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Unit Title: Enterprise Start-up

Guided Learning Hours: 100


Unit Reference Number: R/504/4409
Level: Level 4
Number of Credits: 12
Unit purpose and aim(s):
This unit aims to give learners a sound understanding of:
creativity and how to turn creative ideas in to business opportunities
key issues when starting a business
self-assessment of personal skills and self-development
staffing and management considerations
the importance of a business plan when starting a business

Learning Outcome 1
The learner will: Understand that creativity is a central component of true entrepreneurial
activity; what makes an individual creative; the barriers to creativity and the
creative process.

Assessment Criteria
The learner can:

Indicative Content

1.1 Explain the importance


of creativity to the
entrepreneur.

1.1.1. Understand that creativity is important in coming up with


new ways of doing things.
The need for entrepreneurs to focus on creating
commercial opportunities leading to new
products/services.
Be aware that out of every 11 ideas only one will be
successful (Page,1993).
The more ideas generated, the more chance of
success.

1.2 Explain how creativity


can be stimulated.

1.2.1 Understand how the two sides of the brain operate in


different ways.
Understand that the left side of the brain tends to be
rational/logical or vertical thinking and the right side
tends to be more creative and lateral thinking.
Understand that both sides of the brain are used but
there is a need to encourage the development of the
right side to encourage creativity.
Creativity can be encouraged with training.

1.3 Explain the barriers to


creativity.

1.3.1 Understand and explain the main barriers to creativity.


Explain that being creative often takes individuals out
of their comfort zone.
Be aware that many people find change threatening.
Von Oech (1998) identifies 10 blocks to individual
creativity.
Realising that these blocks exist can be the first step
in dismantling the barriers.

1.4 Explain the creative


process.

1.4.1 Explain the four stage creative process:


Stage 1 Generating knowledge and awareness the
importance of travel, reading, and an open mind in the
creative process.
Stage 2 The incubation process mull over all the
information, sleep on the problem.
Stage 3 Generating ideas. Ideas often happen
unexpectedly even while asleep. Techniques for
generating ideas include brainstorming, analogy,
attribute analysis, gap analysis.
Stage 4 Evaluation and implementation selecting
the ideas that are most promising. May involve
discussion, analysis and possibly voting. Many ideas
will be rejected while others may need to be worked
up.

Learning Outcome 2
The learner will: Understand how to turn creative ideas into a business opportunity.

Assessment Criteria
The learner can:

Indicative Content

2.1 Explain how to


recognise a business
opportunity.

2.1.1 Explain that creativity alone is not necessarily


entrepreneurial. It is only entrepreneurial if it is applied to the
process of innovation which leads to the development of new
products or services that have a value in the market.
Innovation is the specific tool of entrepreneurs (Drucker)
2.1.2 Identify and explain the Seven Sources of Opportunity
(Drucker, (2006)) which help turn an opportunity search into a
business opportunity.
Internal - the unexpected, incongruity, and inadequacy
in underlying processes, changes in industry or market
structure.
External - demographic changes, changes in
perception, mood and meaning and new knowledge.

2.2 Identify and explain the


sources of business ideas.

2.2.1 Identify and explain the many sources of business ideas,


including:
Existing businesses around the world - what they are
offering or not offering.
Existing franchises not offered in certain countries.
Innovations your own or from other people.
Your patents & licenses or those belonging to others
that have not been fully developed.
Ideas generated by research institutions and
universities.
Identified gaps in the market.
Ideas from business networks, contacts and friends.

2.3 Explain that spotting

2.3.1 Explain that even after start-up entrepreneurs must

opportunities is a
continuous process.

continue to work at spotting opportunities. Identify and explain


Druckers Five Stage approach to purposeful, systematic
innovation:
Start with the analysis of opportunities inside the firm
and its industry and the external environment.
Innovation is both conceptual and perceptional.
An innovation must be simple and has to be focused.
To be effective start small.
Aim at leadership and dominate the competition in a
particular area of innovation as soon as possible.

Learning Outcome 3
The learner will: Understand the key issues that need to be addressed when starting a
business.

Assessment Criteria
The learner can:

Indicative Content

3.1 Explain why so many


small businesses fail in the
first three years of trading.

3.1.1 Understand that more than a good idea is needed to


start a successful small business. Many fail because they do
not have the right skills and attributes.
3.1.2 Identify and explain the actions that could be taken to
improve the chances of survival for small firms in their early
years.

3.2 Explain the need to


have the right personal
skills, characteristic traits
and qualities to run a small
business.

3.2.1 Identify and explain the skills and traits required to start
a small business. These are covered in the Understanding
Entrepreneurship Unit (LO2) and will not be duplicated here.
However, learners should acquaint themselves with the detail
from that unit.

3.3 Identify and explain the


personal qualities required
when starting a business.

3.3.1 Identify and explain the personal qualities that are


required when starting a new business. These include:
Stamina: long hours, few holidays and hard work.
Commitment and dedication: the need to make
personal sacrifices and be highly motivated.
Opportunity perception: the need to spot opportunities
and continue doing it.
Tolerance of risk, ambiguity and uncertainty: Living
with uncertainty and taking risks is a key character
trait of entrepreneurs.

3.4 Explain the importance


of knowing your
customers.

3.4.1 Explain that many people place too much focus on the
product or service and that market demand is key to
commercial viability. Explain the key issues that need to be
determined about customers. These include:
Who is going to buy the product or service?
Why will they buy it?
Is the customer reachable?

How big is the market?


Is the market growing or declining?
Is the market concentrated or fragmented?
Explain the importance of market research in answering these
questions.

3.5 Explain the importance


of knowing your
competitors.

3.5.1 Explain the importance of understanding the nature of


the competition and how appropriate information may be
obtained. In particular:
The importance of market research and how this is
undertaken.
Porters Five Forces model to understand the power
of buyers, the power of suppliers, the threat of new
entrants, the threat of substitutes and the competitive
rivalry within the industry.

3.6 Explain the importance


of marketing and how to
communicate to customers
that you have a product or
service that meets their
needs.

3.6.1 Explain the importance of marketing and how


sustainable competitive advantage can be achieved through
marketing activity.

3.7 Identify and explain the


resources that are needed
when starting a business.

3.7.1 Explain that the resources required will be determined by


the size of the business which is difficult to predict at time of
start-up. Resources required will increase as the business
grows and steps must be taken well in advance to ensure that
these are available. The key resources required at start up
may include:
Money (usually from savings, the bank or family)
Property
Suppliers
Customers
Employees
Networks and contacts

3.6.2 Explain Porters Generic Strategy model, how the model


can relate to small businesses, and define each of its
strategies:
Cost leadership (low price)
Differentiation
Focus (niche player)
Stuck in the middle

Learning Outcome 4
The learner will: Understand techniques for self-assessment of personal skills and how to
produce an action plan for self-development.

Assessment Criteria
The learner can:

Indicative Content

4.1 Explain a range of


techniques that can be

4.1.1 Identify and explain several methods of self-assessment


for prospective entrepreneurs to be able to evaluate their

used for self-assessment


of personal skills.

personal skills and areas for self-development. These include:


SWOT analysis
What makes a Good Entrepreneur exercise
Psychometric personality tests
Creativity questionnaire
GoSmallBiz Entrepreneurial Aptitude test
Learning styles questionnaire
Belbin Team Roles

4.2 Explain how to


produce an action plan for
self-development.

4.2.1 Explain the four-stage process of action-planning for selfdevelopment:


Identify each of the skills that need to be improved.
Identify specific actions (e.g. training courses or work
based activities) that will be used to develop the skills
and timescales for these to take place.
Monitor the progress of each of the development
activities.
Reflect on the success (or failure) of the process to
identify what went right or wrong, and any further
actions needed to complete the activity.

Learning Outcome 5
The learner will: Understand the processes of leading, managing, motivating and working
closely with small numbers of staff in a new or developing business.

Assessment Criteria
The learner can:

Indicative Content

5.1 Explain the process


involved in leading,
managing, motivating and
working with small
numbers of staff in small or
developing businesses.

5.1.1 Explain the ways in which management style can


improve and maintain positive relationships with staff in a
small business.
5.1.2 Explain the meaning and purpose of staff motivation as
part of the process of creating job satisfaction.
5.1.3 Outline and explain the main theories relating to
motivation:
Maslows Hierarchy of Needs
Herzbergs Dual Structure Theory
McGregors X-Y Theory

Learning Outcome 6
The learner will: Understand the importance of producing a properly structured business plan
as part of the preparation process of starting a new business.

Assessment Criteria
The learner can:

Indicative Content

6.1 Understand and


explain the purpose and
benefits of the business
planning process.

6.1.1 Understand and explain the three criteria used to define


a good business plan structure:
The need to provide potential lenders, investors and
other interested parties with sufficiently detailed
information to enable them to make a decision about
investment and support.
The business plan should follow best-practice
guidelines to ensure it contains the information
required for the entrepreneur to make a balanced
judgement about the viability and risks of the proposal
before going ahead.
The need to provide the prospective entrepreneur with
the knowledge to enable the venture to reach
profitability before the start-up capital runs out.
6.1.2 Understand and explain the benefits of developing a
business plan when planning a new venture.

6.2 Understand and


explain the content and
structure that would be
expected in a generic
business plan.

6.2.1 Understand and explain the main sections of the


business plan structure and the information expected within
each of those sections when developing a new business
proposal.

Assessment:
Assessment of this unit will be by a three hour examination.

Recommended Reading:
-

rd

Burns, P., Entrepreneurship and Small Business, 3 ed. (2011), Palgrave Macmillan,
Basingstoke (Core Text)
Butler, D., Enterprise Planning and Development, (2006), Elsevier, Oxford
ABE Study Manual, Business Start-up and Entrepreneurship, (2013)