·ol·ed, grabbing attention, mastering the art oí negotiations,
designing your workspace íor success, getting and staying organized, taking time oíí, limiting
the number oí hats you wear, and íollowing-up constantly. 1he work oí 1iííany & Peterson
,2004, on business planning supports similar perspecti·es on successíul small business
de·elopment. lollowing is a brieí discussion oí each oí the íoregoing attributes.
Doing what you enjoy
It has oíten been said that ´if ,ov ao rbat ,ov reatt, ev;o,, ,ov ritt verer ror/ a aa, iv ,ovr tife´. 1he
rationale is that what you enjoy doing, e·en ií it is work, oíten íeels like play. Ií you enjoy
working in your small business, you will end up gi·ing it a lot oí your time, with the result that
the business will get a lot oí beneíit, and, as a result, you will also get a lot out oí the business.
\hat you get out oí your business - in the íorm oí personal satisíaction and enjoyment and
íinancial gain and stability will be the sum oí what you put into the business. It then goes
without say that ií you do not enjoy what you are doing ,your business,, it is highly unlikely that
the business will succeed. So, bottom line is that ií you do not enjoy what you are doing,
chances are you will not succeed. It is, thereíore, important that the decision to go into
business and the choice oí what business to go into should take into consideration what the
entrepreneur really enjoys doing.
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Taking what you do seriously
\ou ha·e to belie·e in what you are doing beíore anyone else can belie·e in it. \our belieí in
your product or ser·ice can actually become contagious in that more people become con·erts
to the product or ser·ice just because you belie·e in it ·ery strongly. 1he re·erse is also true -
no one will belie·e in your business, product, or ser·ice unless you belie·e in it íirst. \ou
cannot expect to be eííecti·e and successíul in business unless you truly belie·e in your
business and in the goods and ser·ices that you sell. But taking your business seriously oíten
goes beyond your belieí in the goods and ser·ices that your business oííers. It includes the
commitments and promises that you make to your customers and the diligence with which
you íulíill the commitments and keep the promises. lar too many small business owners íail
to take their own businesses seriously allowing themsel·es to get easily sidetracked and not
staying moti·ated. 1oo oíten they íall prey to 'naysayers' who do not take them seriously,
sometimes because they work out oí their homes as opposed to working írom an oííice
building, oííice park, storeíront, or íactory. 1he íirst step to being taken seriously by your
customers, suppliers, and e·en competitors is taking what you do seriously.
Planning everything
It has oíten been said that ´faitivg to ptav i. ptavvivg to fait´. 1his adage is just as true in
establishing a new enterprise, ií not truer. Planning e·ery aspect oí your new business is not
only necessary, it builds habits that e·ery new business owner needs to de·elop, implement,
and maintain. 1he act oí business planning is ·ery important and requires you, the business
owner, to analyze each business situation, to research and to compile data, and to make
conclusions based mainly on the íacts as re·ealed through the research íindings. Business
planning also ser·es the íunction oí ha·ing your goals and strategies íor achie·ing them on
paper. \ou can use the plan you create as both a map to take you írom start-up to success and
as a yardstick to measure the success oí each indi·idual segment within the plan.
Managing money wisely
1here is an old adage that says ´a pevv, .area i. a pevv, earvea´. 1he rationale is that watching
your expenditure is as important as watching your sales and deser·es just as much attention.
1here are two aspects to wise money management: the money recei·ed írom clients in
exchange íor goods and ser·ices pro·ided ,income,, and the money spent on in·entory,
supplies, wages and other items required to keep the business operating ,expenses,. 1he
liíeblood oí any business enterprise is its cash ílow. \hen this 'liíeblood' is cut oíí íor
whate·er reason, sur·i·al becomes a big struggle. Many otherwise successíul businesses ha·e
been known to buckle under íor their inability to pay bills when they become due. So, keep
cash ílowing in ,and out, oí your business in a planned manner. 1his means setting priorities
and expending only on the most important and urgent things. \ou need money to buy
in·entory, pay íor ser·ices, promote and market your business, repair and replace tools and
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equipment, and to pay yourselí and your staíí. 1hereíore, all new business owners need to
become wise money managers to ensure that the cash keeps ílowing and the bills get paid.
Asking for the sale
Asking íor the sale should happen as soon as the customer is adequately educated on the
product or ser·ice. It is the culmination oí all the sales, marketing, and ad·ertising eííorts. A
new business entrepreneur must always remember that marketing, ad·ertising, or
promotional acti·ities are completely worthless, regardless oí how cle·er, expensi·e, or
períectly targeted they are, unless one simple thing is accomplished - asking íor the sale. 1his is
not to say that being a great salesperson, ad·ertising whiz, or a public relations specialist is not
a tremendous asset to your business, it is just that all oí these skills will be íor naught ií you do
not acti·ely ask people to buy what you are selling.
Remembering it's all about the customer
1here is a relati·ely new adage that says tbe cv.tover i. /ivg` and another one that says the
customer is always right`. 1he rationale is that whate·er you do in your new business, you are
doing it íor the want, need, and satisíaction oí the customer. Ií your target customer does not
care íor your product or ser·ice, your business is history. \our new business is not about the
products or ser·ices that you sell, nor is it about the prices that you charge íor your goods and
ser·ices. \our new business is not about your competition and how to beat them. \our
business is all about your customer, end oí story. 1hey are the people that ultimately decide ií
your business goes boom or bust. L·erything you do in business must be customer íocused,
including your policies, warranties, payment options, operating hours, presentations,
ad·ertising and promotional campaigns, and website. 1he íirst step to being customer íocused
is getting to know your customer. 1he second step is remembering that all that you do is íor
and about the customer.
Becoming a shameless self-promoter (without becoming obnoxious)
Use e·ery possible opportunity to create awareness about yourselí, your business, product and
ser·ices. 1hese opportunities can be those created by you, the entrepreneur, such as in·iting
current and potential customers to ·isit your premises or to sample your products and
ser·ices, or they can be those created by others such as taking part in seminars and coníerences
related to your industry or products. One oí the greatest myths about personal or business
success is that e·entually your business, personal abilities, products or ser·ices will get
disco·ered and be embraced by the masses that will beat a path to your door to buy what you
are selling. But how can this happen ií no one knows who you are, what you sell and why they
should be buying· Selí-promotion is one oí the most beneíicial, yet most underutilized,
marketing tools that the majority oí new business owners ha·e at their immediate disposal.
\hen attending and participating at industry, product, or ser·ice seminars make sure you are
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noticed - by presenting papers or participating in panels.
Projecting a positive business image
\hen people see you and your business in a positi·e light, they will want to do business with
you. \ou ha·e but a passing moment to make a positi·e and memorable impression on people
with whom you intend to do business. Remember the adage that says you ne·er ha·e a second
chance to make a íirst impression`. New business owners must go out oí their way and make a
conscious eííort to always project the most proíessional business image possible on the get
go`. 1his is especially important since a majority oí new business owners do not ha·e the
ad·antage oí elaborate oííices or elegant storeíronts and showrooms to wow` prospects and
impress customers. Instead, they must rely on imagination, creati·ity and attention to the
smallest detail when creating and maintaining a proíessional image íor themsel·es and their
new businesses.
Getting to know your customers
Business research study results ha·e shown that a large majority oí business ,80°, will come
írom repeat customers and that only the other 20° will come írom new customers.
1hereíore, along with trying to draw new customers, the more you can do to woo your regular
customers the better oíí you will be in the long run. Gi·ing your customers personalized
attention is one way to achie·e this goal, and is ·ery much appreciated and remembered in the
modern high-tech world where businesses are increasingly relying on computers to maintain
their customer relations íor them. Call it high-tech backlash ií you will, but customers are sick
and tired oí hearing that their iníormation is somewhere in the computer and must be
retrie·ed, or told to push a dozen digits to íinally get to the right department only to end up
with ·oice mail--írom which they ne·er recei·e a return phone call. One oí the biggest
íeatures and oíten the most signiíicant competiti·e edge the small business entrepreneur has
o·er the larger competitors is the ability to oííer personalized attention. 1he new business
owner can actually answer phone calls, get to know customers, pro·ide personal attention and
win o·er repeat business by doing so.
Leveling the playing field with technology
\ou and your new business may not be household names yet, but you can ha·e a web-
presence that put many big businesses to shame. One oí the most amazing aspects oí the
internet is that a one or two person business operating írom a home or basement oííice can
ha·e a superior website to a >50 million company, and no one can tell the diííerence. Such a
web presence comes with the credibility necessary to attract any kind oí customer. Although
it is wise to a·oid getting o·erly caught up in the high-tech world such as ha·ing computers
answer customer phone calls, it is important to know how to take ad·antage oí it. 1he best
technology is that which helps you, not that which impresses your neighbors. Make sure you
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are keeping up with the high-tech world in line with your needs.
Building a top-notch business team
As a new business owner you are a manager. Management has sometimes been deíined as
achie·ing results through people`. No one person can build a successíul business alone, as it is
a task that requires a team that is both competent and as committed as you are to the business
and its success. \our business team may include íamily members, íriends, business alliances,
employees, sub-contractors, suppliers, industry and business associations, local go·ernment,
and the local community. 1he important thing is to put together a team that can and will get
the job done ,lill, 198¯,.
Becoming known as an expert
An expert is someone who is a specialist in a speciíic area. \hen people and businesses want
to outsource ser·ices, they look íor experts who can do the job ·ery well. Becoming known as
an expert in your business, product, or ser·ice area means that people and businesses will seek
you out when they need your expertise. 1his means that becoming known as an expert allows
your business to sell itselí and to grow. \hen you ha·e a problem that needs to be sol·ed, do
you seek just anyone's ad·ice or do you seek an expert in the íield to help sol·e your particular
problem· Ob·iously, you want the most accurate iníormation and assistance that you can get.
\ou naturally seek an expert to help sol·e your problem. \ou call a plumber when the hot
water tank leaks, and not just any plumber íor that matter, an expert plumber. \ou call a real
estate agent when it's time to sell your home, and not just any real estate agent, but one who has
established a good reputation in that area. \ou call a dentist when you ha·e a toothache, and
not just any dentist, an expert in the area oí your special need. 1hereíore, it only stands to
reason that the more you become known íor your expertise in your business, the more people
will seek you out to tap into your expertise, creating more selling and reíerral opportunities. In
eííect, becoming known as an expert is another way oí prospecting íor new business. Instead
oí íinding new and qualiíied people to sell to, these people seek you out íor your expertise.
Creating a competitive advantage
\ours will not be the only company selling a particular product or oííering a particular ser·ice.
L·ery market segment is crowded with businesses doing the same things, selling the same
products, or oííering the same ser·ices. Because oí this crowding oí the market, a business
needs to establish, de·elop, or otherwise identiíy certain areas oí the business in which it can
períorm better than the competition. 1hese become its competiti·e ad·antages. Many
businesses ha·e used iníormation technology to create competiti·e ad·antages. lor example,
Dell Computers is just one oí the many companies that sell personal computers ,PCs, oí
similar quality and cost, but its competiti·e ad·antage may be in its deli·ery time. Because oí
its sophisticated network oí suppliers and a robust portal, you may recei·e your order oí a PC
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írom Dell in two days ,in the continental USA, while it will take its competitor íi·e to se·en
days to deli·er a similar computer to you. Under this scenario, Dell is not able to beat the
competition on quality or cost, but is able to beat them on deli·er time, its competiti·e
ad·antage. A new business must ha·e a clearly deíined unique selling proposition. It must ask
the question "why will people choose to do business with us instead oí with the
competition·" In other words, what one aspect or combination oí aspects is going to separate
your business írom your competition· \ill it be better ser·ice, a longer warranty, better
selection, longer business hours, more ílexible payment options, lowest price, personalized
ser·ice, better customer ser·ice, better return and exchange policies or a combination oí
se·eral oí these· ,lar·ard Business School Press, 2005,.
Investing in yourself
As a new business owner, you can only take your business as íar as your knowledge goes. In
order to sell in international markets, íor example, you ha·e to know about them íirst.
Lxpanding your own personal knowledge base, thereíore, expands your company`s potential.
In·est in yourselí so that you are prepared to take the business to new heights. Successíul
entrepreneurs buy and read business and marketing books, magazines, reports, journals,
newsletters, websites and industry publications, with the understanding that these resources
will impro·e their understanding oí the business en·ironment, marketing íunctions, and
other skills. 1hey join business associations and clubs and network with other skilled business
people to learn their secrets oí success and to help deíine their own goals and objecti·es.
Successíul entrepreneurs attend business and marketing seminars, workshops and training
courses, e·en ií they ha·e already mastered the subject matter. 1hey do this because they ha·e
understood that education is an ongoing process, and that there are ways to do things better,
in less time, with less eííort. 1hey ne·er stop in·esting in the most poweríul, eííecti·e, and
immediate business tool at their disposal - themsel·es.
Being accessible
Being accessible to your customers is important and it means being a·ailable to them when
they need you. Be a·ailable to answer customer questions, not only about product and ser·ice
quality and a·ailability but also about íailures in the system - such as when product and
ser·ice quality ha·e íailed to meet stipulated standards or ha·e not been deli·ered as
promised. \e're li·ing in a time when we expect our íast íood lunch at the dri·e-thru window
to be ready in minutes, our dry cleaning to be ready íor pick-up on the same day, our money to
be a·ailable at the A1M machine at the press oí a button, and our pizza to be deli·ered in 30
minutes or it's íree`. In keeping with the times and with the competition, you must make it as
easy as possible íor people to do business with you. Making it easy íor people to do business
with you means that you must be accessible.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 10
Being knowledgeable
1ake great pride in knowing your product or ser·ice well. 1he better you understand your
product or ser·ice, the better you can sell it on the market. In íact marketing is not much more
than educating the customer on the ·alue proposition oí the product or ser·ice. Once the
customer understands the product, s,he becomes comíortable enough to buy it. Many don`t
buy` decisions are made on the basis oí not knowing or not understanding the product or
ser·ice enough. Be knowledgeable about your product or ser·ice, share that knowledge with
others and your business will grow in leaps and bounds. Remain cognizant that people will
work hard, go out oí their way, or be incon·enienced just íor the pri·ilege oí gi·ing you their
hard-earned money. \ou must be able to pro·ide customers with what they want, when they
want it.
Building a rock-solid reputation
Being known around your customer circles as a reliable and dependable person and company
has tremendous ·alue. Ií your customers think they can rely on you to pro·ide and deli·er the
products and ser·ices they are looking íor, they will want to do business with you. \hen more
and more people want to do business with you, your new business start-up can only grow. A
good reputation is unquestionably one oí the new business owner's most ·aluable assets. But
a good reputation cannot be bought rather it is something that you earn by honoring your
commitments and keeping your promises. Consistency in your product and ser·ice oííerings
is another key íactor to building a good reputation. Ií you cannot come through with the same
quality products and le·el oí ser·ice íor your customers on a regular and consistent basis, they
ha·e no basis íor trusting you. \ithout trust among your customers, you cannot ha·e a good
reputation. \ithout a good reputation, it is diííicult to grow your business.
Selling benefits
People make purchases íor the beneíits they stand to recei·e írom the purchased products and
ser·ices. 1his means that beíore a purchase can take place, the buyer has to ha·e an
understanding oí the beneíits oí the purchase. lrom the opposite side oí the purchase is the
sale. Beíore a sale can take place, the seller has to successíully sell the beneíits oí the product
or ser·ice to the buyer. Not understanding this íundamental íact, no·ice entrepreneurs and
sales personnel will try to push product and ser·ice íeatures, rather than their beneíits, to the
detriment oí the business. Selling the beneíits associated with owning and using the products
and ser·ices is what sales proíessionals íocus on to create excitement which allows them to
sell, to sell more, and to sell more írequently to their customers. \our ad·ertising, sales
presentations, printed marketing materials, product packaging, website, newsletters, trade
show exhibits, and signage are ·ital and eííecti·e only so íar as they sell the beneíits oí your
products and ser·ices. L·ery medium you use to communicate with your target audience has
to always be selling the beneíits associated with owning your product or using your ser·ice.
11 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Getting involved
Both indi·iduals and businesses do not operate in isolation. \e all belong to our local
communities. 1he íact and sense oí belonging is íundamental to business growth. L·ery
community wants to de·elop, grow, and impro·e in some way. A successíul business within a
community pro·ides much beneíit to that community, such as employment opportunities íor
the youth. lor these reasons, members oí a community will support businesses in their
community in many diííerent ways, including buying írom them. It is an accepted íact that
people like to do business with people they know, like, and respect, and with people who do
things to help them as members oí the same community. As a new entrepreneur, thereíore,
you should always go out oí your way to get in·ol·ed in the community that supports your
business. \ou can do this in many ways, including pitching in to help local charities or the íood
bank, becoming in·ol·ed in organizing community e·ents, and getting in·ol·ed in local
politics. \ou can, íor example, join associations and clubs that concentrate on programs and
policies designed to impro·e the local community.
Grabbing attention
\hile long-term planning is good íor business, the priority íor a start-up business is grabbing
immediate attention with quick results, and this is where it should spend most oí its marketing
and promotional budget. A small business owner cannot aííord to spend its time, money, and
energy on marketing and promotional acti·ities aimed at building awareness solely through
long-term, repeated exposure. Ií you do, chances are you will go broke long beíore this goal is
accomplished. Instead, e·ery marketing and promotional acti·ity you engage in should put
money back into your pocket quickly so that you are able to reiterate the process, spend the
budget, get results, and put more money back into the campaign - so that you can continue to
grab more attention and to grow your business.
Mastering the art of negotiation
Make no mistake about it, business deals are more íundamental than the money needed to buy
the business itselí. A deal comes íirst then money íollows, ne·er the other way around.
Striking a good business deal depends ·ery much on the negotiation skills oí the in·ol·ed
parties. 1he o·erall goal is a íair bargain íor each side, not just íor one oí the parties. 1he
ability to negotiate eííecti·ely is unquestionably a skill that e·ery new business owner needs to
make e·ery eííort to master. It is perhaps second in importance only to asking íor the sale in
terms oí new business musts. Mastering the art oí negotiation means that your skills are so
íinely tuned that you can almost always orchestrate a win-win situation in e·ery deal. 1hese
win-win arrangements mean that e·eryone in·ol·ed íeels they ha·e won, which is really the
basis íor building long-term and proíitable business relationships. In business, negotiation
skills are used on a daily basis.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 12
Designing your workspace for success
Commercial real estate in the central business district oí any city is expensi·e and oíten out oí
reach íor many small new businesses. In íact íor many new businesses it is a death trap. As part
oí your start-up and growth strategy, careíully locate, plan, and design your oííice workspace
íor success by ensuring maximum personal períormance and producti·ity and, ií necessary, to
project proíessionalism íor ·isiting clients. Ií at all possible, resist the temptation to turn a
corner oí your li·ing room or bedroom into your oííice. Ií you operate írom home, ideally,
you will need a separate room with a door that closes to keep business acti·ities in and íamily
members out, at least during prime business and re·enue generating hours oí the day. A den,
spare bedroom, basement or con·erted garage are good candidates íor your new oííice. Ií this
is not possible, you will ha·e to íind a means oí con·erting a room with a partition or simply
íind hours to do the bulk oí your work when nobody else is home.
Getting and staying organized
One oí the major trappings oí a small business is the sheer ·olume oí work against the
number oí staíí the business can aííord to engage. It is about achie·ing much on a shoe string
budget, in limited space, within a limited timeírame. Getting and staying organized will play a
key role in helping achie·e these objecti·es. 1he key to staying organized is not about which
type oí íile you ha·e or whether you keep a stack or two oí papers on your desk. Rather, it is
about managing your business eííecti·ely and eííiciently. It is about ha·ing systems in place
with which to do things. \ou want to establish a routine by which you can accomplish as much
as possible in a gi·en workday, whether that is three hours íor a part-time business or eight
hours íor a íull-time business. In íact, you should de·elop systems, procedures, and routines
íor just about e·ery single acti·ity you undertake in the business. Small things such as creating
a to-do` list at the end oí each business day, or íor the week, will help keep you on top oí
important tasks to tackle and in the appropriate order. Creating a single calendar to work írom,
rather than multiple sets íor indi·idual tasks or jobs, will also ensure that jobs are completed
on schedule and appointments kept. Incorporating íamily and personal acti·ities into your
work calendar is also critical so that you work and plan írom a single calendar.
Taking time off
Another major trapping oí running a start-up business is girivg it ,ovr att`, oíten interpreted by
new entrepreneurs to mean working around the clock. 1he temptation to work around the
clock is ·ery real íor some new business owners. Aíter all, they do not ha·e a manager telling
them it is time to go home because the company cannot aííord the o·ertime pay. A new
business owner, especially one working írom home, needs to establish a regular work schedule
that includes time to stretch your legs, exercise, take lunch breaks, take some days oíí, and to
go on scheduled ·acations. Create the schedule as soon as you ha·e made the commitment to
start a new business. \our schedule needs to be ílexible, and do not íill e·ery possible hour in
1S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
the day. Gi·e yourselí a backup hour or two. All work and no play makes you burn out ·ery
íast, makes you grumpy, while grumpy customer ser·ice is not what people want.
Limiting the number of hats you wear
One common characteristic oí successíul entrepreneurs is that they are inno·ati·e.
Inno·ation creates many business opportunities through niches and competiti·e ad·antages.
\hile being inno·ati·e is a ·ery good thing, there is a trapping in the possibility oí coming up
with many diííerent ideas and angles oí a business, resulting in ha·ing many initiati·es all
going on at the same time - wearing many hats`. It is a better idea to start one initiati·e at a
time, and to grow each idea sequentially in the case oí a serial entrepreneur. \earing many
hats at the same time disperses energy and attention to the many initiati·es, thereby denying
íocused attention to each, with the result oí likelihood oí íailure íor each. Inside the business,
it is diííicult íor most business owners not to take a hands-on approach and to try to do as
much as possible and tackle as many tasks as possible in their business simultaneously. 1he
ability to multitask is good, in íact, it is a common trait shared by successíul entrepreneurs.
lowe·er, it can become a liability ií not kept in check. Once in a while you ha·e to stand back,
take stock, and look beyond today to determine what is in the best interest oí your business
and yourselí o·er the long run. Identiíy areas where you can either outsource the ser·ice to
others or when to hire a new employee. Many successíul entrepreneurs will tell you that írom
the time they started out, they knew what they were good at and what tasks to delegate to
others.
Iollowing-up constantly
Constant contact, íollow-up, and íollow-through with customers, prospects, and business
alliances should be the mantra oí e·ery business owner, new or established. Constant and
consistent íollow-up enables you to turn prospects into customers, increase the ·alue oí each
sale and buying írequency írom existing customers, and build stronger business relationships
with suppliers and your core business team. lollow-up is especially important with your
existing customer base, as the real work begins aíter the sale. It is easy to sell one product or
ser·ice, but it takes work to retain customers and keep them coming back.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 14
3. Identiíying an Inno·ation that can be
Commercialized
An inno·ation can be deíined as the creation oí better or more eííecti·e products, processes,
ser·ices, technologies, or ideas that are accepted by markets, go·ernments, and society.
1echnology, on the other hand, can be deíined as the making, usage, and knowledge oí tools,
machines, techniques, craíts, systems or methods oí organization in order to sol·e a problem
or períorm a speciíic íunction. lor the purpose oí this discussion, howe·er, the terms
inno·ation and technology are used interchangeably. 1he terms technology transíer and
commercialization are deíined below, howe·er, the two terms are oíten used interchangeably
in some situations.
a. Commercialization
According to Abramson et. al. ,199¯,, commercialization is the process that con·erts ideas,
research, or prototypes into ·iable products that retain the desired íunctionality. It is oíten a
necessary step to commercial success íor inno·ations coming írom startup ·entures or
company research eííorts. 1he commercialization process oíten has the íollowing three key
aspects:
1. looking at se·eral ideas to identiíy one or two products or businesses that can be
sustained long-term ,the íunnel,,
2. a stage-wise process where each stage has its own key goals and milestones, and
3. in·ol·ement oí key stakeholders early, including customers
b. Technology transfer
1echnology transíer is the process oí sharing oí skills, knowledge, technologies, methods oí
manuíacturing, samples oí manuíacturing and íacilities among uni·ersities, industry,
go·ernments and other institutions to ensure that scientiíic and technological de·elopments
are accessible to a wider range oí users who can then íurther de·elop and exploit the
technology into new products, processes, applications, materials or ser·ices ,Speser, 2006,.
15 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
c. Transfer process
Many companies, uni·ersities and go·ernmental organizations now ha·e an "Oííice oí
1echnology 1ransíer" dedicated to identiíying research which has potential commercial
interest and de·elop strategies on how to exploit it. lor instance, a research result may be oí
scientiíic and commercial interest, but patents are normally only issued íor practical
processes, and so someone-not necessarily the researchers-must come up with a speciíic
practical process, and this is now largely done by the 1echnology 1ransíer Oííice. Another
consideration is commercial ·alue oí the technology or inno·ation. 1he process oí
commercially exploiting research ·aries widely, can in·ol·e licensing agreements and setting
up joint ·entures and partnerships to share both the risks and rewards oí bringing new
technologies to market, and so need specialized attention ,Vijay, 199¯,. Other methods oí
commercialization include corporate ·ehicles such as spin-outs that are used where the host
organization does not ha·e the necessary will, resources or skills to de·elop a new technology.
Most commercialization approaches are associated with raising Venture Capital ,VC, íunds as
a means oí íunding the de·elopment process. 1echnology 1ransíer Oííices ha·e primary
íocus on commercialization and may work on behalí oí research institutions, go·ernments
and e·en large multinationals. \here start-ups and spin-outs are the clients, commercial íees
are sometimes wai·ed in lieu oí an equity stake in the business ,Ndede-Amadi, 2011,. As a
result oí the potential complexity oí the technology transíer process, 1echnology 1ransíer
Oííices are oíten multidisciplinary, including economists, engineers, lawyers, marketers and
scientists ,Speser, 2006,.
d. Technology Readiness
According to Mankins ,1995,, one method oí identiíying an Inno·ation that can be
commercialized is the 1echnology Readiness Le·el ,1RL,, a measure that has been used by
the USA`s National Aeronautics and Space Administration ,NASA, and other organizations
to assess the maturity oí e·ol·ing technologies ,e.g. materials, components, and de·ices, prior
to incorporating that technology into a system or subsystem, deíined as commercialization
íor our purpose. It is based on the premise that when a new technology is íirst in·ented or
conceptualized, it is not suitable íor immediate application. Rather, new technologies are
subjected to experimentation, reíinement, and increasingly realistic testing beíore it can be
commercialized. 1he primary objecti·e oí using 1echnology Readiness Le·els is to help
management in making decisions concerning the de·elopment and transitioning oí
technology. Ad·antages oí using the 1RL tool to assess the readiness oí a technology íor
commercialization include the íollowing:
· It pro·ides a common understanding oí technology status
· It is a tool íor risk management
· It is useíul íor making decisions concerning íunding oí the transíer process
· It is useíul íor making decisions concerning transition oí technology
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 16
1here are se·eral 1RL models that ha·e been de·eloped and used by other organizations.
1able 1 below shows NASA`s 1echnology Readiness Le·el, with each le·el described in the
íacing column. ligure 2 below is a pictorial depiction oí the NASA`s technology readiness
le·el ,1RL,.
17 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Techno|ogy ßead|ness
Leve|
ûescr|pI|on
1. Bas|c p||uc|p|es
obse|ved aud |epo|led
Th|s |s lhe |owesl "|eve|" ol lechuo|ogy malu|al|ou. Al lh|s |eve|, sc|eul|l|c |esea|ch beg|us lo
be l|aus|aled |ulo app||ed |esea|ch aud deve|opmeul.
2. Techuo|ogy coucepl
aud/o| app||cal|ou
lo|mu|aled
0uce bas|c phys|ca| p||uc|p|es a|e obse|ved, lheu al lhe ue/l |eve| ol malu|al|ou, p|acl|ca|
app||cal|ous ol lhose cha|acle||sl|cs cau
be '|uveuled' o| |deul|l|ed. Al lh|s |eve|, lhe
app||cal|ou |s sl||| specu|al|ve. lhe|e |s uol e/pe||meula| p|ool o| dela||ed aua|ys|s lo suppo|l
lhe coujeclu|e.
8. Aua|yl|ca| aud
e/pe||meula| c||l|ca|
luucl|ou aud/o|
cha|acle||sl|c p|ool ol
coucepl
Al l h|s slep |u lhe malu|al|ou p|ocess, acl|ve |esea|ch aud deve|opmeul (R&û) |s |u|l|aled.
Th|s musl |uc|ude bolh aua|yl|ca| slud|es lo sel lhe lechuo|ogy |ulo au app|op||ale coule/l
aud |abo|alo|y-based slud|es lo phys|ca||y va||dale lhal lhe aua|yl|ca| p|ed|cl|ous a|e co||ecl.
These slud|es aud e/pe||meuls shou|d cousl|lule "p|ool -ol-coucepl" va||dal|ou ol lhe
app||cal|ous/coucepls lo|mu|aled al TRL 2.
4. Compoueul aud/o|
b|eadboa|d va||dal|ou |u
|abo|alo|y euv||oumeul
lo||ow|ug successlu| "p|ool-ol-coucepl" wo||, bas|c lechuo|og|ca| e|emeuls musl be
|uleg|aled lo eslab||sh lhal lhe "p|eces" w||| wo|| logelhe| lo ach|eve coucepl-euab||ug |eve|s
ol pe|lo|mauce lo| a compoueul aud/o| b|eadboa|d. Th|s va||dal|ou musl be dev|sed lo
suppo|l lhe coucepl lhal was lo|mu|aled ea|||e|, aud shou|d a|so be cous|sleul w|lh lhe
|equ||emeuls ol poleul|a| syslem app||cal|ous. The va||dal|ou |s "|ow- l|de||ly" compa|ed lo lhe
eveulua| syslem. |l cou|d be composed ol ad hoc d|sc|ele compoueuls |u a |abo|alo|y.
5. Compoueul aud/o|
b|eadboa|d va||dal|ou |u
|e|evaul euv||oumeul
Al lh|s |eve|, lhe l|de||ly ol lhe compoueul aud/o| b|eadboa|d be|ug lesled has lo |uc|ease
s|gu|l|caul|y. The bas|c lechuo|og|ca| e|emeuls musl be |uleg|aled w|lh |easouab|y |ea||sl|c
suppo|l|ug e|emeuls so lhal lhe lola| app||cal|ous (compoueul-|eve|, sub-syslem |eve|, o|
syslem-|eve|) cau be lesled |u a 's|mu|aled' o| somewhal |ea||sl|c euv||oumeul.
G. Syslem/subsyslem
mode| o| p|ololype
demousl|al|ou |u a |e|evaul
euv||oumeul (g|ouud o|
space)
A majo| slep |u lhe |eve| ol l|de||ly ol lhe lechuo|ogy demousl|al|ou lo||ows lhe comp|el|ou ol
TRL 5. Al TRL G, a |ep|eseulal|ve mode| o| p|ololype syslem o| syslem -
wh|ch wou|d go
we|| beyoud ad hoc, 'palch- co|d' o| d|sc|ele compoueul |eve| b|eadboa|d|ug -
wou|d be
lesled |u a |e|evaul euv||oumeul. Al lh|s |eve|, |l lhe ou|y '|e|evaul euv||oumeul' |s lhe
euv||oumeul ol space, lheu lhe mode|/p|ololype musl be demousl|aled |u space.
7. Syslem p|ololype
demousl|al|ou |u a space
euv||oumeul
TRL 7 |s a s|gu|l|caul slep beyoud TRL G, |equ|||ug au aclua| syslem p|ololype
demousl|al|ou |u a space euv||oumeul. The p|ololype shou|d be uea| o| al lhe sca|e ol lhe
p|auued ope|al|oua| syslem aud lhe demousl|al|ou musl la|e p|ace |u space.
8. Aclua| syslem
comp|eled aud 'l||ghl
qua||l|ed' lh|ough lesl aud
demousl|al|ou (g|ouud o|
space)
lu a|mosl a|| cases, lh|s |eve| |s lhe eud ol l|ue 'syslem deve|opmeul' lo| mosl lechuo|ogy
e|emeuls. Th|s m|ghl |uc|ude |uleg|al|ou ol uew lechuo|ogy |ulo au e/|sl|ug syslem.
9. Aclua| syslem 'l||ghl
p|oveu' lh|ough successlu|
m|ss|ou ope|al|ous
lu a|mosl a|| cases, lhe eud ol |asl 'bug l|/|ug' aspecls ol l|ue 'syslem deve|opmeul'. Th|s
m|ghl |uc|ude |uleg|al|ou ol uew lechuo|ogy |ulo au e/|sl|ug syslem. Th|s TRL does 1u|
|uc|ude p|auued p|oducl |mp|ovemeul ol ougo|ug o| |eusab|e syslems.
(Suv|ce. |11||1s (¹995}, |ec|1u|u]j |e11|1ess |e|e|s. 4 w|||e |1ue|}
Table 1: Technology Readiness Levels in the Hational Aeronautics and Space
Administration (HASA}
Discussion
1echnology readiness le·el is a relati·e term that should be understood and used in the
context oí the particular technology or inno·ation being de·eloped. By the same token, the
method oí technology transíer or commercialization is also relati·e. lor example, a
technology de·eloped by NASA is much more likely to be integrated into an already existing
system oí sub-system as opposed to being subjected to commercialization in the regular sense
oí the concept oí technology transíer. lor these reasons, both the NASA and the Luropean
Space Agency ,LSA, ,see below, 1echnology Readiness Le·el measurement methods are íor
illustration purposes only, in an attempt to achie·e a general understanding oí the process oí
assessing technology readiness íor integration or íor commercialization.
1he Luropean Space Agency ,LSA, has a diííerent deíinition and an alternati·e 1RL model.
In it, as in the NASA model, instruments and spacecraít sub-systems are classiíied according
to a 1RL on a scale oí 1 to 9. Le·els 1 to 4 relate to creati·e inno·ate technologies pre or during
mission assessment phase. Le·els 5 to 9 relate to existing technologies and to missions in
deíinition phase. 1he LSA 1RL model is shown in 1able 2 .
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 18
Syslem Tesl, Lauuch
& 0pe|al|ous
Syslem/Subsyslem
ûeve|opmeul
Techuo|ogy
ûemousl|al|ou
Techuo|ogy
ûeve|opmeul
Resea|ch lo P|ove
leas|b|||ly
Bas|c Techuo|ogy
Resea|ch
TßL 9
TßL B
TßL 7
TßL 6
TßL 6
TßL 4
TßL 3
TßL 2
TßL 1
Figure 2: Technology Readiness Levels in the HASA
(Suv|ce. |11||1s (¹995}, |ec|1u|u]j |e11|1ess |e|e|s. 4 w|||e |1ue|}
e. Commercializable Innovations
Contrary to popular belieí, inno·ations, like ideas, are not in short supply. \hat is in short
supply are commercializable ones. 1he end result oí a successíully commercialized
inno·ation is either a new or expanded business. 1he success oí a business hinges on the
ability and capacity oí its management to identiíy a íew commercially ·iable inno·ations and
to deploy resources around them to make them commercial success stories ,1ouhill, et al.
2008,. 1o succeed in this endea·or, management needs to obser·e a íew guidelines, including
the íollowing íi·e:
1, Continually íocus resources on the inno·ations with the greatest potential íor
commercial success. Although this does not guarantee the commercial success oí the
inno·ations, it increases the likelihood oí success oí both the inno·ations and the business.
One oí the major challenges oí commercializing inno·ations is íinancing. Successíully
commercializing a íew inno·ations mean more resources with which to commercialize new
inno·ations. Not only that, it becomes easier to attract more íunding, írom corporate
partners and commercial banks, which puts more successíul products under the company's
belt.
2, Determine which inno·ations are truly capable oí producing new wealth. A business
that has a robust research and de·elopment program will not íall short oí inno·ations írom its
Techno|ogy
ßead|ness Leve| ûescr|pI|on
TRL 1. Bas|c p||uc|p|es obse|ved aud |epo|led
TRL 2. Techuo|ogy coucepl aud/o| app||cal|ou lo|mu|aled
TRL 8. Aua|yl|ca| & e/pe||meula| c||l|ca| luucl|ou aud/o| cha|acle||sl|c p|ool-ol-coucepl
TRL 4. Compoueul aud/o| b|eadboa|d va||dal|ou |u |abo|alo|y euv||oumeul
TRL 5. Compoueul aud/o| b|eadboa|d va||dal|ou |u |e|evaul euv||oumeul
TRL G. Syslem/subsyslem mode| o| p|ololype demousl|al|ou |u a |e|evaul euv||oumeul
(g|ouud o| space)
TRL 7. Syslem p|ololype demousl|al|ou |u a space euv||oumeul
TRL 8. Aclua| syslem comp|eled aud "l||ghl qua||l|ed" lh|ough lesl aud demousl|al|ou
(g|ouud o| space)
TRL 9. Aclua| syslem "l||ghl p|oveu" lh|ough successlu| m|ss|ou ope|al|ous
Table 2: Technology Readiness Levels in the European Space Agency (ESA}
(Suv|ce. |||u.//sc|.es1.|1|/sc|e1ce-e/zzz/u||ec|/|11e\.c|1?|u||ec||1=J77¹0}. |u|es. || ||e ||| |s |uu |uz, ||e1 1 1|ss|u1
||s|s |e|1] |euu1|1|¯e1 |j 1e|1js u| cus| u|e|-|v1s. || |s 1 |esuu1s||||||j u| ||e 41|11ce1 S|v1|es 111 |ec|1u|u]j ||eu1|1||u1
||||s|u1 |u u|u1u|e ||e |ec|1u|u]j |e11|1ess 1| 1 |e|j e1||j s|1]e |1 u|1e| |u 11|e 1ez 1|ss|u1s |e1s|||e.
19 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 20
research results. \ith se·eral options to choose írom, it is important to de·elop explicit
criteria íor selecting commercially ·iable inno·ations. Among these criteria should be the
inno·ation's ability to create new wealth. 1his approach is important considering that
sometimes increased sales in one product may mean decreased sales in a substitute product,
leading to no substanti·e gains íor the company. Ií there is a choice to make between two
inno·ations, one oí which would attract a totally diííerent set oí clientele, it is the one to
select.
3, locus on the inno·ations that are truly the right ones to put money and resources
behind. A rigorous analysis needs to go behind e·ery commercialization decision. Such
analyses need to go beyond cost-beneíit to other considerations such as the kind oí
technology it is, other competing products and technologies on the market, existence oí a
target market, potential size oí the target market, ability to reco·er the in·estment quickly,
ability oí the competition to come up with a competing inno·ation in a short period oí time -
beíore costs are reco·ered, among others.
4, Separate the truly ·iable inno·ations írom all the rest. Commercial ·iability is what
separates an excellent inno·ation írom good ones. An inno·ation is only as good as its worth
in the market place. A commercially ·iable inno·ation will pro·ide return on in·estment, the
primary objecti·e oí any business. Businesses in·est in order to make money. 1his is just as
true oí inno·ations as it is oí products and ser·ices.
5, Identiíy 'ií', 'why', or 'why not' an inno·ation has the potential íor commercial success.
1he commercial success oí an inno·ation is in its íuture. 1he existence or absence oí this
potential can only be determined through an in-depth and detailed analyses oí ií it can
happen, and why or why not it can happen. 1his is important as some studies ha·e shown
that only about 10° oí inno·ations in any gi·en set can actually be ·alidated as ha·ing a good
potential íor commercial success. It is important to identiíy the other 90° early to a·oid
wasting resources on them.
lor all the abo·e reasons, it is important to rank inno·ations within a business to help make
optimal selections íor commercialization. 1o achie·e this goal, the business needs to either
come up with a standardized way oí making such selections, or adopt existing selection
methods with requisite modiíications. lor example, the 1echnology Readiness Le·els
discussed abo·e are good guidelines íor ranking and then selecting inno·ations íor
commercialization. Under ideal circumstances, an inno·ation should not be commercialized
until it reaches Le·el 9. Internally de·eloped tools such as the sample questionnaire below
can pro·e useíul in identiíying inno·ations íor commercialization:
1able 4 below presents another tool íor assessing, ranking, and selecting inno·ations íor
commercialization.
21 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Table S: Questionnaire for Ranking ¡nnovations
ExecuI|ve 8ummary oI Ihe InnovaI|on
a. whal, b||el|y, |s you| |uuoval|ou?
b. whal |s lhe cu||eul sceua||o |u lhe l|e|d |u wh|ch you| |uuoval|ou appea|s?
c. whal |s lhe p|ob|em |u lhe p|eseul sceua||o lhal you| |uuoval|ou see|s lo add|ess?
d. how does you| |uuoval|ou add|ess lh|s p|ob|em?
e. whal |s pa|l|cu|a||y uove| o| uolewo|lhy aboul you| |uuoval|ou?
Techno|ogy commerc|a||taI|on eIIorIs so Iar
1. P|ov|de |ulo|mal|ou ou auy s|gu|l|caul m||esloue ach|eved alle| lhe |uuoval|ou gol paleuled (|.e.
|ul|oducl|ou lo lhe ma||el / lesl ma||el|ug |epo|l, s|gu|l|caul upg|ade ol au e/|sl|ug p|oducl, elc.)
2. ûesc||be auy p|acl|ca| |esu|ls lhal lhe lechuo|ogy / p|oducl has ach|eved lo dale, such as sa|es, p|ol|ls,
a|le|ual|ve usages, c|lal|ous, p||/es, elc.
8. P|ov|de |ulo|mal|ou ou auy p|og|ess lowa|ds / comme|c|a||/al|ou ol lhe p|oducl
4. ß|ve uames aud coulacl dela||s ol ageuc|es o| |udusl||es lhal have showu |ule|esl |u you| |uuoval|ou
(allached |e|aled documeuls, |l auy)
5. whal a|e you| lulu|e p|aus lo| lh|s |uuoval|ou (e.g. ma||el|ug sl|alegy?)
G. lu case ol se|ecl|ou, wou|d you |||e lo comme|c|a||/e lhe lechuo|ogy al you| owu e/peuse
(eul|ep|eueu|sh|p mode), l|ausle| o| ||ceuse lhe lechuo|ogy al you| owu e/peuse, o| l|ausle| o| ||ceuse
lhe lechuo|ogy lh|ough olhe| uelwo||s?
7. ldeul|ly opl|ma| bus|uess mode|s, d|sl||bul|ou mode|s, aud p||c|ug mode|s lo| comme|c|a||/al|ou ol lhe
|uuoval|ou.
|. whal a|e lhe cuslome| e/peclal|ous?
||. who a|e lhe poleul|a| pa|lue|s aud ea||y bac|e|s ol lhe |uuoval|ou?
Suv|ce. ||e1e||c| Sc|z1||¯ |1 ¨||e e11 u| ||e 1|||e11|v1 (1s ze |1uz ||}¨ |1 |1|e1||u1 & |ec|1u|u]j, w|1|e| ?000
1) IhVEhTIûh PEßFûßNAh0E: ûoes lhe |uveul|ou pe|lo|m lhe las| lhal |l c|a|ms lo pe|lo|m?
a. O ho. ll p|obab|y w||| uol wo||
b. 1 Yes, bul |equ||es subslaul|a| chauges
c. 2 Yes, bul w||| |equ||e subslaul|a| chauges du||ug deve|opmeul
d. 8 Yes, bul may |equ||e m|uo| chauges du||ug deve|opmeul
e. 4 Yes. ll w||| uol |equ||e chauges.
2) 8û0IETAL IhFLüEh0E: The uew |uveul|ou/|dea/p|oducl wou|d |||e|y have au |ul|ueuce ou soc|ely lhal.
a. O Ve|y ha|mlu|
b. 1 Node|ale|y ha|mlu|
c. 2 he|lhe| ha|mlu| o| beuel|c|a|
d. 8 Beuel|c|a|
e. 4 Ve|y beuel|c|a|
3) LEûAL: The uew |uveul|ou/|dea/p|oducl w||| comp|y w|lh app||cab|e |aw .
a. O uude| uo c||cumslauces
b. 1 w|lh s|gu|l|caul mod|l|cal|ous
c. 2 w|lh some mod|l|cal|ou
d. 8 w|lh m|uo| mod|l|cal|ous poss|b|y uecessa|y
e. 4 w|lhoul auy chauges
Table 4: Commercializability criteria for evaluating a technological invention
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 22
4) Pû88I8LE hAZAßû8: Bea||ug |u m|ud |ls poss|b|e ha/a|ds aud s|de ellecls, lhe uew
|uveul|ou/|dea/p|oducl |s |||e|y lo be .
a. O Ve|y dauge|ous
b. 1 ûauge|ous
c. 2 Node|ale|y sale
d. 8 Sale
e. 4 Ve|y sale
6) ûEVELûPNEhTAL 8TAûE: Subm|lled |ulo|mal|ou cau besl be desc||bed as .
a. O A |ough |dea
b. 1 A desc||pl|ve |dea
c. 2 Au |dea w|lh d|aw|ugs
d. 8 Au |dea w|lh a p|ololype
e. 4 Au |dea |eady lo| ma||el
6) IhVEhTIûh ß&û: The |esea|ch aud deve|opmeul uecessa|y lo ach|eve a ma||el |eady p|oducl, |u
le|ms ol d|ll|cu|ly aud e/peuse, |s |||e|y lo be .
a. O Ve|y h|gh
b. 1 h|gh
c. 2 Node|ale
d. 8 Low
e. 4 Ve|y |ow
7) NAhüFA0TüßIhû: Bea||ug |u m|ud lhe cu||eul lechuo|ogy aud whal wou|d be ueeded lo mauulaclu|e
o| p|acl|ce lhe |uveul|ou/|dea/p|oducl, mauulaclu||ug o| p|acl|c|ug lhe |uveul|ou w||| be .
a. O uuleas|b|e uow o| auy l|me soou
b. 1 leas|b|e, bul ve|y comp||caled
c. 2 leas|b|e, bul w|lh majo| lo|eseeab|e d|ll|cu|l|es
d. 8 leas|b|e, bul w|lh m|uo| lo|eseeab|e d|ll|cu|l|es
e. 4 leas|b|e, w|lhoul lo|eseeab|e d|ll|cu|l|es
B) PßûFITA8ILITY: A|e lhe ma|g|us lo| p|ol|lab|||ly such lhal lhe|e w||| be a subslaul|a| p|ol|l? P|ojecled
|eveuues a|e |||e|y lo be .
a. O Ve|y |ow
b. 1 Low
c. 2 Nodesl
d. 8 h|gh
e. 4 Ve|y h|gh
9) ûENAhû TßEhû: lo| p|oducls |u lhe calego|y ol lhe |uveul|ou/|dea/p|oducl, lhe ma||el demaud
seems lo be .
a. O Ve|y |ow, |||e|y lo become ouldaled
b. 1 Low, dec|eas|ug
c. 2 Node|ale, slab|e
d. 8 h|gh, mode|ale|y |uc|eas|ug
e. 4 Ve|y h|gh, |uc|eas|ug
10) 8IZE ûF NAßkET: lo| p|oducls |u lhe calego|y ol lhe |uveul|ou/|dea/p|oducl, lhe poleul|a| ma||el
seems lo be .
a. O Ve|y sma||, |oca| o| spec|a||/ed ma||el
b. 1 Sma||, |eg|oua| o| |e|al|ve|y spec|a||/ed ma||el
c. 2 Ned|um, mu|l|p|e |eg|ous o| mode|ale|y spec|a||/ed ma||el
d. 8 La|ge, ual|oua| o| b|oad ma||el
e. 4 Ve|y |a|ge, |ule|ual|oua| o| ve|y b|oad ma||el
2S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
11) Pßûûü0T-LIhE Pû88I8ILITY: The poleul|a| lo| lhe |uveul|ou/|dea/p|oducl lo e/paud |ulo a ||ue ol
p|oducls |s .
a. O Ve|y |ow, ||m|led lo lhe oue p|oducl
b. 1 Low, s|ghl mod|l|cal|ous poss|b|e
c. 2 Node|ale, mauy mod|l|cal|ous poss|b|e
d. 8 h|gh, uume|ous p|oducls poss|b|e
e. 4 Ve|y h|gh, a uew ma||el
12) ûVEßALL 0ûh8üNEß APPEAL/ûENAhû: Bea||ug |u m|ud lhe poleul|a| cousume|s' ove|a||
all|acl|veuess lo lhe uew |uveul|ou/|dea/p|oducl, lhe demaud lo| lhe uew |uveul|ou/|dea/p|oducl |s
|||e|y lo be .
a. O Ve|y |ow
b. 1 Low
c. 2 Node|ale
d. 8 h|gh
e. 4 Ve|y h|gh
13) ûüAhTITY ûF 0ûNPETITIûh: Bea||ug |u m|ud lhe e/|sl|ug p|oducls lhal lhe uew
|uveul|ou/|dea/p|oducl w||| compele w|lh, lhe ba|||e|s lo ma||el eul|y a|e |||e|y lo be .
a. O Ve|y h|gh, e/l|eme|y d|ll|cu|l peuel|al|ou
b. 1 h|gh, d|ll|cu|l peuel|al|ou
c. 2 Node|ale
d. 8 Low, easy ma||el peuel|al|ou
e. 4 Ve|y |ow, e/l|eme|y easy ma||el peuel|al|ou
14) ûüALITY ûF 0ûNPETITIûh: Bea||ug |u m|ud lhe e/|sl|ug p|oducls lhal lhe uew |uveul|ou/|dea/p|oducl
w||| compele w|lh (|uc|ud|ug p||ce, qua||ly, elc.), lhe |uveul|ou/|dea/p|oducl w||| |||e|y be pe|ce|ved
as.
a. O Ve|y |ule||o|, e/l|eme|y d|ll|cu|l lo ove|come
b. 1 lule||o|, d|ll|cu|l lo ove|come
c. 2 The same, some advaulages aud d|sadvaulages
d. 8 Supe||o|, some advaulage
e. 4 Ve|y supe||o|, obv|ous advaulage
16) LI0hE8Ihû PûTEhTIAL: Bea||ug |u m|ud mauy ol lhe p|eced|ug 15 quesl|ous, lhe chauces lhal a
mauulaclu|e| w||| see| lo ||ceuse lhe uew |uveul|ou/|dea/p|oducl |s .
a. O Ve|y |ow
b. 1 Low
c. 2 Ave|age
d. 8 ßood
e. 4 Ve|y good
key Io eva|uaI|on and recommendaI|ons:
a) OO - 1G |uveul|ou shou|d be abaudoued
b) 17 - 82 caul|ous |esea|ch aud deve|opmeul (|l uol abaudoued)
c) 88 - 4O pe|l|ueul |ssues lo be coul|ouled belo|e coul|uu|ug R&û
d) 41 - 5G coul|uued R&û
e) 57+ olle| |uveul|ou ma||el|ug & ||ceus|ug se|v|ces (comme|c|a||/e)
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
f. Commercializing Innovations
Any business that intends to commercialize an inno·ation should undertake an analysis oí the
inno·ation's proíit extraction potential. 1he decision to commercialize should only be made
aíter the business asks itselí a series oí questions, the answers to which determine the
mechanisms to be used to con·ert the technology to cash as well as the degree oí risk in·ol·ed
in successíully completing the cash con·ersion ,Speser, 2006,. 1he table below shows
sources oí ·alue and con·ersion mechanisms íor commercialization oí an inno·ation.
lrom the table abo·e, we see that there are se·eral diííerent options and approaches to
commercializing an inno·ation. In weighing the pros and cons oí commercializability oí an
inno·ation, it is important to look at each approach. In terms oí con·ersation mechanisms
íor an inno·ation, it is noteworthy that the inno·ation can be sold outright, it can be licensed
out, a joint ·enture can be íormed to operationalize the inno·ation, a strategic alliance with
others can be íormed íor this purpose, the commercialized inno·ation can be integrated with
the current business, a new business can be created to house the new inno·ation, or the
inno·ation can be donated. All these options pro·ide ·alue to the business that owns the
inno·ation and should be considered and ·alued in the 'commercialize' or 'do not
commercialize' decision process.
g. Commercialization Strategy
Commercially ·iable products are generally oí high quality, designed to be readily
manuíacturable at low costs and to be launched into the market quickly. Commercialization
also in·ol·es íormulating the manuíacturing and supply chain strategies, de·ising
implementation plans, and implementing such plans. It can also be seen as the process oí
introducing a new product or production method into the market. As a process, it can be
considered as one íor introducing a new product, pre·iously proto-tested product, into the
market. It happens when a company decides to launch its new product into the market place,
and requires the building oí a marketing plan and budget to launch the product. Successíul
commercialization will ultimately lead to or exceed predicted sales íorecasts.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 24
8ources oI Va|ue 0onvers|on Nechan|sms
luuoval|ous
Comp|emeula|y Bus|uess Assels 0ul-L|ceuse
> Pu|chas|ug Jo|ul Veulu|e
> Nauulaclu||ug Sl|aleg|c A|||auce
> û|sl||bul|ou luleg|ale w|lh Cu||eul Bus|uess
> Sa|es C|eale uew bus|uess
ûouale
Sa|e
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
Table 5: Sources of Value and Conversion Mechanisms
Commercialization should not, howe·er, be coníused with sales, marketing, or business
de·elopment.
1he actual launch oí a new product, its commercialization, is the íinal stage oí new product
de·elopment, and the one where the most money is spent íor ad·ertising, sales promotion,
and other marketing eííorts. lor this reason, it is important to lay out a commercialization
strategy íor each inno·ation. Such a strategy will speciíy milestones to be achie·ed and how
each inno·ation will be íunded. 1he table below shows one commercialization strategy
approach, with the series oí íinancing options that a company might consider in mo·ing its
technology írom concept to the marketplace.
1he concept de·elopment stage is so early that the entrepreneur oíten has to undertake much
oí the íinancing her,himselí, as the product is still in the idea stage, still too young to attract
external stakeholders. 1he same can be said oí the business case de·elopment stage. At the
prototyping stage, it is likely that some external stakeholders are able to see the ·alue
proposition and may in·est in it by pro·iding seed capital. It is also possible to get some seed
íunding íor the intellectual property protection stage. 1he beta testing and U,L appro·al
stages can be íunded by corporate partners through a ·igorous marketing strategy oí the idea
and its potential. 1he last two stages, marketing and scale-up oí production should ideally be
íinanced by earnings retained in the business ,1ouhill, et al. 2008,.
25 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
The ser|es oI I|nanc|ng opI|ons IhaI a company may cons|der When mov|ng |Is Iechno|ogy Irom concepI Io
Ihe mar|eIp|ace
N||esIone hoW Funded?
a. Coucepl deve|opmeul Pe|soua| o| lam||y sav|ugs
b. Bus|uess case deve|opmeul Pe|soua| o| lam||y sav|ugs
c. P|ololype deve|opmeul Seed luud|ug
d. lule||eclua| p|ope|ly p|olecl|ou Seed luud|ug
e. Bela lesl|ug Co|po|ale pa|lue|
l. u/L app|ova| Co|po|ale pa|lue|
g. Tesl ma||el |ul|oducl|ou Comme|c|a| bau| |oau
h. Na||el|ug Rela|ued ea|u|ugs
l. Sca|e-up p|oducl|ou Rela|ued ea|u|ugs
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
Table 6: Commercialization Strategy
4. Managing a Small Business
1his part oí the training manual on small business management highlights pertinent areas
critical to running a successíul small business. It explores problems íaced by small businesses,
the legal en·ironment, the competition, sourcing íor íunds, and publicity íor the business. 1he
íundamentals required íor creating a ·iable ·enture are also discussed.
a. Defining a small business
A small business is a business that is pri·ately owned and operated, with a small number oí
employees and relati·ely low ·olume oí sales. Small businesses are normally pri·ately owned
corporations, partnerships, or sole proprietorships. 1he legal deíinition oí "small" ·aries by
country and by industry, ranging írom íewer than 15 employees under the Australian lair
\ork Act 2009, 50 employees in the Luropean Union and íewer than 500 employees to qualiíy
íor many USA Small Business Administration programs. Small businesses can also be
classiíied according to other methods such as sales, assets, or net proíits. In Kenya, there is no
standard deíinition oí a small business but lenders tend to ha·e a generally accepted one -
"micro-enterprises" are those with 10 or íewer workers, "small enterprises" ha·e írom 11 to 50
workers, and "medium enterprises" ha·e írom 51 to 100 workers, and that an SML is a
business with six to íiíty employees or with annual re·enue below Kshs.50 million ,Ndede-
Amadi, 2008,.
b. Advantages of a small business
A small business can be started at a ·ery low cost and on a part-time basis. A small business is
also well suited to marketing because it can easily ser·e specialized niches, something that
would ha·e been more diííicult prior to the internet re·olution which began in the late 1990s.
Adapting to change is crucial in business and particularly small business, not being tied to any
inertia, it is typically easier íor a small business to respond to the marketplace quickly. Small
business proprietors tend to be intimate with their customers and clients which results in
greater accountability and maturity. Independence is another ad·antage oí owning a small
business. One sur·ey oí small business owners showed that 38° oí those who leít their jobs
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 26
at other companies said their main reason íor lea·ing was that they wanted to be their own
bosses. lreedom to operate independently is a reward íor small business owners. In addition,
many people desire to make their own decisions, take their own risks, and reap the rewards oí
their eííorts. Small business owners ha·e the satisíaction oí making their own decisions
within the constraints imposed by economic and other en·ironmental íactors. lowe·er,
entrepreneurs ha·e to work ·ery long hours and need to understand that ultimately their
customers are their bosses ,Abrams, 2000,.
c. Problems faced by small businesses
Small businesses oíten íace a ·ariety oí problems related to their size. A írequent cause oí
bankruptcy is undercapitalization. 1his is oíten a result oí poor planning rather than
economic conditions - it is a common rule oí thumb that the entrepreneur should ha·e access
to a sum oí money at least equal to the projected re·enue íor the íirst year oí business in
addition to his anticipated expenses. lor example, ií the prospecti·e owner thinks that he will
generate Kshs.1, 000,000 in re·enues in the íirst year with Kshs.1, 500,000 in start-up
expenses, then he should ha·e no less than Kshs.2,500,000 a·ailable. lailure to pro·ide this
le·el oí íunding íor the company could lea·e the owner liable íor all oí the company's debt
should he end up in bankruptcy court, under the theory oí undercapitalization - depending
on the country in which the business is located. In addition to ensuring that the business has
enough capital, the small business owner must also be mindíul oí contribution margin ,sales
minus ·ariable costs,. 1o break e·en, the business must be able to reach a le·el oí sales where
the contribution margin equals íixed costs. \hen they íirst start out, many small business
owners underprice their products to a point where e·en at their maximum capacity, it would
be diííicult and sometimes e·en impossible to break e·en. Cost controls or price increases
oíten resol·e this problem ,Ndede-Amadi, 2008,.
d. Marketing the small business
linding new customers is one oí the major challenges íor small business owners. Small
businesses typically íind themsel·es strapped íor time but in order to create a continual stream
oí new business, they must work on marketing their business aggressi·ely. Common
marketing techniques íor small business include networking, word oí mouth, customer
reíerrals, yellow pages directories, tele·ision, radio, outdoor ,roadside billboards,, print, email
and internet marketing. Llectronic media like tele·ision can be quite expensi·e and is
normally intended to create awareness oí a product or ser·ice rather than to sell it ,Ramsey &
\indhaus, 2009,.
Many small business owners íind internet marketing more aííordable. Google Ad\ords and
\ahoo! Search Marketing are two popular options oí getting small business products or
ser·ices in íront oí moti·ated \eb searchers. Successíul online small business marketers are
27 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
also adept at utilizing the most rele·ant keywords in their site content. Ad·ertising on niche
sites can also be eííecti·e, but with the long tail oí the internet, it can be time intensi·e to
ad·ertise on enough sites to garner an eííecti·e reach. Creating a business \eb site has
become increasingly aííordable with many 'do-it-yourselí' programs now a·ailable íor
beginners. A \eb site can pro·ide signiíicant marketing exposure íor small businesses when
marketed through the Internet and other channels. Some popular ser·ices are \ordPress,
Joomla and Squarespace.
Social media has pro·en to be ·ery useíul in gaining additional exposure íor many small
businesses. Many small business owners use lacebook and 1witter as ways oí reaching out to
their loyal customers to gi·e them news about specials oí the day or special coupons and to
generate repeat business. 1he relational nature oí social media, along with its immediacy and
24-hour presence lend intimacy to the relationship small businesses can ha·e with their
customers, while making it more eííicient íor them to communicate with greater numbers.
lacebook ads are also a ·ery cost-eííecti·e way íor small businesses to reach a targeted
audience with a ·ery speciíic message.
In addition to the social networking sites, blogs ha·e become a highly eííecti·e way íor small
businesses to position themsel·es as experts on issues that are important to their customers.
1his can be done with a proprietary blog or by using a 'backlink' strategy wherein the marketer
comments on other blogs and lea·es a link to the small business' own web site.
A solid public relations strategy that utilizes speaking engagements, press releases, íeature
stories, e·ents and sponsorships can also be a ·ery cost-eííecti·e way to build a loyal íollowing
íor a small business ,Ndede-Amadi, 2008,.
e. Principles of small business management
Managing a small business is not íundamentally diííerent írom managing a large organization.
One major diííerence, howe·er, is that a small business is generally run and managed by an
owner manager, who is oíten the entrepreneur him,herselí, whereas a large corporation is
oíten run by a manager who does not necessarily own shares in the company. 1he rest is just a
matter oí diííerences on scale. A small business operates on a ·ery small scale compared to a
corporation.
Lííecti·e and eííicient management leads to success, by achie·ing the objecti·es and goals oí
the organization or small business. \hen taking on the management oí a company, there are
certain essential skills that one must recognize as necessary and attain. 1hese are 1echnical
Skills, luman Skills, and Conceptual Skills. 1echnical skills consist oí the ability to process
the technical side oí a job or part oí your work. Proíiciency in the technical knowledge oí a
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 28
manager's job and company is critical ií the job requires a manager to be "hands on" with the
work. luman skill is the power to communicate with íellow workers. It is a skill that 99° oí
all businesses look íor in a manager. Learning how to eííecti·ely communicate with people is
a key principle oí management that a manager needs in order to be successíul in the role and
position oí a small business owner manager. Conceptual skills in·ol·e the íormulation oí
ideas and concepts. Managers that ha·e great conceptual skills generally possess the power to
create inno·ati·e ideas and to deli·er abstract theories. 1his skill set in the management oí a
business will gi·e the small business the edge it needs against its competitors ií it can be used
to íormulate groundbreaking concepts that will push it ahead oí the competition ,Axson,
2010,.
f. Small business management concepts
Any organization, whether new or old, whether small or big, needs to run smoothly to achie·e
the goals and objecti·es íor which it was set up. 1owards this goal, it has to de·elop and
implement its own management concepts. 1here are íour basic management concepts that
allow any organization to handle planned, tactical, and set decisions as planned, that gi·e rise
to the íour concepts oí management which are to plan, organize, direct, and control ,Axson,
200¯,. Lach oí these is discussed next.
Ptavvivg
Planning is the íoundation area oí management. It is the base upon which all the areas oí
management should be built. Planning requires administration to assess where the small
business is presently and where it would be in the íuture. lrom there an appropriate course oí
action is determined and implemented to attain the business's goals and objecti·es. Planning
is an ongoing course oí action.
Orgavi¸ivg
1he second íunction oí management is getting prepared and getting organized. 1hrough this
process, management will now determine the inside directorial coníiguration, establish and
maintain relationships, and assign required resources. \hile determining the inside directorial
coníiguration, management ought to look at the diííerent di·isions or departments. 1hey also
see to the harmonization oí staíí, and try to íind out the best way to handle the important
tasks and expenditure oí iníormation within the small business. Management determines the
di·ision oí work according to its need. It also has to deíine suitable departmental structures to
handle the authority and responsibilities.
Directivg
Directing is the third íunction oí management. \orking under this íunction helps
management to control and super·ise the actions oí staíí. 1his helps them to assist the staíí
29 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
in achie·ing the business's goals and also accomplishing their personal and career goals which
can be powered by moti·ation, communication, department dynamics, and department
leadership. Lmployees play an important role in achie·ing the small business's goals. lere lies
the reason why managers íocus on moti·ating their employees - in the íorm oí prize and
incenti·e programs based on job períormance and geared in the direction oí the employees
requirements. It is ·ery important to maintain a producti·e working en·ironment, to build
positi·e interpersonal relationships, and to acquire problem sol·ing skills, which can be done
only with eííecti·e communication. Understanding the communication process and working
on areas that need impro·ement help owner managers become more eííecti·e
communicators.
Covtrottivg
Control, the last oí the íour íunctions oí management, includes establishing períormance
standards which are based on the small business's objecti·es. It also in·ol·es e·aluating and
reporting oí actual job períormance, which iníorms íurther correcti·e and pre·enti·e actions.
g. Growing the Business
According to Ramsey & \indhaus, ,2009,, there are essentially íour o·er-arching strategies
íor growing a business.
1. Get more customers and clients
2. Get your customers,clients to buy more írequently
3. Get your customers,clients to spend more money per transaction
4. Keep your customers longer
\hile there are only íour primary strategies íor growing a business, there are literally dozens
oí diííerent techniques you can use to implement these íour strategies. Strategies are
important because they gi·e us something concrete. Strategies tell us \lA1 to do. Strategies
endure while techniques may come and go. But the techniques are equally important.
1echniques tell us lO\ to do it. Below is a list oí techniques íor growing a business,
categorized by the íour strategies.
=1: Cettivg vore cv.tover.
\hen we talk about growing a business, this is by íar the most common approach: get more
customers. And while this is certainly an important step, it is also the most expensi·e way to
grow a business. And it takes the most eííort, too. lere are nine ways to get more customers:
· Dri·e more traííic to your web site
· Impro·e the eííecti·eness oí your ad·ertisements and sales letters
· lind new,better places to ad·ertise ,newspaper, 1V, social media, etc.,
· Create stronger oííers that appeal to more people in your target market
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S0
· Lnlist the help oí aííiliates to reach more people
· Ask íor reíerrals
· Down-sell prospects who reject your initial oííer
· Craít irresistible guarantees so your customers ha·e little or no risk when they buy
· lost a íree tele-seminar where you can demonstrate your expertise and ask íor the sale
=2: Cet ,ovr cv.tover. to bv, vore freqvevtt,
Most entrepreneurs and business owners íocus on getting the íirst sale, and then neglect to
e·er get a second. 1his is uníortunate because you make much more proíit on subsequent
sales. lere are six ways to get your customers to buy írom you more írequently:
· Create a customer mailing list, send them customers-only oííers on a weekly or monthly
basis
· Send out promotional emails to your house list on a more írequent basis
· Run time-limited or quantity-limited promotions and use scarcity to get customers to act
now instead oí later
· Design a product íunnel that automatically mo·es your clients írom one purchase to the
next
· Start a monthly continuity program that automatically bills customers e·ery month ,print
newsletter, membership site, etc.,
· Use auto-responder email sequences to automatically introduce your prospects to all oí
your products
=²: Cet ,ovr cv.tover. to .peva vore vove, per trav.actiov.
1his is probably the simplest and easiest way to grow a business. But íor some reason, many
entrepreneurs a·oid this strategy because they íear how their customers will react. 1hey íear
their customers don't ha·e more money to spend. lere's a suggestion: Get o·er your íear. By
implementing these techniques, you can easily grow your business 5° or more within the next
íew months. A word oí caution though. raising prices is not something you do willy-nilly. It
helps to ha·e a good reason íor raising prices, it also helps to add more ·alue to a
product,ser·ice. lere are se·en ways to get your customers to spend more money per
transaction:
· Increase your íees and prices
· Add more ·alue to your products and ser·ices
· Aíter a customer buys one product, up-sell or cross-sell them another related product
· Oííer payment plans on your expensi·e products and ser·ices
· Charge íor shipping separately
· Use phone sales to help close large ticket purchases
· Do a product launch
S1 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
=1: Keep ,ovr cv.tover. tovger
1his íourth strategy is oíten o·erlooked, but is highly eííecti·e. Ií you can keep a customer or
client íor an extra month or two, or e·en an extra year, that could bring thousands oí extra
dollars to you - especially ií you ha·e a continuity program or a well-designed promotional
calendar. lere are nine ways to encourage loyalty and keep your customers íor a longer
period oí time:
· Send out surprise bonus giíts with new purchases ,you may e·en consider gi·ing away
business promotional items that are branded with your business name so you stay in the
top oí your customers' minds,
· Create a íollow-up sequence oí communication designed to get customers and clients to
actually use the product or ser·ice they ha·e purchased
· Call your best customers and thank them íor their business
· Send out birthday cards and Christmas cards and giíts
· Deli·er more ·alue than you ha·e promised to deli·er ,go abo·e and beyond,
· Ask your customers íor testimonials ,aíter a customer has publicly declared their support
oí you, they will automatically be more loyal to you and your business,
· Create incenti·es to encourage customer longe·ity
· Publish the date when a person subscribes and,or becomes a customer ,example:
Customer since 4,99,
· Gi·e your customers public recognition in your newsletter or blog
h. Lxpanding Your Business
1here are many practical ways to expand your business. \hen you íirst started your business,
you probably did a lot oí research. \ou may ha·e sought help írom ad·isors, you may ha·e
gotten iníormation írom books, magazines and other readily a·ailable sources. \ou in·ested a
lot-in terms oí money, time and sweat equity to get your business oíí the ground. 1hose who
ha·e sur·i·ed start-ups and built successíul businesses may be wondering how to take the next
step and grow the business beyond its current status. 1here are numerous possibilities, 10 oí
which are outlined here. Choosing the proper one ,or ones, íor a particular business depends
on the type oí business, a·ailable resources, and how much money, time and sweat equity the
small business owner is willing to in·est all o·er again ,Patterson & lloyd, 2009,.
Opev avotber tocatiov
1his might not be the best choice íor business expansion, but it is listed íirst here because that
is what oíten comes to mind íirst íor so many entrepreneurs considering expansion. "Physical
expansion is not always the best growth answer without careíul research, planning and
number-planning. lor anyone considering another location, consider the íollowing tips:
· Make sure you are maintaining a consistent bottom-line proíit and that you ha·e shown
steady growth o·er the past íew years
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S2
· Look at the trends, both economic and consumer, íor indications on your company's
staying power
· Make sure your administrati·e systems and management team are extraordinary, as you
will need them to get a new location up and running
· Prepare a complete business plan íor a new location
· Determine where and how you will obtain íinancing
· Choose your location based on what is best íor your business, not íor your wallet
Offer ,ovr bv.ive.. a. a fravcbi.e or bv.ive.. opportvvit,
Streamlining internal systems and marketing in nearby towns, cities, and countries in the
region will help bring in the íirst íew íranchisees. \ith se·eral units and some time under your
belt, you will then sign on with regional íranchise broker íirms. \ith 10 or more íranchisees
regionally, you can stay true to your ·ision oí steady growth. It is ad·isable to network within
the íranchise community - becoming a member oí a íranchise association and íinding a good
íranchise attorney as well as a mentor who has been through the íranchise process. 1here is
need to be open to growing and expanding your ·ision but at the same time, be a strong leader
who knows how to keep the key ·ision in íocus at all times.
íicev.e ,ovr proavct
1his can be an eííecti·e, low-cost growth medium, particularly ií you ha·e a ser·ice product
or a branded product. \ou can recei·e upíront monies and royalties írom the continued sales
or use oí your product - ií it is successíul. Licensing also minimizes your risk and is low cost in
comparison to the price oí starting your own company to produce and sell your brand or
product. 1o íind a licensing partner, start by researching companies that pro·ide products or
ser·ices similar to yours. But beíore you set up a meeting or contact any company, íind a
competent attorney who specializes in intellectual property rights. 1his is the best way to
minimize the risk oí losing control oí your ser·ice or product.
íorv av attiavce
Aligning yourselí with a similar type oí business can be a poweríul way to expand quickly. Ií
the thought oí shelling out commissions or any oí your own money íor the sake oí an alliance
makes you uncomíortable, look at the big picture: Ií you want to keep all the money to
yourselí, you are really shooting yourselí in the íoot. \ou need to align with other businesses
that already ha·e lists oí prospecti·e customers. It is the íastest way to success ,lar·ard
Business School Press, 2002,.
Direr.if,
Di·ersiíying is an excellent growth strategy, as it allows you to ha·e multiple streams oí
income that can oíten íill seasonal ·oids and, oí course, increase sales and proíit margins. It
SS ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
broadens your target audience and increases your presence in the marketplace, gi·ing you the
credibility to approach a much larger customer base. lere are se·eral ideas íor di·ersiíying
your product or ser·ice line:
· Sell complementary products or ser·ices
· 1each adult education or other types oí classes
· Import or export yours or others' products
· Become a paid speaker or columnist
1arget otber var/et.
\our current market is probably ser·ing you well, but it is important to consider other
markets. . lor example, ií your consumer market ranges írom teenagers to college students,
think about where these people spend most oí their time. Is it íeasible that you could
introduce your business to schools, clubs or colleges· \ou could oííer discounts to special-
interest clubs or donate part oí your proíits to schools and associations. Let your imagination
take you where you need to be. 1hen take your product to the markets that need it.
!iv a gorervvevt covtract
1he best way íor a small business to grow is to ha·e the go·ernment as a customer, since it is
the largest buyer oí goods and ser·ices in the country. \orking with your local small business
de·elopment oííices as well as with your local and regional economic de·elopment agencies
will help you determine the types oí contracts a·ailable to your type and size oí business. A
íair amount oí patience is required in working to secure most go·ernment contracts, howe·er,
Requests íor proposals ,RlPs, usually require a signiíicant amount oí groundwork and
research. Ií you are not prepared to take the time to íully comply with RlP terms and
conditions, you will only be wasting your time.
Merge ritb or acqvire avotber bv.ive..
1his is a good small business growth strategy, although the process can be intense and
exhausting. lere are íour keys to the success oí some acquisitions:
Customer retention
· Do what it takes to ensure retention oí a large customer base
· Staíí retention
Rehire or retain the best and brightest oí the other company's staíí
· Melding technologies
One oí the reasons íor acquisition is similarities between the product architectures oí the two
companies. 1his allows íor a smooth integration oí the two technologies - as the case may be.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S4
íocv.
oOne oí the biggest reasons íor an acquisition to work well is the íocus that the new company
brings to an otherwise neglected product or ser·ice.
í·pava gtobatt,
\ou will need a íoreign distributor who will carry an in·entory oí your product and resell it in
their domestic markets. \ou can locate íoreign distributors by scouring your city or region íor
a íoreign company with the help oí others such as the Lxport Promotion Council oí Kenya.
1rade groups, íoreign chambers oí commerce, and branches oí chambers oí commerce in
íoreign countries are also good places to íind distributors you can work with ,Mullins &
Komisar, 2009,.
í·pava to tbe ívtervet
Landing your \eb site in search engine results is key as more than 80 percent oí traííic comes
·ia search engines. \ith now more than 4 billion \eb pages, and with traííic on the Internet
doubling e·ery 100 days, making your \eb site ·isible is ·ital. Design and programming are
also important, but it is your content that will draw a ·isitor into your site and get them to stay.
Putting together a content strategy based on user beha·ior, measuring and tracking ·isitor
click streams, and writing the content based on researched keywords will get you excellent
search results and meet the needs oí your ·isitors ,Mullins & Komisar, 2009,.
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5. lrom leasibility Plan to
Business Plan
a. Ieasibility Plan
According to Berrie ,2008,, a comprehensi·e business íeasibility study contains detailed
iníormation about your business structure, your products and ser·ices, the market, logistics
oí how you will actually deli·er a product or ser·ice, the resources you need to make the
business run eííiciently, as well as other iníormation about the business. A íeasibility study
assesses a business initiati·e and considers both its pros and cons, analyzing alternati·e
potential business scenarios. It looks at the ·iability oí an idea with emphasis on identiíying
potential problems ,and opportunities,, and attempts to answer one main question: \ill the
idea work and should you proceed with it· All íeasibility studies should look at ií things work,
how they will work, and identiíy potential problems. A íeasibility study can be carried out on
an idea, a campaign, a product, a process, or an entire business. A íeasibility study precedes a
business plan. Beíore writing a business plan, one needs to identiíy how, where, and to whom
they intend to sell a ser·ice or product. One also needs to assess the competition and to íigure
out how much money they need to start the business and to keep it running until it is
established - all oí which is achie·ed through a íeasibility study. leasibility studies address
things like where and how the business will operate. 1hey pro·ide in-depth details about the
business to determine ií and how it can succeed. 1hey ser·e as a ·aluable tool íor de·eloping
a winning business plan.
i. The importance of a feasibility study
1he iníormation you gather and present in your íeasibility study will help you:
· List in detail all the things you need to do to make the business work,
· Identiíy logistical and other business-related problems and solutions,
· De·elop marketing strategies to con·ince a bank or in·estor that your business is worth
considering as an in·estment, and
· Ser·e as a solid íoundation íor de·eloping your business plan.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S6
L·en ií you ha·e a great business idea, you still ha·e to íind a cost-eííecti·e way to market and
sell your products and ser·ices. 1his is especially important íor store-íront retail businesses
where location could make or break your business. lor example, most commercial space leases
place restrictions on businesses that can ha·e a dramatic impact on income. A lease may limit
business hours, days, and parking spaces, restrict the product or ser·ice you can oííer, and in
some cases, e·en limit the number oí customers your business can recei·e each day.
ii. The Components of a Ieasibility Study
· De.criptiov of tbe ßv.ive..: 1he product or ser·ices to be oííered and how they will be
deli·ered.
· Mar/et íea.ibitit,: Includes a description oí the industry, current market, anticipated íuture
market potential, competition, sales projections, potential buyers, etc.
· 1ecbvicat íea.ibitit,: Details how you will deli·er a product or ser·ice ,i.e., materials, labor,
transportation, where your business will be located, technology needed, etc.,.
· íivavciat íea.ibitit,: Projects how much start-up capital is needed, sources oí capital,
returns on in·estment, etc.
· Orgavi¸atiov íea.ibitit,: Clearly states what legal and operational structure will work íor
the organization. 1hese include proíessional skills necessary íor achie·ement oí its aims.
Market Ieasibility
\hat is a Market leasibility Study and how does it diííer írom a Marketing Plan· A íeasibility
study analyzes potential business scenarios. A Marketing Plan, on the other hand, maps out
speciíic ideas, strategies, and campaigns based on íeasibility study in·estigations, which are
intended to be implemented. One can think oí market íeasibility studies as logistical studies
and marketing plans as speciíic, planned courses oí action to take ,Dougherty & Gray, 2006,.
1hings to consider in a market íeasibility study include:
· Description oí the Industry
· Current Market Analysis
· Competitor Analysis
· Anticipated luture
· Market Potential
· Potential Buyers and Sources oí Re·enues
· Sales Projections
How to Write an Industry Description
Gi·e a brieí one-to-two paragraph description oí the industry your business is categorized
under. Determining your industry is important íor recei·ing go·ernment contracts, attracting
in·estors, and íor recei·ing grants ,ií your íormation is a nonproíit,.
S7 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Analyzing your current market
1his section oí a market íeasibility study describes the current market íor your product or
ser·ice. Ií you are oííering something so unique that there are íew market statistics, you can
either use related industry iníormation, or e·en conduct your own independent study. \ays
to conduct your own research íor new ideas include: polling Internet íorums, questionnaires
addressed to targeted consumer groups or the general population, or e·en customer sur·eys.
Any "prooí" you ha·e that there is a demand ,or market, íor your product or ser·ices will help
you sell your idea. 1his is particularly important ií you are marketing something unique, or
within a ·ery small and specialized market. \ou need to show that your idea is no·el because
you ha·e íound a niche and not because there is no existing market íor the idea. A good
source íor íinding out what is selling ,and what is not, is the media, among many sources.
Industries showing employee growth are oíten good indicators oí an industry's o·erall
stability. Massi·e layoíís by íew employers oí employees indicate íewer business
opportunities. \here there is demand íor something, there should be correlating growth in
employment, the number oí new companies being íormed, and in the industry's o·erall
combined re·enue.
Anticipated future market (based on industry trends)
1his section should include a narrati·e description as well as attached spreadsheets, graphs
and tables showing trends, statistics, or projections. 1here are no sure-íire ways to tell ií an
industry will ha·e measurable growth in the íuture, but you can make logical and reasonable
predictions based on trends, past growth, and current markets.
|.e fact., vot fictiov: It is critical in this section that your projections are íact-based as much as
possible. Any business takes risks, the key is to minimize those risks by careíully studying
businesses that are already successíul. Rather than target just the entire industry, try to isolate
similar businesses and study what they are doing, how they are doing it, and their íinancial
track records.
1i.it ,ovr covpetitor.´ reb.ite.: \ou can obtain a lot oí iníormation by just ·isiting company
websites and looking o·er product lines. Look íor discontinued products or ser·ices and high-
priced items. Somewhere in between these two things are probably the most stable long-term
items. Discontinued might mean consumers are no longer demanding the product, while
high-priced items may indicate a íad.
íoo/ at big covpavie.´ .trategie.: Since big companies spend big monies on market research, take
ad·antage oí their spent money and public iníormation.
lor example, ií you are trying to crack the Soít drink market, look at Coca Cola and our own
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S8
Kuguru loods or Milli. \hat new product lines or ser·ices are they oííering· Chances are
good that they spent millions oí Kenya Shillings researching industry trends to de·elop new
product ideas ,Ndede-Amadi, 2008,.
´tva, pre.. retea.e.: Look íor press releases about businesses in your industry. Press releases are
an ad·ertisement, but they also oíten tell why a company is branching out, closing a di·ision,
or changing its product line. 1hey ha·e already done the research íor you so do not hesitate to
take clues írom them.
Tips on how to research local competition in business
Ií you are planning to ser·e only a local market, start by identiíying e·ery competitor within a
íiíty ,50, mile radius. 1he íastest way to do this is to use a telephone book or an online business
directory.
· List each competitor by location and distance írom you, and írom each other ,you should
closely examine all competing businesses that are within íiíteen ,15, kilometers oí your
location,,
· Consider their locations, business hours, and how long they ha·e been in business ,these
things can help you determine how hard it will be to establish a similar business in the
same geographic area,.
\ou should also make note oí any similar businesses in your area that ha·e recently close
down. 1here may be a reason such as poor location, high taxes or operating restrictions, or
there may not be enough demand íor the product or ser·ice in that area to sustain a business.
Iníormation obtained írom researching local competitor can tell you what works and what has
not worked.
How to calculate sales projections
Sales projections can be a challenge íor any new business owner because there is little or no
track record to support how íast you will grow or what products or ser·ices will sell best.
lowe·er, sales projections should íactor in how much time and money will be in·ested into
the business, and the markets you will be targeting.
lor example, ií you sell your products or ser·ices to Nakumatt or 1uskeys, your sales are more
likely to grow íaster and your proíits to be higher than ií you sell your product at the Kisumu's
Jubilee Market or only in other local markets and shops ,Ndede-Amadi, 2008,.
lor these reasons, it is important that you write a market íeasibility study íirst. \our market
study will help you decide where to sell your product or ser·ices, and what products and
ser·ices are most likely to generate the most re·enue. Ií you ha·e an Internet-based business:
S9 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· Lstimate the total traííic ,number oí ·isitors, to your website each month
· Project anticipated site traííic ·olume o·er time
· Use traííic projections to estimate the a·erage number oí sales per e·ery 10,000 ·isits to
your site
· Calculate the a·erage amount íor each sale
1he more traííic you can dri·e to your site, the more opportunities you ha·e íor making a sale.
Do you ha·e good Search Lngine Optimization ,SLO, skills· Do you ha·e your website li·e
and ready to go· 1hese things are important to all Internet businesses because as your site
becomes more popular, you can project an increase in sales.
1ip: Summarize sales projections in the body oí the study, but attach a spreadsheet showing
actual numbers based on sales projections.
How to identify potential customers, clients, and contract sources
1his component oí your small business market íeasibility study should be descripti·e. \our
potential customers, clients, and contract sources should include the íollowing:
· A list oí current customers, clients, and contracts and the potential íor new or renewed
contracts
· Any sales leads that may generate new customers or clients
· A list oí go·ernment contracting agencies with a brieí description oí what type oí
contracts they solicit, and how they pertain to your industry
· A list oí market types you currently target or intend to target, such as senior citizens,
working mothers, organizations, specialty retailers, etc.
Depending upon the nature oí your business, it may not be possible to associate speciíic
amounts oí re·enue with a particular market, but you can at least try to estimate the
percentage oí total re·enue expected írom each source.
lor example, ií you plan to sell products to íi·e specialty stores, list each store you plan to sell
to and total o·erall re·enue íor a category specialty store` rather than an amount íor each
indi·idual store.
Technical Ieasibility
1he 1echnical leasibility Study assesses the details oí how you will deli·er a product or ser·ice
,i.e., materials, labor, transportation, where your business will be located, technology needed,
etc.,. 1hink oí the technical íeasibility study as the logistical or tactical plan oí how your
business will produce, store, deli·er, and track its products or ser·ices.
A technical íeasibility study is an excellent tool íor trouble-shooting and long-term planning.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 40
In some cases it ser·es as a ílow chart oí how your products and ser·ices e·ol·e and mo·e
through your business to physically reach your market.
The Technical feasibility study must support your financial information
Do not make the mistake oí trying to entice in·estors with your staggering growth projections
and potential returns on their in·estment that only includes income ,re·enue, to the business.
\ith any increase in re·enue there is always an increase in expenses. Lxpenses íor technical
requirements ,i.e., materials and labor, should be noted in the technical íeasibility study.
\ou should also not strictly rely on íeasibility study conclusions to impress an in·estor. An
experienced in·estor or lending institution will read your entire report and come to their own
conclusions. 1hereíore, it is critical that the technical and íinancial data in your study reconcile.
Ií other parts oí your íeasibility study shows growth, you will also ha·e to project labor and
other costs and the technical ability to support that growth.
1he technical component ser·es as the written explanation oí íinancial data because ií oííers
you a place to include detailed iníormation about why an expense has been projected high or
low, or why it is e·en necessary. It demonstrates to potential in·estors and lenders ,and in some
cases, potential clients, that you ha·e thought through the long-term needs your business will
ha·e as it grows.
Preparing an outline for writing your technical feasibility study
1he order in which you present technical iníormation is not as important as making sure you
ha·e all the components to show how you can run your business. \ou do not ha·e to include
speciíic íinancial iníormation in the technical portion oí your íeasibility study, but all
iníormation in this component must support your íinancial data represented elsewhere. Basic
things that most businesses need to include in their technical íeasibility studies include:
· Materials
· Labor
· 1ransportation ,or Shipping,
· Physical Location
· 1echnology
Calculating material requirements
In this section you list the materials you need to produce a product or ser·ice, and where you
will get those materials. Include iníormation such as ií ·olume discounts will be a·ailable as
your business grows, or ií you e·er plan to manuíacture your own parts at some point in time.
1hings to include in your list oí materials are:
· Parts needed to produce a product,
41 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· Supplies ,glue, nails, etc.,, and
· Other materials that are in·ol·ed in producing or manuíacturing your product.
\ou do not need to include actual íinancial data in this portion oí the study but íinancial data
supporting your narrati·e assessment should be included in a separate spreadsheet as an
attachment.
Iinancial Ieasibility Study
A íinancial íeasibility study is an assessment oí the íinancial aspects oí a business, in this case,
íor starting and running a business. It considers many things including start-up capital,
expenses, re·enues, and in·estor income and disbursements. Other portions oí a complete
íeasibility study will also contribute data to your basic íinancial study. A íinancial íeasibility
study can íocus on one particular project or area, or on a group oí projects ,such as ad·ertising
campaigns, ,Justis & Kreigsmann, 19¯9,. lowe·er, íor the purpose oí establishing a business
or attracting in·estors, you should include at least the íollowing three key things in your
comprehensi·e íinancial íeasibility study:
· Start-up capital requirements
· Start-up capital sources, and
· Potential returns íor in·estors
Start-up capital requirements
Start-up capital is simply how much cash you need to start your business and keep it running
until it is selí-sustaining. \ou should include enough capital íunds ,cash, or access to cash, to
run the business íor one to two years.
Iinding start-up capital funding sources
1here are many ways to raise capital íor your business, but no matter what route you take,
in·estors are more likely to in·est, banks are more likely to appro·e loans, and large
corporations are more likely to gi·e you contracts, ií you ha·e personally in·ested into the
business yourselí. \hen you make a list oí íunding sources, be sure to include anything that
you can contribute to the business, including íree labor. Ií you are starting a nonproíit
organization, your donated proíessional time may e·en be tax deductible.
Potential returns for investors
Determine your start-up cost structure: Running your own soítware company is going to ha·e
diííerent start-up requirements than opening a pet store, íor example. Some sources ,e.g.
Startupnation.com, say there are six at least cost categories íor new companies as íollows:
· Cost oí sales
· Proíessional íees
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 42
4S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· 1echnology costs
· Administrati·e costs
· Sales and marketing costs
· \ages and beneíits
Gi·e thought to how these cost categories will be weighted across your business. Going back
to the earlier example, the soítware íirm presumably would want to allocate more money to
technology while the pet store presumably would need se·eral shiíts oí employees, which
means wages will carry a higher cost ,Schwetie & Vaseghi, 200¯,.
De·elop comparables: Look at industry leaders to help predict your own business's costs. Ií
you are opening a linance company, scan the íinancial statement oí a similar company that is
publicly traded, e.g. Centum, In·es1ech etc. Ob·iously your re·enue numbers will look a little
diííerent, but break down how much a coííee chain spends on cost oí sales and administrati·e
expenses as a percentage oí re·enue. Keep in mind that large companies and chains will be
more eííicient since they ha·e greater buying power and economies oí scale than a start-up,
but you can still use these percentages as goals to shoot íor.
Contact trade associations, small-business message boards or entrepreneurs in related íields:
1rade associations are an in·aluable source oí iníormation íor both new and established
companies e.g. Matatu Owners Association, Chamber oí Commerce, etc. Also, don't be
aíraid to seek out other entrepreneurs who ha·e set up shop in your industry, or perhaps a
related one, and talk to them about their experience with start-up costs, especially unexpected
costs ,Ndede-Amadi, 2008,.
Project start-up costs conser·ati·ely: Business success stories like Google, Kenya Airways,
Pollmans etc were not o·ernight sensations. Keep in mind that you will most likely need a íew
months oí íunding to co·er expenses beíore you e·en open íor business when calculating
start-up costs. And once you do begin operating, it likely will take a signiíicant amount oí time
until the business is selí-sustaining. \hen approaching banks and other lenders íor money, try
to include a substantial cushion íor beginning operations to ensure you will ha·e enough
money to set up an oííice, take orders, hire employees ií necessary, and co·er other related
costs. Be reasonable with your re·enue assumptions in the early stages and be conser·ati·e
with cost projections. It is also possible to structure a small-business loan to deíer payments
during the initial operating period.
Separate one-time start-up costs írom recurring costs: Distinguish between which costs you
will ha·e to account íor year-aíter-year, such as salaries and rent, and which upíront costs will
be one-time charges, such as oííice íurniture. 1his should allow you to establish a budget íor
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 44
aíter the start-up period. Look íor opportunities to delay non-·ital expenses such as oííice
decorations until aíter you ha·e begun getting some business ,Georgakellos & Marcis, 2009,.
Organizational Ieasibility Study
According to \oodmorappe ,1996,, the purpose oí an organizational íeasibility study is to
deíine the legal and corporate structure oí the business. An organizational íeasibility study
may also include proíessional background iníormation about the íounders and principals oí
the business and what skills they can contribute to the business ,Matson, 2000,. \our
organizational íeasibility study should include:
· Description oí your business structure
· Description oí your organizational structure
· Internal and external principles and practices oí the business
· Proíessional skills and resumes
Description of your business structure
1his section contains a narrati·e description oí the legal requirements íor establishing your
business and why you íeel this is the right structure íor your business ,\oung, 19¯0,. Discuss
the pros and cons oí diííerent business structures.
lor example, a sole proprietorship lea·es the sole proprietor open to both íinancial and legal
liability risks. A high-risk business should ne·er be set up as a sole proprietorship because it
will make it diííicult to attract in·estors as well as clients and customers. It is also the hardest
and most expensi·e íorm oí business to insure.
Organizational structure
Discuss your business' organizational structure. One oí the best ways to present this
iníormation is with an organizational chart. An organizational chart shows the hierarchy or
chain oí command in your business. It lists key positions and subordinate positions under
department heads, managers and super·isors.
Principles and practices of the business
L·ery business should ha·e a published code oí ethics and principals that go·ern how the
company conducts its business. In this section, include both internal and external principals
oí operations ,Matson, 2000,.
Internal operations business principles and practices:
· Businesses that are incorporated must ha·e a board oí directors. Do you ha·e a conílict
oí interest policy in place· \ill you use any speciíic Rules` íor conducting meetings·
· Do you oííer ser·ices where clients need to be screened íor eligibility íor íinancial aid,
45 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
social ser·ices, or are there other pre-requisite requirements such as being a senior
citizen, minority, or disabled·
· Do you ha·e hiring and employee training and management practices in place·
· Do you ha·e an o·erall corporate philosophy that inspires, encourages, or oííers
incenti·es to employees·
· Do you ha·e an anti-discrimination policy in place·
Lxternal business practices and principles
Do you ha·e a customer policy or philosophy· Lxamples oí client,customer philosophies
include:
· \e do not ser·e clients, we team with clients to meet their goals.
· \e ·alue creati·ity and imagination and use these to our client's ad·antage.
· Our employees maintain high ethical standards that reílect on how we treat our clients.
Professional skills and resumes
A business' strengths come írom the talent, skills, and experience oí those running the
company. In this section, you gi·e a brieí o·er·iew oí all íounders, employees, and partners
in·ol·ed in the business that will be contributing their skills and input into how the business is
operated. \ou should also include any board members, directors, and oííicers. Include in your
list oí principals ,most important people in your business or organization,, a brieí o·er·iew
oí how their particular skills will ser·e the business. \ou can also include accomplishments
that relate to the business. It is also beneíicial to attach resumes íor at least the top three
principals listed ,Co·ello & lazelgren, 1995,.
b. Business Plan
According to loran ,2006,, ií the íeasibility study indicates that the business idea is sound, the
next step is a business plan. 1he business plan continues the analysis at a deeper and more
complex le·el, building on the íoundation created by the íeasibility study. A business plan has
three primary íunctions:
1. 1o ser·e as an Action Plan
2. 1o ser·e as a Road Map
3. 1o ser·e as a Sales 1ool
According to Co·ello & lazelgren ,2006,, there are basically two types oí business plans,
both designed to help de·elop the new business írom conceptualization to operation. 1he
íirst type oí business plan is a Concept Presentation Plan. 1his type oí plan contains no
íinancial projections or íinancial statements. Its primary purpose is to con·ince stakeholders
that there is a sound and appealing business concept. 1he Concept Presentation Plan should
include the íollowing elements:
· Co·er page
· Mission statement
· 1he principals
· Products
· Ser·ice philosophy
· Market trend analysis
· 1arget market
· Marketing techniques
· 1arget market locations
· Sample menu
1he second type oí business plan is a lull linancial Business Plan. 1ypically, you will need a
lull linancial Business Plan to borrow money írom a bank, or to entice in·estors to lend you
money. It can contain all the elements oí the concept presentation plan, but primarily it
examines in-depth what the total costs oí your project will be, when the project will turn a
proíit, and what le·el oí return you can expect.
According to Ndede-Amadi ,2011,, a business plan deíines your business precisely, identiíies
your goals, and ser·es as a resume íor your business. It helps you allocate resources properly,
handle uníoreseen circumstances, and make the right decisions and choices. It will iníorm
your sales personnel, suppliers, customers and others about your operations and goals. Much
oí what you need to run a successíul operation depend on it, such as outside íunding, credit
írom suppliers, management oí your operation and íinances, promotion and marketing oí
your business, and achie·ement oí your business goals and objecti·es. Business plans are
required when applying íor business loans or seeking in·estors. In addition, a good business
plan is a crucial part oí any loan package as it pro·ides speciíic and organized iníormation
about your company and how you will repay any borrowed money.
Uníortunately, many entrepreneurs drag their íeet when it comes to preparing a good, written
business plan document, arguing that their marketplace changes too íast íor a business plan to
be useíul or that they just don't ha·e enough time. 1he íacts are, howe·er, that just as a good
builder will not begin construction without a blueprint, a good business owner should not
rush into a new ·enture without a plan - no matter how eager. Beíore you begin writing your
business plan, howe·er, consider the íollowing íour core questions:
· \hat ser·ice or product does your business pro·ide and what needs does it íill·
· \ho are the potential customers íor your product or ser·ice and why will they purchase it
írom you·
· low will you reach your potential customers·
· \here will you get the íinancial resources to start and run your business·
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 46
i. Descriptive Narrative of Your Business
\ithout going into detail, this section should include a high le·el look at how all oí the
diííerent elements oí your business íit together. 1he company description section should
include iníormation about the nature oí your business as well as a list oí the primary íactors
that you belie·e will make your business a success.
\hen deíining the nature oí your business ,or why you're in business,, be sure to list the
marketplace needs that you are trying to satisíy. Include the ways in which you plan to satisíy
these needs using your products or ser·ices. linally, list the speciíic indi·iduals and,or
organizations that you ha·e identiíied as ha·ing these needs.
Critical success íactors might include a superior ability to satisíy your customers' needs, highly
eííicient methods oí deli·ering your product or ser·ice, outstanding personnel, or a key
location. Lach oí these would gi·e your business a competiti·e ad·antage.
ii. The Lxecutive Summary
1he executi·e summary is the most important section oí your business plan as it pro·ides a
concise o·er·iew oí the entire plan along with a history oí your company. It tells your reader
where your company is and where you plan to take it. Since it is the íirst thing your readers see,
it is the thing that will either grab their attention, retain their interest, and make them want to
keep on reading or it will be the thing that makes them stop reading and want to put the entire
document down. More than anything else, howe·er, this section is important because it tells
the reader why you think your business idea will be successíul. Although it comes íirst, the
Lxecuti·e summary should be the last section you write. Aíter you'·e worked out all the details
oí your plan, you'll be in a better position to summarize it - and it should remain just that, a
summary ,i.e. no more than 2-4 pages,.
Contents of the Lxecutive Summary
· 1he Mission Statement brieíly explains the thrust oí your business. It could be two words,
two sentences, or a paragraph. It should be as direct and íocused as possible, and i t
should lea·e the reader with a clear picture oí what your business is all about
· Date business began
· Names oí íounders and the íunctions they períorm
· Number oí employees
· Location oí business and any branches or subsidiaries
· Description oí plant or íacilities
· Products manuíactured or sold ,ser·ices rendered
· Banking relationships and iníormation regarding current in·estors
· Summary oí company growth including íinancial or market highlights ,e.g. your company
47 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 48
doubled its worth in a 12-month period, you became the íirst company in your industry to
pro·ide a certain ser·ice,
· Summary oí management's íuture plans
\ith the exception oí the mission statement, all oí the iníormation in the Lxecuti·e
Summary should be highlighted in a brieí ,e·en bulleted, íashion. Ií you are just starting a
new business, chances are that you will not ha·e a lot oí iníormation to plug into Lxecuti·e
Summary as indicated. In that case, íocus on your experience and background as well as the
decisions that led you to start this particular enterprise. Include iníormation about the
problems your target market has and what solutions you pro·ide. Show how the expertise you
ha·e will allow you to make signiíicant inroads into the market place. 1ell your reader what
you are going to do diííerently or better. Con·ince the reader that there is a need íor your
ser·ice or product, beíore going ahead to address your ,the company's, íuture plans ,Berle &
Kirschner, 1996,.
Include a table oí contents directly íollowing the Lxecuti·e Summary to assist the reader in
locating speciíic sections in your business plan. Make sure that the content titles are ·ery
broad ,i.e. a·oid detailed descriptions in your table oí contents,.
iii. General Company Description
In this section, articulate the Vision and Mission Statements oí the business, its goals,
objecti·es, and business philosophy. A general company description mainly dwells on the
current status oí the company and pro·ides a brieí oí its íuture operations. "\hat business
am I really in·" is a question that iníorms the purpose oí the business and one that e·ery
business owner has to ask himselí. Some businesses ha·e íailed because their owner managers
ne·er stopped long enough to ask and answer this question. A well-written business plan is
essential to starting and running a business. A good business plan describes in detail the
mission and goals oí the business and how these goals will be achie·ed.
Lxample: One watch store owner realized that most oí his time was spent repairing watches,
while most oí his money was spent selling them. le íinally decided he was in the watch repair
business and not in the watch sales business. Upon making this decision and discontinuing
watch sales, his proíits impro·ed dramatically - as he was now spending his time and money at
the same place.
iv. Operational Plan
According to Berry ,2004,, e·ery business should ha·e a plan íor its operations which should
address issues oí ser·ice or product line, production, location, accessibility, the legal
en·ironment, in·entory, suppliers, personnel and management, and credit policies, among
others.
49 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Service or Product Line
\hat are you selling· In this section, describe your ser·ice or product, emphasizing the
beneíits to potential and current customers. locus on the areas where you ha·e a distinct
ad·antage. Identiíy the problem in your target market íor which your ser·ice or product
pro·ides a solution. Gi·e the reader hard e·idence that people are, or will be, willing to pay íor
your solution. List your company's ser·ices and products and attach any
marketing,promotional materials. Pro·ide details regarding suppliers, a·ailability oí
products,ser·ices, and ser·ice or product costs. Also include iníormation addressing new
ser·ices or products which will soon be added to the company's line. O·erall, this section
should include:
. aetaitea ae.criptiov of ,ovr proavct or .errice ;frov ,ovr cv.tover.´ per.pectire). lere, you need to
include iníormation about the speciíic beneíits oí your product or ser·ice. \ou also want to
talk about your product,ser·ice's ability to meet consumer needs, any ad·antages your
product has o·er that oí the competition, and the present de·elopment stage your product is
in ,i.e., idea, prototype, etc.,
ívforvatiov retatea to ,ovr proavct´. tife c,cte. Be sure to include iníormation about where your
product or ser·ice is in its liíe cycle, as well as any íactors that may iníluence its cycle in the
íuture
.v, cop,rigbt, patevt, ava traae .ecret ivforvatiov tbat va, be reteravt. lere, you need to include
iníormation related to existing, pending, or anticipated copyright and patent íilings along with
any key characteristics oí your products,ser·ices that you cannot obtain a copyright or patent
íor. 1his is where you should also incorporate key aspects oí your products,ser·ices that may
be classiíied as trade secrets. Last, but not least, be sure to add any iníormation pertaining to
existing legal agreements, such as nondisclosure or non-compete agreements
Re.earcb ava aeretopvevt actiritie. ,ov are ivrotrea iv or are ptavvivg to be ivrotrea iv. R&D acti·ities
include any in-process or íuture acti·ities related to the de·elopment oí new
products,ser·ices. 1his section should also include iníormation about what you expect the
results oí íuture R&D acti·ities to be. Be sure to analyze the R&D eííorts oí not only your
own business, but also that oí others in your industry
Organization & Management
1his section should include your company's organizational structure, details about the
ownership oí your company, proíiles oí your management team, and the qualiíications oí
your board oí directors.
\ho does what in your business· \hat is their background and why are you bringing them
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 50
into the business as board members or employees· \hat are they responsible íor· 1hese may
seem like unnecessary questions to answer in a one- or two-person organization, but the
people reading your business plan want to know who is in charge, so tell them. 1his section
should include who's on the board ,ií you ha·e an ad·isory board, and how you intend to keep
them there. \hat kind oí salary and beneíits package do you ha·e íor them· \hat incenti·es
are you oííering· low about promotions· Reassure your reader that the people you ha·e on
staíí are more than just names on a letterhead.
v. Professional Advisory Support
According to Carlock & \ard ,2010,, many businesses use outside ad·isory and support
ser·ices in addition to management and other personnel.
Board of Directors
1he major beneíit oí an unpaid ad·isory board is that it can pro·ide expertise that your
company cannot otherwise aííord. A list oí well-known, successíul business
owners,managers can go a long way toward enhancing your company's credibility and
perception oí management expertise.
vi. Marketing Plan
1he market analysis section oí the business plan should illustrate your knowledge about the
particular industry your business is in. It should also present general highlights and
conclusions oí any marketing research data you ha·e collected. 1his section should include
an industry description and outlook, target market iníormation, market test results, lead times,
and an e·aluati·e assessment oí your competition ,speciíic details oí your marketing research
studies should be mo·ed to the appendix section oí your business plan,.
Industry Description and Outlook
1his o·er·iew section should include a description oí your primary industry, the current size
oí the industry as well as its historic growth rate, trends and characteristics related to the
industry as a whole ,i.e., \hat liíe cycle stage is the industry in· \hat is its projected growth
rate·,, and the major customer groups within the industry ,i.e. businesses, go·ernments,
consumers, etc,.
Identifying Your Target Market
\our target market is simply the market ,or group oí customers, that you want to target ,or
íocus on and sell to,. \hen you are deíining your target market, it is important to narrow it to a
manageable size. Many businesses make the mistake oí trying to be e·erything to e·erybody,
a philosophy that oíten leads to íailure. In this section, you should gather iníormation which
identiíies the:
Di.tivgvi.bivg cbaracteri.tic. of tbe va;or,privar, var/et ,ov are targetivg. 1his section might include
iníormation about the critical needs oí your potential customers, the degree to which those
needs are ,or are not, currently being met, and the demographics oí the group. It should also
include the geographic location oí your target market, the identiíication oí the major
decision-makers, and any seasonal or cyclical trends which may impact the industry or your
business.
´i¸e of tbe privar, target var/et. lere, you gi·e iníormation regarding the number oí potential
customers in your primary market, the number oí annual purchases they make in products or
ser·ices similar to your own, the geographic area they reside in, and the íorecasted market
growth íor this group.
1be e·tevt to rbicb ,ov feet ,ov ritt be abte to gaiv var/et .bare ava tbe rea.ov. rb,. In the accompanying
research, you will ha·e determined the market share percentage and number oí customers you
expect to obtain in a deíined geographic area. \ou will need to outline the logic and
assumptions you used to de·elop these estimates.
Yovr pricivg ava gro.. vargiv target.. lere, you deíine the le·els oí your pricing, your gross margin
le·els, and any discount structures that you plan to set up íor your business, such as
·olume,bulk discounts or prompt payment discounts.
Re.ovrce. for fivaivg ivforvatiov retatea to ,ovr target var/et. 1hese resources might include
directories, trade association publications, and go·ernment documents.
Meaia ,ov ritt v.e to reacb ,ovr target avaievce. 1hese might include publications, radio or tele·ision
broadcasts, or any other type oí credible source that may ha·e iníluence on your target market.
Pvrcba.ivg c,cte of ,ovr potevtiat cv.tover.. lere, you need to identiíy the needs oí your target
market, do research to íind the solutions to their needs, e·aluate the solutions you come up
with, and íinally, identiíy who actually has the authority to choose the íinal solution.
1reva. ava potevtiat cbavge. rbicb va, ivpact ,ovr privar, target var/et. Key characteristics oí your
secondary markets. Just like with your primary target market, here you again want to identiíy
the needs, demographics, and the signiíicant trends which will iníluence your secondary
markets in the íuture.
Your niche market
A market in its entirety is too broad in scope íor any but the largest companies to tackle
successíully. 1he best strategy íor a smaller business is to di·ide demand into manageable
51 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
market niches. Small operations can then oííer specialized goods and ser·ices attracti·e to a
speciíic group oí prospecti·e buyers.
1here are undoubtedly some particular products or ser·ices you are especially suited to
pro·ide. Study the market careíully and you will íind opportunities.
í·avpte: Surgical instruments used to be sold in bulk to both small medical practices and large
hospitals. One small business owner realized that the smaller practices could not aííord to
sterilize instruments aíter each use like hospitals did, but instead simply disposed oí them. 1he
íirm's sales representati·es talked to surgeons and hospital workers to learn what would be
more suitable íor them. Based on this iníormation, the company de·eloped disposable
instruments which could be sold in larger quantities at a lower cost.
\hile researching your own company's niche, consider the results oí your market sur·ey and
the areas in which your competitors are already íirmly situated. Put this iníormation into a
table or a graph to illustrate where an opening might exist íor your product or ser·ice. 1ry to
íind the right coníiguration oí products, ser·ices, quality, and price that will ensure the least
direct competition.
A well-designed database can help you sort through your market iníormation and re·eal
particular segments you might not see otherwise. lor example, do customers in a certain
geographic area tend to purchase products that combine high quality and high price more
írequently· Do your small business clients take ad·antage oí your customer ser·ice more
oíten than larger ones· Ií so, consider íocusing on being a local pro·ider oí high quality goods
and ser·ices or a ser·ice-oriented company that pays extra attention to small businesses. Ií
you do target a new niche market, make sure that this niche does not conílict with your o·erall
business plan.
í·avpte: A small bakery that makes biscuits by hand cannot go aíter a market íor inexpensi·e,
mass-produced biscuits ,successíully,, regardless oí demand.
Competitive analysis
\hen you are doing a competiti·e analysis, you need to identiíy your competition by product
line or ser·ice as well as by market segment. Assess their strengths and weaknesses, determine
how important your target market is to your competitors, and identiíy any barriers which may
hinder your entry into the market. Be sure to identiíy all oí your key competitors íor each oí
your products or ser·ices. lor each key competitor, determine what their market share is, then
try to estimate how long it will take beíore new competitors will enter into the marketplace. In
other words: what is your window oí opportunity· linally, identiíy any indirect or secondary
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 52
competitors which may ha·e an impact on the success oí your business. 1he strengths oí
your competitors are also competiti·e ad·antages which you too can pro·ide. 1he strengths
oí your competitors may take many íorms, but the most common include:
· An ability to satisíy customer needs
· A large share oí the market and the consumer awareness that comes with it
· A good track record and reputation
· Solid íinancial resources and the subsequent staying power that comes with it
· Key personnel
\eaknesses are simply the ílip side oí strengths. Analyze the same areas as you did íor your
competitors' strengths to determine what their weaknesses are. lor example, are they unable
to satisíy their customers' needs· Do they ha·e poor market penetration· Are their track
records or reputation not up to par· Do they ha·e limited íinancial resources· Are they not
able to retain good people· All oí these can be 'red ílags' íor any business. Ií you íind weak
areas in your competition, be sure to íind out why they are ha·ing problems. 1his will allow
you to a·oid the same mistakes they ha·e made.
Ií your target market is not important to your competition, then you will most likely ha·e an
open íield to run in - ií your idea is a good one - at least íor a while. lowe·er, ií the
competition is keen on your target market, be prepared to ha·e to o·ercome some barriers.
Barriers to any market might include the íollowing:
· A high in·estment cost
· 1he time it takes to set up your business
· Changing technology
· Lack oí quality personnel
· Customer resistance ,i.e. long-standing relationships, brand loyalty,
· Lxisting patents and trademarks that you can not iníringe upon
Marketing and Sales Strategies
Marketing is the process oí creating customers, and customers are the liíeblood oí your
business. In this section, the íirst thing you want to do is deíine your marketing strategy.
Because there is no single way to approach a marketing strategy, your strategy should be part
oí an ongoing selí-e·aluation process that is unique to your company. lowe·er, there are
steps you can íollow which will help you think through the strategy you would like to use.
An o·erall marketing strategy should include a:
Mar/et pevetratiov .trateg,. 1his strategy seeks to increase market share oí the current product
or ser·ices in the existing market. It is generally adopted by a íirm to raise its sales re·enue
without making changes to its products or ser·ices. It can be implemented by increasing the
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ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 54
sales íorce, increasing distribution and promotion oí products, and by increasing expenditure
in marketing and ad·ertising acti·ities that result in increased sales.
´trateg, for grorivg ,ovr bv.ive... 1his strategy might include an internal strategy such as how to
increase your human resources, an acquisition strategy such as buying another business, a
íranchise strategy íor branching out, a horizontal strategy where you would pro·ide the same
type oí products to diííerent users, or a ·ertical strategy where you would continue pro·iding
the same products but would oííer them at diííerent le·els oí the distribution chain.
Cbavvet. of ai.tribvtiov .trateg,. Choices íor distribution channels could include an internal sales
íorce, distributors, or retailers.
Covvvvicatiov .trateg,. low are you going to reach your customers· Usually some combination
oí promotions, ad·ertising, public relations, personal selling, and printed materials ,such as
brochures, catalogs, ílyers, etc., works best.
Once you ha·e deíined your marketing strategy, you can then deíine your sales strategy. low
do you plan to actually sell your product· \our O·erall Sales Strategy should include the
íollowing:
. .ate. force .trateg,. Ií you are going to ha·e a sales íorce, do you plan to use internal or
independent representati·es· low many salespeople will you recruit íor your sales íorce·
\hat type oí recruitment strategies will you use· low will you train your sales íorce· \hat
about compensation íor your sales íorce·
Yovr .ate. actiritie.. \hen you are deíining your sales strategy, it is important that you break it
down into acti·ities. lor instance, you need to identiíy your prospects. Once you ha·e made a
list oí your prospects, you need to prioritize it. Next, identiíy the number oí sales calls you will
make o·er a certain period oí time. lrom there, you need to determine the a·erage number oí
sales calls you will need to make per sale, the a·erage ,Kenya Shilling, size per sale, and the
a·erage ,Kenya Shilling, size per ·endor.
Market tests
\hen you are including iníormation about any oí the market tests you ha·e completed íor
your business plan, be sure to íocus only on the results oí these tests. Any speciíic details
should be included in the appendix. Market test results might include the potential customers
who were contacted, any iníormation or demonstrations that were gi·en to prospecti·e
customers, how important it is to satisíy the target market's needs, and the target market's
desire to purchase the products or ser·ices oí your business at ·arying prices.
55 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Lead times
Lead time reíers to the amount oí time between when a customer places an order and when
the product or ser·ice is actually deli·ered. \hen you are researching this iníormation,
determine what your lead time will be íor the initial order, reorders, and ·olume purchases.
vii. Personal Iinance
Personal íinance is the application oí the principles oí íinancial economics to an indi·idual's
íinancial decisions. In this section you should include the íollowing iníormation:
· low much money will you need at ·arious points in the íuture·
· low do you go about getting that money·
· \hat is your annual income·
· low can you increase your income·
· \hat are your annual expenses·
· low can you reduce your expenses·
· low do you best budget íor your a·ailable income each year·
· low much money can you sa·e each year·
Include personal íinancial statements íor each owner and major stockholder, showing assets
and liabilities held outside the business and personal net worth. Include the íollowing
iníormation:
· \ho are the partners in the business and what is their net worth·
· \here is your operating capital going to come írom·
· \hat are the possible sources oí capital íinance·
Capitalization & Startup Lxpenses
Capitati¸atiov denotes the total amount oí íunds used to íinance a íirm's balance sheet and is
calculated as market capitalization plus debt. Market capitalization is the number oí common
shares multiplied by the current price oí those shares. Capitalization, thereíore, is a measure
by which we can classiíy a company according to size.
´tart.·vp e·pev.e. are the resources applied on the conceptualization, onset and early stages oí
the de·elopment oí a business entity. \ou will ha·e many expenses beíore you e·en begin
operating your business. It is important to estimate these expenses accurately and to plan
where you will get suííicient capital. 1his is a research project, and the more thorough your
research eííorts, the less are the chances that you will lea·e out important expenses or
underestimate them. L·en with the best oí research, howe·er, opening a new business has a
way oí costing more than you anticipate. 1here are two ways to make allowances íor such
surprise expenses. 1he íirst is to add a little `padding` to each item in the budget. 1he problem
with that approach, howe·er, is that it destroys the accuracy oí your careíully thought-out
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 56
plan. 1he second approach is to add a separate line item, called contingencies, to account íor
uníoreseeable expenses ,Abrams, 2000,. 1his is the approach we recommend. 1he common
kinds oí start-up expenses that most small businesses íace include the íollowing:
1. Re.earcb ava aeretopvevt co.t.:
\hether you hire a market research íirm or do research by yourselí, you need to budget íor
costs in·ol·ed in knowing more about your market. Inter·iewing potential customers or
suppliers, checking the '\ellow Pages', or photocopying trade publications and articles about
your business all in·ol·e costs.
2. ßv.ive.. Ptav Preparatiov:
Ií you are preparing the business plan yourselí, the only cost to you is your time. lowe·er,
there are entrepreneurs who need help in de·eloping their business plans. Ií you are one oí
those business owners, you need to include the costs oí hiring consultants or business plan
writers into your initial budget.
². Proavct Deretopvevt ava ßegivvivg ívrevtor,:
1his will be your most signiíicant start-up cost. 1o get a better estimate, you can ask potential
suppliers íor required in·entory le·els íor your type oí business. Some entrepreneurs,
particularly those who create their own products, take years oí product de·elopment beíore a
prototype can be launched. \ou need to íactor in the length oí time it will take you to de·elop
your íirst products.
1. .arerti.ivg ava Mar/etivg Provotiov í·pev.e.:
\ou can choose to ha·e some 'buzz' íor your business, e·en beíore you oííicially open. Some
entrepreneurs do a pre-launch campaign to generate interest íor their products or ser·ices.
\ou can also plan íor a 'grand opening' promotion as well. 1he cost, oí course, will depend on
how simple or elaborate your pre-launch acti·ities will be.
:. Ca.b:
1his reíers to the amount oí cash that you need to run your cash register. One thing that your
business should ne·er be caught without is cash.
ó. Co.t of íivavcivg:
\ou also need to allocate some íunds to help you co·er your cost oí íinancing, whether you
got your íunds írom the bank or írom your credit card. Be prepared to pay the interest on your
loans, particularly ií you used your credit cards to íinance your business.
¯. Remodeling and Decorating:
1his will include physical and cosmetic impro·ements to the new business íacility. Solicit bids
írom contractors or interior designers, e·en ií you decide to do e·erything later on, to gi·e you
an idea oí how much these jobs cost.
º. íi·tvre. ava íqvipvevt:
1he íixtures and equipment needed íor your new business are normally substantial,
depending on your kind oí business. A restaurant business, íor example, will need modern
kitchen equipment, chairs and tables, tableware and utensils. On the other hand, a home
business will require signiíicantly less in terms oí íixtures and equipment. Computers, íax
machines, and modems are some oí the most important equipment that you would need. In
addition, you should pro·ide some budget íor the costs oí installing the íixtures and
equipment and making sure that these are ready íor use.
·. íirivg evpto,ee.:
Allocate a íew months' salary íor the payroll oí your new employees. \hile employee costs
will not actually start until you are open íor business, some entrepreneurs hire a íew employees
e·en beíore the business is launched to help in the initial groundwork.
10. ív.vravce Co.t.:
\ou will need liability and property insurance to protect yourselí and your business assets.
Some businesses also require workers' compensation, health, liíe, íire, product liability and
proíessional malpractice insurance. Check what you need íor your kind oí business.
11. íea.e Pa,vevt.:
1hese include amounts that must be paid íor equipment and íacility leases beíore opening.
Lxpect to pay se·eral months' worth oí lease payments e·en beíore you open your doors íor
business.
12. íicev.e. ava Pervit.:
1his amount will include all íees charged by the local and go·ernment agencies. 1he more
regulated your industry, the higher the íees and charges. Various local authorities also ha·e
diííerent licensing requirements and íee structures.
1². Profe..iovat íee.:
\ou will probably need the assistance oí a lawyer in drawing up the proper documents and
íiling them with the go·ernment ií you are íorming a partnership, Limited Liability Company
or Corporation. \ou can opt to incorporate your own business yourselí, as long as you
understand each íorm and requirements. Part oí the proíessional íees you need to budget íor
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ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 58
include the accountant's íees, should you decide to outsource your record keeping or
accounting tasks.
11. ´igvage Co.t.:
1he signs íor your business establishment can lea·e a signiíicant dent on your budget. Obtain
bids írom sign-making companies, depending on how elaborate you plan your signs to be.
1:. ´vpptie.:
1his is the part oí your budget íor all the oííice, cleaning and employee supplies that your
business needs in its íirst íew months. 1o help you sa·e, try buying wholesale ií you can meet
the minimum order requirements.
1ó. Co.t of !eb ´ite Creatiov:
Ií you are planning to supplement your brick-and-mortar business with online operations,
you need to budget íor the costs oí creating a web site. 1hese include web-hosting íees, web
designer, e-commerce components ,shopping cart, merchant account, etc,. \ou also need to
allocate some amount to co·er the marketing and promotion expenses oí your online
business.
1¨. |vavticipatea í·pev.e.:
1he rule oí thumb is to allocate about 10 to 20 percent oí your total start-up budget íor
contingencies and other unexpected expenses
viii. Iinancial Planning
1he broader íinancial plan consists oí a 12-month proíit and loss projection, a íour-year
proíit and loss projection ,optional,, a cash-ílow projection, a projected balance sheet, and a
break-e·en analysis, ration analysis, and sensiti·ity analysis. 1ogether they constitute a
reasonable estimate oí your company's íinancial íuture. Most importantly, the process oí
thinking through the íinancial plan will impro·e your insight into the inner íinancial workings
oí your company ,Berry, 2004,.
i. 12·Movtb Profit ava ío.. Pro;ectiov:
Many business owners think oí the 12-month proíit and loss projection as the centerpiece oí
their plan. 1his is where you put it all together in numbers and get an idea oí what it will take to
make a proíit and be successíul. \our sales projections will come írom a sales íorecast in
which you íorecast sales, cost oí goods sold, expenses, and proíit month-by-month íor one
year. Proíit projections should be accompanied by a narrati·e explaining the major
assumptions used to estimate company income and expenses.
59 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ii. íovr·Year Profit Pro;ectiov ;Optiovat)
1he 12-month projection is the heart oí your íinancial plan. 1his section is íor those who
want to carry their íorecasts beyond the íirst year.
Projected Cash Ilow
Ií the proíit projection is the heart oí your business plan, cash ílow is its liíe-blood.
Businesses íail because they cannot pay their bills. L·ery part oí your business plan is
important, but none oí it means a thing ií you run out oí cash. 1he point oí this worksheet is
to help you plan how much you need beíore start-up, íor preliminary expenses, operating
expenses, and reser·es. \ou should keep updating it and using it aíterward. It will enable you
to íoresee shortages in time to do something about them perhaps cut expenses, or perhaps
negotiate a loan. But íoremost, you shouldn't be taken by surprise. 1here is no great trick to
preparing it: 1he cash-ílow projection is just a íorward look at your 'current' account.
lor each item, determine when you actually expect to recei·e cash ,íor sales, or when you will
actually ha·e to write a check ,íor expense items,. \ou should track essential operating data,
which is not necessarily part oí cash ílow but allows you to track items that ha·e a hea·y
impact on cash ílow, such as sales and in·entory purchases.
\our cash ílow will show you whether your working capital is adequate. Clearly, ií your
projected cash balance e·er goes negati·e, you will need more start-up capital. 1his plan will
also predict just when and how much you will need to borrow. Lxplain your major
assumptions, especially those that make the cash ílow diííer írom the Proíit and Loss
Projection. lor example, ií you make a sale in month one, when do you actually collect the
cash· \hen you buy in·entory or materials, do you pay in ad·ance, upon deli·ery, or much
later· low will this aííect cash ílow·
Are some expenses payable in ad·ance· \hen· Are there irregular expenses, such as
quarterly tax payments, maintenance and repairs, or seasonal in·entory build-up that should
be budgeted íor· Loan payments, equipment purchases, and owner's draws usually do not
show on proíit and loss statements but deíinitely do take cash out. Be sure to include them.
And oí course, depreciation does not appear in the cash ílow at all because you ne·er write a
cheque íor it.
iii. Opevivg Da, ßatavce ´beet
A balance sheet is one oí the íundamental íinancial reports that any business needs íor
reporting and íinancial management. A balance sheet shows what items oí ·alue are held by
the company ,assets,, and what its debts are ,liabilities,. \hen liabilities are subtracted írom
assets, the remainder is owners' equity. Use a startup expenses and capitalization spreadsheet
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 60
as a guide to preparing a balance sheet as oí the opening day. 1hen detail how you calculated
the account balances on your opening day balance sheet.
ir. ßrea/·írev .vat,.i.
A break-e·en analysis predicts the sales ·olume, at a gi·en price, required to reco·er total costs.
In other words, the sales le·el is the di·iding line between operating at a loss and operating at a
proíit. Lxpressed as a íormula, break-e·en is:
ßrea/erev ´ate. ~ íi·ea Co.t. , Rerevve per vvit - 1ariabte Co.t. per vvit
,\here íixed costs are expressed in units oí currency ,e.g. dollars or shillings,, but ·ariable
costs are expressed as a percent oí total sales,.
^ote: Include all assumptions upon which your break-e·en calculation is based.
r. Ratio .vat,.i.
íivavciat or .ccovvtivg ratio. are useíul measures oí a business's períormance and íinancial
situation at a point in time. 1hey are calculated írom iníormation pro·ided by both accounting
and íinancial statements such as the income statement, balance sheet, cash ílow statement, and
the statement oí retained earnings. Ratios are used by managers inside the business by current
and potential owners oí the business and by the business's creditors. Some examples include:
Liquidity Ratios pro·ide iníormation about a business's ability to meet its short-term
obligations. 1hree liquidity ratios that are used most oíten are the Current Ratio ,the ratio oí
current assets to current liabilities,, the Quick Ratio ,the ratio oí current assets, less in·entory,
to current liabilities,, and the Cash Ratio ,the ratio oí cash and marketable securities to current
liabilities,. A high liquidity ratio demonstrates the business's ability to meet short-term
obligations when they become due. Current assets include cash, marketable securities,
accounts recei·ables, in·entory, and notes recei·ables. Current liabilities include accounts and
notes payable in the short term.
...et 1vrvorer Ratio. show how eííiciently the business utilizes its assets and are sometimes
reíerred to as Lííiciency, Asset Utilization, or Asset Management Ratios. 1he two most
common asset turno·er ratios are the Recei·ables 1urno·er ,the ratio oí Annual Credit Sales
to Accounts Recei·ables, which measures how quickly a business collects its accounts
recei·ables,, and the In·entory 1urno·er ,the ratio oí Cost oí Goods Sold to A·erage
In·entory, which measures the a·erage number oí days worth oí in·entory on hand,.
linancial ratios quantiíy many aspects oí a business and are an integral part oí íinancial
statement analysis. Other ratios include Acti·ity Ratios which measure how quickly a business
61 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
con·erts non-cash assets to cash assets, debt ratios which measure the business's ability to
repay long-term debt, proíitability ratios which measure the business's use oí its assets and
control oí its expenses to generate an acceptable rate oí return, and market ratios which
measure in·estor response to owning a company's stock but also the cost oí issuing stock.
Ratios are oíten expressed as a decimal ·alue, such as 0.10, but can be expressed in the
equi·alent percent ·alue, such as 10°.
ri. ´ev.itirit, .vat,.i.
Sensiti·ity analysis in·estigates how projected períormance ·aries along with changes in the
key assumptions on which the initial projections are based. Ií a small change in a parameter
results in relati·ely large changes in the outcomes, the outcomes are said to be sensiti·e to that
parameter. 1his may mean that the parameter has to be determined ·ery accurately or that the
alternati·e has to be redesigned íor low sensiti·ity.
According to Ndede-Amadi ,2011,, the íinancials should be de·eloped aíter you ha·e
analyzed the market and set clear objecti·es. 1hat is when you can allocate resources
eííiciently. 1he íollowing is a list oí the critical íinancial statements to include in your business
plan packet:
rii. íi.toricat íivavciat Data
Ií you own an established business, you will be requested to supply historical data related to
your company's períormance. Most creditors request data íor the last three to íi·e years,
depending on the length oí time you ha·e been in business. 1he historical íinancial data
would be your company's income statements, balance sheets, and cash ílow statements íor
each year you ha·e been in business ,usually íor up to 3 to 5 years,. Oíten creditors are also
interested in any collateral that you may ha·e that could be used to ensure your loan, regardless
oí the stage oí your business.
riii. Pro.pectire íivavciat Data
All businesses will be required to supply prospecti·e íinancial data, whether startup or
growing. Most oí the time, creditors will want to see what you expect your company to be
able to do within the next íi·e years. Lach year's documents should include íorecasted income
statements, balance sheets, cash ílow statements, and capital expenditure budgets. lor the íirst
year, you should supply monthly or quarterly projections. Aíter that, you can stretch it to
quarterly and,or yearly projections íor years 2 through 5. Make sure that your projections
match your íunding requests, as creditors will be on the lookout íor inconsistencies. It is much
better ií you catch mistakes beíore they do. Ií you ha·e made assumptions in your projections,
be sure to summarize what you ha·e assumed. 1his way, the reader will not be leít guessing.
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linally, include a short analysis oí your íinancial iníormation. Include a ratio and trend
analysis íor all oí your íinancial statements ,both historical and prospecti·e,. Since pictures
speak louder than words, you may want to add graphs oí your trend analysis ,especially ií they
are positi·e,.
i·. ívvaivg Reqve.t
In this section, you will request the amount oí íunding you will need to start or expand your
business. Ií necessary, you can include diííerent íunding scenarios, such as a best and worst
case scenarios, but remember that later, in the íinancial section, you must be able to back up
these requests and scenarios with corresponding íinancial statements. \ou will want to
include the íollowing in this section:
· your current íunding requirement
· your íuture íunding requirements o·er the next íi·e years
· how you will use the íunds you recei·e, and
· any long-range íinancial strategies that you are planning that would ha·e any type oí
impact on your íunding request.
\hen you are outlining your current and íuture íunding requirements, be sure to include the
amount you want now and the amount you want in the íuture, the time period that each
request will co·er, the type oí íunding you would like to ha·e ,i.e., equity, debt,, and the terms
that you would like to ha·e applied. low you will use your íunds is ·ery important to a
creditor. Is the íunding request íor capital expenditures, working capital, debt retirement, or
íor acquisitions· \hate·er the purpose oí the íunding, be sure to list it in this section.
Last oí all make sure that you include any strategic iníormation related to your business that
may ha·e an impact on your íinancial situation in the íuture, such as:
· going public with your company
· ha·ing a le·eraged buyout
· being acquired by another company
· the method with which you will ser·ice your debt, or
· whether or not you plan to sell your business in the íuture
Lach oí these is extremely important to a íuture creditor, since they will directly impact your
ability to repay your loan,s,.
6. Lthics in Running a Small Business
According to Badaracco Jr. ,199¯,, regardless oí size, all businesses ha·e the same objecti·e,
that oí making proíits, which necessitates the same operational model. 1hereíore, business
ethics and related issues such as corporate social responsibility ,CSR,, are not just big business
issues, they are issues core to small business as well. Lthical business practices include
assuring that the highest legal and moral standards are obser·ed in relationships with the
people in the business community - including the most important person in the business - the
customer.
Lthics
Lthics in·ol·es learning what is right or wrong, and then doing the right thing. lowe·er, "the
right thing" is relati·e. Most ethical dilemmas in the workplace are not simply a matter oí
choosing between right and wrong, it is oíten much more in·ol·ed than that. In the ethics
debate, there are those who assert that there is always a right thing to do based on moral
principle, and then there are others who belie·e that the right thing to do depends on the
situation - and that ultimately it is up to the indi·idual to decide what is the right and the wrong
thing to do. Many ethicists consider emerging ethical belieís to be "state oí the art" legal
matters, which means that what becomes an ethical guideline today is oíten translated to a law,
regulation or rule tomorrow. Values which guide how we ought to beha·e are considered
moral ·alues ,e.g. respect, honesty, íairness, responsibility,. Statements around how these
·alues are applied are sometimes called moral or ethical principles ,Collins, 2001,.
Business Lthics
1he concept oí business ethics has come to mean diííerent things to diííerent people.
lowe·er, it is generally regarded as knowing what is right or wrong and doing what is right in
the workplace, with respect to their eííects on products or ser·ices and with regard to
stakeholders. Attention to ethics in the workplace sensitizes both leaders and staíí on how
they should act. But perhaps e·en more important is that attention to ethics in the workplaces
helps ensure that when leaders and managers are struggling in times oí crises and coníusion,
6S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 64
they still retain a strong moral grounding. In addition, attention to business ethics in the work
place pro·ides numerous other beneíits.
Managing ethics programs in the workplace
A business can manage ethics in the workplace by establishing an ethics management
program. Lthics programs con·ey company ·alues, oíten using codes and policies to guide
decisions and beha·ior, and can include extensi·e training and e·aluation, depending on the
organization. 1hese programs are rarely alike between any two organizations, but they will
pro·ide guidance in ethical dilemmas within the organization. 1he reality is that e·ery
business has an organizational ethics program made up oí ·alues, policies and acti·ities which
impact the propriety oí organizational beha·iors, e·en though most do not know that they do.
A basic purpose oí an ethics management program is balancing competing ·alues and
reconciling them. A good example oí competing ·alues is pushing products at all costs ·is-a-
·is educating the consumer. L·en then, it is true that business people need more practical
tools and iníormation to help them understand competing ·alues and how to manage them.
Developing Codes of Lthics
According to some ethics scholars, a philosophy generally describes the highest ·alues to
which the company aspires to operate, and will contain the `dos.' A code oí ethics, on the
other hand, will speciíy the ethical rules oí operation, and will contain the 'don'ts'. Others
disagree, howe·er, that codes ha·e any ·alue, arguing that too much íocus is oíten put on the
codes themsel·es, which are not iníluential in managing ethics in the workplace. 1hey argue
íurther that de·eloping and continuing dialogue around the ·alues oí the code is more
important.
Developing Codes of Conduct
lor large organizations that include se·eral large programs or departments, there is need to
de·elop an o·erall corporate code oí ethics and then a separate code to guide each oí the
programs or departments. Codes oí conduct are insuííicient ií intended only to ensure that
policies are legal. On the contrary, all staíí must understand and buy into the ethics program
being dri·en by top management. It is noteworthy that codes oí ethics and codes oí conduct
may be the same in some organizations but diííerent in others, depending on the
organization's culture and operations as well as on the ultimate le·el oí speciíicity in the codes
themsel·es.
Assessing and Cultivating Lthical Culture
Culture is comprised oí the ·alues, norms, and beha·iors within a business, and e·ery
organization has one. Lthics, on the other hand, is about moral ·alues, or ·alues regarding
right and wrong. Because oí these commonalities, cultural assessments can be ·aluable in
assessing the moral ·alues in an organization.
Lthics Training
An ethics program is essentially useless unless all staíí members are trained about what it is,
how it works and their roles in it. By its ·ery nature, howe·er, the program may in·ite
suspicion ií not handled openly and honestly. In addition, no matter how íair and up-to-date a
set oí policies is, the legal system will oíten interpret employee beha·ior as de íacto ,actual,
policy, rather than written policies. 1hereíore, all staíí must be aware oí and act in accordance
with policies and procedures. 1his is true whether policies and procedures are íor an ethics
program or íor personnel management. An appropriate le·el oí íull accordance requires
training about policies and procedures. 1he rise oí ethics training inside organizations is one
dri·er credited with changing the beha·ior and culture oí those organizations. 1he aim oí
such training is to help employees make ethical decisions when the answers are unclear. 1he
greatest beneíit oí an ethics training program is reducing the likelihood oí íines and damaged
reputations íor breaching laws or moral norms, íor both the organization and the indi·idual.
Additional beneíits include increased employee loyalty and pride in the organization
,lartman, 2004,.
b. Corporate Social Responsibility
Corporate Social Responsibility ,CSR,, also called corporate cov.cievce, corporate citi¸ev.bip, .ociat
perforvavce, or .v.taivabte re.pov.ibte bv.ive.. is a íorm oí corporate selí-regulation integrated into
a business model. CSR policy íunctions as a built-in, selí-regulating mechanism through
which a business monitors and ensures its acti·e compliance with the spirit oí the law, ethical
standards, and international norms. 1he goal oí CSR is to embrace responsibility íor the
company's actions and to encourage a positi·e impact oí its acti·ities on the en·ironment,
consumers, employees, communities, stakeholders and all other members oí the public
sphere who may also be considered as stakeholders ,largadon, 2003,.
Approaches to CSR
One common approach oí CSR is philanthropy, which includes monetary donations and aid
gi·en to local organizations and impo·erished communities in de·eloping countries. Some
organizations do not like this approach as it does not help build on the skills oí the local
people, and preíer community-based de·elopment that generally leads to more sustainable
de·elopment. Another approach to CSR is to incorporate the CSR strategy directly into the
business strategy oí an organization. A third approach that is garnering increasing interest is
called Creating Shared Value ,or CSV,, a model based on the notion that corporate success
and social welíare are interdependent. A business needs a healthy, educated workíorce,
sustainable resources and adept go·ernment to compete eííecti·ely. lor society to thri·e,
65 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
proíitable and competiti·e businesses must be de·eloped and supported to create income,
wealth, tax re·enues, and opportunities íor philanthropy.
Many companies use the strategy oí benchmarking to compete within their respecti·e
industries in CSR policy, implementation, and eííecti·eness. Benchmarking in·ol·es
re·iewing competitor CSR initiati·es, as well as measuring and e·aluating the impact that
those policies ha·e on society and the en·ironment, and how customers percei·e competitor
CSR strategy. Aíter a comprehensi·e study oí competitor strategy and an internal policy
re·iew, a comparison can be drawn and a strategy de·eloped íor competition with CSR
initiati·es.
Increasingly, businesses are becoming interested in processes that can add ·isibility to their
CSR policies and acti·ities. One method that is gaining increasing popularity is the use oí well-
grounded training programs, where CSR is a major issue, and where business simulations play
a part ,Kotter, 1992,.
c. Lthics in a Small Business
According to Seglin ,2006,, a small business owner, just any other business owner, need to
beha·e ethically, and has to accept responsibility íor the impact the business has on society.
Most business owners do take responsibility íor the near-term eííects oí their successíul
enterprises, but the ·ery thoughtíul ones also pay attention to the long-term psycho-social
health and wealth oí indi·iduals and groups in·ol·ed in and aííected by the business. 1he
small enterprise pro·ides the right en·ironment in which to work towards the long-term
eííects oí the business on the en·ironment, íor example.
Research in the area oí small business ethics has lagged behind, despite the íact that the small
business is responsible íor a large percentage oí economic growth íor many countries, both
de·eloped and de·eloping. 1his, also despite the íact that there is clear e·idence that, small
businesses can be particularly ·ulnerable to unethical practices. And while the majority oí
small business owners,managers do not íeel compelled to act unethically, there remains a
signiíicant percentage that do íeel pressure to act in a less than ethical manner due to
economic pressures brought about by their liability oí smallness. Clearly, there remains a
need íor better understanding the perceptions, belieís, and attitudes that impact the decision
making oí small business owners ,Solomon, 1993,.
1o de·elop a code oí ethics íor your small business, use the íollowing guidelines:
1. Identiíy the general principles that would lead to íair business practices
2. Check with the industry association íor basic standards to re·iew
3. Allow that ethical questions do not always ha·e a unique, íaultless answer
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 66
4. \rite out speciíic statements that will assist in making day-to-day ethical decisions
5. Apply the code oí ethics to a written policy and procedures manual identiíying major
rules íor operating the business
6. 1rain employees ,and íamily members, to make ethical decisions about the business
67 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 68
¯. 1echnology Licensing
By the nature oí products emerging írom technology, it is necessary to put a legal structure in
place to regulate transactions, markets and production. 1echnology 1ransíer Agreements will
usually impro·e economic eííiciency and be pro-competiti·e as they can reduce duplication
oí research and de·elopment, strengthen the incenti·e íor the initial research and
de·elopment, spur incremental inno·ation, íacilitate diííusion and generate product market
competition. lowe·er, licensing agreements may also be used íor anti-competiti·e purposes,
such as where two competitors use a licensing agreement to share-out markets between
themsel·es or where an important licence holder excludes competing technologies írom the
market.
According to Parr & Sulli·an ,1996,, a 1echnology Licensing Agreement grants a licensee the
right to utilize speciíic technologies, patents, soítware, know-how or product designs. In a
typical technology license agreement, a running royalty íee based on licensed product sales
re·enue is paid to the licensor on a periodic basis. Beneíits oí technology licensing include:
· Shorten product de·elopment time
· Gain entry into otherwise protected industries
· Lnhance quality oí products and processes
· Build competiti·e ad·antage
· Increase sales re·enue
· Lxpand existing business capabilities
1echnology that can be licensed out may range írom public to nonpublic technical or other
iníormation, trade secrets, know-how, processes, íormulations, concepts, ideas, preclinical,
clinical, pharmacological or other data and testing results, experimental methods or results,
descriptions, business or scientiíic plans, depictions, customer lists, any other written, printed
or electronically stored materials, any and all other intellectual property, including patents,
patent applications, to trademarks and trademark applications oí any nature whatsoe·er.
1echnology licensing signiíies willingness to transíer and license to a licensee, and licensee
willingness to acquire and license írom licensor, certain technology and intellectual property
and rights to the technology íor the purpose oí allowing licensee to de·elop and market
products using such technology and intellectual property and rights to the technology.
A technology license may pro·ide that the licensee may de·elop certain in·entions,
impro·ements, processes or know-how, or that it may obtain technology or patents or other
proprietary rights useíul in the business oí the licensor, and, in each such case, licensor is
willing to grant to licensee a license or sublicense to use such de·elopments, technology or
rights ,lox, 2008,.
In consideration oí mutual agreements set íorth in a License Agreement and íor other good
and ·aluable consideration, the receipt and suííiciency oí which are acknowledged in the
1echnology License, the Licensor ad Licensee may set íorth the terms and conditions oí such
an agreement.
1he transíer oí technology is generally subject to the terms and conditions speciíied in the
agreement, whereby the Licensor transíers and assigns to the Licensee all oí the licensor's
right, title and interest to the licensor's technology and the assets and equipment to be set íorth
in a separate letter agreement between the parties ,oíten call the "Letter Agreement", ,Guth,
200¯,.
a. Licenses and Right of Iirst Refusal
Cravt of íicev.e to íicev.ee: Subject to the terms and conditions oí the License Agreement,
Licensor may grant to Licensee perpetual, royalty-íree and exclusi·e right and license,
including the right to grant sublicenses, to impro·ements íor use in the Licensee lield ,lox,
2008,.
1bira·Part, íicev.e.: 1o the extent that any Licensor technology or impro·ements assigned or
licensed to Licensee under the License Agreement consist oí rights oí Licensor under an
agreement or license with or írom a third party, any assignment or license granted to Licensee
under the License Agreement can be limited to the rights which Licensor has a right to grant
under such agreement or license and otherwise subject to any obligations assumed by
Licensor in consideration oí the grant or assignment oí such right or license to Licensor
which is to be assigned or sublicensed to Licensee.
Cravt of íicev.e. to íicev.or: Subject to the terms and conditions oí the License Agreement,
Licensee may grant to Licensor ,i, a perpetual, royalty-íree and exclusi·e ,against Licensee and
all other Persons, right and license, including the right to grant sublicenses, to the Licensor
69 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
1echnology íor the de·elopment, manuíacture, use or sale oí any products within the
Licensor lield and ,ii, a perpetual, royalty-íree and nonexclusi·e right and license, including
the right to grant sublicenses, to the Licensor 1echnology íor the de·elopment, manuíacture,
use or sale oí any products outside the Licensee lield and the Licensor lield.
Rigbt of íir.t Refv.at: Under this pro·ision, ií Licensor proposes to sell, or license a third party
to sell, any product íor use within the Licensee lield ,a "Product",, Licensor may be required
to íirst pro·ide Licensee with written notice oí such proposal, including all material terms and
conditions thereoí ,the "Product Notice",. lor a speciíic number oí days ,e.g. 30 days,
íollowing receipt oí the Product Notice, Licensee shall ha·e the option to purchase or license
írom Licensor the Product upon the terms and conditions set íorth in the Product Notice. In
the e·ent Licensee elects to purchase or license the Product írom Licensor, Licensee shall gi·e
written notice oí its election to Licensor within the speciíic number oí days and the parties
shall negotiate a mutually agreeable agreement íor the purchase or license oí the Product. Ií
Licensee does not elect to purchase or license the Product, Licensor may, within a speciíied
period íollowing the expiration oí the option right granted to Licensee, transíer or license the
Product to the proposed transíeree or any other transíeree, pro·ided that the transíer shall not
be on terms and conditions more ía·orable to the purchaser than those contained in the
Product Notice.
1ervivatiov of a 1ecbvotog, íicev.ivg .greevevt: 1he pro·isions oí speciíic sections oí the
Agreement may terminate upon the earlier oí ,a, a speciíied period ,e.g. íour years, aíter the
date oí the Agreement or ,b, the acquisition oí all or substantially all oí the business or assets,
by merger, sale oí assets or otherwise, oí either Licensee or Licensor, pro·ided, that any
licenses or sublicenses granted under speciíic sections oí the License Agreement shall sur·i·e
such termination to the extent that they relate to impro·ements existing on such date oí
termination.
b. Registration Rights
According to Meeker ,2004,, it can be pro·ided that Licensee not be required to eííect more
than two registrations in accordance with speciíic sections oí the Agreement. Ií at the time oí
any request to register shares oí Licensee Common Stock pursuant to that section oí the
Agreement, Licensee is engaged in any other acti·ity which, in the good íaith determination oí
Licensee's Board oí Directors, would be ad·ersely aííected by the requested registration to the
material detriment oí Licensee, then Licensee may at its option direct that such request be
delayed íor a period not in excess oí a speciíied period ,e.g. six months, írom the date oí
commencement oí such other material acti·ity, such right to delay a request to be exercised by
Licensee not more than once in any speciíied period oí time ,e.g. two-years,. It can be
pro·ided that Licensor to pay all Registration Lxpenses.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 70
c. Technology, Patent Rights and Disclosure
1ecbvotog, 1rav.fer: It can be pro·ided in the License Agreement that Licensor to pro·ide to
Licensee, or a sub-licensee designated by Licensee, reasonable technical assistance and
instruction, at Licensee's or such permitted sub-licensee's sole option and expense, in
understanding, interpreting and applying Licensor 1echnology and impro·ements íor the
purpose oí commercially de·eloping products within the Licensee lield. It can be pro·ided
íurther that Licensor to make its employees reasonably a·ailable íor consultation by
telephone, or in person at the oííices oí Licensor, in connection with such assistance and
instruction, all at the sole expense oí Licensee or such sub-licensee ,Megantz, 1996,.
Patevt Rigbt.: It can be pro·ided in the License Agreement that Licensor to ha·e the exclusi·e
right, at its expense, to prepare, prosecute and maintain patent applications, and to maintain
and eníorce patents issued thereon with respect to impro·ements disco·ered, de·eloped or
otherwise acquired by Licensor.
Cooperatiov: It can be pro·ided that each party to agree to cause each oí its employees and
agents to take all actions and to execute, acknowledge and deli·er all instruments or
agreements reasonably requested by the other party, and necessary íor the períection,
maintenance, eníorcement or deíense oí that party's rights as set íorth in the 1echnology
Licensing Agreement.
Covfiaevtiat ívforvatiov: It can be pro·ided that any party recei·ing Coníidential Iníormation
shall maintain the coníidential and proprietary status oí such Coníidential Iníormation, keep
such Coníidential Iníormation and each part thereoí within its possession or under its control
suííicient to pre·ent any acti·ity with respect to the Coníidential Iníormation that is not
speciíically authorized by the Agreement, use commercially reasonable eííorts to pre·ent the
disclosure oí any Coníidential Iníormation to any other Person, and use commercially
reasonable eííorts to ensure that such Coníidential Iníormation is used only íor those
purposes speciíically authorized in the 1echnology Licensing Agreement, pro·ided, howe·er,
that such restriction shall not apply to any Coníidential Iníormation which is ,a,
independently de·eloped by the recei·ing party, ,b, in the public domain at the time oí its
receipt or thereaíter becomes part oí the public domain through no íault oí the recei·ing
party, ,c, recei·ed without an obligation oí coníidentiality írom a third party ha·ing the right
to disclose such iníormation, ,d, released írom the restrictions oí this section oí the
Agreement by the express written consent oí the disclosing party, ,e, disclosed to any
permitted assignee, permitted sub-licensee or permitted subcontractor oí either Licensor or
Licensee under the Agreement ,ií such assignee, sub-licensee or subcontractor is subject to
the pro·isions oí the particular section oí the Agreement or comparable pro·isions oí such
other documents,, or ,í, required by law, statute, rule or court order to be disclosed ,the
71 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
disclosing party shall, howe·er, use commercially reasonable eííorts to obtain coníidential
treatment oí any such disclosure,. 1he Agreement can pro·ide that the obligations set íorth
in this particular section oí the Agreement to sur·i·e íor a speciíic period oí time ,such as íi·e
,5, years, írom the termination or expiration oí the Agreement. \ithout limiting the
generality oí the pro·isions, the Agreement can pro·ide that Licensor and Licensee each use
commercially reasonable eííorts to obtain coníidentiality agreements írom its respecti·e
employees and agents, similar in scope to this section oí the Agreement, to protect the
Coníidential Iníormation. Licensor may agree to treat the Licensor 1echnology as
Coníidential Iníormation oí Licensee. Notwithstanding anything to the contrary in the
Agreement, it can be pro·ided that Licensor and Licensee may undertake to each be deemed
to ha·e satisíied its obligations under this section oí the Agreement ií it protects the
Coníidential Iníormation oí the other party with the same degree oí care that it uses to
protect its own similar Coníidential Iníormation ,Megantz, 2002,.
Pervittea Di.cto.vre.: Notwithstanding the pro·isions oí section oí the Agreement, it can be
pro·ided that Licensor and Licensee may, to the extent necessary, disclose and use
Coníidential Iníormation, consistent with the rights oí Licensor and Licensee otherwise
granted under the Agreement ,a, íor the purpose oí engaging in research and de·elopment,
conducting clinical testing and marketing programs, or securing institutional or go·ernment
appro·al to clinically test or market any product, ,b, íor the purpose oí sharing clinical trial
results and data with third parties conducting clinical trials on, or ,c, íor the purpose oí
securing patent protection íor an in·ention within the scope oí the Impro·ements.
d. Disclaimer of Warranty, Consequential Damages
Disclaimer oí \arranty: According to Poltorak & Lerner ,2003,, it can be pro·ided that
nothing in the Agreement to be construed as a representation made or warranty gi·en by
either party to the Agreement that any patents will issue based on pending applications within
the Licensor 1echnology, or that any such patents which do issue will be ·alid, or that the
practice by the other party to the Agreement oí any license granted there under, or that the use
oí any Licensor 1echnology and Impro·ements transíerred or licensed under the Agreement,
to not iníringe the patent or proprietary rights oí any other person. In addition, Licensor and
Licensee may acknowledge that 1lL 1LClNOLOG\ IS LICLNSLD AND
1RANSlLRRLD, AS 1lL CASL MA\ BL, 1O LICLNSLL AND LICLNSOR,
RLSPLC1IVLL\, AS IS, AND LICLNSOR AND LICLNSLL LXPRLSSL\ DISCLAIM
AND 1lLRLB\ \AIVL, RLLLASL AND RLNOUNCL AN\ \ARRAN1\,
LXPRLSS OR IMPLILD, \I1l RLSPLC1 1O SUCl 1LClNOLOG\, INCLUDING,
\I1lOU1 LIMI1A1ION, AN\ \ARRAN1\ Ol MLRClAN1ABILI1\ OR
lI1NLSS lOR A PAR1ICULAR PURPOSL.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 72
Cov.eqvevtiat Davage.: It can be pro·ided that LXCLP1 AS O1lLR\ISL SL1 lOR1l IN
1lL AGRLLMLN1, NLI1lLR PAR1\ 1O 1lL AGRLLMLN1 1O BL LN1I1LLD
1O RLCOVLR lROM 1lL O1lLR AN\ SPLCIAL, INCIDLN1AL,
CONSLQULN1IAL OR PUNI1IVL DAMAGLS.
^o ívptiea !airer.; Rigbt. Cvvvtatire: 1here may be pro·isions that no íailure on the part oí
Licensor or Licensee to exercise no delay in exercising any right, power, remedy or pri·ilege
under the Agreement, or pro·ided by statute or at law or in equity or otherwise, to impair,
prejudice or constitute a wai·er oí any such right, power, remedy or pri·ilege or be construed
as a wai·er oí any breach oí the Agreement or as an acquiescence therein, nor to any single or
partial exercise oí any such right, power, remedy or pri·ilege preclude any other or íurther
exercise thereoí or the exercise oí any other right, power, remedy or pri·ilege.
íorce Ma;evre: 1he Agreement may pro·ide that Licensor and Licensee to each be excused íor
any íailure or delay in períorming any oí its respecti·e obligations under the Agreement,
other than the obligations oí Licensee to make certain payments to Licensor pursuant to a
speciíic section oí the Agreement, ií such íailure or delay is caused by lorce Majeure ,1ollen,
2011,.
^otice.: 1he Agreement may pro·ide that all notices, requests and other communications to
Licensor or Licensee under the Agreement to be in writing ,including telecopy or similar
electronic transmissions,, to reíer speciíically to the Agreement and to be personally deli·ered
or sent by telecopy or other electronic íacsimile transmission or by registered mail or certiíied
mail, return receipt requested, postage prepaid, in each case to the respecti·e address speciíied
in the Agreement ,or to such other address as may be speciíied in writing to the other party to
the Agreement. Any notice or communication gi·en in coníormity with this section oí the
Agreement be deemed to be eííecti·e when recei·ed by the addressee, ií deli·ered by hand,
telecopy or other electronic íacsimile transmission, and a speciíic time period ,such as three
,3, days, aíter mailing, ií mailed.
ívrtber ...vravce.: Lach oí Licensor and Licensee may agree to duly execute and deli·er, or
cause to be duly executed and deli·ered, such íurther instruments and do and cause to be done
such íurther acts and things, including, without limitation, the íiling oí such additional
assignments, agreements, documents and instruments, that may be necessary or as the other
party to the Agreement may at any time and írom time to time reasonably request in
connection with the Agreement or to carry out more eííecti·ely the pro·isions and purposes
oí, or to better assure and coníirm to such other party its rights and remedies under the
Agreement.
7S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
´vcce..or. ava ...igv.: 1he terms and pro·isions oí the Agreement may inure to the beneíit oí,
and be binding upon, Licensor, Licensee, and their respecti·e successors and assigns,
pro·ided, howe·er, that neither Licensor nor Licensee may assign or otherwise transíer any
oí its rights and interests, nor delegate any oí its respecti·e obligations under the Agreement,
including, without limitation, pursuant to a merger or consolidation, without the prior written
consent oí the other party to the Agreement, which consent shall not be unreasonably
withheld. 1he Agreement may pro·ide that any attempt to assign or delegate any portion oí
the Agreement in ·iolation oí this speciíic section oí the Agreement to be null and ·oid.
Subject to the íoregoing, any reíerence to Licensor and Licensee under the Agreement may be
deemed to include the successors thereto and assigns thereoí.
.vevavevt.: 1he Agreement may pro·ide that no amendment, modiíication, wai·er,
termination or discharge oí any pro·ision oí the Agreement, nor consent to any departure by
Licensor or Licensee there írom, can be eííecti·e unless the same be in writing speciíically
identiíying the Agreement and the pro·ision intended to be amended, modiíied, wai·ed,
terminated or discharged and signed by Licensor and Licensee, and each such amendment,
modiíication, wai·er, termination or discharge to be eííecti·e only in the speciíic instance and
íor the speciíic purpose íor which gi·en. 1he Agreement can pro·ide that no pro·ision
thereoí may be ·aried, contradicted or explained by any oral agreements course oí dealing or
períormance or any other matter not set íorth in an agreement in writing and signed by
Licensor and Licensee.
Corervivg íar: It should be pro·ided that the 1echnology Licensing Agreement be go·erned
by and construed in accordance with the laws oí the country oí its jurisdiction.
´ererabitit,: 1he 1echnology License Agreement may pro·ide that ií any pro·ision therein
should be held in·alid, illegal or uneníorceable in any respect in any jurisdiction, then, to the
íullest extent permitted by law, ,a, all other pro·isions thereoí should remain in íull íorce and
eííect in such jurisdiction and to be liberally construed in order to carry out the intentions oí
the parties thereto as nearly as may be possible and ,b, such in·alidity, illegality or
uneníorceability not to aííect the ·alidity, legality or eníorceability oí such pro·ision in any
other jurisdiction. 1o the extent permitted by applicable law, Licensor and Licensee may
thereby wai·e any pro·ision oí law that would render any pro·ision thereoí prohibited or
uneníorceable in any respect.
íeaaivg.: 1here need to be pro·ision in the Agreement to the eííect that headings used therein
are íor con·enience only and not to in any way aííect the construction oí, or be taken into
consideration in interpreting the Agreement.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 74
í·ecvtiov iv Covvterpart.: 1he Agreement may pro·ide that it may be executed in counterparts,
each oí which counterparts, when so executed and deli·ered, to be deemed to be an original,
and all oí which counterparts, taken together, to constitute one and the same instrument.
ívtire .greevevt: It may be pro·ided that the Agreement together with any agreements
reíerenced therein, constitutes, on and as oí the date thereoí, the entire agreement oí
Licensor and Licensee with respect to the subject matter thereoí, and all prior or
contemporaneous understandings or agreements, whether written or oral, between Licensor
and Licensee with respect to such subject matter be thereby superseded in their entirety ,Stark,
200¯,.
75 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
8. Intellectual Property ,IP, Law
Intellectual Property is about the capacity oí human beings to ha·e Intellect and will power -
the ability to choose íreely. Intellectual Property ,IP, is a term reíerring to a number oí distinct
types oí creations oí the mind íor which a set oí exclusi·e rights are recognized under the
corresponding íields oí law. Intellectual property legislation coníers exclusi·e rights on
holders oí patents, rights, registered trademarks and other rights protected by the law. A
holder oí intellectual property rights is authorized to pre·ent any unauthorized use oí its
intellectual property and to exploit such property, particular by licensing it to third parties.
1here are se·eral reasons why Intellectual Property Rights should be protected:
· Protect in·estments in time, money or other resources used to create new contributions to
technology, commerce and entertainment
· Go·ernments encourage creators to disclose their creations to the public in order to
promote the progress oí science and useíul arts which are the engines oí de·elopment -
in·estors demand this guarantee
· loster economic growth
· Pro·ide incenti·es íor technological inno·ations, and
· Attract in·estments that will create new jobs and career opportunities
· Intellectual property also contributes to the creation oí a competiti·e and transparent
market in an economic system where consumers are protected and businesses are able to
enter the market íreely and to compete íairly
· Intellectual property is also used to de·elop new businesses ,e.g. M-Pesa, a system oí
transacting money using mobile phones which has contributed massi·ely to job creation in
the Kenya
According to Pressman & Llias ,1999,, Intellectual Property ,IP, is a term reíerring to a
number oí distinct types oí creations oí the mind íor which a set oí exclusi·e rights are
recognized under the corresponding íields oí law. It is the area oí law that deals with and
o·ersees the creation oí intellectual property patents, copyrights, trademarks and trade secret
laws, the protection oí intellectual property rights, and the legal pursuit oí those who iníringe
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 76
on another's rights to his,her intellectual property. It o·erlaps with se·eral other areas oí law,
such as patent law, copyright law, contract law, tort law, trademark law and litigation. Under
intellectual property law, owners are granted certain exclusi·e rights to a ·ariety oí intangible
assets, such as musical, literary, and artistic works, disco·eries and in·entions, and words,
phrases, symbols, and designs. Common types oí intellectual property rights include
copyrights, trademarks, patents, industrial design rights and trade secrets in some
jurisdictions. A patent, íor example, represents a legal |right| obtained by an in·entor
pro·iding íor exclusi·e control o·er the production and sale oí his mechanical or scientiíic
in·ention.
a. Support perspectives of IP
listorically, intellectual property rights were granted only when they were necessary to
encourage in·ention, and they were limited in time and scope. Until recently, the purpose oí
intellectual property law was to gi·e as little protection to the inno·ator as possible in order to
encourage inno·ation. 1his meant that the inno·ator had only a limited time within which to
enjoy the inno·ation beíore mo·ing on to a new inno·ation. Currently, the objecti·e oí
intellectual property legislators and those who support its implementation is "absolute
protection". 1he proponents reason that ií some intellectual property is desirable because it
encourages inno·ation, more is better. 1he rationale is that creators will not ha·e suííicient
incenti·e to in·ent unless they are legally entitled to capture the íull social ·alue oí their
in·entions ,Razgaitis, 2009,.
Lconomic growth
1he \orld Intellectual Property Organization ,\IPO, treaty and se·eral related international
agreements are premised on the notion that the protection oí intellectual property rights is
essential to maintaining economic growth. It gi·es two primary reasons íor intellectual
property laws:
a. 1o gi·e statutory expression to the moral and economic rights oí creators in their
creations and the rights oí the public in access to those creations.
b. 1o promote, as a deliberate act oí go·ernment policy, creati·ity and the dissemination and
application oí its results and to encourage íair trading which would contribute to
economic and social de·elopment.
Lconomists argue that intellectual property-intensi·e industries are estimated to generate ¯2
percent more ·alue added ,deíined as price minus material cost, per employee than non-
intellectual property-intensi·e industries. lor example, they estimate that two-thirds oí the
·alue oí large businesses in the USA can be attributed to intangible assets. Other eííorts ha·e
drawn similar conclusions. lor example, a joint research project oí the \IPO and the United
77 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Nations Uni·ersity measuring the impact oí IP systems on six Asian countries reported a
positi·e association between strengthening oí the IP system and subsequent economic
growth.
Morality
Although the relationship between intellectual property and human rights is a complex one,
moral arguments ha·e been made íor intellectual property. lor example, among supporters
oí IP rights was writer Ayn Rand, who argued that the protection oí intellectual property is
essentially a moral issue, that the human mind itselí is the source oí wealth and sur·i·al and
that all property at its base is intellectual property. 1o ·iolate intellectual property, he argued, is
no diííerent morally írom ·iolating other property, such as real property, rights which
compromises the ·ery processes oí sur·i·al - and thereíore constitutes an immoral act
,Meeker, 2004,.
According to Article 2¯ oí the Uni·ersal Declaration oí luman Rights, e·eryone has the
right to protection oí the moral and material interests resulting írom any scientiíic, literary or
artistic production oí which he is the author". Moreo·er, moral justiíications íor pri·ate
property ha·e been used to argue in ía·or oí the morality oí intellectual property, such as the
íollowing arguments:
1. ^atvrat ]v.tice: this argument is based on the premise that a person has a natural right o·er
the labor and products oí his,her body, which includes the hands and the mind.
Appropriating these labor and products by others is ·iewed as unjust. Under this premise, it
is possible to apply his argument to intellectual property rights, in which it would be unjust íor
people to misuse another's ideas, products oí the mind.
2. |tititariav·Pragvatic: according to this premise, a society that protects pri·ate property is
more eííecti·e and prosperous than one that does not. lor example, the de·elopment oí the
patent system in the USA has been credited íor inno·ation and in·ention in 19th century
America. 1he argument is that by pro·iding inno·ators with "durable and tangible return on
their in·estment oí time, labor, and other resources", intellectual property rights seek to
maximize social utility. 1he presumption is that intellectual property rights promote public
welíare by encouraging the "creation, production, and distribution oí intellectual works".
3. ¨Per.ovatit,: this argument is premised on the notion that ideas are an extension oí
oneselí and oí one's personality`, and is based on a quote írom legel that says: L·ery man
has the right to turn his will upon a thing or make the thing an object oí his will, that is to say, to
set aside the mere thing and recreate it as his own`.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 78
Iinancial incentive
1he exclusi·e rights that come with intellectual property protection are supposed to allow
owners oí intellectual property to beneíit írom them, pro·iding a íinancial incenti·e íor the
creation oí an in·estment in intellectual property.
b. Opposing perspectives of IP
Richard Stallman ,íounder oí the lree Soítware loundation,, argues that, although the term
ivtettectvat propert, is in wide use, it should be rejected altogether because it "systematically
distorts and coníuses these issues, and its use was and is promoted by those who gain írom
this coníusion." le claims that the term "operates as a catch-all to lump together disparate
laws |which| originated separately, e·ol·ed diííerently, co·er diííerent acti·ities, ha·e diííerent
rules, and raise diííerent public policy issues" and that it creates a "bias" by coníusing these
monopolies with ownership oí limited physical things, likening them to "property rights". le
ad·ocates reíerring to copyrights, patents and trademarks in the singular and warns against
abstracting disparate laws into a collecti·e term. In addition, many íree soítware acti·ists ha·e
criticized the implied analogy oí intellectual property with physical property ,like land or an
automobile,, arguing that such an analogy is selí-deíeating because the two are íundamentally
diííerent. \hile physical property is generally ri·alrous, intellectual works are not, meaning
that ií one makes a copy oí a work, the enjoyment oí the copy does not pre·ent enjoyment oí
the original.
Limitations
Some critics oí intellectual property, such as those in the íree culture mo·ement, point at
intellectual monopolies as harming health, pre·enting progress, and beneíiting concentrated
interests to the detriment oí the masses, and argue that the public interest is harmed by e·er
expansi·e monopolies in the íorm oí copyright extensions, soítware patents and business
method patents. 1he Committee on Lconomic, Social and Cultural Rights ,CLSCR,
recognizes that "conílicts may exist between the respect íor and implementation oí current
intellectual property systems and other human rights". It argues that intellectual property
tends to be go·erned by economic goals when it should be ·iewed primarily as a social
product. 1hat, in order to ser·e human well-being, intellectual property systems must respect
and coníorm to human rights laws. According to the Committee, when systems íail to respect
and coníorm to human rights laws, they risk iníringing upon the human right to íood and
health, and to cultural participation and scientiíic beneíits. Some libertarian critics oí
intellectual property ha·e argued that allowing property rights in ideas and iníormation
creates artiíicial scarcity, thereby iníringing on the right to own tangible property ,Pressman &
Llias, 1999,.
Other criticism oí intellectual property law concerns the tendency oí the protections oí
79 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
intellectual property to expand, both in duration and in scope. 1he trend has been toward
longer copyright protection, raising íears that it may someday be eternal. Moreo·er,
de·elopers and controllers ha·e sought to bring more items under the same intellectual
property protection. 1he dilemma goes on: patents ha·e been granted íor li·ing organisms,
certain li·ing organisms ha·e been patentable íor o·er a century, and colors ha·e been
trademarked. Because they are systems oí go·ernment-granted monopolies copyrights,
patents, and trademarks ha·e been called intellectual monopoly pri·ileges, ,IMP,. Among
non-supporters oí intellectual property rights was 1homas Jeííerson, who wrote in a letter to
Isaac McPherson in 1813: "Ií nature has made any one thing less susceptible than all others oí
exclusi·e property, it is the action oí the thinking power called an idea, which an indi·idual
may exclusi·ely possess as long as he keeps it to himselí, but the moment it is di·ulged, it
íorces itselí into the possession oí e·ery one, and the recei·er cannot dispossess himselí oí it.
Its peculiar character, too, is that no one possesses the less, because e·ery other possesses the
whole oí it. le who recei·es an idea írom me, recei·es instruction himselí without lessening
mine, as he who lights his taper at mine, recei·es light without darkening me."
Another limitation oí most current Intellectual Property legislation is its íocus on indi·idual
and joint works. lor example, copyright protection can only be obtained in 'original' works oí
authorship, which deíinition excludes any works that are the result oí community creati·ity.
Good examples are nati·e songs and stories: most current legislations, including the USA, do
not recognize the uniqueness oí indigenous cultural 'property' and its e·er-changing nature.
Asking nati·e cultures to 'write down' their cultural artiíacts on tangible mediums ignores
their necessary morality and eníorces a \estern bias oí the written íorm as more
authoritati·e.
Lthics
1he ethical problems brought up by intellectual property rights issues are most pertinent
when it is socially ·aluable goods like liíe-sa·ing medicines and genetically modiíied seeds that
are gi·en intellectual property protection. lor example, pharmaceutical companies that
produce the medicines apply íor and obtain intellectual property rights in order to pre·ent
other companies írom manuíacturing the same product without the additional cost oí
research and de·elopment. Application oí intellectual property rights so obtained allows the
pharmaceutical company to charge higher prices than the marginal cost oí production in
order to recoup the costs oí research and de·elopment. 1his strategy immediately excludes,
írom the market, anyone who cannot aííord the now relati·ely high cost oí the product, e·en
ií it might be a liíesa·ing drug ,Seglin, 2006,.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 80
a. Intellectual Property Management
Intellectual property management employs a ·ariety oí tools to achie·e diííerent end
objecti·es oí the ·arious aspects oí intellectual property management. 1hese tools includes:
institutional IP policies, IP audits and use oí ·arious agreements. It can also reíer to strategies
geared towards management oí intellectual creations ,intellectual assets, oí determined
economic ·alue de·eloped within an institution or organization. Lssentially management oí
IP in·ol·es identiíications and making in·entory oí the types oí intellectual property,
determination oí ownership, securing the rights and transíerring the rights ,licensing or
assignments, through ·arious agreements ,Poltorak & Lerner, 2003,.
b. Why Protect Intellectual Property
· Protect in·estment in time, money or other resources used to create new contribution to
technology, commerce and entertainment.
· Go·ernments encourage Creators to disclose their creations to the public in order to
promote the progress oí science and useíul arts which are the engines oí de·elopment-
in·estors demand this guarantee
· losters economic growth
· Pro·ides incenti·es íor technological inno·ation, and
· Attracts in·estment that will create new jobs and opportunities.
c. Role of IP in Technology Transfer
An Intellectual Property right grants an owner a monopoly o·er time. A pri·ate in·estor or
partner can get interested in an inno·ation due to the higher guarantee oí success associated
with this monopoly. As a result, Intellectual Property is a crucial bargaining chip íor
commercialisation oí inno·ation and an important entry point in joint ·enture or partnership
agreements ,Megantz, 1996,.
d. Intellectual Property in Kenya
íi.toricat ßac/grovva
In 1989 the Industrial Property Act Cap 509 was enacted by the Kenya Parliament. An
in·ention by KLMRI dubbed KLMRON` acted as the catalyst íor the enactment oí the Act
when it was realised that the in·ention could not be patented in Kenya. 1he Kenya Industrial
Property Institute ,KIPI, was transíormed írom Kenya Industrial Property Oííice ,KIPO,
upon enactment oí the Industrial Property Act 2001, with the responsibilities íor examining
applications íor and grants industrial property rights íor:
· Patents íor in·entions
· Utility models íor inno·ations
· Industrial Designs íor aesthetic íeatures oí products
· 1rade and ser·ice marks íor goods and ser·ices
81 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
It core íunctions became to:
· pro·ide industrial property iníormation to the public
· promote in·enti·eness and inno·ati·eness in Kenya
· organize and conduct training in IP
KIPI is charged with the mandate to administer Industrial Property Rights ,IPRs,, pro·ision
oí technological iníormation and training in IPRs and the promotion oí in·enti·eness and
inno·ati·eness. In executing this mandate, KIPI íosters protection oí inno·ation and
intellectual property to catalyze technological de·elopment ,1he Industrial Property
Regulations, 2002,.
Between 1914 and 1989 the Patents Registration Act Cap 508 was the law go·erning patent
protection in Kenya. 1he law required an in·entor to apply and obtain protection in the
United Kingdom ,UK, beíore ha·ing the same registered in Kenya. Under that law:
1. Industrial Property Rights were administered by the Kenya industrial property institute
,KIPI, under IPA 2001 & 1M oí 195¯ & Amended in 2002.
2. Copyright & Neighbouring Rights was administered by Oííice oí Registrar General under
the Copyright Act. 2001
3. Plant Breeder's Rights was administered by KLPlIS under an Act oí 199¯ ,1he
Industrial Property Act, 2001,.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 82
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85 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Ihe kfrIcan IechnoIo§¡ FoIIc¡ $tudIes ßetWork {kIF$) Is a muItI-
dIscIµIInar¡ netWork of researchers, µrIvate sector actors and
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doc_782791319.pdf
During in this such a detailed explanation in relation to entrepreneurship skills training manual for scientists.
Lntrepreneurship Skills
1raining Manual íor Scientists
Lntrepreneurship Skills
1raining Manual íor Scientists
Published by the Aírican 1echnology Policy Studies Network
P O Box 10081, 00100 GPO Nairobi Kenya
2012 Published by the Aírican 1echnology Policy Studies Network
ISBN: 9¯8-9966-030-45-0
1he Aírican 1echnology Policy Studies Network ,A1PS, is a
multi-disciplinary network oí researchers, pri·ate sector actors and
policy makers promoting the generation, dissemination, use and
mastery oí science, technology and inno·ation ,S1&I, íor Aírican
de·elopment, en·ironmental sustainability and global inclusion.
A1PS intends to achie·e its mandate through research, capacity
building and training, science communication,dissemination and
sensitization, participatory multi-stakeholder dialogue,
knowledge brokerage, and policy ad·ocacy.
1able oí Contents
Acknowledgment ii
List oí 1ables iii
List oí ligures i·
List oí Acronyms ·
1. Introduction 1
2. Lstablishing a Successíul Lnterprise 5
3. Identiíying an Inno·ation that can be Commercialized 15
4. Managing a Small Business 26
5. lrom leasibility Plan to Business Plan 36
6. Lthics in Running a Small Business 63
¯. 1echnology Licensing 68
8. Intellectual Property ,IP, Law ¯6
Reíerences 83
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Acknowledgement
1his training manual is produced as part oí the implementation oí the A1PS mandates under
the Biosciences Inno·ation Policy Consortium íor Lastern Aírica ,BIPCLA, Partnership
Project. \e are grateíul to the Swedish International De·elopment Agency ,SIDA, íor
pro·iding the íunds íor the implementation oí Bio Inno·ate Projects in Lastern Aírica. \e
acknowledge the supports írom our BIPCLA partners including the Kenya National Council
íor Science and 1echnology ,KNCS1,, the 1anzania Commission íor Science and
1echnology ,COS1LCl,, the Uganda National Council íor Science and 1echnology
,UNCS1,, the Ministry oí Science and 1echnology ,MoS1, and the Addis Ababa Uni·ersity
,AAU,, Lthiopia, the Directorate oí Science, 1echnology and Research ,DS1R,, Rwanda, the
International Li·estock Research Institute ,ILRI,, the Stockholm Ln·ironment Institute
,SLI,, and the International Ser·ice íor the Acquisition oí Agri-biotech Applications
,ISAAA,.
I would like to express my gratitude to all the A1PS Secretariat staíí members. In particular,
the A1PS Senior Research Oííicer, Dr. Nicholas Ozor's dedicated eííort has íacilitated the
eííecti·e coordination oí the BIPCLA project within the A1PS including the de·elopment oí
this manual. linally, we are grateíul to Proí. Atieno Ndede-Amadi íor pro·iding useíul
resources íor the implementation oí this Project. I hope that the content oí this training
manual will stimulate passions and pro·ide ·aluable tips to promote and nurture
entrepreneurship skills among bio-scientists that will ultimately contribute to sustainable
de·elopment in Aírica.
Prof. Kevin C. Urama
í·ecvtire Director
1be .fricav 1ecbvotog, Potic, ´tvaie. ^etror/ ;.1P´)
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List oí 1ables
1able 1: 1echnology Readiness Le·els in the National Aeronautics 1¯
and Space Administration ,NASA,
1able 2: 1echnology Readiness Le·els in the Luropean Space Agency ,LSA, 19
1able 3: Questionnaire íor Ranking Inno·ations 21
1able 4: Commercializability criteria íor e·aluating a technological in·ention 21
1able 5: Sources oí Value and Con·ersion Mechanisms 24
1able 6: Commercialization Strategy 26
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List oí ligures
ligure 1: Path to entrepreneurship in liíe sciences 3
ligure 2: 1echnology Readiness Le·els in the NASA 18
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List oí Acronyms
AAU Addis Ababa Uni·ersity
A1M Automatic 1eller Machine
A1PS Aírican 1echnology Policy Studies Network
BIPCLA Biosciences Inno·ation Policy Consortium íor Lastern Aírica
CLSCR Committee on Lconomic, Social and Cultural Rights
CSR Corporate Social Responsibility
CSV Creating Shared Value
DS1R Directorate oí Science, 1echnology and Research, Rwanda
LSA Luropean Space Agency
IMP Intellectual Monopoly Pri·ilege
ILRI International Li·estock Research Institute
IP Intellectual Property
IPR Industrial Property Right
ISAAA International Ser·ice íor the Acquisition oí Agri-biotech Applications
KLMRI Kenya Medical Research Institute
KLPlIS Kenya Plant lealth Inspectorate Ser·ice
KIPI Kenya Industrial Property Institute
KIPO Kenya Industrial Property Oííice
KNCS1 Kenya National Council íor Science and 1echnology
MoS1 Ministry oí Science and 1echnology, Lthiopia
NASA National Aeronautical and Space Administration
PC Personal Computer
RlP Request íor Proposal
R&D Research and De·elopment
SLI Stockholm Ln·ironment Institute
SLO Search Lngine Optimization
SIDA Swedish International De·elopment Agency
SML Small and Medium Lnterprises
1CS1 1anzania Commission íor Science and 1echnology
1RL 1echnology Readiness Le·el
1M 1rade Mark
UK United Kingdom
UNCS1 Uganda National Council íor Science and 1echnology
USA United States oí America
VC Venture Capital
\IPO \orld Intellectual Property Organization
1. Introduction
1his training manual is a booklet oí instructions, designed to impro·e the quality oí
entrepreneurship in bio-sciences inno·ations. It íorms an important part oí the íormal
training program. lor example, it helps ensure consistency in presentation oí content in
addition to ascertaining that pertinent iníormation on processes, procedures, skills, and
knowledge related to the training objecti·es are all together in one place. It is particularly
useíul as:
· an introduction to the subject matter oí entrepreneurship prior to the training
· an outline to be íollowed during the training
· a reíerence to the entrepreneurship subject matter aíter training
· a general reíerence document
J.J. Innovation and entrepreneurship in the biosciences
1he world is currently witnessing a transíormation beginning that is being dri·en by new
science and proceeding by way oí technology and markets to a new society. 1he success oí
science has led to radical modiíications oí social beha·ior, íor example ad·ances in
reproducti·e health ha·e challenged traditional norms. Moreo·er, science and technology
appear to be compromising the integrity and uniqueness oí human liíe, íor instance, gene
sequencing and cloning. In this regard, the impact oí new technologies is seen as
undermining the meaningíulness oí industrial-age social constructions. L·idently, the íield
oí bioscience which has its emphasis on biotechnology has both positi·e and negati·e
ramiíications on society.
1he rapid de·elopment and application oí digital and genetic technologies in a globalizing
world shows the imminent shiít írom an industrial era to a network era. In the network era,
producti·ity and competition are increasingly determined by knowledge and iníormation as
well as by technologies. Networks ha·e thus become the typical current íorm oí producti·e
cooperation. In the networks, the íorm oí cooperation is no longer guided just by the
'entrepreneur' but by the scientist,researcher who creates the products. 1he
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ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 2
scientist's,researcher's role has e·ol·ed to include more creation oí cooperati·e links,
maintenance oí communication channels, exchange, appropriation and injection oí
appropriate iníormation into new products. 1his is to say that scientists,researchers are
increasingly being transíormed into Sciento-preneurs.`
Sciento-preneurs` need to possess certain characteristics which will enable them to harness
and prosper in the network era. 1hey include their ability to:
· build up networks ,networking skills,
· accept people and their ideas and to exchange iníormation ,socialization skills,
· learn to adapt to diííerent networks ,ílexibility and adaptability,
· integrate input írom diííerent disciplines ,multi-disciplinarity,
· get used to mobility and communicate in the language oí the target audience beyond the
peer community ,e.g. policy-makers, markets, users,
In order to achie·e success in bio-entrepreneurship, it is important to íocus on its three pillars,
which are: management, capital and technology.
Management: 1here can be no transíormation oí technological opportunities into product
sales without the in·ol·ement oí skilled management. 1he skill sets required are wide ranging
and e·ol·e with the liíe oí the company. lor example:
· at start-up stage: critical skill sets needed include the ability to direct R&D and
communicate the company's promise to the íinancial community
· at commercialization stage: this stage requires manuíacturing and commercialization
capabilities and collaborations
· as it approaches the market: marketing and sales skills are needed gi·en that sales
agreements ha·e a bearing on proíit and loss
· good managerial skills are need to help the company transition well írom a R&D dri·en
culture to a market dri·en culture
Capital: Access to íinancing, especially long-term íinancing, is a big challenge to many
Aírican companies. 1he challenge is e·en bigger íor R&D, inno·ation and science-based
companies due to the inherent risks in inno·ation ,no guarantee íor success in the market,.
Technology: Most companies still rely on the academia íor sources oí new technologies. 1he
uni·ersities pro·ide íertile grounds íor har·esting new in·entions and disco·ery which makes
technology licencing,transíer and other íorms oí IP critical. Moreo·er, e·ery biotech
industry must ha·e a well-deíined and well-articulated product,ser·ice íocus.
1o be successíul in the bioscience íield, it is mandatory íor the entrepreneurs to ha·e a clear
·ision oí e·ery step they will take towards their goal. lor example, they need to identiíy the
particular challenge the company,technology,inno·ation will address, which essentially
means being clear about the opportunity. It is also important to ha·e a clear ·ision oí sources
oí íuture re·enues. Some oí the areas entrepreneurs need to íocus on in order to be íruitíul in
their endea·ours are shown in ligure 1 below.
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Founder =
Na||el
Pe|ce|ve|
ûpporIun|Iy
|ecogu|l|ou
InIe||ecIua|
ProperIy ß|ghIs
Fund
aud bu||d leam
aud compauy
ûeve|op
lechuo|ogy lowa|d p|oducl
8urv|ve
by add|l|oua| luud|ug, se|||ug
assels (lP ||ceus|ug) o|
sp|uu|ug oul app||cal|ous
Nar|eI
p|oducl
Founder =
luveulo| ol
Techuo|ogy
Figure 1: Path to entrepreneurship in life sciences
In order to build successíul enterprises in the biosciences, prospecti·e entrepreneurs need to
íollow the tips below:
Timing - the entrepreneur needs to predict íuture changes in society and markets - timing can
be a real determinant oí success
· 1here is need to take a macro ·iew and predict how the industry or a particular sector will
de·elop and how it will look in 5 - 10 years time
· Aspiring entrepreneurs must ne·er think the market is static - rele·ant competitors are
those in the íuture
1he competiti·e space will change down the line and aspiring entrepreneurs must be prepared
Location - clustering leads to positi·e externalities and this connotes the saying that birds oí
the same íeathers ílock together:
· Clustering enables companies to be tuned into the industries strategic shiíts and become
successíul together
· Clustering pro·ides an en·ironment that will attract world-class talent, knowing that ií
things don't work with one company, there are others nearby
· Clustering allows mixing oí skill sets, and the con·ergence oí many disciplines and
cultures
1here are some challenges that an entrepreneur in this current dispensation íaces. Some oí
them include:
· in the network era, new products and ser·ices are the results oí social organizations oí
knowledge networks
· appropriation oí such products through patenting and other íorms oí IPR could be
challenged
· open source inno·ation models are opening up and íreeing knowledge which other
íirms could patent, thus changing the inno·ation landscape
· there is a shiít oí power oí regulation írom the domain oí politics to production means
· social and policy organizations are becoming hostile and deíensi·e towards
biotechnology
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2. Lstablishing a Successíul Lnterprise
According to Ramsey & \indhaus ,2009,, there are certain things - attributes, beha·iors,
attitudes, and practices that must be íully de·eloped, implemented, and managed by a small
business owner in order to start, operate and grow a proíitable small business. Among these
are: doing what you enjoy, taking what you do seriously, planning e·erything, managing
money wisely, asking íor the sale, remembering it's all about the customer, becoming a
shameless selí-promoter ,without being obnoxious,, projecting a positi·e business image,
getting to know your customers, le·eling the playing íield with technology, building a top-
notch business team, becoming known as an expert, creating a competiti·e ad·antage,
in·esting in yourselí, being accessible, being knowledgeable, building a rock-solid reputation,
selling beneíits, getting in·ol·ed, grabbing attention, mastering the art oí negotiations,
designing your workspace íor success, getting and staying organized, taking time oíí, limiting
the number oí hats you wear, and íollowing-up constantly. 1he work oí 1iííany & Peterson
,2004, on business planning supports similar perspecti·es on successíul small business
de·elopment. lollowing is a brieí discussion oí each oí the íoregoing attributes.
Doing what you enjoy
It has oíten been said that ´if ,ov ao rbat ,ov reatt, ev;o,, ,ov ritt verer ror/ a aa, iv ,ovr tife´. 1he
rationale is that what you enjoy doing, e·en ií it is work, oíten íeels like play. Ií you enjoy
working in your small business, you will end up gi·ing it a lot oí your time, with the result that
the business will get a lot oí beneíit, and, as a result, you will also get a lot out oí the business.
\hat you get out oí your business - in the íorm oí personal satisíaction and enjoyment and
íinancial gain and stability will be the sum oí what you put into the business. It then goes
without say that ií you do not enjoy what you are doing ,your business,, it is highly unlikely that
the business will succeed. So, bottom line is that ií you do not enjoy what you are doing,
chances are you will not succeed. It is, thereíore, important that the decision to go into
business and the choice oí what business to go into should take into consideration what the
entrepreneur really enjoys doing.
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Taking what you do seriously
\ou ha·e to belie·e in what you are doing beíore anyone else can belie·e in it. \our belieí in
your product or ser·ice can actually become contagious in that more people become con·erts
to the product or ser·ice just because you belie·e in it ·ery strongly. 1he re·erse is also true -
no one will belie·e in your business, product, or ser·ice unless you belie·e in it íirst. \ou
cannot expect to be eííecti·e and successíul in business unless you truly belie·e in your
business and in the goods and ser·ices that you sell. But taking your business seriously oíten
goes beyond your belieí in the goods and ser·ices that your business oííers. It includes the
commitments and promises that you make to your customers and the diligence with which
you íulíill the commitments and keep the promises. lar too many small business owners íail
to take their own businesses seriously allowing themsel·es to get easily sidetracked and not
staying moti·ated. 1oo oíten they íall prey to 'naysayers' who do not take them seriously,
sometimes because they work out oí their homes as opposed to working írom an oííice
building, oííice park, storeíront, or íactory. 1he íirst step to being taken seriously by your
customers, suppliers, and e·en competitors is taking what you do seriously.
Planning everything
It has oíten been said that ´faitivg to ptav i. ptavvivg to fait´. 1his adage is just as true in
establishing a new enterprise, ií not truer. Planning e·ery aspect oí your new business is not
only necessary, it builds habits that e·ery new business owner needs to de·elop, implement,
and maintain. 1he act oí business planning is ·ery important and requires you, the business
owner, to analyze each business situation, to research and to compile data, and to make
conclusions based mainly on the íacts as re·ealed through the research íindings. Business
planning also ser·es the íunction oí ha·ing your goals and strategies íor achie·ing them on
paper. \ou can use the plan you create as both a map to take you írom start-up to success and
as a yardstick to measure the success oí each indi·idual segment within the plan.
Managing money wisely
1here is an old adage that says ´a pevv, .area i. a pevv, earvea´. 1he rationale is that watching
your expenditure is as important as watching your sales and deser·es just as much attention.
1here are two aspects to wise money management: the money recei·ed írom clients in
exchange íor goods and ser·ices pro·ided ,income,, and the money spent on in·entory,
supplies, wages and other items required to keep the business operating ,expenses,. 1he
liíeblood oí any business enterprise is its cash ílow. \hen this 'liíeblood' is cut oíí íor
whate·er reason, sur·i·al becomes a big struggle. Many otherwise successíul businesses ha·e
been known to buckle under íor their inability to pay bills when they become due. So, keep
cash ílowing in ,and out, oí your business in a planned manner. 1his means setting priorities
and expending only on the most important and urgent things. \ou need money to buy
in·entory, pay íor ser·ices, promote and market your business, repair and replace tools and
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equipment, and to pay yourselí and your staíí. 1hereíore, all new business owners need to
become wise money managers to ensure that the cash keeps ílowing and the bills get paid.
Asking for the sale
Asking íor the sale should happen as soon as the customer is adequately educated on the
product or ser·ice. It is the culmination oí all the sales, marketing, and ad·ertising eííorts. A
new business entrepreneur must always remember that marketing, ad·ertising, or
promotional acti·ities are completely worthless, regardless oí how cle·er, expensi·e, or
períectly targeted they are, unless one simple thing is accomplished - asking íor the sale. 1his is
not to say that being a great salesperson, ad·ertising whiz, or a public relations specialist is not
a tremendous asset to your business, it is just that all oí these skills will be íor naught ií you do
not acti·ely ask people to buy what you are selling.
Remembering it's all about the customer
1here is a relati·ely new adage that says tbe cv.tover i. /ivg` and another one that says the
customer is always right`. 1he rationale is that whate·er you do in your new business, you are
doing it íor the want, need, and satisíaction oí the customer. Ií your target customer does not
care íor your product or ser·ice, your business is history. \our new business is not about the
products or ser·ices that you sell, nor is it about the prices that you charge íor your goods and
ser·ices. \our new business is not about your competition and how to beat them. \our
business is all about your customer, end oí story. 1hey are the people that ultimately decide ií
your business goes boom or bust. L·erything you do in business must be customer íocused,
including your policies, warranties, payment options, operating hours, presentations,
ad·ertising and promotional campaigns, and website. 1he íirst step to being customer íocused
is getting to know your customer. 1he second step is remembering that all that you do is íor
and about the customer.
Becoming a shameless self-promoter (without becoming obnoxious)
Use e·ery possible opportunity to create awareness about yourselí, your business, product and
ser·ices. 1hese opportunities can be those created by you, the entrepreneur, such as in·iting
current and potential customers to ·isit your premises or to sample your products and
ser·ices, or they can be those created by others such as taking part in seminars and coníerences
related to your industry or products. One oí the greatest myths about personal or business
success is that e·entually your business, personal abilities, products or ser·ices will get
disco·ered and be embraced by the masses that will beat a path to your door to buy what you
are selling. But how can this happen ií no one knows who you are, what you sell and why they
should be buying· Selí-promotion is one oí the most beneíicial, yet most underutilized,
marketing tools that the majority oí new business owners ha·e at their immediate disposal.
\hen attending and participating at industry, product, or ser·ice seminars make sure you are
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noticed - by presenting papers or participating in panels.
Projecting a positive business image
\hen people see you and your business in a positi·e light, they will want to do business with
you. \ou ha·e but a passing moment to make a positi·e and memorable impression on people
with whom you intend to do business. Remember the adage that says you ne·er ha·e a second
chance to make a íirst impression`. New business owners must go out oí their way and make a
conscious eííort to always project the most proíessional business image possible on the get
go`. 1his is especially important since a majority oí new business owners do not ha·e the
ad·antage oí elaborate oííices or elegant storeíronts and showrooms to wow` prospects and
impress customers. Instead, they must rely on imagination, creati·ity and attention to the
smallest detail when creating and maintaining a proíessional image íor themsel·es and their
new businesses.
Getting to know your customers
Business research study results ha·e shown that a large majority oí business ,80°, will come
írom repeat customers and that only the other 20° will come írom new customers.
1hereíore, along with trying to draw new customers, the more you can do to woo your regular
customers the better oíí you will be in the long run. Gi·ing your customers personalized
attention is one way to achie·e this goal, and is ·ery much appreciated and remembered in the
modern high-tech world where businesses are increasingly relying on computers to maintain
their customer relations íor them. Call it high-tech backlash ií you will, but customers are sick
and tired oí hearing that their iníormation is somewhere in the computer and must be
retrie·ed, or told to push a dozen digits to íinally get to the right department only to end up
with ·oice mail--írom which they ne·er recei·e a return phone call. One oí the biggest
íeatures and oíten the most signiíicant competiti·e edge the small business entrepreneur has
o·er the larger competitors is the ability to oííer personalized attention. 1he new business
owner can actually answer phone calls, get to know customers, pro·ide personal attention and
win o·er repeat business by doing so.
Leveling the playing field with technology
\ou and your new business may not be household names yet, but you can ha·e a web-
presence that put many big businesses to shame. One oí the most amazing aspects oí the
internet is that a one or two person business operating írom a home or basement oííice can
ha·e a superior website to a >50 million company, and no one can tell the diííerence. Such a
web presence comes with the credibility necessary to attract any kind oí customer. Although
it is wise to a·oid getting o·erly caught up in the high-tech world such as ha·ing computers
answer customer phone calls, it is important to know how to take ad·antage oí it. 1he best
technology is that which helps you, not that which impresses your neighbors. Make sure you
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are keeping up with the high-tech world in line with your needs.
Building a top-notch business team
As a new business owner you are a manager. Management has sometimes been deíined as
achie·ing results through people`. No one person can build a successíul business alone, as it is
a task that requires a team that is both competent and as committed as you are to the business
and its success. \our business team may include íamily members, íriends, business alliances,
employees, sub-contractors, suppliers, industry and business associations, local go·ernment,
and the local community. 1he important thing is to put together a team that can and will get
the job done ,lill, 198¯,.
Becoming known as an expert
An expert is someone who is a specialist in a speciíic area. \hen people and businesses want
to outsource ser·ices, they look íor experts who can do the job ·ery well. Becoming known as
an expert in your business, product, or ser·ice area means that people and businesses will seek
you out when they need your expertise. 1his means that becoming known as an expert allows
your business to sell itselí and to grow. \hen you ha·e a problem that needs to be sol·ed, do
you seek just anyone's ad·ice or do you seek an expert in the íield to help sol·e your particular
problem· Ob·iously, you want the most accurate iníormation and assistance that you can get.
\ou naturally seek an expert to help sol·e your problem. \ou call a plumber when the hot
water tank leaks, and not just any plumber íor that matter, an expert plumber. \ou call a real
estate agent when it's time to sell your home, and not just any real estate agent, but one who has
established a good reputation in that area. \ou call a dentist when you ha·e a toothache, and
not just any dentist, an expert in the area oí your special need. 1hereíore, it only stands to
reason that the more you become known íor your expertise in your business, the more people
will seek you out to tap into your expertise, creating more selling and reíerral opportunities. In
eííect, becoming known as an expert is another way oí prospecting íor new business. Instead
oí íinding new and qualiíied people to sell to, these people seek you out íor your expertise.
Creating a competitive advantage
\ours will not be the only company selling a particular product or oííering a particular ser·ice.
L·ery market segment is crowded with businesses doing the same things, selling the same
products, or oííering the same ser·ices. Because oí this crowding oí the market, a business
needs to establish, de·elop, or otherwise identiíy certain areas oí the business in which it can
períorm better than the competition. 1hese become its competiti·e ad·antages. Many
businesses ha·e used iníormation technology to create competiti·e ad·antages. lor example,
Dell Computers is just one oí the many companies that sell personal computers ,PCs, oí
similar quality and cost, but its competiti·e ad·antage may be in its deli·ery time. Because oí
its sophisticated network oí suppliers and a robust portal, you may recei·e your order oí a PC
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írom Dell in two days ,in the continental USA, while it will take its competitor íi·e to se·en
days to deli·er a similar computer to you. Under this scenario, Dell is not able to beat the
competition on quality or cost, but is able to beat them on deli·er time, its competiti·e
ad·antage. A new business must ha·e a clearly deíined unique selling proposition. It must ask
the question "why will people choose to do business with us instead oí with the
competition·" In other words, what one aspect or combination oí aspects is going to separate
your business írom your competition· \ill it be better ser·ice, a longer warranty, better
selection, longer business hours, more ílexible payment options, lowest price, personalized
ser·ice, better customer ser·ice, better return and exchange policies or a combination oí
se·eral oí these· ,lar·ard Business School Press, 2005,.
Investing in yourself
As a new business owner, you can only take your business as íar as your knowledge goes. In
order to sell in international markets, íor example, you ha·e to know about them íirst.
Lxpanding your own personal knowledge base, thereíore, expands your company`s potential.
In·est in yourselí so that you are prepared to take the business to new heights. Successíul
entrepreneurs buy and read business and marketing books, magazines, reports, journals,
newsletters, websites and industry publications, with the understanding that these resources
will impro·e their understanding oí the business en·ironment, marketing íunctions, and
other skills. 1hey join business associations and clubs and network with other skilled business
people to learn their secrets oí success and to help deíine their own goals and objecti·es.
Successíul entrepreneurs attend business and marketing seminars, workshops and training
courses, e·en ií they ha·e already mastered the subject matter. 1hey do this because they ha·e
understood that education is an ongoing process, and that there are ways to do things better,
in less time, with less eííort. 1hey ne·er stop in·esting in the most poweríul, eííecti·e, and
immediate business tool at their disposal - themsel·es.
Being accessible
Being accessible to your customers is important and it means being a·ailable to them when
they need you. Be a·ailable to answer customer questions, not only about product and ser·ice
quality and a·ailability but also about íailures in the system - such as when product and
ser·ice quality ha·e íailed to meet stipulated standards or ha·e not been deli·ered as
promised. \e're li·ing in a time when we expect our íast íood lunch at the dri·e-thru window
to be ready in minutes, our dry cleaning to be ready íor pick-up on the same day, our money to
be a·ailable at the A1M machine at the press oí a button, and our pizza to be deli·ered in 30
minutes or it's íree`. In keeping with the times and with the competition, you must make it as
easy as possible íor people to do business with you. Making it easy íor people to do business
with you means that you must be accessible.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 10
Being knowledgeable
1ake great pride in knowing your product or ser·ice well. 1he better you understand your
product or ser·ice, the better you can sell it on the market. In íact marketing is not much more
than educating the customer on the ·alue proposition oí the product or ser·ice. Once the
customer understands the product, s,he becomes comíortable enough to buy it. Many don`t
buy` decisions are made on the basis oí not knowing or not understanding the product or
ser·ice enough. Be knowledgeable about your product or ser·ice, share that knowledge with
others and your business will grow in leaps and bounds. Remain cognizant that people will
work hard, go out oí their way, or be incon·enienced just íor the pri·ilege oí gi·ing you their
hard-earned money. \ou must be able to pro·ide customers with what they want, when they
want it.
Building a rock-solid reputation
Being known around your customer circles as a reliable and dependable person and company
has tremendous ·alue. Ií your customers think they can rely on you to pro·ide and deli·er the
products and ser·ices they are looking íor, they will want to do business with you. \hen more
and more people want to do business with you, your new business start-up can only grow. A
good reputation is unquestionably one oí the new business owner's most ·aluable assets. But
a good reputation cannot be bought rather it is something that you earn by honoring your
commitments and keeping your promises. Consistency in your product and ser·ice oííerings
is another key íactor to building a good reputation. Ií you cannot come through with the same
quality products and le·el oí ser·ice íor your customers on a regular and consistent basis, they
ha·e no basis íor trusting you. \ithout trust among your customers, you cannot ha·e a good
reputation. \ithout a good reputation, it is diííicult to grow your business.
Selling benefits
People make purchases íor the beneíits they stand to recei·e írom the purchased products and
ser·ices. 1his means that beíore a purchase can take place, the buyer has to ha·e an
understanding oí the beneíits oí the purchase. lrom the opposite side oí the purchase is the
sale. Beíore a sale can take place, the seller has to successíully sell the beneíits oí the product
or ser·ice to the buyer. Not understanding this íundamental íact, no·ice entrepreneurs and
sales personnel will try to push product and ser·ice íeatures, rather than their beneíits, to the
detriment oí the business. Selling the beneíits associated with owning and using the products
and ser·ices is what sales proíessionals íocus on to create excitement which allows them to
sell, to sell more, and to sell more írequently to their customers. \our ad·ertising, sales
presentations, printed marketing materials, product packaging, website, newsletters, trade
show exhibits, and signage are ·ital and eííecti·e only so íar as they sell the beneíits oí your
products and ser·ices. L·ery medium you use to communicate with your target audience has
to always be selling the beneíits associated with owning your product or using your ser·ice.
11 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Getting involved
Both indi·iduals and businesses do not operate in isolation. \e all belong to our local
communities. 1he íact and sense oí belonging is íundamental to business growth. L·ery
community wants to de·elop, grow, and impro·e in some way. A successíul business within a
community pro·ides much beneíit to that community, such as employment opportunities íor
the youth. lor these reasons, members oí a community will support businesses in their
community in many diííerent ways, including buying írom them. It is an accepted íact that
people like to do business with people they know, like, and respect, and with people who do
things to help them as members oí the same community. As a new entrepreneur, thereíore,
you should always go out oí your way to get in·ol·ed in the community that supports your
business. \ou can do this in many ways, including pitching in to help local charities or the íood
bank, becoming in·ol·ed in organizing community e·ents, and getting in·ol·ed in local
politics. \ou can, íor example, join associations and clubs that concentrate on programs and
policies designed to impro·e the local community.
Grabbing attention
\hile long-term planning is good íor business, the priority íor a start-up business is grabbing
immediate attention with quick results, and this is where it should spend most oí its marketing
and promotional budget. A small business owner cannot aííord to spend its time, money, and
energy on marketing and promotional acti·ities aimed at building awareness solely through
long-term, repeated exposure. Ií you do, chances are you will go broke long beíore this goal is
accomplished. Instead, e·ery marketing and promotional acti·ity you engage in should put
money back into your pocket quickly so that you are able to reiterate the process, spend the
budget, get results, and put more money back into the campaign - so that you can continue to
grab more attention and to grow your business.
Mastering the art of negotiation
Make no mistake about it, business deals are more íundamental than the money needed to buy
the business itselí. A deal comes íirst then money íollows, ne·er the other way around.
Striking a good business deal depends ·ery much on the negotiation skills oí the in·ol·ed
parties. 1he o·erall goal is a íair bargain íor each side, not just íor one oí the parties. 1he
ability to negotiate eííecti·ely is unquestionably a skill that e·ery new business owner needs to
make e·ery eííort to master. It is perhaps second in importance only to asking íor the sale in
terms oí new business musts. Mastering the art oí negotiation means that your skills are so
íinely tuned that you can almost always orchestrate a win-win situation in e·ery deal. 1hese
win-win arrangements mean that e·eryone in·ol·ed íeels they ha·e won, which is really the
basis íor building long-term and proíitable business relationships. In business, negotiation
skills are used on a daily basis.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 12
Designing your workspace for success
Commercial real estate in the central business district oí any city is expensi·e and oíten out oí
reach íor many small new businesses. In íact íor many new businesses it is a death trap. As part
oí your start-up and growth strategy, careíully locate, plan, and design your oííice workspace
íor success by ensuring maximum personal períormance and producti·ity and, ií necessary, to
project proíessionalism íor ·isiting clients. Ií at all possible, resist the temptation to turn a
corner oí your li·ing room or bedroom into your oííice. Ií you operate írom home, ideally,
you will need a separate room with a door that closes to keep business acti·ities in and íamily
members out, at least during prime business and re·enue generating hours oí the day. A den,
spare bedroom, basement or con·erted garage are good candidates íor your new oííice. Ií this
is not possible, you will ha·e to íind a means oí con·erting a room with a partition or simply
íind hours to do the bulk oí your work when nobody else is home.
Getting and staying organized
One oí the major trappings oí a small business is the sheer ·olume oí work against the
number oí staíí the business can aííord to engage. It is about achie·ing much on a shoe string
budget, in limited space, within a limited timeírame. Getting and staying organized will play a
key role in helping achie·e these objecti·es. 1he key to staying organized is not about which
type oí íile you ha·e or whether you keep a stack or two oí papers on your desk. Rather, it is
about managing your business eííecti·ely and eííiciently. It is about ha·ing systems in place
with which to do things. \ou want to establish a routine by which you can accomplish as much
as possible in a gi·en workday, whether that is three hours íor a part-time business or eight
hours íor a íull-time business. In íact, you should de·elop systems, procedures, and routines
íor just about e·ery single acti·ity you undertake in the business. Small things such as creating
a to-do` list at the end oí each business day, or íor the week, will help keep you on top oí
important tasks to tackle and in the appropriate order. Creating a single calendar to work írom,
rather than multiple sets íor indi·idual tasks or jobs, will also ensure that jobs are completed
on schedule and appointments kept. Incorporating íamily and personal acti·ities into your
work calendar is also critical so that you work and plan írom a single calendar.
Taking time off
Another major trapping oí running a start-up business is girivg it ,ovr att`, oíten interpreted by
new entrepreneurs to mean working around the clock. 1he temptation to work around the
clock is ·ery real íor some new business owners. Aíter all, they do not ha·e a manager telling
them it is time to go home because the company cannot aííord the o·ertime pay. A new
business owner, especially one working írom home, needs to establish a regular work schedule
that includes time to stretch your legs, exercise, take lunch breaks, take some days oíí, and to
go on scheduled ·acations. Create the schedule as soon as you ha·e made the commitment to
start a new business. \our schedule needs to be ílexible, and do not íill e·ery possible hour in
1S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
the day. Gi·e yourselí a backup hour or two. All work and no play makes you burn out ·ery
íast, makes you grumpy, while grumpy customer ser·ice is not what people want.
Limiting the number of hats you wear
One common characteristic oí successíul entrepreneurs is that they are inno·ati·e.
Inno·ation creates many business opportunities through niches and competiti·e ad·antages.
\hile being inno·ati·e is a ·ery good thing, there is a trapping in the possibility oí coming up
with many diííerent ideas and angles oí a business, resulting in ha·ing many initiati·es all
going on at the same time - wearing many hats`. It is a better idea to start one initiati·e at a
time, and to grow each idea sequentially in the case oí a serial entrepreneur. \earing many
hats at the same time disperses energy and attention to the many initiati·es, thereby denying
íocused attention to each, with the result oí likelihood oí íailure íor each. Inside the business,
it is diííicult íor most business owners not to take a hands-on approach and to try to do as
much as possible and tackle as many tasks as possible in their business simultaneously. 1he
ability to multitask is good, in íact, it is a common trait shared by successíul entrepreneurs.
lowe·er, it can become a liability ií not kept in check. Once in a while you ha·e to stand back,
take stock, and look beyond today to determine what is in the best interest oí your business
and yourselí o·er the long run. Identiíy areas where you can either outsource the ser·ice to
others or when to hire a new employee. Many successíul entrepreneurs will tell you that írom
the time they started out, they knew what they were good at and what tasks to delegate to
others.
Iollowing-up constantly
Constant contact, íollow-up, and íollow-through with customers, prospects, and business
alliances should be the mantra oí e·ery business owner, new or established. Constant and
consistent íollow-up enables you to turn prospects into customers, increase the ·alue oí each
sale and buying írequency írom existing customers, and build stronger business relationships
with suppliers and your core business team. lollow-up is especially important with your
existing customer base, as the real work begins aíter the sale. It is easy to sell one product or
ser·ice, but it takes work to retain customers and keep them coming back.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 14
3. Identiíying an Inno·ation that can be
Commercialized
An inno·ation can be deíined as the creation oí better or more eííecti·e products, processes,
ser·ices, technologies, or ideas that are accepted by markets, go·ernments, and society.
1echnology, on the other hand, can be deíined as the making, usage, and knowledge oí tools,
machines, techniques, craíts, systems or methods oí organization in order to sol·e a problem
or períorm a speciíic íunction. lor the purpose oí this discussion, howe·er, the terms
inno·ation and technology are used interchangeably. 1he terms technology transíer and
commercialization are deíined below, howe·er, the two terms are oíten used interchangeably
in some situations.
a. Commercialization
According to Abramson et. al. ,199¯,, commercialization is the process that con·erts ideas,
research, or prototypes into ·iable products that retain the desired íunctionality. It is oíten a
necessary step to commercial success íor inno·ations coming írom startup ·entures or
company research eííorts. 1he commercialization process oíten has the íollowing three key
aspects:
1. looking at se·eral ideas to identiíy one or two products or businesses that can be
sustained long-term ,the íunnel,,
2. a stage-wise process where each stage has its own key goals and milestones, and
3. in·ol·ement oí key stakeholders early, including customers
b. Technology transfer
1echnology transíer is the process oí sharing oí skills, knowledge, technologies, methods oí
manuíacturing, samples oí manuíacturing and íacilities among uni·ersities, industry,
go·ernments and other institutions to ensure that scientiíic and technological de·elopments
are accessible to a wider range oí users who can then íurther de·elop and exploit the
technology into new products, processes, applications, materials or ser·ices ,Speser, 2006,.
15 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
c. Transfer process
Many companies, uni·ersities and go·ernmental organizations now ha·e an "Oííice oí
1echnology 1ransíer" dedicated to identiíying research which has potential commercial
interest and de·elop strategies on how to exploit it. lor instance, a research result may be oí
scientiíic and commercial interest, but patents are normally only issued íor practical
processes, and so someone-not necessarily the researchers-must come up with a speciíic
practical process, and this is now largely done by the 1echnology 1ransíer Oííice. Another
consideration is commercial ·alue oí the technology or inno·ation. 1he process oí
commercially exploiting research ·aries widely, can in·ol·e licensing agreements and setting
up joint ·entures and partnerships to share both the risks and rewards oí bringing new
technologies to market, and so need specialized attention ,Vijay, 199¯,. Other methods oí
commercialization include corporate ·ehicles such as spin-outs that are used where the host
organization does not ha·e the necessary will, resources or skills to de·elop a new technology.
Most commercialization approaches are associated with raising Venture Capital ,VC, íunds as
a means oí íunding the de·elopment process. 1echnology 1ransíer Oííices ha·e primary
íocus on commercialization and may work on behalí oí research institutions, go·ernments
and e·en large multinationals. \here start-ups and spin-outs are the clients, commercial íees
are sometimes wai·ed in lieu oí an equity stake in the business ,Ndede-Amadi, 2011,. As a
result oí the potential complexity oí the technology transíer process, 1echnology 1ransíer
Oííices are oíten multidisciplinary, including economists, engineers, lawyers, marketers and
scientists ,Speser, 2006,.
d. Technology Readiness
According to Mankins ,1995,, one method oí identiíying an Inno·ation that can be
commercialized is the 1echnology Readiness Le·el ,1RL,, a measure that has been used by
the USA`s National Aeronautics and Space Administration ,NASA, and other organizations
to assess the maturity oí e·ol·ing technologies ,e.g. materials, components, and de·ices, prior
to incorporating that technology into a system or subsystem, deíined as commercialization
íor our purpose. It is based on the premise that when a new technology is íirst in·ented or
conceptualized, it is not suitable íor immediate application. Rather, new technologies are
subjected to experimentation, reíinement, and increasingly realistic testing beíore it can be
commercialized. 1he primary objecti·e oí using 1echnology Readiness Le·els is to help
management in making decisions concerning the de·elopment and transitioning oí
technology. Ad·antages oí using the 1RL tool to assess the readiness oí a technology íor
commercialization include the íollowing:
· It pro·ides a common understanding oí technology status
· It is a tool íor risk management
· It is useíul íor making decisions concerning íunding oí the transíer process
· It is useíul íor making decisions concerning transition oí technology
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 16
1here are se·eral 1RL models that ha·e been de·eloped and used by other organizations.
1able 1 below shows NASA`s 1echnology Readiness Le·el, with each le·el described in the
íacing column. ligure 2 below is a pictorial depiction oí the NASA`s technology readiness
le·el ,1RL,.
17 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Techno|ogy ßead|ness
Leve|
ûescr|pI|on
1. Bas|c p||uc|p|es
obse|ved aud |epo|led
Th|s |s lhe |owesl "|eve|" ol lechuo|ogy malu|al|ou. Al lh|s |eve|, sc|eul|l|c |esea|ch beg|us lo
be l|aus|aled |ulo app||ed |esea|ch aud deve|opmeul.
2. Techuo|ogy coucepl
aud/o| app||cal|ou
lo|mu|aled
0uce bas|c phys|ca| p||uc|p|es a|e obse|ved, lheu al lhe ue/l |eve| ol malu|al|ou, p|acl|ca|
app||cal|ous ol lhose cha|acle||sl|cs cau
be '|uveuled' o| |deul|l|ed. Al lh|s |eve|, lhe
app||cal|ou |s sl||| specu|al|ve. lhe|e |s uol e/pe||meula| p|ool o| dela||ed aua|ys|s lo suppo|l
lhe coujeclu|e.
8. Aua|yl|ca| aud
e/pe||meula| c||l|ca|
luucl|ou aud/o|
cha|acle||sl|c p|ool ol
coucepl
Al l h|s slep |u lhe malu|al|ou p|ocess, acl|ve |esea|ch aud deve|opmeul (R&û) |s |u|l|aled.
Th|s musl |uc|ude bolh aua|yl|ca| slud|es lo sel lhe lechuo|ogy |ulo au app|op||ale coule/l
aud |abo|alo|y-based slud|es lo phys|ca||y va||dale lhal lhe aua|yl|ca| p|ed|cl|ous a|e co||ecl.
These slud|es aud e/pe||meuls shou|d cousl|lule "p|ool -ol-coucepl" va||dal|ou ol lhe
app||cal|ous/coucepls lo|mu|aled al TRL 2.
4. Compoueul aud/o|
b|eadboa|d va||dal|ou |u
|abo|alo|y euv||oumeul
lo||ow|ug successlu| "p|ool-ol-coucepl" wo||, bas|c lechuo|og|ca| e|emeuls musl be
|uleg|aled lo eslab||sh lhal lhe "p|eces" w||| wo|| logelhe| lo ach|eve coucepl-euab||ug |eve|s
ol pe|lo|mauce lo| a compoueul aud/o| b|eadboa|d. Th|s va||dal|ou musl be dev|sed lo
suppo|l lhe coucepl lhal was lo|mu|aled ea|||e|, aud shou|d a|so be cous|sleul w|lh lhe
|equ||emeuls ol poleul|a| syslem app||cal|ous. The va||dal|ou |s "|ow- l|de||ly" compa|ed lo lhe
eveulua| syslem. |l cou|d be composed ol ad hoc d|sc|ele compoueuls |u a |abo|alo|y.
5. Compoueul aud/o|
b|eadboa|d va||dal|ou |u
|e|evaul euv||oumeul
Al lh|s |eve|, lhe l|de||ly ol lhe compoueul aud/o| b|eadboa|d be|ug lesled has lo |uc|ease
s|gu|l|caul|y. The bas|c lechuo|og|ca| e|emeuls musl be |uleg|aled w|lh |easouab|y |ea||sl|c
suppo|l|ug e|emeuls so lhal lhe lola| app||cal|ous (compoueul-|eve|, sub-syslem |eve|, o|
syslem-|eve|) cau be lesled |u a 's|mu|aled' o| somewhal |ea||sl|c euv||oumeul.
G. Syslem/subsyslem
mode| o| p|ololype
demousl|al|ou |u a |e|evaul
euv||oumeul (g|ouud o|
space)
A majo| slep |u lhe |eve| ol l|de||ly ol lhe lechuo|ogy demousl|al|ou lo||ows lhe comp|el|ou ol
TRL 5. Al TRL G, a |ep|eseulal|ve mode| o| p|ololype syslem o| syslem -
wh|ch wou|d go
we|| beyoud ad hoc, 'palch- co|d' o| d|sc|ele compoueul |eve| b|eadboa|d|ug -
wou|d be
lesled |u a |e|evaul euv||oumeul. Al lh|s |eve|, |l lhe ou|y '|e|evaul euv||oumeul' |s lhe
euv||oumeul ol space, lheu lhe mode|/p|ololype musl be demousl|aled |u space.
7. Syslem p|ololype
demousl|al|ou |u a space
euv||oumeul
TRL 7 |s a s|gu|l|caul slep beyoud TRL G, |equ|||ug au aclua| syslem p|ololype
demousl|al|ou |u a space euv||oumeul. The p|ololype shou|d be uea| o| al lhe sca|e ol lhe
p|auued ope|al|oua| syslem aud lhe demousl|al|ou musl la|e p|ace |u space.
8. Aclua| syslem
comp|eled aud 'l||ghl
qua||l|ed' lh|ough lesl aud
demousl|al|ou (g|ouud o|
space)
lu a|mosl a|| cases, lh|s |eve| |s lhe eud ol l|ue 'syslem deve|opmeul' lo| mosl lechuo|ogy
e|emeuls. Th|s m|ghl |uc|ude |uleg|al|ou ol uew lechuo|ogy |ulo au e/|sl|ug syslem.
9. Aclua| syslem 'l||ghl
p|oveu' lh|ough successlu|
m|ss|ou ope|al|ous
lu a|mosl a|| cases, lhe eud ol |asl 'bug l|/|ug' aspecls ol l|ue 'syslem deve|opmeul'. Th|s
m|ghl |uc|ude |uleg|al|ou ol uew lechuo|ogy |ulo au e/|sl|ug syslem. Th|s TRL does 1u|
|uc|ude p|auued p|oducl |mp|ovemeul ol ougo|ug o| |eusab|e syslems.
(Suv|ce. |11||1s (¹995}, |ec|1u|u]j |e11|1ess |e|e|s. 4 w|||e |1ue|}
Table 1: Technology Readiness Levels in the Hational Aeronautics and Space
Administration (HASA}
Discussion
1echnology readiness le·el is a relati·e term that should be understood and used in the
context oí the particular technology or inno·ation being de·eloped. By the same token, the
method oí technology transíer or commercialization is also relati·e. lor example, a
technology de·eloped by NASA is much more likely to be integrated into an already existing
system oí sub-system as opposed to being subjected to commercialization in the regular sense
oí the concept oí technology transíer. lor these reasons, both the NASA and the Luropean
Space Agency ,LSA, ,see below, 1echnology Readiness Le·el measurement methods are íor
illustration purposes only, in an attempt to achie·e a general understanding oí the process oí
assessing technology readiness íor integration or íor commercialization.
1he Luropean Space Agency ,LSA, has a diííerent deíinition and an alternati·e 1RL model.
In it, as in the NASA model, instruments and spacecraít sub-systems are classiíied according
to a 1RL on a scale oí 1 to 9. Le·els 1 to 4 relate to creati·e inno·ate technologies pre or during
mission assessment phase. Le·els 5 to 9 relate to existing technologies and to missions in
deíinition phase. 1he LSA 1RL model is shown in 1able 2 .
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 18
Syslem Tesl, Lauuch
& 0pe|al|ous
Syslem/Subsyslem
ûeve|opmeul
Techuo|ogy
ûemousl|al|ou
Techuo|ogy
ûeve|opmeul
Resea|ch lo P|ove
leas|b|||ly
Bas|c Techuo|ogy
Resea|ch
TßL 9
TßL B
TßL 7
TßL 6
TßL 6
TßL 4
TßL 3
TßL 2
TßL 1
Figure 2: Technology Readiness Levels in the HASA
(Suv|ce. |11||1s (¹995}, |ec|1u|u]j |e11|1ess |e|e|s. 4 w|||e |1ue|}
e. Commercializable Innovations
Contrary to popular belieí, inno·ations, like ideas, are not in short supply. \hat is in short
supply are commercializable ones. 1he end result oí a successíully commercialized
inno·ation is either a new or expanded business. 1he success oí a business hinges on the
ability and capacity oí its management to identiíy a íew commercially ·iable inno·ations and
to deploy resources around them to make them commercial success stories ,1ouhill, et al.
2008,. 1o succeed in this endea·or, management needs to obser·e a íew guidelines, including
the íollowing íi·e:
1, Continually íocus resources on the inno·ations with the greatest potential íor
commercial success. Although this does not guarantee the commercial success oí the
inno·ations, it increases the likelihood oí success oí both the inno·ations and the business.
One oí the major challenges oí commercializing inno·ations is íinancing. Successíully
commercializing a íew inno·ations mean more resources with which to commercialize new
inno·ations. Not only that, it becomes easier to attract more íunding, írom corporate
partners and commercial banks, which puts more successíul products under the company's
belt.
2, Determine which inno·ations are truly capable oí producing new wealth. A business
that has a robust research and de·elopment program will not íall short oí inno·ations írom its
Techno|ogy
ßead|ness Leve| ûescr|pI|on
TRL 1. Bas|c p||uc|p|es obse|ved aud |epo|led
TRL 2. Techuo|ogy coucepl aud/o| app||cal|ou lo|mu|aled
TRL 8. Aua|yl|ca| & e/pe||meula| c||l|ca| luucl|ou aud/o| cha|acle||sl|c p|ool-ol-coucepl
TRL 4. Compoueul aud/o| b|eadboa|d va||dal|ou |u |abo|alo|y euv||oumeul
TRL 5. Compoueul aud/o| b|eadboa|d va||dal|ou |u |e|evaul euv||oumeul
TRL G. Syslem/subsyslem mode| o| p|ololype demousl|al|ou |u a |e|evaul euv||oumeul
(g|ouud o| space)
TRL 7. Syslem p|ololype demousl|al|ou |u a space euv||oumeul
TRL 8. Aclua| syslem comp|eled aud "l||ghl qua||l|ed" lh|ough lesl aud demousl|al|ou
(g|ouud o| space)
TRL 9. Aclua| syslem "l||ghl p|oveu" lh|ough successlu| m|ss|ou ope|al|ous
Table 2: Technology Readiness Levels in the European Space Agency (ESA}
(Suv|ce. |||u.//sc|.es1.|1|/sc|e1ce-e/zzz/u||ec|/|11e\.c|1?|u||ec||1=J77¹0}. |u|es. || ||e ||| |s |uu |uz, ||e1 1 1|ss|u1
||s|s |e|1] |euu1|1|¯e1 |j 1e|1js u| cus| u|e|-|v1s. || |s 1 |esuu1s||||||j u| ||e 41|11ce1 S|v1|es 111 |ec|1u|u]j ||eu1|1||u1
||||s|u1 |u u|u1u|e ||e |ec|1u|u]j |e11|1ess 1| 1 |e|j e1||j s|1]e |1 u|1e| |u 11|e 1ez 1|ss|u1s |e1s|||e.
19 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 20
research results. \ith se·eral options to choose írom, it is important to de·elop explicit
criteria íor selecting commercially ·iable inno·ations. Among these criteria should be the
inno·ation's ability to create new wealth. 1his approach is important considering that
sometimes increased sales in one product may mean decreased sales in a substitute product,
leading to no substanti·e gains íor the company. Ií there is a choice to make between two
inno·ations, one oí which would attract a totally diííerent set oí clientele, it is the one to
select.
3, locus on the inno·ations that are truly the right ones to put money and resources
behind. A rigorous analysis needs to go behind e·ery commercialization decision. Such
analyses need to go beyond cost-beneíit to other considerations such as the kind oí
technology it is, other competing products and technologies on the market, existence oí a
target market, potential size oí the target market, ability to reco·er the in·estment quickly,
ability oí the competition to come up with a competing inno·ation in a short period oí time -
beíore costs are reco·ered, among others.
4, Separate the truly ·iable inno·ations írom all the rest. Commercial ·iability is what
separates an excellent inno·ation írom good ones. An inno·ation is only as good as its worth
in the market place. A commercially ·iable inno·ation will pro·ide return on in·estment, the
primary objecti·e oí any business. Businesses in·est in order to make money. 1his is just as
true oí inno·ations as it is oí products and ser·ices.
5, Identiíy 'ií', 'why', or 'why not' an inno·ation has the potential íor commercial success.
1he commercial success oí an inno·ation is in its íuture. 1he existence or absence oí this
potential can only be determined through an in-depth and detailed analyses oí ií it can
happen, and why or why not it can happen. 1his is important as some studies ha·e shown
that only about 10° oí inno·ations in any gi·en set can actually be ·alidated as ha·ing a good
potential íor commercial success. It is important to identiíy the other 90° early to a·oid
wasting resources on them.
lor all the abo·e reasons, it is important to rank inno·ations within a business to help make
optimal selections íor commercialization. 1o achie·e this goal, the business needs to either
come up with a standardized way oí making such selections, or adopt existing selection
methods with requisite modiíications. lor example, the 1echnology Readiness Le·els
discussed abo·e are good guidelines íor ranking and then selecting inno·ations íor
commercialization. Under ideal circumstances, an inno·ation should not be commercialized
until it reaches Le·el 9. Internally de·eloped tools such as the sample questionnaire below
can pro·e useíul in identiíying inno·ations íor commercialization:
1able 4 below presents another tool íor assessing, ranking, and selecting inno·ations íor
commercialization.
21 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Table S: Questionnaire for Ranking ¡nnovations
ExecuI|ve 8ummary oI Ihe InnovaI|on
a. whal, b||el|y, |s you| |uuoval|ou?
b. whal |s lhe cu||eul sceua||o |u lhe l|e|d |u wh|ch you| |uuoval|ou appea|s?
c. whal |s lhe p|ob|em |u lhe p|eseul sceua||o lhal you| |uuoval|ou see|s lo add|ess?
d. how does you| |uuoval|ou add|ess lh|s p|ob|em?
e. whal |s pa|l|cu|a||y uove| o| uolewo|lhy aboul you| |uuoval|ou?
Techno|ogy commerc|a||taI|on eIIorIs so Iar
1. P|ov|de |ulo|mal|ou ou auy s|gu|l|caul m||esloue ach|eved alle| lhe |uuoval|ou gol paleuled (|.e.
|ul|oducl|ou lo lhe ma||el / lesl ma||el|ug |epo|l, s|gu|l|caul upg|ade ol au e/|sl|ug p|oducl, elc.)
2. ûesc||be auy p|acl|ca| |esu|ls lhal lhe lechuo|ogy / p|oducl has ach|eved lo dale, such as sa|es, p|ol|ls,
a|le|ual|ve usages, c|lal|ous, p||/es, elc.
8. P|ov|de |ulo|mal|ou ou auy p|og|ess lowa|ds / comme|c|a||/al|ou ol lhe p|oducl
4. ß|ve uames aud coulacl dela||s ol ageuc|es o| |udusl||es lhal have showu |ule|esl |u you| |uuoval|ou
(allached |e|aled documeuls, |l auy)
5. whal a|e you| lulu|e p|aus lo| lh|s |uuoval|ou (e.g. ma||el|ug sl|alegy?)
G. lu case ol se|ecl|ou, wou|d you |||e lo comme|c|a||/e lhe lechuo|ogy al you| owu e/peuse
(eul|ep|eueu|sh|p mode), l|ausle| o| ||ceuse lhe lechuo|ogy al you| owu e/peuse, o| l|ausle| o| ||ceuse
lhe lechuo|ogy lh|ough olhe| uelwo||s?
7. ldeul|ly opl|ma| bus|uess mode|s, d|sl||bul|ou mode|s, aud p||c|ug mode|s lo| comme|c|a||/al|ou ol lhe
|uuoval|ou.
|. whal a|e lhe cuslome| e/peclal|ous?
||. who a|e lhe poleul|a| pa|lue|s aud ea||y bac|e|s ol lhe |uuoval|ou?
Suv|ce. ||e1e||c| Sc|z1||¯ |1 ¨||e e11 u| ||e 1|||e11|v1 (1s ze |1uz ||}¨ |1 |1|e1||u1 & |ec|1u|u]j, w|1|e| ?000
1) IhVEhTIûh PEßFûßNAh0E: ûoes lhe |uveul|ou pe|lo|m lhe las| lhal |l c|a|ms lo pe|lo|m?
a. O ho. ll p|obab|y w||| uol wo||
b. 1 Yes, bul |equ||es subslaul|a| chauges
c. 2 Yes, bul w||| |equ||e subslaul|a| chauges du||ug deve|opmeul
d. 8 Yes, bul may |equ||e m|uo| chauges du||ug deve|opmeul
e. 4 Yes. ll w||| uol |equ||e chauges.
2) 8û0IETAL IhFLüEh0E: The uew |uveul|ou/|dea/p|oducl wou|d |||e|y have au |ul|ueuce ou soc|ely lhal.
a. O Ve|y ha|mlu|
b. 1 Node|ale|y ha|mlu|
c. 2 he|lhe| ha|mlu| o| beuel|c|a|
d. 8 Beuel|c|a|
e. 4 Ve|y beuel|c|a|
3) LEûAL: The uew |uveul|ou/|dea/p|oducl w||| comp|y w|lh app||cab|e |aw .
a. O uude| uo c||cumslauces
b. 1 w|lh s|gu|l|caul mod|l|cal|ous
c. 2 w|lh some mod|l|cal|ou
d. 8 w|lh m|uo| mod|l|cal|ous poss|b|y uecessa|y
e. 4 w|lhoul auy chauges
Table 4: Commercializability criteria for evaluating a technological invention
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 22
4) Pû88I8LE hAZAßû8: Bea||ug |u m|ud |ls poss|b|e ha/a|ds aud s|de ellecls, lhe uew
|uveul|ou/|dea/p|oducl |s |||e|y lo be .
a. O Ve|y dauge|ous
b. 1 ûauge|ous
c. 2 Node|ale|y sale
d. 8 Sale
e. 4 Ve|y sale
6) ûEVELûPNEhTAL 8TAûE: Subm|lled |ulo|mal|ou cau besl be desc||bed as .
a. O A |ough |dea
b. 1 A desc||pl|ve |dea
c. 2 Au |dea w|lh d|aw|ugs
d. 8 Au |dea w|lh a p|ololype
e. 4 Au |dea |eady lo| ma||el
6) IhVEhTIûh ß&û: The |esea|ch aud deve|opmeul uecessa|y lo ach|eve a ma||el |eady p|oducl, |u
le|ms ol d|ll|cu|ly aud e/peuse, |s |||e|y lo be .
a. O Ve|y h|gh
b. 1 h|gh
c. 2 Node|ale
d. 8 Low
e. 4 Ve|y |ow
7) NAhüFA0TüßIhû: Bea||ug |u m|ud lhe cu||eul lechuo|ogy aud whal wou|d be ueeded lo mauulaclu|e
o| p|acl|ce lhe |uveul|ou/|dea/p|oducl, mauulaclu||ug o| p|acl|c|ug lhe |uveul|ou w||| be .
a. O uuleas|b|e uow o| auy l|me soou
b. 1 leas|b|e, bul ve|y comp||caled
c. 2 leas|b|e, bul w|lh majo| lo|eseeab|e d|ll|cu|l|es
d. 8 leas|b|e, bul w|lh m|uo| lo|eseeab|e d|ll|cu|l|es
e. 4 leas|b|e, w|lhoul lo|eseeab|e d|ll|cu|l|es
B) PßûFITA8ILITY: A|e lhe ma|g|us lo| p|ol|lab|||ly such lhal lhe|e w||| be a subslaul|a| p|ol|l? P|ojecled
|eveuues a|e |||e|y lo be .
a. O Ve|y |ow
b. 1 Low
c. 2 Nodesl
d. 8 h|gh
e. 4 Ve|y h|gh
9) ûENAhû TßEhû: lo| p|oducls |u lhe calego|y ol lhe |uveul|ou/|dea/p|oducl, lhe ma||el demaud
seems lo be .
a. O Ve|y |ow, |||e|y lo become ouldaled
b. 1 Low, dec|eas|ug
c. 2 Node|ale, slab|e
d. 8 h|gh, mode|ale|y |uc|eas|ug
e. 4 Ve|y h|gh, |uc|eas|ug
10) 8IZE ûF NAßkET: lo| p|oducls |u lhe calego|y ol lhe |uveul|ou/|dea/p|oducl, lhe poleul|a| ma||el
seems lo be .
a. O Ve|y sma||, |oca| o| spec|a||/ed ma||el
b. 1 Sma||, |eg|oua| o| |e|al|ve|y spec|a||/ed ma||el
c. 2 Ned|um, mu|l|p|e |eg|ous o| mode|ale|y spec|a||/ed ma||el
d. 8 La|ge, ual|oua| o| b|oad ma||el
e. 4 Ve|y |a|ge, |ule|ual|oua| o| ve|y b|oad ma||el
2S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
11) Pßûûü0T-LIhE Pû88I8ILITY: The poleul|a| lo| lhe |uveul|ou/|dea/p|oducl lo e/paud |ulo a ||ue ol
p|oducls |s .
a. O Ve|y |ow, ||m|led lo lhe oue p|oducl
b. 1 Low, s|ghl mod|l|cal|ous poss|b|e
c. 2 Node|ale, mauy mod|l|cal|ous poss|b|e
d. 8 h|gh, uume|ous p|oducls poss|b|e
e. 4 Ve|y h|gh, a uew ma||el
12) ûVEßALL 0ûh8üNEß APPEAL/ûENAhû: Bea||ug |u m|ud lhe poleul|a| cousume|s' ove|a||
all|acl|veuess lo lhe uew |uveul|ou/|dea/p|oducl, lhe demaud lo| lhe uew |uveul|ou/|dea/p|oducl |s
|||e|y lo be .
a. O Ve|y |ow
b. 1 Low
c. 2 Node|ale
d. 8 h|gh
e. 4 Ve|y h|gh
13) ûüAhTITY ûF 0ûNPETITIûh: Bea||ug |u m|ud lhe e/|sl|ug p|oducls lhal lhe uew
|uveul|ou/|dea/p|oducl w||| compele w|lh, lhe ba|||e|s lo ma||el eul|y a|e |||e|y lo be .
a. O Ve|y h|gh, e/l|eme|y d|ll|cu|l peuel|al|ou
b. 1 h|gh, d|ll|cu|l peuel|al|ou
c. 2 Node|ale
d. 8 Low, easy ma||el peuel|al|ou
e. 4 Ve|y |ow, e/l|eme|y easy ma||el peuel|al|ou
14) ûüALITY ûF 0ûNPETITIûh: Bea||ug |u m|ud lhe e/|sl|ug p|oducls lhal lhe uew |uveul|ou/|dea/p|oducl
w||| compele w|lh (|uc|ud|ug p||ce, qua||ly, elc.), lhe |uveul|ou/|dea/p|oducl w||| |||e|y be pe|ce|ved
as.
a. O Ve|y |ule||o|, e/l|eme|y d|ll|cu|l lo ove|come
b. 1 lule||o|, d|ll|cu|l lo ove|come
c. 2 The same, some advaulages aud d|sadvaulages
d. 8 Supe||o|, some advaulage
e. 4 Ve|y supe||o|, obv|ous advaulage
16) LI0hE8Ihû PûTEhTIAL: Bea||ug |u m|ud mauy ol lhe p|eced|ug 15 quesl|ous, lhe chauces lhal a
mauulaclu|e| w||| see| lo ||ceuse lhe uew |uveul|ou/|dea/p|oducl |s .
a. O Ve|y |ow
b. 1 Low
c. 2 Ave|age
d. 8 ßood
e. 4 Ve|y good
key Io eva|uaI|on and recommendaI|ons:
a) OO - 1G |uveul|ou shou|d be abaudoued
b) 17 - 82 caul|ous |esea|ch aud deve|opmeul (|l uol abaudoued)
c) 88 - 4O pe|l|ueul |ssues lo be coul|ouled belo|e coul|uu|ug R&û
d) 41 - 5G coul|uued R&û
e) 57+ olle| |uveul|ou ma||el|ug & ||ceus|ug se|v|ces (comme|c|a||/e)
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
f. Commercializing Innovations
Any business that intends to commercialize an inno·ation should undertake an analysis oí the
inno·ation's proíit extraction potential. 1he decision to commercialize should only be made
aíter the business asks itselí a series oí questions, the answers to which determine the
mechanisms to be used to con·ert the technology to cash as well as the degree oí risk in·ol·ed
in successíully completing the cash con·ersion ,Speser, 2006,. 1he table below shows
sources oí ·alue and con·ersion mechanisms íor commercialization oí an inno·ation.
lrom the table abo·e, we see that there are se·eral diííerent options and approaches to
commercializing an inno·ation. In weighing the pros and cons oí commercializability oí an
inno·ation, it is important to look at each approach. In terms oí con·ersation mechanisms
íor an inno·ation, it is noteworthy that the inno·ation can be sold outright, it can be licensed
out, a joint ·enture can be íormed to operationalize the inno·ation, a strategic alliance with
others can be íormed íor this purpose, the commercialized inno·ation can be integrated with
the current business, a new business can be created to house the new inno·ation, or the
inno·ation can be donated. All these options pro·ide ·alue to the business that owns the
inno·ation and should be considered and ·alued in the 'commercialize' or 'do not
commercialize' decision process.
g. Commercialization Strategy
Commercially ·iable products are generally oí high quality, designed to be readily
manuíacturable at low costs and to be launched into the market quickly. Commercialization
also in·ol·es íormulating the manuíacturing and supply chain strategies, de·ising
implementation plans, and implementing such plans. It can also be seen as the process oí
introducing a new product or production method into the market. As a process, it can be
considered as one íor introducing a new product, pre·iously proto-tested product, into the
market. It happens when a company decides to launch its new product into the market place,
and requires the building oí a marketing plan and budget to launch the product. Successíul
commercialization will ultimately lead to or exceed predicted sales íorecasts.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 24
8ources oI Va|ue 0onvers|on Nechan|sms
luuoval|ous
Comp|emeula|y Bus|uess Assels 0ul-L|ceuse
> Pu|chas|ug Jo|ul Veulu|e
> Nauulaclu||ug Sl|aleg|c A|||auce
> û|sl||bul|ou luleg|ale w|lh Cu||eul Bus|uess
> Sa|es C|eale uew bus|uess
ûouale
Sa|e
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
Table 5: Sources of Value and Conversion Mechanisms
Commercialization should not, howe·er, be coníused with sales, marketing, or business
de·elopment.
1he actual launch oí a new product, its commercialization, is the íinal stage oí new product
de·elopment, and the one where the most money is spent íor ad·ertising, sales promotion,
and other marketing eííorts. lor this reason, it is important to lay out a commercialization
strategy íor each inno·ation. Such a strategy will speciíy milestones to be achie·ed and how
each inno·ation will be íunded. 1he table below shows one commercialization strategy
approach, with the series oí íinancing options that a company might consider in mo·ing its
technology írom concept to the marketplace.
1he concept de·elopment stage is so early that the entrepreneur oíten has to undertake much
oí the íinancing her,himselí, as the product is still in the idea stage, still too young to attract
external stakeholders. 1he same can be said oí the business case de·elopment stage. At the
prototyping stage, it is likely that some external stakeholders are able to see the ·alue
proposition and may in·est in it by pro·iding seed capital. It is also possible to get some seed
íunding íor the intellectual property protection stage. 1he beta testing and U,L appro·al
stages can be íunded by corporate partners through a ·igorous marketing strategy oí the idea
and its potential. 1he last two stages, marketing and scale-up oí production should ideally be
íinanced by earnings retained in the business ,1ouhill, et al. 2008,.
25 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
The ser|es oI I|nanc|ng opI|ons IhaI a company may cons|der When mov|ng |Is Iechno|ogy Irom concepI Io
Ihe mar|eIp|ace
N||esIone hoW Funded?
a. Coucepl deve|opmeul Pe|soua| o| lam||y sav|ugs
b. Bus|uess case deve|opmeul Pe|soua| o| lam||y sav|ugs
c. P|ololype deve|opmeul Seed luud|ug
d. lule||eclua| p|ope|ly p|olecl|ou Seed luud|ug
e. Bela lesl|ug Co|po|ale pa|lue|
l. u/L app|ova| Co|po|ale pa|lue|
g. Tesl ma||el |ul|oducl|ou Comme|c|a| bau| |oau
h. Na||el|ug Rela|ued ea|u|ugs
l. Sca|e-up p|oducl|ou Rela|ued ea|u|ugs
Suv|ce. Cu11e|c|1||¯|1] |ez |ec|1u|u]|es. ûe|||1] ||u1 ||11 |u |1||e| |j l||1j |. Ju||j (¹997}, |1||1|1 5vs|1ess ||ess
Table 6: Commercialization Strategy
4. Managing a Small Business
1his part oí the training manual on small business management highlights pertinent areas
critical to running a successíul small business. It explores problems íaced by small businesses,
the legal en·ironment, the competition, sourcing íor íunds, and publicity íor the business. 1he
íundamentals required íor creating a ·iable ·enture are also discussed.
a. Defining a small business
A small business is a business that is pri·ately owned and operated, with a small number oí
employees and relati·ely low ·olume oí sales. Small businesses are normally pri·ately owned
corporations, partnerships, or sole proprietorships. 1he legal deíinition oí "small" ·aries by
country and by industry, ranging írom íewer than 15 employees under the Australian lair
\ork Act 2009, 50 employees in the Luropean Union and íewer than 500 employees to qualiíy
íor many USA Small Business Administration programs. Small businesses can also be
classiíied according to other methods such as sales, assets, or net proíits. In Kenya, there is no
standard deíinition oí a small business but lenders tend to ha·e a generally accepted one -
"micro-enterprises" are those with 10 or íewer workers, "small enterprises" ha·e írom 11 to 50
workers, and "medium enterprises" ha·e írom 51 to 100 workers, and that an SML is a
business with six to íiíty employees or with annual re·enue below Kshs.50 million ,Ndede-
Amadi, 2008,.
b. Advantages of a small business
A small business can be started at a ·ery low cost and on a part-time basis. A small business is
also well suited to marketing because it can easily ser·e specialized niches, something that
would ha·e been more diííicult prior to the internet re·olution which began in the late 1990s.
Adapting to change is crucial in business and particularly small business, not being tied to any
inertia, it is typically easier íor a small business to respond to the marketplace quickly. Small
business proprietors tend to be intimate with their customers and clients which results in
greater accountability and maturity. Independence is another ad·antage oí owning a small
business. One sur·ey oí small business owners showed that 38° oí those who leít their jobs
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 26
at other companies said their main reason íor lea·ing was that they wanted to be their own
bosses. lreedom to operate independently is a reward íor small business owners. In addition,
many people desire to make their own decisions, take their own risks, and reap the rewards oí
their eííorts. Small business owners ha·e the satisíaction oí making their own decisions
within the constraints imposed by economic and other en·ironmental íactors. lowe·er,
entrepreneurs ha·e to work ·ery long hours and need to understand that ultimately their
customers are their bosses ,Abrams, 2000,.
c. Problems faced by small businesses
Small businesses oíten íace a ·ariety oí problems related to their size. A írequent cause oí
bankruptcy is undercapitalization. 1his is oíten a result oí poor planning rather than
economic conditions - it is a common rule oí thumb that the entrepreneur should ha·e access
to a sum oí money at least equal to the projected re·enue íor the íirst year oí business in
addition to his anticipated expenses. lor example, ií the prospecti·e owner thinks that he will
generate Kshs.1, 000,000 in re·enues in the íirst year with Kshs.1, 500,000 in start-up
expenses, then he should ha·e no less than Kshs.2,500,000 a·ailable. lailure to pro·ide this
le·el oí íunding íor the company could lea·e the owner liable íor all oí the company's debt
should he end up in bankruptcy court, under the theory oí undercapitalization - depending
on the country in which the business is located. In addition to ensuring that the business has
enough capital, the small business owner must also be mindíul oí contribution margin ,sales
minus ·ariable costs,. 1o break e·en, the business must be able to reach a le·el oí sales where
the contribution margin equals íixed costs. \hen they íirst start out, many small business
owners underprice their products to a point where e·en at their maximum capacity, it would
be diííicult and sometimes e·en impossible to break e·en. Cost controls or price increases
oíten resol·e this problem ,Ndede-Amadi, 2008,.
d. Marketing the small business
linding new customers is one oí the major challenges íor small business owners. Small
businesses typically íind themsel·es strapped íor time but in order to create a continual stream
oí new business, they must work on marketing their business aggressi·ely. Common
marketing techniques íor small business include networking, word oí mouth, customer
reíerrals, yellow pages directories, tele·ision, radio, outdoor ,roadside billboards,, print, email
and internet marketing. Llectronic media like tele·ision can be quite expensi·e and is
normally intended to create awareness oí a product or ser·ice rather than to sell it ,Ramsey &
\indhaus, 2009,.
Many small business owners íind internet marketing more aííordable. Google Ad\ords and
\ahoo! Search Marketing are two popular options oí getting small business products or
ser·ices in íront oí moti·ated \eb searchers. Successíul online small business marketers are
27 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
also adept at utilizing the most rele·ant keywords in their site content. Ad·ertising on niche
sites can also be eííecti·e, but with the long tail oí the internet, it can be time intensi·e to
ad·ertise on enough sites to garner an eííecti·e reach. Creating a business \eb site has
become increasingly aííordable with many 'do-it-yourselí' programs now a·ailable íor
beginners. A \eb site can pro·ide signiíicant marketing exposure íor small businesses when
marketed through the Internet and other channels. Some popular ser·ices are \ordPress,
Joomla and Squarespace.
Social media has pro·en to be ·ery useíul in gaining additional exposure íor many small
businesses. Many small business owners use lacebook and 1witter as ways oí reaching out to
their loyal customers to gi·e them news about specials oí the day or special coupons and to
generate repeat business. 1he relational nature oí social media, along with its immediacy and
24-hour presence lend intimacy to the relationship small businesses can ha·e with their
customers, while making it more eííicient íor them to communicate with greater numbers.
lacebook ads are also a ·ery cost-eííecti·e way íor small businesses to reach a targeted
audience with a ·ery speciíic message.
In addition to the social networking sites, blogs ha·e become a highly eííecti·e way íor small
businesses to position themsel·es as experts on issues that are important to their customers.
1his can be done with a proprietary blog or by using a 'backlink' strategy wherein the marketer
comments on other blogs and lea·es a link to the small business' own web site.
A solid public relations strategy that utilizes speaking engagements, press releases, íeature
stories, e·ents and sponsorships can also be a ·ery cost-eííecti·e way to build a loyal íollowing
íor a small business ,Ndede-Amadi, 2008,.
e. Principles of small business management
Managing a small business is not íundamentally diííerent írom managing a large organization.
One major diííerence, howe·er, is that a small business is generally run and managed by an
owner manager, who is oíten the entrepreneur him,herselí, whereas a large corporation is
oíten run by a manager who does not necessarily own shares in the company. 1he rest is just a
matter oí diííerences on scale. A small business operates on a ·ery small scale compared to a
corporation.
Lííecti·e and eííicient management leads to success, by achie·ing the objecti·es and goals oí
the organization or small business. \hen taking on the management oí a company, there are
certain essential skills that one must recognize as necessary and attain. 1hese are 1echnical
Skills, luman Skills, and Conceptual Skills. 1echnical skills consist oí the ability to process
the technical side oí a job or part oí your work. Proíiciency in the technical knowledge oí a
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 28
manager's job and company is critical ií the job requires a manager to be "hands on" with the
work. luman skill is the power to communicate with íellow workers. It is a skill that 99° oí
all businesses look íor in a manager. Learning how to eííecti·ely communicate with people is
a key principle oí management that a manager needs in order to be successíul in the role and
position oí a small business owner manager. Conceptual skills in·ol·e the íormulation oí
ideas and concepts. Managers that ha·e great conceptual skills generally possess the power to
create inno·ati·e ideas and to deli·er abstract theories. 1his skill set in the management oí a
business will gi·e the small business the edge it needs against its competitors ií it can be used
to íormulate groundbreaking concepts that will push it ahead oí the competition ,Axson,
2010,.
f. Small business management concepts
Any organization, whether new or old, whether small or big, needs to run smoothly to achie·e
the goals and objecti·es íor which it was set up. 1owards this goal, it has to de·elop and
implement its own management concepts. 1here are íour basic management concepts that
allow any organization to handle planned, tactical, and set decisions as planned, that gi·e rise
to the íour concepts oí management which are to plan, organize, direct, and control ,Axson,
200¯,. Lach oí these is discussed next.
Ptavvivg
Planning is the íoundation area oí management. It is the base upon which all the areas oí
management should be built. Planning requires administration to assess where the small
business is presently and where it would be in the íuture. lrom there an appropriate course oí
action is determined and implemented to attain the business's goals and objecti·es. Planning
is an ongoing course oí action.
Orgavi¸ivg
1he second íunction oí management is getting prepared and getting organized. 1hrough this
process, management will now determine the inside directorial coníiguration, establish and
maintain relationships, and assign required resources. \hile determining the inside directorial
coníiguration, management ought to look at the diííerent di·isions or departments. 1hey also
see to the harmonization oí staíí, and try to íind out the best way to handle the important
tasks and expenditure oí iníormation within the small business. Management determines the
di·ision oí work according to its need. It also has to deíine suitable departmental structures to
handle the authority and responsibilities.
Directivg
Directing is the third íunction oí management. \orking under this íunction helps
management to control and super·ise the actions oí staíí. 1his helps them to assist the staíí
29 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
in achie·ing the business's goals and also accomplishing their personal and career goals which
can be powered by moti·ation, communication, department dynamics, and department
leadership. Lmployees play an important role in achie·ing the small business's goals. lere lies
the reason why managers íocus on moti·ating their employees - in the íorm oí prize and
incenti·e programs based on job períormance and geared in the direction oí the employees
requirements. It is ·ery important to maintain a producti·e working en·ironment, to build
positi·e interpersonal relationships, and to acquire problem sol·ing skills, which can be done
only with eííecti·e communication. Understanding the communication process and working
on areas that need impro·ement help owner managers become more eííecti·e
communicators.
Covtrottivg
Control, the last oí the íour íunctions oí management, includes establishing períormance
standards which are based on the small business's objecti·es. It also in·ol·es e·aluating and
reporting oí actual job períormance, which iníorms íurther correcti·e and pre·enti·e actions.
g. Growing the Business
According to Ramsey & \indhaus, ,2009,, there are essentially íour o·er-arching strategies
íor growing a business.
1. Get more customers and clients
2. Get your customers,clients to buy more írequently
3. Get your customers,clients to spend more money per transaction
4. Keep your customers longer
\hile there are only íour primary strategies íor growing a business, there are literally dozens
oí diííerent techniques you can use to implement these íour strategies. Strategies are
important because they gi·e us something concrete. Strategies tell us \lA1 to do. Strategies
endure while techniques may come and go. But the techniques are equally important.
1echniques tell us lO\ to do it. Below is a list oí techniques íor growing a business,
categorized by the íour strategies.
=1: Cettivg vore cv.tover.
\hen we talk about growing a business, this is by íar the most common approach: get more
customers. And while this is certainly an important step, it is also the most expensi·e way to
grow a business. And it takes the most eííort, too. lere are nine ways to get more customers:
· Dri·e more traííic to your web site
· Impro·e the eííecti·eness oí your ad·ertisements and sales letters
· lind new,better places to ad·ertise ,newspaper, 1V, social media, etc.,
· Create stronger oííers that appeal to more people in your target market
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S0
· Lnlist the help oí aííiliates to reach more people
· Ask íor reíerrals
· Down-sell prospects who reject your initial oííer
· Craít irresistible guarantees so your customers ha·e little or no risk when they buy
· lost a íree tele-seminar where you can demonstrate your expertise and ask íor the sale
=2: Cet ,ovr cv.tover. to bv, vore freqvevtt,
Most entrepreneurs and business owners íocus on getting the íirst sale, and then neglect to
e·er get a second. 1his is uníortunate because you make much more proíit on subsequent
sales. lere are six ways to get your customers to buy írom you more írequently:
· Create a customer mailing list, send them customers-only oííers on a weekly or monthly
basis
· Send out promotional emails to your house list on a more írequent basis
· Run time-limited or quantity-limited promotions and use scarcity to get customers to act
now instead oí later
· Design a product íunnel that automatically mo·es your clients írom one purchase to the
next
· Start a monthly continuity program that automatically bills customers e·ery month ,print
newsletter, membership site, etc.,
· Use auto-responder email sequences to automatically introduce your prospects to all oí
your products
=²: Cet ,ovr cv.tover. to .peva vore vove, per trav.actiov.
1his is probably the simplest and easiest way to grow a business. But íor some reason, many
entrepreneurs a·oid this strategy because they íear how their customers will react. 1hey íear
their customers don't ha·e more money to spend. lere's a suggestion: Get o·er your íear. By
implementing these techniques, you can easily grow your business 5° or more within the next
íew months. A word oí caution though. raising prices is not something you do willy-nilly. It
helps to ha·e a good reason íor raising prices, it also helps to add more ·alue to a
product,ser·ice. lere are se·en ways to get your customers to spend more money per
transaction:
· Increase your íees and prices
· Add more ·alue to your products and ser·ices
· Aíter a customer buys one product, up-sell or cross-sell them another related product
· Oííer payment plans on your expensi·e products and ser·ices
· Charge íor shipping separately
· Use phone sales to help close large ticket purchases
· Do a product launch
S1 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
=1: Keep ,ovr cv.tover. tovger
1his íourth strategy is oíten o·erlooked, but is highly eííecti·e. Ií you can keep a customer or
client íor an extra month or two, or e·en an extra year, that could bring thousands oí extra
dollars to you - especially ií you ha·e a continuity program or a well-designed promotional
calendar. lere are nine ways to encourage loyalty and keep your customers íor a longer
period oí time:
· Send out surprise bonus giíts with new purchases ,you may e·en consider gi·ing away
business promotional items that are branded with your business name so you stay in the
top oí your customers' minds,
· Create a íollow-up sequence oí communication designed to get customers and clients to
actually use the product or ser·ice they ha·e purchased
· Call your best customers and thank them íor their business
· Send out birthday cards and Christmas cards and giíts
· Deli·er more ·alue than you ha·e promised to deli·er ,go abo·e and beyond,
· Ask your customers íor testimonials ,aíter a customer has publicly declared their support
oí you, they will automatically be more loyal to you and your business,
· Create incenti·es to encourage customer longe·ity
· Publish the date when a person subscribes and,or becomes a customer ,example:
Customer since 4,99,
· Gi·e your customers public recognition in your newsletter or blog
h. Lxpanding Your Business
1here are many practical ways to expand your business. \hen you íirst started your business,
you probably did a lot oí research. \ou may ha·e sought help írom ad·isors, you may ha·e
gotten iníormation írom books, magazines and other readily a·ailable sources. \ou in·ested a
lot-in terms oí money, time and sweat equity to get your business oíí the ground. 1hose who
ha·e sur·i·ed start-ups and built successíul businesses may be wondering how to take the next
step and grow the business beyond its current status. 1here are numerous possibilities, 10 oí
which are outlined here. Choosing the proper one ,or ones, íor a particular business depends
on the type oí business, a·ailable resources, and how much money, time and sweat equity the
small business owner is willing to in·est all o·er again ,Patterson & lloyd, 2009,.
Opev avotber tocatiov
1his might not be the best choice íor business expansion, but it is listed íirst here because that
is what oíten comes to mind íirst íor so many entrepreneurs considering expansion. "Physical
expansion is not always the best growth answer without careíul research, planning and
number-planning. lor anyone considering another location, consider the íollowing tips:
· Make sure you are maintaining a consistent bottom-line proíit and that you ha·e shown
steady growth o·er the past íew years
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S2
· Look at the trends, both economic and consumer, íor indications on your company's
staying power
· Make sure your administrati·e systems and management team are extraordinary, as you
will need them to get a new location up and running
· Prepare a complete business plan íor a new location
· Determine where and how you will obtain íinancing
· Choose your location based on what is best íor your business, not íor your wallet
Offer ,ovr bv.ive.. a. a fravcbi.e or bv.ive.. opportvvit,
Streamlining internal systems and marketing in nearby towns, cities, and countries in the
region will help bring in the íirst íew íranchisees. \ith se·eral units and some time under your
belt, you will then sign on with regional íranchise broker íirms. \ith 10 or more íranchisees
regionally, you can stay true to your ·ision oí steady growth. It is ad·isable to network within
the íranchise community - becoming a member oí a íranchise association and íinding a good
íranchise attorney as well as a mentor who has been through the íranchise process. 1here is
need to be open to growing and expanding your ·ision but at the same time, be a strong leader
who knows how to keep the key ·ision in íocus at all times.
íicev.e ,ovr proavct
1his can be an eííecti·e, low-cost growth medium, particularly ií you ha·e a ser·ice product
or a branded product. \ou can recei·e upíront monies and royalties írom the continued sales
or use oí your product - ií it is successíul. Licensing also minimizes your risk and is low cost in
comparison to the price oí starting your own company to produce and sell your brand or
product. 1o íind a licensing partner, start by researching companies that pro·ide products or
ser·ices similar to yours. But beíore you set up a meeting or contact any company, íind a
competent attorney who specializes in intellectual property rights. 1his is the best way to
minimize the risk oí losing control oí your ser·ice or product.
íorv av attiavce
Aligning yourselí with a similar type oí business can be a poweríul way to expand quickly. Ií
the thought oí shelling out commissions or any oí your own money íor the sake oí an alliance
makes you uncomíortable, look at the big picture: Ií you want to keep all the money to
yourselí, you are really shooting yourselí in the íoot. \ou need to align with other businesses
that already ha·e lists oí prospecti·e customers. It is the íastest way to success ,lar·ard
Business School Press, 2002,.
Direr.if,
Di·ersiíying is an excellent growth strategy, as it allows you to ha·e multiple streams oí
income that can oíten íill seasonal ·oids and, oí course, increase sales and proíit margins. It
SS ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
broadens your target audience and increases your presence in the marketplace, gi·ing you the
credibility to approach a much larger customer base. lere are se·eral ideas íor di·ersiíying
your product or ser·ice line:
· Sell complementary products or ser·ices
· 1each adult education or other types oí classes
· Import or export yours or others' products
· Become a paid speaker or columnist
1arget otber var/et.
\our current market is probably ser·ing you well, but it is important to consider other
markets. . lor example, ií your consumer market ranges írom teenagers to college students,
think about where these people spend most oí their time. Is it íeasible that you could
introduce your business to schools, clubs or colleges· \ou could oííer discounts to special-
interest clubs or donate part oí your proíits to schools and associations. Let your imagination
take you where you need to be. 1hen take your product to the markets that need it.
!iv a gorervvevt covtract
1he best way íor a small business to grow is to ha·e the go·ernment as a customer, since it is
the largest buyer oí goods and ser·ices in the country. \orking with your local small business
de·elopment oííices as well as with your local and regional economic de·elopment agencies
will help you determine the types oí contracts a·ailable to your type and size oí business. A
íair amount oí patience is required in working to secure most go·ernment contracts, howe·er,
Requests íor proposals ,RlPs, usually require a signiíicant amount oí groundwork and
research. Ií you are not prepared to take the time to íully comply with RlP terms and
conditions, you will only be wasting your time.
Merge ritb or acqvire avotber bv.ive..
1his is a good small business growth strategy, although the process can be intense and
exhausting. lere are íour keys to the success oí some acquisitions:
Customer retention
· Do what it takes to ensure retention oí a large customer base
· Staíí retention
Rehire or retain the best and brightest oí the other company's staíí
· Melding technologies
One oí the reasons íor acquisition is similarities between the product architectures oí the two
companies. 1his allows íor a smooth integration oí the two technologies - as the case may be.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S4
íocv.
oOne oí the biggest reasons íor an acquisition to work well is the íocus that the new company
brings to an otherwise neglected product or ser·ice.
í·pava gtobatt,
\ou will need a íoreign distributor who will carry an in·entory oí your product and resell it in
their domestic markets. \ou can locate íoreign distributors by scouring your city or region íor
a íoreign company with the help oí others such as the Lxport Promotion Council oí Kenya.
1rade groups, íoreign chambers oí commerce, and branches oí chambers oí commerce in
íoreign countries are also good places to íind distributors you can work with ,Mullins &
Komisar, 2009,.
í·pava to tbe ívtervet
Landing your \eb site in search engine results is key as more than 80 percent oí traííic comes
·ia search engines. \ith now more than 4 billion \eb pages, and with traííic on the Internet
doubling e·ery 100 days, making your \eb site ·isible is ·ital. Design and programming are
also important, but it is your content that will draw a ·isitor into your site and get them to stay.
Putting together a content strategy based on user beha·ior, measuring and tracking ·isitor
click streams, and writing the content based on researched keywords will get you excellent
search results and meet the needs oí your ·isitors ,Mullins & Komisar, 2009,.
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5. lrom leasibility Plan to
Business Plan
a. Ieasibility Plan
According to Berrie ,2008,, a comprehensi·e business íeasibility study contains detailed
iníormation about your business structure, your products and ser·ices, the market, logistics
oí how you will actually deli·er a product or ser·ice, the resources you need to make the
business run eííiciently, as well as other iníormation about the business. A íeasibility study
assesses a business initiati·e and considers both its pros and cons, analyzing alternati·e
potential business scenarios. It looks at the ·iability oí an idea with emphasis on identiíying
potential problems ,and opportunities,, and attempts to answer one main question: \ill the
idea work and should you proceed with it· All íeasibility studies should look at ií things work,
how they will work, and identiíy potential problems. A íeasibility study can be carried out on
an idea, a campaign, a product, a process, or an entire business. A íeasibility study precedes a
business plan. Beíore writing a business plan, one needs to identiíy how, where, and to whom
they intend to sell a ser·ice or product. One also needs to assess the competition and to íigure
out how much money they need to start the business and to keep it running until it is
established - all oí which is achie·ed through a íeasibility study. leasibility studies address
things like where and how the business will operate. 1hey pro·ide in-depth details about the
business to determine ií and how it can succeed. 1hey ser·e as a ·aluable tool íor de·eloping
a winning business plan.
i. The importance of a feasibility study
1he iníormation you gather and present in your íeasibility study will help you:
· List in detail all the things you need to do to make the business work,
· Identiíy logistical and other business-related problems and solutions,
· De·elop marketing strategies to con·ince a bank or in·estor that your business is worth
considering as an in·estment, and
· Ser·e as a solid íoundation íor de·eloping your business plan.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S6
L·en ií you ha·e a great business idea, you still ha·e to íind a cost-eííecti·e way to market and
sell your products and ser·ices. 1his is especially important íor store-íront retail businesses
where location could make or break your business. lor example, most commercial space leases
place restrictions on businesses that can ha·e a dramatic impact on income. A lease may limit
business hours, days, and parking spaces, restrict the product or ser·ice you can oííer, and in
some cases, e·en limit the number oí customers your business can recei·e each day.
ii. The Components of a Ieasibility Study
· De.criptiov of tbe ßv.ive..: 1he product or ser·ices to be oííered and how they will be
deli·ered.
· Mar/et íea.ibitit,: Includes a description oí the industry, current market, anticipated íuture
market potential, competition, sales projections, potential buyers, etc.
· 1ecbvicat íea.ibitit,: Details how you will deli·er a product or ser·ice ,i.e., materials, labor,
transportation, where your business will be located, technology needed, etc.,.
· íivavciat íea.ibitit,: Projects how much start-up capital is needed, sources oí capital,
returns on in·estment, etc.
· Orgavi¸atiov íea.ibitit,: Clearly states what legal and operational structure will work íor
the organization. 1hese include proíessional skills necessary íor achie·ement oí its aims.
Market Ieasibility
\hat is a Market leasibility Study and how does it diííer írom a Marketing Plan· A íeasibility
study analyzes potential business scenarios. A Marketing Plan, on the other hand, maps out
speciíic ideas, strategies, and campaigns based on íeasibility study in·estigations, which are
intended to be implemented. One can think oí market íeasibility studies as logistical studies
and marketing plans as speciíic, planned courses oí action to take ,Dougherty & Gray, 2006,.
1hings to consider in a market íeasibility study include:
· Description oí the Industry
· Current Market Analysis
· Competitor Analysis
· Anticipated luture
· Market Potential
· Potential Buyers and Sources oí Re·enues
· Sales Projections
How to Write an Industry Description
Gi·e a brieí one-to-two paragraph description oí the industry your business is categorized
under. Determining your industry is important íor recei·ing go·ernment contracts, attracting
in·estors, and íor recei·ing grants ,ií your íormation is a nonproíit,.
S7 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Analyzing your current market
1his section oí a market íeasibility study describes the current market íor your product or
ser·ice. Ií you are oííering something so unique that there are íew market statistics, you can
either use related industry iníormation, or e·en conduct your own independent study. \ays
to conduct your own research íor new ideas include: polling Internet íorums, questionnaires
addressed to targeted consumer groups or the general population, or e·en customer sur·eys.
Any "prooí" you ha·e that there is a demand ,or market, íor your product or ser·ices will help
you sell your idea. 1his is particularly important ií you are marketing something unique, or
within a ·ery small and specialized market. \ou need to show that your idea is no·el because
you ha·e íound a niche and not because there is no existing market íor the idea. A good
source íor íinding out what is selling ,and what is not, is the media, among many sources.
Industries showing employee growth are oíten good indicators oí an industry's o·erall
stability. Massi·e layoíís by íew employers oí employees indicate íewer business
opportunities. \here there is demand íor something, there should be correlating growth in
employment, the number oí new companies being íormed, and in the industry's o·erall
combined re·enue.
Anticipated future market (based on industry trends)
1his section should include a narrati·e description as well as attached spreadsheets, graphs
and tables showing trends, statistics, or projections. 1here are no sure-íire ways to tell ií an
industry will ha·e measurable growth in the íuture, but you can make logical and reasonable
predictions based on trends, past growth, and current markets.
|.e fact., vot fictiov: It is critical in this section that your projections are íact-based as much as
possible. Any business takes risks, the key is to minimize those risks by careíully studying
businesses that are already successíul. Rather than target just the entire industry, try to isolate
similar businesses and study what they are doing, how they are doing it, and their íinancial
track records.
1i.it ,ovr covpetitor.´ reb.ite.: \ou can obtain a lot oí iníormation by just ·isiting company
websites and looking o·er product lines. Look íor discontinued products or ser·ices and high-
priced items. Somewhere in between these two things are probably the most stable long-term
items. Discontinued might mean consumers are no longer demanding the product, while
high-priced items may indicate a íad.
íoo/ at big covpavie.´ .trategie.: Since big companies spend big monies on market research, take
ad·antage oí their spent money and public iníormation.
lor example, ií you are trying to crack the Soít drink market, look at Coca Cola and our own
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. S8
Kuguru loods or Milli. \hat new product lines or ser·ices are they oííering· Chances are
good that they spent millions oí Kenya Shillings researching industry trends to de·elop new
product ideas ,Ndede-Amadi, 2008,.
´tva, pre.. retea.e.: Look íor press releases about businesses in your industry. Press releases are
an ad·ertisement, but they also oíten tell why a company is branching out, closing a di·ision,
or changing its product line. 1hey ha·e already done the research íor you so do not hesitate to
take clues írom them.
Tips on how to research local competition in business
Ií you are planning to ser·e only a local market, start by identiíying e·ery competitor within a
íiíty ,50, mile radius. 1he íastest way to do this is to use a telephone book or an online business
directory.
· List each competitor by location and distance írom you, and írom each other ,you should
closely examine all competing businesses that are within íiíteen ,15, kilometers oí your
location,,
· Consider their locations, business hours, and how long they ha·e been in business ,these
things can help you determine how hard it will be to establish a similar business in the
same geographic area,.
\ou should also make note oí any similar businesses in your area that ha·e recently close
down. 1here may be a reason such as poor location, high taxes or operating restrictions, or
there may not be enough demand íor the product or ser·ice in that area to sustain a business.
Iníormation obtained írom researching local competitor can tell you what works and what has
not worked.
How to calculate sales projections
Sales projections can be a challenge íor any new business owner because there is little or no
track record to support how íast you will grow or what products or ser·ices will sell best.
lowe·er, sales projections should íactor in how much time and money will be in·ested into
the business, and the markets you will be targeting.
lor example, ií you sell your products or ser·ices to Nakumatt or 1uskeys, your sales are more
likely to grow íaster and your proíits to be higher than ií you sell your product at the Kisumu's
Jubilee Market or only in other local markets and shops ,Ndede-Amadi, 2008,.
lor these reasons, it is important that you write a market íeasibility study íirst. \our market
study will help you decide where to sell your product or ser·ices, and what products and
ser·ices are most likely to generate the most re·enue. Ií you ha·e an Internet-based business:
S9 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· Lstimate the total traííic ,number oí ·isitors, to your website each month
· Project anticipated site traííic ·olume o·er time
· Use traííic projections to estimate the a·erage number oí sales per e·ery 10,000 ·isits to
your site
· Calculate the a·erage amount íor each sale
1he more traííic you can dri·e to your site, the more opportunities you ha·e íor making a sale.
Do you ha·e good Search Lngine Optimization ,SLO, skills· Do you ha·e your website li·e
and ready to go· 1hese things are important to all Internet businesses because as your site
becomes more popular, you can project an increase in sales.
1ip: Summarize sales projections in the body oí the study, but attach a spreadsheet showing
actual numbers based on sales projections.
How to identify potential customers, clients, and contract sources
1his component oí your small business market íeasibility study should be descripti·e. \our
potential customers, clients, and contract sources should include the íollowing:
· A list oí current customers, clients, and contracts and the potential íor new or renewed
contracts
· Any sales leads that may generate new customers or clients
· A list oí go·ernment contracting agencies with a brieí description oí what type oí
contracts they solicit, and how they pertain to your industry
· A list oí market types you currently target or intend to target, such as senior citizens,
working mothers, organizations, specialty retailers, etc.
Depending upon the nature oí your business, it may not be possible to associate speciíic
amounts oí re·enue with a particular market, but you can at least try to estimate the
percentage oí total re·enue expected írom each source.
lor example, ií you plan to sell products to íi·e specialty stores, list each store you plan to sell
to and total o·erall re·enue íor a category specialty store` rather than an amount íor each
indi·idual store.
Technical Ieasibility
1he 1echnical leasibility Study assesses the details oí how you will deli·er a product or ser·ice
,i.e., materials, labor, transportation, where your business will be located, technology needed,
etc.,. 1hink oí the technical íeasibility study as the logistical or tactical plan oí how your
business will produce, store, deli·er, and track its products or ser·ices.
A technical íeasibility study is an excellent tool íor trouble-shooting and long-term planning.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 40
In some cases it ser·es as a ílow chart oí how your products and ser·ices e·ol·e and mo·e
through your business to physically reach your market.
The Technical feasibility study must support your financial information
Do not make the mistake oí trying to entice in·estors with your staggering growth projections
and potential returns on their in·estment that only includes income ,re·enue, to the business.
\ith any increase in re·enue there is always an increase in expenses. Lxpenses íor technical
requirements ,i.e., materials and labor, should be noted in the technical íeasibility study.
\ou should also not strictly rely on íeasibility study conclusions to impress an in·estor. An
experienced in·estor or lending institution will read your entire report and come to their own
conclusions. 1hereíore, it is critical that the technical and íinancial data in your study reconcile.
Ií other parts oí your íeasibility study shows growth, you will also ha·e to project labor and
other costs and the technical ability to support that growth.
1he technical component ser·es as the written explanation oí íinancial data because ií oííers
you a place to include detailed iníormation about why an expense has been projected high or
low, or why it is e·en necessary. It demonstrates to potential in·estors and lenders ,and in some
cases, potential clients, that you ha·e thought through the long-term needs your business will
ha·e as it grows.
Preparing an outline for writing your technical feasibility study
1he order in which you present technical iníormation is not as important as making sure you
ha·e all the components to show how you can run your business. \ou do not ha·e to include
speciíic íinancial iníormation in the technical portion oí your íeasibility study, but all
iníormation in this component must support your íinancial data represented elsewhere. Basic
things that most businesses need to include in their technical íeasibility studies include:
· Materials
· Labor
· 1ransportation ,or Shipping,
· Physical Location
· 1echnology
Calculating material requirements
In this section you list the materials you need to produce a product or ser·ice, and where you
will get those materials. Include iníormation such as ií ·olume discounts will be a·ailable as
your business grows, or ií you e·er plan to manuíacture your own parts at some point in time.
1hings to include in your list oí materials are:
· Parts needed to produce a product,
41 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· Supplies ,glue, nails, etc.,, and
· Other materials that are in·ol·ed in producing or manuíacturing your product.
\ou do not need to include actual íinancial data in this portion oí the study but íinancial data
supporting your narrati·e assessment should be included in a separate spreadsheet as an
attachment.
Iinancial Ieasibility Study
A íinancial íeasibility study is an assessment oí the íinancial aspects oí a business, in this case,
íor starting and running a business. It considers many things including start-up capital,
expenses, re·enues, and in·estor income and disbursements. Other portions oí a complete
íeasibility study will also contribute data to your basic íinancial study. A íinancial íeasibility
study can íocus on one particular project or area, or on a group oí projects ,such as ad·ertising
campaigns, ,Justis & Kreigsmann, 19¯9,. lowe·er, íor the purpose oí establishing a business
or attracting in·estors, you should include at least the íollowing three key things in your
comprehensi·e íinancial íeasibility study:
· Start-up capital requirements
· Start-up capital sources, and
· Potential returns íor in·estors
Start-up capital requirements
Start-up capital is simply how much cash you need to start your business and keep it running
until it is selí-sustaining. \ou should include enough capital íunds ,cash, or access to cash, to
run the business íor one to two years.
Iinding start-up capital funding sources
1here are many ways to raise capital íor your business, but no matter what route you take,
in·estors are more likely to in·est, banks are more likely to appro·e loans, and large
corporations are more likely to gi·e you contracts, ií you ha·e personally in·ested into the
business yourselí. \hen you make a list oí íunding sources, be sure to include anything that
you can contribute to the business, including íree labor. Ií you are starting a nonproíit
organization, your donated proíessional time may e·en be tax deductible.
Potential returns for investors
Determine your start-up cost structure: Running your own soítware company is going to ha·e
diííerent start-up requirements than opening a pet store, íor example. Some sources ,e.g.
Startupnation.com, say there are six at least cost categories íor new companies as íollows:
· Cost oí sales
· Proíessional íees
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 42
4S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
· 1echnology costs
· Administrati·e costs
· Sales and marketing costs
· \ages and beneíits
Gi·e thought to how these cost categories will be weighted across your business. Going back
to the earlier example, the soítware íirm presumably would want to allocate more money to
technology while the pet store presumably would need se·eral shiíts oí employees, which
means wages will carry a higher cost ,Schwetie & Vaseghi, 200¯,.
De·elop comparables: Look at industry leaders to help predict your own business's costs. Ií
you are opening a linance company, scan the íinancial statement oí a similar company that is
publicly traded, e.g. Centum, In·es1ech etc. Ob·iously your re·enue numbers will look a little
diííerent, but break down how much a coííee chain spends on cost oí sales and administrati·e
expenses as a percentage oí re·enue. Keep in mind that large companies and chains will be
more eííicient since they ha·e greater buying power and economies oí scale than a start-up,
but you can still use these percentages as goals to shoot íor.
Contact trade associations, small-business message boards or entrepreneurs in related íields:
1rade associations are an in·aluable source oí iníormation íor both new and established
companies e.g. Matatu Owners Association, Chamber oí Commerce, etc. Also, don't be
aíraid to seek out other entrepreneurs who ha·e set up shop in your industry, or perhaps a
related one, and talk to them about their experience with start-up costs, especially unexpected
costs ,Ndede-Amadi, 2008,.
Project start-up costs conser·ati·ely: Business success stories like Google, Kenya Airways,
Pollmans etc were not o·ernight sensations. Keep in mind that you will most likely need a íew
months oí íunding to co·er expenses beíore you e·en open íor business when calculating
start-up costs. And once you do begin operating, it likely will take a signiíicant amount oí time
until the business is selí-sustaining. \hen approaching banks and other lenders íor money, try
to include a substantial cushion íor beginning operations to ensure you will ha·e enough
money to set up an oííice, take orders, hire employees ií necessary, and co·er other related
costs. Be reasonable with your re·enue assumptions in the early stages and be conser·ati·e
with cost projections. It is also possible to structure a small-business loan to deíer payments
during the initial operating period.
Separate one-time start-up costs írom recurring costs: Distinguish between which costs you
will ha·e to account íor year-aíter-year, such as salaries and rent, and which upíront costs will
be one-time charges, such as oííice íurniture. 1his should allow you to establish a budget íor
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 44
aíter the start-up period. Look íor opportunities to delay non-·ital expenses such as oííice
decorations until aíter you ha·e begun getting some business ,Georgakellos & Marcis, 2009,.
Organizational Ieasibility Study
According to \oodmorappe ,1996,, the purpose oí an organizational íeasibility study is to
deíine the legal and corporate structure oí the business. An organizational íeasibility study
may also include proíessional background iníormation about the íounders and principals oí
the business and what skills they can contribute to the business ,Matson, 2000,. \our
organizational íeasibility study should include:
· Description oí your business structure
· Description oí your organizational structure
· Internal and external principles and practices oí the business
· Proíessional skills and resumes
Description of your business structure
1his section contains a narrati·e description oí the legal requirements íor establishing your
business and why you íeel this is the right structure íor your business ,\oung, 19¯0,. Discuss
the pros and cons oí diííerent business structures.
lor example, a sole proprietorship lea·es the sole proprietor open to both íinancial and legal
liability risks. A high-risk business should ne·er be set up as a sole proprietorship because it
will make it diííicult to attract in·estors as well as clients and customers. It is also the hardest
and most expensi·e íorm oí business to insure.
Organizational structure
Discuss your business' organizational structure. One oí the best ways to present this
iníormation is with an organizational chart. An organizational chart shows the hierarchy or
chain oí command in your business. It lists key positions and subordinate positions under
department heads, managers and super·isors.
Principles and practices of the business
L·ery business should ha·e a published code oí ethics and principals that go·ern how the
company conducts its business. In this section, include both internal and external principals
oí operations ,Matson, 2000,.
Internal operations business principles and practices:
· Businesses that are incorporated must ha·e a board oí directors. Do you ha·e a conílict
oí interest policy in place· \ill you use any speciíic Rules` íor conducting meetings·
· Do you oííer ser·ices where clients need to be screened íor eligibility íor íinancial aid,
45 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
social ser·ices, or are there other pre-requisite requirements such as being a senior
citizen, minority, or disabled·
· Do you ha·e hiring and employee training and management practices in place·
· Do you ha·e an o·erall corporate philosophy that inspires, encourages, or oííers
incenti·es to employees·
· Do you ha·e an anti-discrimination policy in place·
Lxternal business practices and principles
Do you ha·e a customer policy or philosophy· Lxamples oí client,customer philosophies
include:
· \e do not ser·e clients, we team with clients to meet their goals.
· \e ·alue creati·ity and imagination and use these to our client's ad·antage.
· Our employees maintain high ethical standards that reílect on how we treat our clients.
Professional skills and resumes
A business' strengths come írom the talent, skills, and experience oí those running the
company. In this section, you gi·e a brieí o·er·iew oí all íounders, employees, and partners
in·ol·ed in the business that will be contributing their skills and input into how the business is
operated. \ou should also include any board members, directors, and oííicers. Include in your
list oí principals ,most important people in your business or organization,, a brieí o·er·iew
oí how their particular skills will ser·e the business. \ou can also include accomplishments
that relate to the business. It is also beneíicial to attach resumes íor at least the top three
principals listed ,Co·ello & lazelgren, 1995,.
b. Business Plan
According to loran ,2006,, ií the íeasibility study indicates that the business idea is sound, the
next step is a business plan. 1he business plan continues the analysis at a deeper and more
complex le·el, building on the íoundation created by the íeasibility study. A business plan has
three primary íunctions:
1. 1o ser·e as an Action Plan
2. 1o ser·e as a Road Map
3. 1o ser·e as a Sales 1ool
According to Co·ello & lazelgren ,2006,, there are basically two types oí business plans,
both designed to help de·elop the new business írom conceptualization to operation. 1he
íirst type oí business plan is a Concept Presentation Plan. 1his type oí plan contains no
íinancial projections or íinancial statements. Its primary purpose is to con·ince stakeholders
that there is a sound and appealing business concept. 1he Concept Presentation Plan should
include the íollowing elements:
· Co·er page
· Mission statement
· 1he principals
· Products
· Ser·ice philosophy
· Market trend analysis
· 1arget market
· Marketing techniques
· 1arget market locations
· Sample menu
1he second type oí business plan is a lull linancial Business Plan. 1ypically, you will need a
lull linancial Business Plan to borrow money írom a bank, or to entice in·estors to lend you
money. It can contain all the elements oí the concept presentation plan, but primarily it
examines in-depth what the total costs oí your project will be, when the project will turn a
proíit, and what le·el oí return you can expect.
According to Ndede-Amadi ,2011,, a business plan deíines your business precisely, identiíies
your goals, and ser·es as a resume íor your business. It helps you allocate resources properly,
handle uníoreseen circumstances, and make the right decisions and choices. It will iníorm
your sales personnel, suppliers, customers and others about your operations and goals. Much
oí what you need to run a successíul operation depend on it, such as outside íunding, credit
írom suppliers, management oí your operation and íinances, promotion and marketing oí
your business, and achie·ement oí your business goals and objecti·es. Business plans are
required when applying íor business loans or seeking in·estors. In addition, a good business
plan is a crucial part oí any loan package as it pro·ides speciíic and organized iníormation
about your company and how you will repay any borrowed money.
Uníortunately, many entrepreneurs drag their íeet when it comes to preparing a good, written
business plan document, arguing that their marketplace changes too íast íor a business plan to
be useíul or that they just don't ha·e enough time. 1he íacts are, howe·er, that just as a good
builder will not begin construction without a blueprint, a good business owner should not
rush into a new ·enture without a plan - no matter how eager. Beíore you begin writing your
business plan, howe·er, consider the íollowing íour core questions:
· \hat ser·ice or product does your business pro·ide and what needs does it íill·
· \ho are the potential customers íor your product or ser·ice and why will they purchase it
írom you·
· low will you reach your potential customers·
· \here will you get the íinancial resources to start and run your business·
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 46
i. Descriptive Narrative of Your Business
\ithout going into detail, this section should include a high le·el look at how all oí the
diííerent elements oí your business íit together. 1he company description section should
include iníormation about the nature oí your business as well as a list oí the primary íactors
that you belie·e will make your business a success.
\hen deíining the nature oí your business ,or why you're in business,, be sure to list the
marketplace needs that you are trying to satisíy. Include the ways in which you plan to satisíy
these needs using your products or ser·ices. linally, list the speciíic indi·iduals and,or
organizations that you ha·e identiíied as ha·ing these needs.
Critical success íactors might include a superior ability to satisíy your customers' needs, highly
eííicient methods oí deli·ering your product or ser·ice, outstanding personnel, or a key
location. Lach oí these would gi·e your business a competiti·e ad·antage.
ii. The Lxecutive Summary
1he executi·e summary is the most important section oí your business plan as it pro·ides a
concise o·er·iew oí the entire plan along with a history oí your company. It tells your reader
where your company is and where you plan to take it. Since it is the íirst thing your readers see,
it is the thing that will either grab their attention, retain their interest, and make them want to
keep on reading or it will be the thing that makes them stop reading and want to put the entire
document down. More than anything else, howe·er, this section is important because it tells
the reader why you think your business idea will be successíul. Although it comes íirst, the
Lxecuti·e summary should be the last section you write. Aíter you'·e worked out all the details
oí your plan, you'll be in a better position to summarize it - and it should remain just that, a
summary ,i.e. no more than 2-4 pages,.
Contents of the Lxecutive Summary
· 1he Mission Statement brieíly explains the thrust oí your business. It could be two words,
two sentences, or a paragraph. It should be as direct and íocused as possible, and i t
should lea·e the reader with a clear picture oí what your business is all about
· Date business began
· Names oí íounders and the íunctions they períorm
· Number oí employees
· Location oí business and any branches or subsidiaries
· Description oí plant or íacilities
· Products manuíactured or sold ,ser·ices rendered
· Banking relationships and iníormation regarding current in·estors
· Summary oí company growth including íinancial or market highlights ,e.g. your company
47 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 48
doubled its worth in a 12-month period, you became the íirst company in your industry to
pro·ide a certain ser·ice,
· Summary oí management's íuture plans
\ith the exception oí the mission statement, all oí the iníormation in the Lxecuti·e
Summary should be highlighted in a brieí ,e·en bulleted, íashion. Ií you are just starting a
new business, chances are that you will not ha·e a lot oí iníormation to plug into Lxecuti·e
Summary as indicated. In that case, íocus on your experience and background as well as the
decisions that led you to start this particular enterprise. Include iníormation about the
problems your target market has and what solutions you pro·ide. Show how the expertise you
ha·e will allow you to make signiíicant inroads into the market place. 1ell your reader what
you are going to do diííerently or better. Con·ince the reader that there is a need íor your
ser·ice or product, beíore going ahead to address your ,the company's, íuture plans ,Berle &
Kirschner, 1996,.
Include a table oí contents directly íollowing the Lxecuti·e Summary to assist the reader in
locating speciíic sections in your business plan. Make sure that the content titles are ·ery
broad ,i.e. a·oid detailed descriptions in your table oí contents,.
iii. General Company Description
In this section, articulate the Vision and Mission Statements oí the business, its goals,
objecti·es, and business philosophy. A general company description mainly dwells on the
current status oí the company and pro·ides a brieí oí its íuture operations. "\hat business
am I really in·" is a question that iníorms the purpose oí the business and one that e·ery
business owner has to ask himselí. Some businesses ha·e íailed because their owner managers
ne·er stopped long enough to ask and answer this question. A well-written business plan is
essential to starting and running a business. A good business plan describes in detail the
mission and goals oí the business and how these goals will be achie·ed.
Lxample: One watch store owner realized that most oí his time was spent repairing watches,
while most oí his money was spent selling them. le íinally decided he was in the watch repair
business and not in the watch sales business. Upon making this decision and discontinuing
watch sales, his proíits impro·ed dramatically - as he was now spending his time and money at
the same place.
iv. Operational Plan
According to Berry ,2004,, e·ery business should ha·e a plan íor its operations which should
address issues oí ser·ice or product line, production, location, accessibility, the legal
en·ironment, in·entory, suppliers, personnel and management, and credit policies, among
others.
49 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Service or Product Line
\hat are you selling· In this section, describe your ser·ice or product, emphasizing the
beneíits to potential and current customers. locus on the areas where you ha·e a distinct
ad·antage. Identiíy the problem in your target market íor which your ser·ice or product
pro·ides a solution. Gi·e the reader hard e·idence that people are, or will be, willing to pay íor
your solution. List your company's ser·ices and products and attach any
marketing,promotional materials. Pro·ide details regarding suppliers, a·ailability oí
products,ser·ices, and ser·ice or product costs. Also include iníormation addressing new
ser·ices or products which will soon be added to the company's line. O·erall, this section
should include:
. aetaitea ae.criptiov of ,ovr proavct or .errice ;frov ,ovr cv.tover.´ per.pectire). lere, you need to
include iníormation about the speciíic beneíits oí your product or ser·ice. \ou also want to
talk about your product,ser·ice's ability to meet consumer needs, any ad·antages your
product has o·er that oí the competition, and the present de·elopment stage your product is
in ,i.e., idea, prototype, etc.,
ívforvatiov retatea to ,ovr proavct´. tife c,cte. Be sure to include iníormation about where your
product or ser·ice is in its liíe cycle, as well as any íactors that may iníluence its cycle in the
íuture
.v, cop,rigbt, patevt, ava traae .ecret ivforvatiov tbat va, be reteravt. lere, you need to include
iníormation related to existing, pending, or anticipated copyright and patent íilings along with
any key characteristics oí your products,ser·ices that you cannot obtain a copyright or patent
íor. 1his is where you should also incorporate key aspects oí your products,ser·ices that may
be classiíied as trade secrets. Last, but not least, be sure to add any iníormation pertaining to
existing legal agreements, such as nondisclosure or non-compete agreements
Re.earcb ava aeretopvevt actiritie. ,ov are ivrotrea iv or are ptavvivg to be ivrotrea iv. R&D acti·ities
include any in-process or íuture acti·ities related to the de·elopment oí new
products,ser·ices. 1his section should also include iníormation about what you expect the
results oí íuture R&D acti·ities to be. Be sure to analyze the R&D eííorts oí not only your
own business, but also that oí others in your industry
Organization & Management
1his section should include your company's organizational structure, details about the
ownership oí your company, proíiles oí your management team, and the qualiíications oí
your board oí directors.
\ho does what in your business· \hat is their background and why are you bringing them
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 50
into the business as board members or employees· \hat are they responsible íor· 1hese may
seem like unnecessary questions to answer in a one- or two-person organization, but the
people reading your business plan want to know who is in charge, so tell them. 1his section
should include who's on the board ,ií you ha·e an ad·isory board, and how you intend to keep
them there. \hat kind oí salary and beneíits package do you ha·e íor them· \hat incenti·es
are you oííering· low about promotions· Reassure your reader that the people you ha·e on
staíí are more than just names on a letterhead.
v. Professional Advisory Support
According to Carlock & \ard ,2010,, many businesses use outside ad·isory and support
ser·ices in addition to management and other personnel.
Board of Directors
1he major beneíit oí an unpaid ad·isory board is that it can pro·ide expertise that your
company cannot otherwise aííord. A list oí well-known, successíul business
owners,managers can go a long way toward enhancing your company's credibility and
perception oí management expertise.
vi. Marketing Plan
1he market analysis section oí the business plan should illustrate your knowledge about the
particular industry your business is in. It should also present general highlights and
conclusions oí any marketing research data you ha·e collected. 1his section should include
an industry description and outlook, target market iníormation, market test results, lead times,
and an e·aluati·e assessment oí your competition ,speciíic details oí your marketing research
studies should be mo·ed to the appendix section oí your business plan,.
Industry Description and Outlook
1his o·er·iew section should include a description oí your primary industry, the current size
oí the industry as well as its historic growth rate, trends and characteristics related to the
industry as a whole ,i.e., \hat liíe cycle stage is the industry in· \hat is its projected growth
rate·,, and the major customer groups within the industry ,i.e. businesses, go·ernments,
consumers, etc,.
Identifying Your Target Market
\our target market is simply the market ,or group oí customers, that you want to target ,or
íocus on and sell to,. \hen you are deíining your target market, it is important to narrow it to a
manageable size. Many businesses make the mistake oí trying to be e·erything to e·erybody,
a philosophy that oíten leads to íailure. In this section, you should gather iníormation which
identiíies the:
Di.tivgvi.bivg cbaracteri.tic. of tbe va;or,privar, var/et ,ov are targetivg. 1his section might include
iníormation about the critical needs oí your potential customers, the degree to which those
needs are ,or are not, currently being met, and the demographics oí the group. It should also
include the geographic location oí your target market, the identiíication oí the major
decision-makers, and any seasonal or cyclical trends which may impact the industry or your
business.
´i¸e of tbe privar, target var/et. lere, you gi·e iníormation regarding the number oí potential
customers in your primary market, the number oí annual purchases they make in products or
ser·ices similar to your own, the geographic area they reside in, and the íorecasted market
growth íor this group.
1be e·tevt to rbicb ,ov feet ,ov ritt be abte to gaiv var/et .bare ava tbe rea.ov. rb,. In the accompanying
research, you will ha·e determined the market share percentage and number oí customers you
expect to obtain in a deíined geographic area. \ou will need to outline the logic and
assumptions you used to de·elop these estimates.
Yovr pricivg ava gro.. vargiv target.. lere, you deíine the le·els oí your pricing, your gross margin
le·els, and any discount structures that you plan to set up íor your business, such as
·olume,bulk discounts or prompt payment discounts.
Re.ovrce. for fivaivg ivforvatiov retatea to ,ovr target var/et. 1hese resources might include
directories, trade association publications, and go·ernment documents.
Meaia ,ov ritt v.e to reacb ,ovr target avaievce. 1hese might include publications, radio or tele·ision
broadcasts, or any other type oí credible source that may ha·e iníluence on your target market.
Pvrcba.ivg c,cte of ,ovr potevtiat cv.tover.. lere, you need to identiíy the needs oí your target
market, do research to íind the solutions to their needs, e·aluate the solutions you come up
with, and íinally, identiíy who actually has the authority to choose the íinal solution.
1reva. ava potevtiat cbavge. rbicb va, ivpact ,ovr privar, target var/et. Key characteristics oí your
secondary markets. Just like with your primary target market, here you again want to identiíy
the needs, demographics, and the signiíicant trends which will iníluence your secondary
markets in the íuture.
Your niche market
A market in its entirety is too broad in scope íor any but the largest companies to tackle
successíully. 1he best strategy íor a smaller business is to di·ide demand into manageable
51 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
market niches. Small operations can then oííer specialized goods and ser·ices attracti·e to a
speciíic group oí prospecti·e buyers.
1here are undoubtedly some particular products or ser·ices you are especially suited to
pro·ide. Study the market careíully and you will íind opportunities.
í·avpte: Surgical instruments used to be sold in bulk to both small medical practices and large
hospitals. One small business owner realized that the smaller practices could not aííord to
sterilize instruments aíter each use like hospitals did, but instead simply disposed oí them. 1he
íirm's sales representati·es talked to surgeons and hospital workers to learn what would be
more suitable íor them. Based on this iníormation, the company de·eloped disposable
instruments which could be sold in larger quantities at a lower cost.
\hile researching your own company's niche, consider the results oí your market sur·ey and
the areas in which your competitors are already íirmly situated. Put this iníormation into a
table or a graph to illustrate where an opening might exist íor your product or ser·ice. 1ry to
íind the right coníiguration oí products, ser·ices, quality, and price that will ensure the least
direct competition.
A well-designed database can help you sort through your market iníormation and re·eal
particular segments you might not see otherwise. lor example, do customers in a certain
geographic area tend to purchase products that combine high quality and high price more
írequently· Do your small business clients take ad·antage oí your customer ser·ice more
oíten than larger ones· Ií so, consider íocusing on being a local pro·ider oí high quality goods
and ser·ices or a ser·ice-oriented company that pays extra attention to small businesses. Ií
you do target a new niche market, make sure that this niche does not conílict with your o·erall
business plan.
í·avpte: A small bakery that makes biscuits by hand cannot go aíter a market íor inexpensi·e,
mass-produced biscuits ,successíully,, regardless oí demand.
Competitive analysis
\hen you are doing a competiti·e analysis, you need to identiíy your competition by product
line or ser·ice as well as by market segment. Assess their strengths and weaknesses, determine
how important your target market is to your competitors, and identiíy any barriers which may
hinder your entry into the market. Be sure to identiíy all oí your key competitors íor each oí
your products or ser·ices. lor each key competitor, determine what their market share is, then
try to estimate how long it will take beíore new competitors will enter into the marketplace. In
other words: what is your window oí opportunity· linally, identiíy any indirect or secondary
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 52
competitors which may ha·e an impact on the success oí your business. 1he strengths oí
your competitors are also competiti·e ad·antages which you too can pro·ide. 1he strengths
oí your competitors may take many íorms, but the most common include:
· An ability to satisíy customer needs
· A large share oí the market and the consumer awareness that comes with it
· A good track record and reputation
· Solid íinancial resources and the subsequent staying power that comes with it
· Key personnel
\eaknesses are simply the ílip side oí strengths. Analyze the same areas as you did íor your
competitors' strengths to determine what their weaknesses are. lor example, are they unable
to satisíy their customers' needs· Do they ha·e poor market penetration· Are their track
records or reputation not up to par· Do they ha·e limited íinancial resources· Are they not
able to retain good people· All oí these can be 'red ílags' íor any business. Ií you íind weak
areas in your competition, be sure to íind out why they are ha·ing problems. 1his will allow
you to a·oid the same mistakes they ha·e made.
Ií your target market is not important to your competition, then you will most likely ha·e an
open íield to run in - ií your idea is a good one - at least íor a while. lowe·er, ií the
competition is keen on your target market, be prepared to ha·e to o·ercome some barriers.
Barriers to any market might include the íollowing:
· A high in·estment cost
· 1he time it takes to set up your business
· Changing technology
· Lack oí quality personnel
· Customer resistance ,i.e. long-standing relationships, brand loyalty,
· Lxisting patents and trademarks that you can not iníringe upon
Marketing and Sales Strategies
Marketing is the process oí creating customers, and customers are the liíeblood oí your
business. In this section, the íirst thing you want to do is deíine your marketing strategy.
Because there is no single way to approach a marketing strategy, your strategy should be part
oí an ongoing selí-e·aluation process that is unique to your company. lowe·er, there are
steps you can íollow which will help you think through the strategy you would like to use.
An o·erall marketing strategy should include a:
Mar/et pevetratiov .trateg,. 1his strategy seeks to increase market share oí the current product
or ser·ices in the existing market. It is generally adopted by a íirm to raise its sales re·enue
without making changes to its products or ser·ices. It can be implemented by increasing the
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ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 54
sales íorce, increasing distribution and promotion oí products, and by increasing expenditure
in marketing and ad·ertising acti·ities that result in increased sales.
´trateg, for grorivg ,ovr bv.ive... 1his strategy might include an internal strategy such as how to
increase your human resources, an acquisition strategy such as buying another business, a
íranchise strategy íor branching out, a horizontal strategy where you would pro·ide the same
type oí products to diííerent users, or a ·ertical strategy where you would continue pro·iding
the same products but would oííer them at diííerent le·els oí the distribution chain.
Cbavvet. of ai.tribvtiov .trateg,. Choices íor distribution channels could include an internal sales
íorce, distributors, or retailers.
Covvvvicatiov .trateg,. low are you going to reach your customers· Usually some combination
oí promotions, ad·ertising, public relations, personal selling, and printed materials ,such as
brochures, catalogs, ílyers, etc., works best.
Once you ha·e deíined your marketing strategy, you can then deíine your sales strategy. low
do you plan to actually sell your product· \our O·erall Sales Strategy should include the
íollowing:
. .ate. force .trateg,. Ií you are going to ha·e a sales íorce, do you plan to use internal or
independent representati·es· low many salespeople will you recruit íor your sales íorce·
\hat type oí recruitment strategies will you use· low will you train your sales íorce· \hat
about compensation íor your sales íorce·
Yovr .ate. actiritie.. \hen you are deíining your sales strategy, it is important that you break it
down into acti·ities. lor instance, you need to identiíy your prospects. Once you ha·e made a
list oí your prospects, you need to prioritize it. Next, identiíy the number oí sales calls you will
make o·er a certain period oí time. lrom there, you need to determine the a·erage number oí
sales calls you will need to make per sale, the a·erage ,Kenya Shilling, size per sale, and the
a·erage ,Kenya Shilling, size per ·endor.
Market tests
\hen you are including iníormation about any oí the market tests you ha·e completed íor
your business plan, be sure to íocus only on the results oí these tests. Any speciíic details
should be included in the appendix. Market test results might include the potential customers
who were contacted, any iníormation or demonstrations that were gi·en to prospecti·e
customers, how important it is to satisíy the target market's needs, and the target market's
desire to purchase the products or ser·ices oí your business at ·arying prices.
55 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Lead times
Lead time reíers to the amount oí time between when a customer places an order and when
the product or ser·ice is actually deli·ered. \hen you are researching this iníormation,
determine what your lead time will be íor the initial order, reorders, and ·olume purchases.
vii. Personal Iinance
Personal íinance is the application oí the principles oí íinancial economics to an indi·idual's
íinancial decisions. In this section you should include the íollowing iníormation:
· low much money will you need at ·arious points in the íuture·
· low do you go about getting that money·
· \hat is your annual income·
· low can you increase your income·
· \hat are your annual expenses·
· low can you reduce your expenses·
· low do you best budget íor your a·ailable income each year·
· low much money can you sa·e each year·
Include personal íinancial statements íor each owner and major stockholder, showing assets
and liabilities held outside the business and personal net worth. Include the íollowing
iníormation:
· \ho are the partners in the business and what is their net worth·
· \here is your operating capital going to come írom·
· \hat are the possible sources oí capital íinance·
Capitalization & Startup Lxpenses
Capitati¸atiov denotes the total amount oí íunds used to íinance a íirm's balance sheet and is
calculated as market capitalization plus debt. Market capitalization is the number oí common
shares multiplied by the current price oí those shares. Capitalization, thereíore, is a measure
by which we can classiíy a company according to size.
´tart.·vp e·pev.e. are the resources applied on the conceptualization, onset and early stages oí
the de·elopment oí a business entity. \ou will ha·e many expenses beíore you e·en begin
operating your business. It is important to estimate these expenses accurately and to plan
where you will get suííicient capital. 1his is a research project, and the more thorough your
research eííorts, the less are the chances that you will lea·e out important expenses or
underestimate them. L·en with the best oí research, howe·er, opening a new business has a
way oí costing more than you anticipate. 1here are two ways to make allowances íor such
surprise expenses. 1he íirst is to add a little `padding` to each item in the budget. 1he problem
with that approach, howe·er, is that it destroys the accuracy oí your careíully thought-out
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 56
plan. 1he second approach is to add a separate line item, called contingencies, to account íor
uníoreseeable expenses ,Abrams, 2000,. 1his is the approach we recommend. 1he common
kinds oí start-up expenses that most small businesses íace include the íollowing:
1. Re.earcb ava aeretopvevt co.t.:
\hether you hire a market research íirm or do research by yourselí, you need to budget íor
costs in·ol·ed in knowing more about your market. Inter·iewing potential customers or
suppliers, checking the '\ellow Pages', or photocopying trade publications and articles about
your business all in·ol·e costs.
2. ßv.ive.. Ptav Preparatiov:
Ií you are preparing the business plan yourselí, the only cost to you is your time. lowe·er,
there are entrepreneurs who need help in de·eloping their business plans. Ií you are one oí
those business owners, you need to include the costs oí hiring consultants or business plan
writers into your initial budget.
². Proavct Deretopvevt ava ßegivvivg ívrevtor,:
1his will be your most signiíicant start-up cost. 1o get a better estimate, you can ask potential
suppliers íor required in·entory le·els íor your type oí business. Some entrepreneurs,
particularly those who create their own products, take years oí product de·elopment beíore a
prototype can be launched. \ou need to íactor in the length oí time it will take you to de·elop
your íirst products.
1. .arerti.ivg ava Mar/etivg Provotiov í·pev.e.:
\ou can choose to ha·e some 'buzz' íor your business, e·en beíore you oííicially open. Some
entrepreneurs do a pre-launch campaign to generate interest íor their products or ser·ices.
\ou can also plan íor a 'grand opening' promotion as well. 1he cost, oí course, will depend on
how simple or elaborate your pre-launch acti·ities will be.
:. Ca.b:
1his reíers to the amount oí cash that you need to run your cash register. One thing that your
business should ne·er be caught without is cash.
ó. Co.t of íivavcivg:
\ou also need to allocate some íunds to help you co·er your cost oí íinancing, whether you
got your íunds írom the bank or írom your credit card. Be prepared to pay the interest on your
loans, particularly ií you used your credit cards to íinance your business.
¯. Remodeling and Decorating:
1his will include physical and cosmetic impro·ements to the new business íacility. Solicit bids
írom contractors or interior designers, e·en ií you decide to do e·erything later on, to gi·e you
an idea oí how much these jobs cost.
º. íi·tvre. ava íqvipvevt:
1he íixtures and equipment needed íor your new business are normally substantial,
depending on your kind oí business. A restaurant business, íor example, will need modern
kitchen equipment, chairs and tables, tableware and utensils. On the other hand, a home
business will require signiíicantly less in terms oí íixtures and equipment. Computers, íax
machines, and modems are some oí the most important equipment that you would need. In
addition, you should pro·ide some budget íor the costs oí installing the íixtures and
equipment and making sure that these are ready íor use.
·. íirivg evpto,ee.:
Allocate a íew months' salary íor the payroll oí your new employees. \hile employee costs
will not actually start until you are open íor business, some entrepreneurs hire a íew employees
e·en beíore the business is launched to help in the initial groundwork.
10. ív.vravce Co.t.:
\ou will need liability and property insurance to protect yourselí and your business assets.
Some businesses also require workers' compensation, health, liíe, íire, product liability and
proíessional malpractice insurance. Check what you need íor your kind oí business.
11. íea.e Pa,vevt.:
1hese include amounts that must be paid íor equipment and íacility leases beíore opening.
Lxpect to pay se·eral months' worth oí lease payments e·en beíore you open your doors íor
business.
12. íicev.e. ava Pervit.:
1his amount will include all íees charged by the local and go·ernment agencies. 1he more
regulated your industry, the higher the íees and charges. Various local authorities also ha·e
diííerent licensing requirements and íee structures.
1². Profe..iovat íee.:
\ou will probably need the assistance oí a lawyer in drawing up the proper documents and
íiling them with the go·ernment ií you are íorming a partnership, Limited Liability Company
or Corporation. \ou can opt to incorporate your own business yourselí, as long as you
understand each íorm and requirements. Part oí the proíessional íees you need to budget íor
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ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 58
include the accountant's íees, should you decide to outsource your record keeping or
accounting tasks.
11. ´igvage Co.t.:
1he signs íor your business establishment can lea·e a signiíicant dent on your budget. Obtain
bids írom sign-making companies, depending on how elaborate you plan your signs to be.
1:. ´vpptie.:
1his is the part oí your budget íor all the oííice, cleaning and employee supplies that your
business needs in its íirst íew months. 1o help you sa·e, try buying wholesale ií you can meet
the minimum order requirements.
1ó. Co.t of !eb ´ite Creatiov:
Ií you are planning to supplement your brick-and-mortar business with online operations,
you need to budget íor the costs oí creating a web site. 1hese include web-hosting íees, web
designer, e-commerce components ,shopping cart, merchant account, etc,. \ou also need to
allocate some amount to co·er the marketing and promotion expenses oí your online
business.
1¨. |vavticipatea í·pev.e.:
1he rule oí thumb is to allocate about 10 to 20 percent oí your total start-up budget íor
contingencies and other unexpected expenses
viii. Iinancial Planning
1he broader íinancial plan consists oí a 12-month proíit and loss projection, a íour-year
proíit and loss projection ,optional,, a cash-ílow projection, a projected balance sheet, and a
break-e·en analysis, ration analysis, and sensiti·ity analysis. 1ogether they constitute a
reasonable estimate oí your company's íinancial íuture. Most importantly, the process oí
thinking through the íinancial plan will impro·e your insight into the inner íinancial workings
oí your company ,Berry, 2004,.
i. 12·Movtb Profit ava ío.. Pro;ectiov:
Many business owners think oí the 12-month proíit and loss projection as the centerpiece oí
their plan. 1his is where you put it all together in numbers and get an idea oí what it will take to
make a proíit and be successíul. \our sales projections will come írom a sales íorecast in
which you íorecast sales, cost oí goods sold, expenses, and proíit month-by-month íor one
year. Proíit projections should be accompanied by a narrati·e explaining the major
assumptions used to estimate company income and expenses.
59 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ii. íovr·Year Profit Pro;ectiov ;Optiovat)
1he 12-month projection is the heart oí your íinancial plan. 1his section is íor those who
want to carry their íorecasts beyond the íirst year.
Projected Cash Ilow
Ií the proíit projection is the heart oí your business plan, cash ílow is its liíe-blood.
Businesses íail because they cannot pay their bills. L·ery part oí your business plan is
important, but none oí it means a thing ií you run out oí cash. 1he point oí this worksheet is
to help you plan how much you need beíore start-up, íor preliminary expenses, operating
expenses, and reser·es. \ou should keep updating it and using it aíterward. It will enable you
to íoresee shortages in time to do something about them perhaps cut expenses, or perhaps
negotiate a loan. But íoremost, you shouldn't be taken by surprise. 1here is no great trick to
preparing it: 1he cash-ílow projection is just a íorward look at your 'current' account.
lor each item, determine when you actually expect to recei·e cash ,íor sales, or when you will
actually ha·e to write a check ,íor expense items,. \ou should track essential operating data,
which is not necessarily part oí cash ílow but allows you to track items that ha·e a hea·y
impact on cash ílow, such as sales and in·entory purchases.
\our cash ílow will show you whether your working capital is adequate. Clearly, ií your
projected cash balance e·er goes negati·e, you will need more start-up capital. 1his plan will
also predict just when and how much you will need to borrow. Lxplain your major
assumptions, especially those that make the cash ílow diííer írom the Proíit and Loss
Projection. lor example, ií you make a sale in month one, when do you actually collect the
cash· \hen you buy in·entory or materials, do you pay in ad·ance, upon deli·ery, or much
later· low will this aííect cash ílow·
Are some expenses payable in ad·ance· \hen· Are there irregular expenses, such as
quarterly tax payments, maintenance and repairs, or seasonal in·entory build-up that should
be budgeted íor· Loan payments, equipment purchases, and owner's draws usually do not
show on proíit and loss statements but deíinitely do take cash out. Be sure to include them.
And oí course, depreciation does not appear in the cash ílow at all because you ne·er write a
cheque íor it.
iii. Opevivg Da, ßatavce ´beet
A balance sheet is one oí the íundamental íinancial reports that any business needs íor
reporting and íinancial management. A balance sheet shows what items oí ·alue are held by
the company ,assets,, and what its debts are ,liabilities,. \hen liabilities are subtracted írom
assets, the remainder is owners' equity. Use a startup expenses and capitalization spreadsheet
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 60
as a guide to preparing a balance sheet as oí the opening day. 1hen detail how you calculated
the account balances on your opening day balance sheet.
ir. ßrea/·írev .vat,.i.
A break-e·en analysis predicts the sales ·olume, at a gi·en price, required to reco·er total costs.
In other words, the sales le·el is the di·iding line between operating at a loss and operating at a
proíit. Lxpressed as a íormula, break-e·en is:
ßrea/erev ´ate. ~ íi·ea Co.t. , Rerevve per vvit - 1ariabte Co.t. per vvit
,\here íixed costs are expressed in units oí currency ,e.g. dollars or shillings,, but ·ariable
costs are expressed as a percent oí total sales,.
^ote: Include all assumptions upon which your break-e·en calculation is based.
r. Ratio .vat,.i.
íivavciat or .ccovvtivg ratio. are useíul measures oí a business's períormance and íinancial
situation at a point in time. 1hey are calculated írom iníormation pro·ided by both accounting
and íinancial statements such as the income statement, balance sheet, cash ílow statement, and
the statement oí retained earnings. Ratios are used by managers inside the business by current
and potential owners oí the business and by the business's creditors. Some examples include:
Liquidity Ratios pro·ide iníormation about a business's ability to meet its short-term
obligations. 1hree liquidity ratios that are used most oíten are the Current Ratio ,the ratio oí
current assets to current liabilities,, the Quick Ratio ,the ratio oí current assets, less in·entory,
to current liabilities,, and the Cash Ratio ,the ratio oí cash and marketable securities to current
liabilities,. A high liquidity ratio demonstrates the business's ability to meet short-term
obligations when they become due. Current assets include cash, marketable securities,
accounts recei·ables, in·entory, and notes recei·ables. Current liabilities include accounts and
notes payable in the short term.
...et 1vrvorer Ratio. show how eííiciently the business utilizes its assets and are sometimes
reíerred to as Lííiciency, Asset Utilization, or Asset Management Ratios. 1he two most
common asset turno·er ratios are the Recei·ables 1urno·er ,the ratio oí Annual Credit Sales
to Accounts Recei·ables, which measures how quickly a business collects its accounts
recei·ables,, and the In·entory 1urno·er ,the ratio oí Cost oí Goods Sold to A·erage
In·entory, which measures the a·erage number oí days worth oí in·entory on hand,.
linancial ratios quantiíy many aspects oí a business and are an integral part oí íinancial
statement analysis. Other ratios include Acti·ity Ratios which measure how quickly a business
61 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
con·erts non-cash assets to cash assets, debt ratios which measure the business's ability to
repay long-term debt, proíitability ratios which measure the business's use oí its assets and
control oí its expenses to generate an acceptable rate oí return, and market ratios which
measure in·estor response to owning a company's stock but also the cost oí issuing stock.
Ratios are oíten expressed as a decimal ·alue, such as 0.10, but can be expressed in the
equi·alent percent ·alue, such as 10°.
ri. ´ev.itirit, .vat,.i.
Sensiti·ity analysis in·estigates how projected períormance ·aries along with changes in the
key assumptions on which the initial projections are based. Ií a small change in a parameter
results in relati·ely large changes in the outcomes, the outcomes are said to be sensiti·e to that
parameter. 1his may mean that the parameter has to be determined ·ery accurately or that the
alternati·e has to be redesigned íor low sensiti·ity.
According to Ndede-Amadi ,2011,, the íinancials should be de·eloped aíter you ha·e
analyzed the market and set clear objecti·es. 1hat is when you can allocate resources
eííiciently. 1he íollowing is a list oí the critical íinancial statements to include in your business
plan packet:
rii. íi.toricat íivavciat Data
Ií you own an established business, you will be requested to supply historical data related to
your company's períormance. Most creditors request data íor the last three to íi·e years,
depending on the length oí time you ha·e been in business. 1he historical íinancial data
would be your company's income statements, balance sheets, and cash ílow statements íor
each year you ha·e been in business ,usually íor up to 3 to 5 years,. Oíten creditors are also
interested in any collateral that you may ha·e that could be used to ensure your loan, regardless
oí the stage oí your business.
riii. Pro.pectire íivavciat Data
All businesses will be required to supply prospecti·e íinancial data, whether startup or
growing. Most oí the time, creditors will want to see what you expect your company to be
able to do within the next íi·e years. Lach year's documents should include íorecasted income
statements, balance sheets, cash ílow statements, and capital expenditure budgets. lor the íirst
year, you should supply monthly or quarterly projections. Aíter that, you can stretch it to
quarterly and,or yearly projections íor years 2 through 5. Make sure that your projections
match your íunding requests, as creditors will be on the lookout íor inconsistencies. It is much
better ií you catch mistakes beíore they do. Ií you ha·e made assumptions in your projections,
be sure to summarize what you ha·e assumed. 1his way, the reader will not be leít guessing.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 62
linally, include a short analysis oí your íinancial iníormation. Include a ratio and trend
analysis íor all oí your íinancial statements ,both historical and prospecti·e,. Since pictures
speak louder than words, you may want to add graphs oí your trend analysis ,especially ií they
are positi·e,.
i·. ívvaivg Reqve.t
In this section, you will request the amount oí íunding you will need to start or expand your
business. Ií necessary, you can include diííerent íunding scenarios, such as a best and worst
case scenarios, but remember that later, in the íinancial section, you must be able to back up
these requests and scenarios with corresponding íinancial statements. \ou will want to
include the íollowing in this section:
· your current íunding requirement
· your íuture íunding requirements o·er the next íi·e years
· how you will use the íunds you recei·e, and
· any long-range íinancial strategies that you are planning that would ha·e any type oí
impact on your íunding request.
\hen you are outlining your current and íuture íunding requirements, be sure to include the
amount you want now and the amount you want in the íuture, the time period that each
request will co·er, the type oí íunding you would like to ha·e ,i.e., equity, debt,, and the terms
that you would like to ha·e applied. low you will use your íunds is ·ery important to a
creditor. Is the íunding request íor capital expenditures, working capital, debt retirement, or
íor acquisitions· \hate·er the purpose oí the íunding, be sure to list it in this section.
Last oí all make sure that you include any strategic iníormation related to your business that
may ha·e an impact on your íinancial situation in the íuture, such as:
· going public with your company
· ha·ing a le·eraged buyout
· being acquired by another company
· the method with which you will ser·ice your debt, or
· whether or not you plan to sell your business in the íuture
Lach oí these is extremely important to a íuture creditor, since they will directly impact your
ability to repay your loan,s,.
6. Lthics in Running a Small Business
According to Badaracco Jr. ,199¯,, regardless oí size, all businesses ha·e the same objecti·e,
that oí making proíits, which necessitates the same operational model. 1hereíore, business
ethics and related issues such as corporate social responsibility ,CSR,, are not just big business
issues, they are issues core to small business as well. Lthical business practices include
assuring that the highest legal and moral standards are obser·ed in relationships with the
people in the business community - including the most important person in the business - the
customer.
Lthics
Lthics in·ol·es learning what is right or wrong, and then doing the right thing. lowe·er, "the
right thing" is relati·e. Most ethical dilemmas in the workplace are not simply a matter oí
choosing between right and wrong, it is oíten much more in·ol·ed than that. In the ethics
debate, there are those who assert that there is always a right thing to do based on moral
principle, and then there are others who belie·e that the right thing to do depends on the
situation - and that ultimately it is up to the indi·idual to decide what is the right and the wrong
thing to do. Many ethicists consider emerging ethical belieís to be "state oí the art" legal
matters, which means that what becomes an ethical guideline today is oíten translated to a law,
regulation or rule tomorrow. Values which guide how we ought to beha·e are considered
moral ·alues ,e.g. respect, honesty, íairness, responsibility,. Statements around how these
·alues are applied are sometimes called moral or ethical principles ,Collins, 2001,.
Business Lthics
1he concept oí business ethics has come to mean diííerent things to diííerent people.
lowe·er, it is generally regarded as knowing what is right or wrong and doing what is right in
the workplace, with respect to their eííects on products or ser·ices and with regard to
stakeholders. Attention to ethics in the workplace sensitizes both leaders and staíí on how
they should act. But perhaps e·en more important is that attention to ethics in the workplaces
helps ensure that when leaders and managers are struggling in times oí crises and coníusion,
6S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 64
they still retain a strong moral grounding. In addition, attention to business ethics in the work
place pro·ides numerous other beneíits.
Managing ethics programs in the workplace
A business can manage ethics in the workplace by establishing an ethics management
program. Lthics programs con·ey company ·alues, oíten using codes and policies to guide
decisions and beha·ior, and can include extensi·e training and e·aluation, depending on the
organization. 1hese programs are rarely alike between any two organizations, but they will
pro·ide guidance in ethical dilemmas within the organization. 1he reality is that e·ery
business has an organizational ethics program made up oí ·alues, policies and acti·ities which
impact the propriety oí organizational beha·iors, e·en though most do not know that they do.
A basic purpose oí an ethics management program is balancing competing ·alues and
reconciling them. A good example oí competing ·alues is pushing products at all costs ·is-a-
·is educating the consumer. L·en then, it is true that business people need more practical
tools and iníormation to help them understand competing ·alues and how to manage them.
Developing Codes of Lthics
According to some ethics scholars, a philosophy generally describes the highest ·alues to
which the company aspires to operate, and will contain the `dos.' A code oí ethics, on the
other hand, will speciíy the ethical rules oí operation, and will contain the 'don'ts'. Others
disagree, howe·er, that codes ha·e any ·alue, arguing that too much íocus is oíten put on the
codes themsel·es, which are not iníluential in managing ethics in the workplace. 1hey argue
íurther that de·eloping and continuing dialogue around the ·alues oí the code is more
important.
Developing Codes of Conduct
lor large organizations that include se·eral large programs or departments, there is need to
de·elop an o·erall corporate code oí ethics and then a separate code to guide each oí the
programs or departments. Codes oí conduct are insuííicient ií intended only to ensure that
policies are legal. On the contrary, all staíí must understand and buy into the ethics program
being dri·en by top management. It is noteworthy that codes oí ethics and codes oí conduct
may be the same in some organizations but diííerent in others, depending on the
organization's culture and operations as well as on the ultimate le·el oí speciíicity in the codes
themsel·es.
Assessing and Cultivating Lthical Culture
Culture is comprised oí the ·alues, norms, and beha·iors within a business, and e·ery
organization has one. Lthics, on the other hand, is about moral ·alues, or ·alues regarding
right and wrong. Because oí these commonalities, cultural assessments can be ·aluable in
assessing the moral ·alues in an organization.
Lthics Training
An ethics program is essentially useless unless all staíí members are trained about what it is,
how it works and their roles in it. By its ·ery nature, howe·er, the program may in·ite
suspicion ií not handled openly and honestly. In addition, no matter how íair and up-to-date a
set oí policies is, the legal system will oíten interpret employee beha·ior as de íacto ,actual,
policy, rather than written policies. 1hereíore, all staíí must be aware oí and act in accordance
with policies and procedures. 1his is true whether policies and procedures are íor an ethics
program or íor personnel management. An appropriate le·el oí íull accordance requires
training about policies and procedures. 1he rise oí ethics training inside organizations is one
dri·er credited with changing the beha·ior and culture oí those organizations. 1he aim oí
such training is to help employees make ethical decisions when the answers are unclear. 1he
greatest beneíit oí an ethics training program is reducing the likelihood oí íines and damaged
reputations íor breaching laws or moral norms, íor both the organization and the indi·idual.
Additional beneíits include increased employee loyalty and pride in the organization
,lartman, 2004,.
b. Corporate Social Responsibility
Corporate Social Responsibility ,CSR,, also called corporate cov.cievce, corporate citi¸ev.bip, .ociat
perforvavce, or .v.taivabte re.pov.ibte bv.ive.. is a íorm oí corporate selí-regulation integrated into
a business model. CSR policy íunctions as a built-in, selí-regulating mechanism through
which a business monitors and ensures its acti·e compliance with the spirit oí the law, ethical
standards, and international norms. 1he goal oí CSR is to embrace responsibility íor the
company's actions and to encourage a positi·e impact oí its acti·ities on the en·ironment,
consumers, employees, communities, stakeholders and all other members oí the public
sphere who may also be considered as stakeholders ,largadon, 2003,.
Approaches to CSR
One common approach oí CSR is philanthropy, which includes monetary donations and aid
gi·en to local organizations and impo·erished communities in de·eloping countries. Some
organizations do not like this approach as it does not help build on the skills oí the local
people, and preíer community-based de·elopment that generally leads to more sustainable
de·elopment. Another approach to CSR is to incorporate the CSR strategy directly into the
business strategy oí an organization. A third approach that is garnering increasing interest is
called Creating Shared Value ,or CSV,, a model based on the notion that corporate success
and social welíare are interdependent. A business needs a healthy, educated workíorce,
sustainable resources and adept go·ernment to compete eííecti·ely. lor society to thri·e,
65 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
proíitable and competiti·e businesses must be de·eloped and supported to create income,
wealth, tax re·enues, and opportunities íor philanthropy.
Many companies use the strategy oí benchmarking to compete within their respecti·e
industries in CSR policy, implementation, and eííecti·eness. Benchmarking in·ol·es
re·iewing competitor CSR initiati·es, as well as measuring and e·aluating the impact that
those policies ha·e on society and the en·ironment, and how customers percei·e competitor
CSR strategy. Aíter a comprehensi·e study oí competitor strategy and an internal policy
re·iew, a comparison can be drawn and a strategy de·eloped íor competition with CSR
initiati·es.
Increasingly, businesses are becoming interested in processes that can add ·isibility to their
CSR policies and acti·ities. One method that is gaining increasing popularity is the use oí well-
grounded training programs, where CSR is a major issue, and where business simulations play
a part ,Kotter, 1992,.
c. Lthics in a Small Business
According to Seglin ,2006,, a small business owner, just any other business owner, need to
beha·e ethically, and has to accept responsibility íor the impact the business has on society.
Most business owners do take responsibility íor the near-term eííects oí their successíul
enterprises, but the ·ery thoughtíul ones also pay attention to the long-term psycho-social
health and wealth oí indi·iduals and groups in·ol·ed in and aííected by the business. 1he
small enterprise pro·ides the right en·ironment in which to work towards the long-term
eííects oí the business on the en·ironment, íor example.
Research in the area oí small business ethics has lagged behind, despite the íact that the small
business is responsible íor a large percentage oí economic growth íor many countries, both
de·eloped and de·eloping. 1his, also despite the íact that there is clear e·idence that, small
businesses can be particularly ·ulnerable to unethical practices. And while the majority oí
small business owners,managers do not íeel compelled to act unethically, there remains a
signiíicant percentage that do íeel pressure to act in a less than ethical manner due to
economic pressures brought about by their liability oí smallness. Clearly, there remains a
need íor better understanding the perceptions, belieís, and attitudes that impact the decision
making oí small business owners ,Solomon, 1993,.
1o de·elop a code oí ethics íor your small business, use the íollowing guidelines:
1. Identiíy the general principles that would lead to íair business practices
2. Check with the industry association íor basic standards to re·iew
3. Allow that ethical questions do not always ha·e a unique, íaultless answer
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 66
4. \rite out speciíic statements that will assist in making day-to-day ethical decisions
5. Apply the code oí ethics to a written policy and procedures manual identiíying major
rules íor operating the business
6. 1rain employees ,and íamily members, to make ethical decisions about the business
67 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 68
¯. 1echnology Licensing
By the nature oí products emerging írom technology, it is necessary to put a legal structure in
place to regulate transactions, markets and production. 1echnology 1ransíer Agreements will
usually impro·e economic eííiciency and be pro-competiti·e as they can reduce duplication
oí research and de·elopment, strengthen the incenti·e íor the initial research and
de·elopment, spur incremental inno·ation, íacilitate diííusion and generate product market
competition. lowe·er, licensing agreements may also be used íor anti-competiti·e purposes,
such as where two competitors use a licensing agreement to share-out markets between
themsel·es or where an important licence holder excludes competing technologies írom the
market.
According to Parr & Sulli·an ,1996,, a 1echnology Licensing Agreement grants a licensee the
right to utilize speciíic technologies, patents, soítware, know-how or product designs. In a
typical technology license agreement, a running royalty íee based on licensed product sales
re·enue is paid to the licensor on a periodic basis. Beneíits oí technology licensing include:
· Shorten product de·elopment time
· Gain entry into otherwise protected industries
· Lnhance quality oí products and processes
· Build competiti·e ad·antage
· Increase sales re·enue
· Lxpand existing business capabilities
1echnology that can be licensed out may range írom public to nonpublic technical or other
iníormation, trade secrets, know-how, processes, íormulations, concepts, ideas, preclinical,
clinical, pharmacological or other data and testing results, experimental methods or results,
descriptions, business or scientiíic plans, depictions, customer lists, any other written, printed
or electronically stored materials, any and all other intellectual property, including patents,
patent applications, to trademarks and trademark applications oí any nature whatsoe·er.
1echnology licensing signiíies willingness to transíer and license to a licensee, and licensee
willingness to acquire and license írom licensor, certain technology and intellectual property
and rights to the technology íor the purpose oí allowing licensee to de·elop and market
products using such technology and intellectual property and rights to the technology.
A technology license may pro·ide that the licensee may de·elop certain in·entions,
impro·ements, processes or know-how, or that it may obtain technology or patents or other
proprietary rights useíul in the business oí the licensor, and, in each such case, licensor is
willing to grant to licensee a license or sublicense to use such de·elopments, technology or
rights ,lox, 2008,.
In consideration oí mutual agreements set íorth in a License Agreement and íor other good
and ·aluable consideration, the receipt and suííiciency oí which are acknowledged in the
1echnology License, the Licensor ad Licensee may set íorth the terms and conditions oí such
an agreement.
1he transíer oí technology is generally subject to the terms and conditions speciíied in the
agreement, whereby the Licensor transíers and assigns to the Licensee all oí the licensor's
right, title and interest to the licensor's technology and the assets and equipment to be set íorth
in a separate letter agreement between the parties ,oíten call the "Letter Agreement", ,Guth,
200¯,.
a. Licenses and Right of Iirst Refusal
Cravt of íicev.e to íicev.ee: Subject to the terms and conditions oí the License Agreement,
Licensor may grant to Licensee perpetual, royalty-íree and exclusi·e right and license,
including the right to grant sublicenses, to impro·ements íor use in the Licensee lield ,lox,
2008,.
1bira·Part, íicev.e.: 1o the extent that any Licensor technology or impro·ements assigned or
licensed to Licensee under the License Agreement consist oí rights oí Licensor under an
agreement or license with or írom a third party, any assignment or license granted to Licensee
under the License Agreement can be limited to the rights which Licensor has a right to grant
under such agreement or license and otherwise subject to any obligations assumed by
Licensor in consideration oí the grant or assignment oí such right or license to Licensor
which is to be assigned or sublicensed to Licensee.
Cravt of íicev.e. to íicev.or: Subject to the terms and conditions oí the License Agreement,
Licensee may grant to Licensor ,i, a perpetual, royalty-íree and exclusi·e ,against Licensee and
all other Persons, right and license, including the right to grant sublicenses, to the Licensor
69 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
1echnology íor the de·elopment, manuíacture, use or sale oí any products within the
Licensor lield and ,ii, a perpetual, royalty-íree and nonexclusi·e right and license, including
the right to grant sublicenses, to the Licensor 1echnology íor the de·elopment, manuíacture,
use or sale oí any products outside the Licensee lield and the Licensor lield.
Rigbt of íir.t Refv.at: Under this pro·ision, ií Licensor proposes to sell, or license a third party
to sell, any product íor use within the Licensee lield ,a "Product",, Licensor may be required
to íirst pro·ide Licensee with written notice oí such proposal, including all material terms and
conditions thereoí ,the "Product Notice",. lor a speciíic number oí days ,e.g. 30 days,
íollowing receipt oí the Product Notice, Licensee shall ha·e the option to purchase or license
írom Licensor the Product upon the terms and conditions set íorth in the Product Notice. In
the e·ent Licensee elects to purchase or license the Product írom Licensor, Licensee shall gi·e
written notice oí its election to Licensor within the speciíic number oí days and the parties
shall negotiate a mutually agreeable agreement íor the purchase or license oí the Product. Ií
Licensee does not elect to purchase or license the Product, Licensor may, within a speciíied
period íollowing the expiration oí the option right granted to Licensee, transíer or license the
Product to the proposed transíeree or any other transíeree, pro·ided that the transíer shall not
be on terms and conditions more ía·orable to the purchaser than those contained in the
Product Notice.
1ervivatiov of a 1ecbvotog, íicev.ivg .greevevt: 1he pro·isions oí speciíic sections oí the
Agreement may terminate upon the earlier oí ,a, a speciíied period ,e.g. íour years, aíter the
date oí the Agreement or ,b, the acquisition oí all or substantially all oí the business or assets,
by merger, sale oí assets or otherwise, oí either Licensee or Licensor, pro·ided, that any
licenses or sublicenses granted under speciíic sections oí the License Agreement shall sur·i·e
such termination to the extent that they relate to impro·ements existing on such date oí
termination.
b. Registration Rights
According to Meeker ,2004,, it can be pro·ided that Licensee not be required to eííect more
than two registrations in accordance with speciíic sections oí the Agreement. Ií at the time oí
any request to register shares oí Licensee Common Stock pursuant to that section oí the
Agreement, Licensee is engaged in any other acti·ity which, in the good íaith determination oí
Licensee's Board oí Directors, would be ad·ersely aííected by the requested registration to the
material detriment oí Licensee, then Licensee may at its option direct that such request be
delayed íor a period not in excess oí a speciíied period ,e.g. six months, írom the date oí
commencement oí such other material acti·ity, such right to delay a request to be exercised by
Licensee not more than once in any speciíied period oí time ,e.g. two-years,. It can be
pro·ided that Licensor to pay all Registration Lxpenses.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 70
c. Technology, Patent Rights and Disclosure
1ecbvotog, 1rav.fer: It can be pro·ided in the License Agreement that Licensor to pro·ide to
Licensee, or a sub-licensee designated by Licensee, reasonable technical assistance and
instruction, at Licensee's or such permitted sub-licensee's sole option and expense, in
understanding, interpreting and applying Licensor 1echnology and impro·ements íor the
purpose oí commercially de·eloping products within the Licensee lield. It can be pro·ided
íurther that Licensor to make its employees reasonably a·ailable íor consultation by
telephone, or in person at the oííices oí Licensor, in connection with such assistance and
instruction, all at the sole expense oí Licensee or such sub-licensee ,Megantz, 1996,.
Patevt Rigbt.: It can be pro·ided in the License Agreement that Licensor to ha·e the exclusi·e
right, at its expense, to prepare, prosecute and maintain patent applications, and to maintain
and eníorce patents issued thereon with respect to impro·ements disco·ered, de·eloped or
otherwise acquired by Licensor.
Cooperatiov: It can be pro·ided that each party to agree to cause each oí its employees and
agents to take all actions and to execute, acknowledge and deli·er all instruments or
agreements reasonably requested by the other party, and necessary íor the períection,
maintenance, eníorcement or deíense oí that party's rights as set íorth in the 1echnology
Licensing Agreement.
Covfiaevtiat ívforvatiov: It can be pro·ided that any party recei·ing Coníidential Iníormation
shall maintain the coníidential and proprietary status oí such Coníidential Iníormation, keep
such Coníidential Iníormation and each part thereoí within its possession or under its control
suííicient to pre·ent any acti·ity with respect to the Coníidential Iníormation that is not
speciíically authorized by the Agreement, use commercially reasonable eííorts to pre·ent the
disclosure oí any Coníidential Iníormation to any other Person, and use commercially
reasonable eííorts to ensure that such Coníidential Iníormation is used only íor those
purposes speciíically authorized in the 1echnology Licensing Agreement, pro·ided, howe·er,
that such restriction shall not apply to any Coníidential Iníormation which is ,a,
independently de·eloped by the recei·ing party, ,b, in the public domain at the time oí its
receipt or thereaíter becomes part oí the public domain through no íault oí the recei·ing
party, ,c, recei·ed without an obligation oí coníidentiality írom a third party ha·ing the right
to disclose such iníormation, ,d, released írom the restrictions oí this section oí the
Agreement by the express written consent oí the disclosing party, ,e, disclosed to any
permitted assignee, permitted sub-licensee or permitted subcontractor oí either Licensor or
Licensee under the Agreement ,ií such assignee, sub-licensee or subcontractor is subject to
the pro·isions oí the particular section oí the Agreement or comparable pro·isions oí such
other documents,, or ,í, required by law, statute, rule or court order to be disclosed ,the
71 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
disclosing party shall, howe·er, use commercially reasonable eííorts to obtain coníidential
treatment oí any such disclosure,. 1he Agreement can pro·ide that the obligations set íorth
in this particular section oí the Agreement to sur·i·e íor a speciíic period oí time ,such as íi·e
,5, years, írom the termination or expiration oí the Agreement. \ithout limiting the
generality oí the pro·isions, the Agreement can pro·ide that Licensor and Licensee each use
commercially reasonable eííorts to obtain coníidentiality agreements írom its respecti·e
employees and agents, similar in scope to this section oí the Agreement, to protect the
Coníidential Iníormation. Licensor may agree to treat the Licensor 1echnology as
Coníidential Iníormation oí Licensee. Notwithstanding anything to the contrary in the
Agreement, it can be pro·ided that Licensor and Licensee may undertake to each be deemed
to ha·e satisíied its obligations under this section oí the Agreement ií it protects the
Coníidential Iníormation oí the other party with the same degree oí care that it uses to
protect its own similar Coníidential Iníormation ,Megantz, 2002,.
Pervittea Di.cto.vre.: Notwithstanding the pro·isions oí section oí the Agreement, it can be
pro·ided that Licensor and Licensee may, to the extent necessary, disclose and use
Coníidential Iníormation, consistent with the rights oí Licensor and Licensee otherwise
granted under the Agreement ,a, íor the purpose oí engaging in research and de·elopment,
conducting clinical testing and marketing programs, or securing institutional or go·ernment
appro·al to clinically test or market any product, ,b, íor the purpose oí sharing clinical trial
results and data with third parties conducting clinical trials on, or ,c, íor the purpose oí
securing patent protection íor an in·ention within the scope oí the Impro·ements.
d. Disclaimer of Warranty, Consequential Damages
Disclaimer oí \arranty: According to Poltorak & Lerner ,2003,, it can be pro·ided that
nothing in the Agreement to be construed as a representation made or warranty gi·en by
either party to the Agreement that any patents will issue based on pending applications within
the Licensor 1echnology, or that any such patents which do issue will be ·alid, or that the
practice by the other party to the Agreement oí any license granted there under, or that the use
oí any Licensor 1echnology and Impro·ements transíerred or licensed under the Agreement,
to not iníringe the patent or proprietary rights oí any other person. In addition, Licensor and
Licensee may acknowledge that 1lL 1LClNOLOG\ IS LICLNSLD AND
1RANSlLRRLD, AS 1lL CASL MA\ BL, 1O LICLNSLL AND LICLNSOR,
RLSPLC1IVLL\, AS IS, AND LICLNSOR AND LICLNSLL LXPRLSSL\ DISCLAIM
AND 1lLRLB\ \AIVL, RLLLASL AND RLNOUNCL AN\ \ARRAN1\,
LXPRLSS OR IMPLILD, \I1l RLSPLC1 1O SUCl 1LClNOLOG\, INCLUDING,
\I1lOU1 LIMI1A1ION, AN\ \ARRAN1\ Ol MLRClAN1ABILI1\ OR
lI1NLSS lOR A PAR1ICULAR PURPOSL.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 72
Cov.eqvevtiat Davage.: It can be pro·ided that LXCLP1 AS O1lLR\ISL SL1 lOR1l IN
1lL AGRLLMLN1, NLI1lLR PAR1\ 1O 1lL AGRLLMLN1 1O BL LN1I1LLD
1O RLCOVLR lROM 1lL O1lLR AN\ SPLCIAL, INCIDLN1AL,
CONSLQULN1IAL OR PUNI1IVL DAMAGLS.
^o ívptiea !airer.; Rigbt. Cvvvtatire: 1here may be pro·isions that no íailure on the part oí
Licensor or Licensee to exercise no delay in exercising any right, power, remedy or pri·ilege
under the Agreement, or pro·ided by statute or at law or in equity or otherwise, to impair,
prejudice or constitute a wai·er oí any such right, power, remedy or pri·ilege or be construed
as a wai·er oí any breach oí the Agreement or as an acquiescence therein, nor to any single or
partial exercise oí any such right, power, remedy or pri·ilege preclude any other or íurther
exercise thereoí or the exercise oí any other right, power, remedy or pri·ilege.
íorce Ma;evre: 1he Agreement may pro·ide that Licensor and Licensee to each be excused íor
any íailure or delay in períorming any oí its respecti·e obligations under the Agreement,
other than the obligations oí Licensee to make certain payments to Licensor pursuant to a
speciíic section oí the Agreement, ií such íailure or delay is caused by lorce Majeure ,1ollen,
2011,.
^otice.: 1he Agreement may pro·ide that all notices, requests and other communications to
Licensor or Licensee under the Agreement to be in writing ,including telecopy or similar
electronic transmissions,, to reíer speciíically to the Agreement and to be personally deli·ered
or sent by telecopy or other electronic íacsimile transmission or by registered mail or certiíied
mail, return receipt requested, postage prepaid, in each case to the respecti·e address speciíied
in the Agreement ,or to such other address as may be speciíied in writing to the other party to
the Agreement. Any notice or communication gi·en in coníormity with this section oí the
Agreement be deemed to be eííecti·e when recei·ed by the addressee, ií deli·ered by hand,
telecopy or other electronic íacsimile transmission, and a speciíic time period ,such as three
,3, days, aíter mailing, ií mailed.
ívrtber ...vravce.: Lach oí Licensor and Licensee may agree to duly execute and deli·er, or
cause to be duly executed and deli·ered, such íurther instruments and do and cause to be done
such íurther acts and things, including, without limitation, the íiling oí such additional
assignments, agreements, documents and instruments, that may be necessary or as the other
party to the Agreement may at any time and írom time to time reasonably request in
connection with the Agreement or to carry out more eííecti·ely the pro·isions and purposes
oí, or to better assure and coníirm to such other party its rights and remedies under the
Agreement.
7S ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
´vcce..or. ava ...igv.: 1he terms and pro·isions oí the Agreement may inure to the beneíit oí,
and be binding upon, Licensor, Licensee, and their respecti·e successors and assigns,
pro·ided, howe·er, that neither Licensor nor Licensee may assign or otherwise transíer any
oí its rights and interests, nor delegate any oí its respecti·e obligations under the Agreement,
including, without limitation, pursuant to a merger or consolidation, without the prior written
consent oí the other party to the Agreement, which consent shall not be unreasonably
withheld. 1he Agreement may pro·ide that any attempt to assign or delegate any portion oí
the Agreement in ·iolation oí this speciíic section oí the Agreement to be null and ·oid.
Subject to the íoregoing, any reíerence to Licensor and Licensee under the Agreement may be
deemed to include the successors thereto and assigns thereoí.
.vevavevt.: 1he Agreement may pro·ide that no amendment, modiíication, wai·er,
termination or discharge oí any pro·ision oí the Agreement, nor consent to any departure by
Licensor or Licensee there írom, can be eííecti·e unless the same be in writing speciíically
identiíying the Agreement and the pro·ision intended to be amended, modiíied, wai·ed,
terminated or discharged and signed by Licensor and Licensee, and each such amendment,
modiíication, wai·er, termination or discharge to be eííecti·e only in the speciíic instance and
íor the speciíic purpose íor which gi·en. 1he Agreement can pro·ide that no pro·ision
thereoí may be ·aried, contradicted or explained by any oral agreements course oí dealing or
períormance or any other matter not set íorth in an agreement in writing and signed by
Licensor and Licensee.
Corervivg íar: It should be pro·ided that the 1echnology Licensing Agreement be go·erned
by and construed in accordance with the laws oí the country oí its jurisdiction.
´ererabitit,: 1he 1echnology License Agreement may pro·ide that ií any pro·ision therein
should be held in·alid, illegal or uneníorceable in any respect in any jurisdiction, then, to the
íullest extent permitted by law, ,a, all other pro·isions thereoí should remain in íull íorce and
eííect in such jurisdiction and to be liberally construed in order to carry out the intentions oí
the parties thereto as nearly as may be possible and ,b, such in·alidity, illegality or
uneníorceability not to aííect the ·alidity, legality or eníorceability oí such pro·ision in any
other jurisdiction. 1o the extent permitted by applicable law, Licensor and Licensee may
thereby wai·e any pro·ision oí law that would render any pro·ision thereoí prohibited or
uneníorceable in any respect.
íeaaivg.: 1here need to be pro·ision in the Agreement to the eííect that headings used therein
are íor con·enience only and not to in any way aííect the construction oí, or be taken into
consideration in interpreting the Agreement.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 74
í·ecvtiov iv Covvterpart.: 1he Agreement may pro·ide that it may be executed in counterparts,
each oí which counterparts, when so executed and deli·ered, to be deemed to be an original,
and all oí which counterparts, taken together, to constitute one and the same instrument.
ívtire .greevevt: It may be pro·ided that the Agreement together with any agreements
reíerenced therein, constitutes, on and as oí the date thereoí, the entire agreement oí
Licensor and Licensee with respect to the subject matter thereoí, and all prior or
contemporaneous understandings or agreements, whether written or oral, between Licensor
and Licensee with respect to such subject matter be thereby superseded in their entirety ,Stark,
200¯,.
75 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
8. Intellectual Property ,IP, Law
Intellectual Property is about the capacity oí human beings to ha·e Intellect and will power -
the ability to choose íreely. Intellectual Property ,IP, is a term reíerring to a number oí distinct
types oí creations oí the mind íor which a set oí exclusi·e rights are recognized under the
corresponding íields oí law. Intellectual property legislation coníers exclusi·e rights on
holders oí patents, rights, registered trademarks and other rights protected by the law. A
holder oí intellectual property rights is authorized to pre·ent any unauthorized use oí its
intellectual property and to exploit such property, particular by licensing it to third parties.
1here are se·eral reasons why Intellectual Property Rights should be protected:
· Protect in·estments in time, money or other resources used to create new contributions to
technology, commerce and entertainment
· Go·ernments encourage creators to disclose their creations to the public in order to
promote the progress oí science and useíul arts which are the engines oí de·elopment -
in·estors demand this guarantee
· loster economic growth
· Pro·ide incenti·es íor technological inno·ations, and
· Attract in·estments that will create new jobs and career opportunities
· Intellectual property also contributes to the creation oí a competiti·e and transparent
market in an economic system where consumers are protected and businesses are able to
enter the market íreely and to compete íairly
· Intellectual property is also used to de·elop new businesses ,e.g. M-Pesa, a system oí
transacting money using mobile phones which has contributed massi·ely to job creation in
the Kenya
According to Pressman & Llias ,1999,, Intellectual Property ,IP, is a term reíerring to a
number oí distinct types oí creations oí the mind íor which a set oí exclusi·e rights are
recognized under the corresponding íields oí law. It is the area oí law that deals with and
o·ersees the creation oí intellectual property patents, copyrights, trademarks and trade secret
laws, the protection oí intellectual property rights, and the legal pursuit oí those who iníringe
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 76
on another's rights to his,her intellectual property. It o·erlaps with se·eral other areas oí law,
such as patent law, copyright law, contract law, tort law, trademark law and litigation. Under
intellectual property law, owners are granted certain exclusi·e rights to a ·ariety oí intangible
assets, such as musical, literary, and artistic works, disco·eries and in·entions, and words,
phrases, symbols, and designs. Common types oí intellectual property rights include
copyrights, trademarks, patents, industrial design rights and trade secrets in some
jurisdictions. A patent, íor example, represents a legal |right| obtained by an in·entor
pro·iding íor exclusi·e control o·er the production and sale oí his mechanical or scientiíic
in·ention.
a. Support perspectives of IP
listorically, intellectual property rights were granted only when they were necessary to
encourage in·ention, and they were limited in time and scope. Until recently, the purpose oí
intellectual property law was to gi·e as little protection to the inno·ator as possible in order to
encourage inno·ation. 1his meant that the inno·ator had only a limited time within which to
enjoy the inno·ation beíore mo·ing on to a new inno·ation. Currently, the objecti·e oí
intellectual property legislators and those who support its implementation is "absolute
protection". 1he proponents reason that ií some intellectual property is desirable because it
encourages inno·ation, more is better. 1he rationale is that creators will not ha·e suííicient
incenti·e to in·ent unless they are legally entitled to capture the íull social ·alue oí their
in·entions ,Razgaitis, 2009,.
Lconomic growth
1he \orld Intellectual Property Organization ,\IPO, treaty and se·eral related international
agreements are premised on the notion that the protection oí intellectual property rights is
essential to maintaining economic growth. It gi·es two primary reasons íor intellectual
property laws:
a. 1o gi·e statutory expression to the moral and economic rights oí creators in their
creations and the rights oí the public in access to those creations.
b. 1o promote, as a deliberate act oí go·ernment policy, creati·ity and the dissemination and
application oí its results and to encourage íair trading which would contribute to
economic and social de·elopment.
Lconomists argue that intellectual property-intensi·e industries are estimated to generate ¯2
percent more ·alue added ,deíined as price minus material cost, per employee than non-
intellectual property-intensi·e industries. lor example, they estimate that two-thirds oí the
·alue oí large businesses in the USA can be attributed to intangible assets. Other eííorts ha·e
drawn similar conclusions. lor example, a joint research project oí the \IPO and the United
77 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
Nations Uni·ersity measuring the impact oí IP systems on six Asian countries reported a
positi·e association between strengthening oí the IP system and subsequent economic
growth.
Morality
Although the relationship between intellectual property and human rights is a complex one,
moral arguments ha·e been made íor intellectual property. lor example, among supporters
oí IP rights was writer Ayn Rand, who argued that the protection oí intellectual property is
essentially a moral issue, that the human mind itselí is the source oí wealth and sur·i·al and
that all property at its base is intellectual property. 1o ·iolate intellectual property, he argued, is
no diííerent morally írom ·iolating other property, such as real property, rights which
compromises the ·ery processes oí sur·i·al - and thereíore constitutes an immoral act
,Meeker, 2004,.
According to Article 2¯ oí the Uni·ersal Declaration oí luman Rights, e·eryone has the
right to protection oí the moral and material interests resulting írom any scientiíic, literary or
artistic production oí which he is the author". Moreo·er, moral justiíications íor pri·ate
property ha·e been used to argue in ía·or oí the morality oí intellectual property, such as the
íollowing arguments:
1. ^atvrat ]v.tice: this argument is based on the premise that a person has a natural right o·er
the labor and products oí his,her body, which includes the hands and the mind.
Appropriating these labor and products by others is ·iewed as unjust. Under this premise, it
is possible to apply his argument to intellectual property rights, in which it would be unjust íor
people to misuse another's ideas, products oí the mind.
2. |tititariav·Pragvatic: according to this premise, a society that protects pri·ate property is
more eííecti·e and prosperous than one that does not. lor example, the de·elopment oí the
patent system in the USA has been credited íor inno·ation and in·ention in 19th century
America. 1he argument is that by pro·iding inno·ators with "durable and tangible return on
their in·estment oí time, labor, and other resources", intellectual property rights seek to
maximize social utility. 1he presumption is that intellectual property rights promote public
welíare by encouraging the "creation, production, and distribution oí intellectual works".
3. ¨Per.ovatit,: this argument is premised on the notion that ideas are an extension oí
oneselí and oí one's personality`, and is based on a quote írom legel that says: L·ery man
has the right to turn his will upon a thing or make the thing an object oí his will, that is to say, to
set aside the mere thing and recreate it as his own`.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 78
Iinancial incentive
1he exclusi·e rights that come with intellectual property protection are supposed to allow
owners oí intellectual property to beneíit írom them, pro·iding a íinancial incenti·e íor the
creation oí an in·estment in intellectual property.
b. Opposing perspectives of IP
Richard Stallman ,íounder oí the lree Soítware loundation,, argues that, although the term
ivtettectvat propert, is in wide use, it should be rejected altogether because it "systematically
distorts and coníuses these issues, and its use was and is promoted by those who gain írom
this coníusion." le claims that the term "operates as a catch-all to lump together disparate
laws |which| originated separately, e·ol·ed diííerently, co·er diííerent acti·ities, ha·e diííerent
rules, and raise diííerent public policy issues" and that it creates a "bias" by coníusing these
monopolies with ownership oí limited physical things, likening them to "property rights". le
ad·ocates reíerring to copyrights, patents and trademarks in the singular and warns against
abstracting disparate laws into a collecti·e term. In addition, many íree soítware acti·ists ha·e
criticized the implied analogy oí intellectual property with physical property ,like land or an
automobile,, arguing that such an analogy is selí-deíeating because the two are íundamentally
diííerent. \hile physical property is generally ri·alrous, intellectual works are not, meaning
that ií one makes a copy oí a work, the enjoyment oí the copy does not pre·ent enjoyment oí
the original.
Limitations
Some critics oí intellectual property, such as those in the íree culture mo·ement, point at
intellectual monopolies as harming health, pre·enting progress, and beneíiting concentrated
interests to the detriment oí the masses, and argue that the public interest is harmed by e·er
expansi·e monopolies in the íorm oí copyright extensions, soítware patents and business
method patents. 1he Committee on Lconomic, Social and Cultural Rights ,CLSCR,
recognizes that "conílicts may exist between the respect íor and implementation oí current
intellectual property systems and other human rights". It argues that intellectual property
tends to be go·erned by economic goals when it should be ·iewed primarily as a social
product. 1hat, in order to ser·e human well-being, intellectual property systems must respect
and coníorm to human rights laws. According to the Committee, when systems íail to respect
and coníorm to human rights laws, they risk iníringing upon the human right to íood and
health, and to cultural participation and scientiíic beneíits. Some libertarian critics oí
intellectual property ha·e argued that allowing property rights in ideas and iníormation
creates artiíicial scarcity, thereby iníringing on the right to own tangible property ,Pressman &
Llias, 1999,.
Other criticism oí intellectual property law concerns the tendency oí the protections oí
79 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
intellectual property to expand, both in duration and in scope. 1he trend has been toward
longer copyright protection, raising íears that it may someday be eternal. Moreo·er,
de·elopers and controllers ha·e sought to bring more items under the same intellectual
property protection. 1he dilemma goes on: patents ha·e been granted íor li·ing organisms,
certain li·ing organisms ha·e been patentable íor o·er a century, and colors ha·e been
trademarked. Because they are systems oí go·ernment-granted monopolies copyrights,
patents, and trademarks ha·e been called intellectual monopoly pri·ileges, ,IMP,. Among
non-supporters oí intellectual property rights was 1homas Jeííerson, who wrote in a letter to
Isaac McPherson in 1813: "Ií nature has made any one thing less susceptible than all others oí
exclusi·e property, it is the action oí the thinking power called an idea, which an indi·idual
may exclusi·ely possess as long as he keeps it to himselí, but the moment it is di·ulged, it
íorces itselí into the possession oí e·ery one, and the recei·er cannot dispossess himselí oí it.
Its peculiar character, too, is that no one possesses the less, because e·ery other possesses the
whole oí it. le who recei·es an idea írom me, recei·es instruction himselí without lessening
mine, as he who lights his taper at mine, recei·es light without darkening me."
Another limitation oí most current Intellectual Property legislation is its íocus on indi·idual
and joint works. lor example, copyright protection can only be obtained in 'original' works oí
authorship, which deíinition excludes any works that are the result oí community creati·ity.
Good examples are nati·e songs and stories: most current legislations, including the USA, do
not recognize the uniqueness oí indigenous cultural 'property' and its e·er-changing nature.
Asking nati·e cultures to 'write down' their cultural artiíacts on tangible mediums ignores
their necessary morality and eníorces a \estern bias oí the written íorm as more
authoritati·e.
Lthics
1he ethical problems brought up by intellectual property rights issues are most pertinent
when it is socially ·aluable goods like liíe-sa·ing medicines and genetically modiíied seeds that
are gi·en intellectual property protection. lor example, pharmaceutical companies that
produce the medicines apply íor and obtain intellectual property rights in order to pre·ent
other companies írom manuíacturing the same product without the additional cost oí
research and de·elopment. Application oí intellectual property rights so obtained allows the
pharmaceutical company to charge higher prices than the marginal cost oí production in
order to recoup the costs oí research and de·elopment. 1his strategy immediately excludes,
írom the market, anyone who cannot aííord the now relati·ely high cost oí the product, e·en
ií it might be a liíesa·ing drug ,Seglin, 2006,.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 80
a. Intellectual Property Management
Intellectual property management employs a ·ariety oí tools to achie·e diííerent end
objecti·es oí the ·arious aspects oí intellectual property management. 1hese tools includes:
institutional IP policies, IP audits and use oí ·arious agreements. It can also reíer to strategies
geared towards management oí intellectual creations ,intellectual assets, oí determined
economic ·alue de·eloped within an institution or organization. Lssentially management oí
IP in·ol·es identiíications and making in·entory oí the types oí intellectual property,
determination oí ownership, securing the rights and transíerring the rights ,licensing or
assignments, through ·arious agreements ,Poltorak & Lerner, 2003,.
b. Why Protect Intellectual Property
· Protect in·estment in time, money or other resources used to create new contribution to
technology, commerce and entertainment.
· Go·ernments encourage Creators to disclose their creations to the public in order to
promote the progress oí science and useíul arts which are the engines oí de·elopment-
in·estors demand this guarantee
· losters economic growth
· Pro·ides incenti·es íor technological inno·ation, and
· Attracts in·estment that will create new jobs and opportunities.
c. Role of IP in Technology Transfer
An Intellectual Property right grants an owner a monopoly o·er time. A pri·ate in·estor or
partner can get interested in an inno·ation due to the higher guarantee oí success associated
with this monopoly. As a result, Intellectual Property is a crucial bargaining chip íor
commercialisation oí inno·ation and an important entry point in joint ·enture or partnership
agreements ,Megantz, 1996,.
d. Intellectual Property in Kenya
íi.toricat ßac/grovva
In 1989 the Industrial Property Act Cap 509 was enacted by the Kenya Parliament. An
in·ention by KLMRI dubbed KLMRON` acted as the catalyst íor the enactment oí the Act
when it was realised that the in·ention could not be patented in Kenya. 1he Kenya Industrial
Property Institute ,KIPI, was transíormed írom Kenya Industrial Property Oííice ,KIPO,
upon enactment oí the Industrial Property Act 2001, with the responsibilities íor examining
applications íor and grants industrial property rights íor:
· Patents íor in·entions
· Utility models íor inno·ations
· Industrial Designs íor aesthetic íeatures oí products
· 1rade and ser·ice marks íor goods and ser·ices
81 ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t.
It core íunctions became to:
· pro·ide industrial property iníormation to the public
· promote in·enti·eness and inno·ati·eness in Kenya
· organize and conduct training in IP
KIPI is charged with the mandate to administer Industrial Property Rights ,IPRs,, pro·ision
oí technological iníormation and training in IPRs and the promotion oí in·enti·eness and
inno·ati·eness. In executing this mandate, KIPI íosters protection oí inno·ation and
intellectual property to catalyze technological de·elopment ,1he Industrial Property
Regulations, 2002,.
Between 1914 and 1989 the Patents Registration Act Cap 508 was the law go·erning patent
protection in Kenya. 1he law required an in·entor to apply and obtain protection in the
United Kingdom ,UK, beíore ha·ing the same registered in Kenya. Under that law:
1. Industrial Property Rights were administered by the Kenya industrial property institute
,KIPI, under IPA 2001 & 1M oí 195¯ & Amended in 2002.
2. Copyright & Neighbouring Rights was administered by Oííice oí Registrar General under
the Copyright Act. 2001
3. Plant Breeder's Rights was administered by KLPlIS under an Act oí 199¯ ,1he
Industrial Property Act, 2001,.
ívtreprevevr.bip ´/itt. 1raivivg Mavvat for ´cievti.t. 82
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