Chapter 4

Question 1

Viability study

Answer 1

-Entails estimating the interest in the business and its product or service, the expected sales in units and at a certain price, the expected costs associated cost with generating the sale, the strengths and weaknesses of the business

-Before a viability study can commence, market research must be done

Question 2

Once market research has been done, assumptions, on the following, can be made:

Answer 2

-The estimated number of units to be sold

-The acceptable price the market is prepared to pay

-Cash flow requirements for a business

Question 3

Market Research

Answer 3

Entails gathering, analysing and interpreting information on a certain market, on a product or service to be offered for sale in that market, and on the past, present and potential customers for the product or service

Question 4

Typical questions to which entrepreneurs should find answers

Answer 4

-Is there a need for my product or service? (Needs analysis)
What type of person (customer) will buy my product or service? (Customer profile/characteristics)

-What can realistically be expected to be sold of this product or service based on the estimated market size? (Market share)

-How much are customers willing to pay for the product or service? (Price analysis)

Question 5

The needs analysis and the characteristics of customers

Answer 5

-Find out who your potential customers are and what their needs are and how they make buying decisionsKey to success is making sure your product is exactly what the customer wants

-There is a distinction between the physical products the customers buy and the image the customers have of the products

-Focus must be on customer profiles which is a description of the potential customers

Question 6

Four questions to establish if there is a need for your product:

Answer 6

-List the features of the product or service-: helps to focus on each aspect of the product or service

-Determine who the major competitors and industry leaders are as well as suppliers and other major role players in this market-: This section forces you to examine the industry as a whole in order to determine its place in the market

-Identify the possible customers and segment of the market-: each market must be examined carefully in terms of overall size/ demand and potential profitability

-Draw up a final list: includes all of the above

Question 7

Types of business structures:

Answer 7

Sole trader/ sole proprietor
Partnership
Close corporation
Company

Question 8

Legal considerations

Answer 8

-New Companies Act:
Companies
Funding statement
Transparency

-Consumer Protection Act

Question 9

A practical check list when starting a business:

Answer 9

D-I-C-E D-A-A-R

-Decided on the type of business you wish to form: Public/private company

-If you have an unique product, register a patent with CIPC

-Choose the name and consider alternatives

-Ensure all enterprise’s intellectual property is copyrighted

-Draw up a business plan

-Await your enterprise registration number from the CIPC

-Apply for your VAT/income tax/PAYE/SDL and UIF number

-Register your logo as a trademark with CIPC