CEBO Participants Manual

Creativity for Employment & Business Opportunity (CEBO): An Entrepreneurship Manual for Young People in CARICOM

© Copyright Caribbean Community Secretariat, 2014 ISBN: 978-976-600-293-0

Cover photo and all images and icons are © copyrights to their respective owners.

This document has been produced by the Youth Development Programme of the Caribbean Community (CARICOM) Secretariat with the support of The Government of Japan – Second Chance Two Project; The United States Agency for International Development (USAID) - Caribbean Basin Security Initiative (CBSI); and The United Nations Development Programme (UNDP) Office for Barbados and the Eastern Caribbean/ Government of Italy (GoI) Youth Innovation (Youth In) Project; The UNDP Citizen’s Security Project; The Government of Spain through the “CARICOM/ SPAIN Citizen Support Security ProjectSupport for Youth Empowerment and Resilience”.

This publication may be reproduced in whole or in part in any form for educational or non- profit services, with permission from the copyright holder, and provided acknowledgement of the source is made. The CARICOM Secretariat would appreciate receiving a copy of any publication, in any form, that uses this publication as a source.

This publication may not be used for resale or any other commercial purpose without prior permission in writing from the CARICOM Secretariat.

Disclaimer: The views expressed in this publication do not necessarily reflect the official views or opinions of the CARICOM Secretariat and its development partners.

Caribbean Community (CARICOM) Secretariat Turkeyen, Greater Georgetown, Guyana, +592 222 0001 www.caricom.org

ACKNOWLEDGEMENTS

T

he regional “Creativity for Employment and Business Opportunity” (CEBO) training manual is a tool to engage, inspire young people in and out of school and from all walks of life to run successful businesses that generate income and contribute to the goals of national and regional development. This Manual fulfills commitments in the Declaration of Paramaribo on the Future of Youth in the Caribbean Community; and responds to recommendations in the reports of the CARICOM Commission on Youth Development and the “Second Chance – Reducing Risk and Vulnerability Among Youth” Pilot Project (2010).

The manual is informed by the Barbados Youth Business Trust’s (BYBT) At-Risk Entrepreneurial Youth Business Labs Training Manual and other regional and international materials; and supported by i. A Workshop Facilitation Manual (WFM), which is a step by step guide to the organization, design, delivery and evaluation of the Training Manual; ii. PowerPoint presentations for facilitators/trainers which also provides a visual element for participants; and iii. A compendium of youth friendly ice breakers, energizers and experiential exercises.

The CEBO manual was developed in 2012 by a broad based Regional Technical Working Group (TWG) appointed by the CARICOM Secretariat. We wish to thank the following members for their sterling support:

• Ms. Marcia Brandon, Executive Director, Barbados Youth Business Trust (BYBT); • Ms. Karlene Gordon, Financial Specialist, Barbados Youth Business Trust (BYBT); • Mr. John Roach, Coordinator, Dominica Youth Business Trust (DYBT); • Mr. Eworth Williams, Pastor, Heavenly Light Full Gospel Fellowship, Guyana; • Mr. Dwayne Gutzmer, CARICOM Youth Ambassador, Jamaica; • Ms. Kerry Chen, CARICOM Youth Ambassador, Jamaica; • Mr. Orlando Hamilton, Director, Eastern Peace and Justice Centre (EPJC), Jamaica; • Ms. Nerissa Golden, Director, Information and Communication, Montserrat; • Mr. Pierre Liburd, Senior Youth Officer, Ministry of Youth Empowerment, St. Kitts and Nevis; • Mr. Ian Richards, St. Kitts and Nevis Information Service, St. Kitts and Nevis; • Mr. John R. Darville, Executive Director, Junior Achievement, Commonwealth of The Bahamas; • Mr. John R. Darville, Executive Director, Junior Achievement, Commonwealth of The Bahamas;

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• Ms. Aimee Schattner, Peace Corps Response Volunteer, Ministry of International Trade, St. Kitts and Nevis; • Dr. Heather Johnson, Deputy Programme Manager, Youth and Community Development, CARICOM Secretariat; • Ms. Patricia McPherson, Deputy Programme Manager, Education, CARICOM Secretariat; • Ms. Anthonette July, Senior Clerk, CARICOM Secretariat.

The Secretariat also wishes to express sincere appreciation to: »» Dr. Hillary Brown, Programme Manager, Culture and Community Development, CARICOM Secretariat; »» Ms. Yldiz Pollack-Beighle, Deputy Programme Manager, Youth Development, CARICOM Secretariat; »» Ms. Sheranne Isaacs, Consultant, United States Agency for International Development (USAID) Youth, Crime and Violence Prevention Project, CARICOM Secretariat; »» Ms. Lisa Calenda, Consultant, Evaluation of the Creativity for Employment and Business Opportunity Initiative; »» Ms. Tanika Jones, Consultant Graphic Designer of the CEBO Participants and Facilitators Manuals.

The Secretariat also wishes to acknowledge and thank the following International Development Partners (IDPs) for their financial support: »» The Government of Japan – Second Chance Two Project; »» The United States Agency for International Development (USAID) - Caribbean Basin Security Initiative (CBSI); and »» The United Nations Development Programme (UNDP) Office for Barbados and the Eastern Caribbean/ Government of Italy (GoI) Youth Innovations (Youth In) Project; »» The UNDP Citizen’s Security Project; »» The Government of Spain through the ”CARICOM/ SPAIN Citizen Support Security Project- Support for Youth Empowerment and Resilience”.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN CARICOM

FOREWORD

O

n behalf of the Caribbean Community (CARICOM), I wish to congratulate the members of the Regional Technical Working Group, the Youth Department, CARICOM Secretariat and CEBO evaluation Consultant on a dynamic and nontraditional “Creativity for Employment and Business Opportunity” (CEBO) Training Manual. The manual simplifies regional integration and the CARICOM Single Market and Economy (CSME).

The impact of globalisation, trade liberalisation and global economic crisis on CARICOM states has adversely affected economic performance and increased levels of poverty, unemployment and social inequities. Unemployment is highest among the youth, and is among the causes of homelessness, substance abuse, illiteracy, Amb. Irwin LaRocque teen pregnancy, crime and violence and other personal, social and economic ills.

Secretary-General Unemployment also deprives young people of steady income and hope for the future, Caribbean Community robs society of creative potential and energies and causes investments needed for community and national development to be redirected to security and health. In short, youth employment threatens to undermine the goals of personal, national and regional development.

The CSME aims to achieve sustained economic development through, among other things, enhanced productivity and competitiveness, and requires a creative, competitive, healthy and productive work force for success and sustainability. Sixty-four per cent (64%) of the Region’s population is under the age of thirty (30), and the report of the CARICOM Commission on Youth Development (CCYD) makes it clear that they are ALL at unprecedented risk of social dislocation. With decent employment, young people will lose hope and migrate to another country/Region where they perceive the chances of fulfilling their dreams and aspirations to be greater.

The Community’s Five-Year Strategic Plan identifies Youth Development as a key element of Social Resilience, one of the eight Integrated Strategic Priorities. This is in keeping with the Declaration of Paramaribo on the Future of Youth in the Community (2010) which identified young people as valued (but under-utilised) resource for development; and youth entrepreneurship development as a priority for countering youth unemployment, migrating drug abuse, crime and violence and fostering economic resilience. Entrepreneurship will not solve the problem of unemployment but is a viable alternative that will propel the Community closer to the goal of Economic Development.

The CEBO initiative is a model of good practice in engaging, inspiring and motivating entrepreneurship interest and action. I look forward to more success stories emanating from CEBO. With best wishes

IRWIN LAROCQUE SECRETARY-GENERAL iii

TABLE OF CONTENTS Abbreviations and Acronyms ...........................................................................................................................................................................................................vi Introduction ...................................................................................................................................................................................................................................................................07

Section 1. Set On Your Mark!

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Chapter 1: Getting to Know You ....................................................................................................................................................................................................... 12 - 21 Module 1.1: The Caribbean Community (CARICOM) - United We Stand .......................................................................................................... 12 1.1.1 CARICOM Role, Structure and Membership ................................................................................................................................................... 12 1.1.2 Regional Youth Vision of the Ideal Caribbean Community ........................................................................................................... 14 1.1.3 Creating the CARICOM Single Market and Economy: Towards further regional integration .....................15 1.1.4 Free Movement of People, Goods, Services and Capital ..................................................................................................................16 1.1.5 Youth knowledge and perceptions of the CSME ........................................................................................................................................17 1.1.6 Challenges to the process of regional Integration ..................................................................................................................................17 Module 1.2: Entrepreneurship and Me - Definitions and Opportunities ......................................................................................................... 18 Module 1.3: Understand Yourself - You Can Do It! ..................................................................................................................................................................... 19 Chapter 2: Together Each Achieves More (Team) ........................................................................................................................................................ 22- 28 Module 2.1: Building My Team ......................................................................................................................................................................................................................... 22 2.1.1 Conflict Resolution ................................................................................................................................................................................................................... 22 2.1.2 Effective Communication .................................................................................................................................................................................................. 23 2.1.3 Anger Management .................................................................................................................................................................................................................. 25 2.1.4 Decision-Making .......................................................................................................................................................................................................................... 26 What is your communication style? .............................................................................................................................................................................................................. 27 Chapter 3: Starting “The Race�: Getting Good Ideas For Your Business .................................................................................... 29 - 33 Module 3.1: Selecting A Viable Business Idea and Name .................................................................................................................................................. 29 Module 3.2: Business Codes of Conduct ............................................................................................................................................................................................... 31 3.2.1 Business Etiquette ..................................................................................................................................................................................................................... 31 3.2.2 Business Ethics ............................................................................................................................................................................................................................. 32

Section 2. Get Set!

34

Chapter 4: Getting On Track to Business .............................................................................................................................................................................. 35 - 40 Module 4.1: Business Categories and Functions ......................................................................................................................................................................... 35 Module 4.2: Legal Business Structures ................................................................................................................................................................................................... 36 Module 4.3: Customer Service .......................................................................................................................................................................................................................... 38

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Chapter 5: Thinking Smart ..................................................................................................................................................................................................................... 41 - 46 Module 5.1: Developing The Basic Business Plan ...................................................................................................................................................................... 41 Module 5.2: Managing Risk and Contingency Planning ..................................................................................................................................................... 45 Chapter 6: Understanding The Market .................................................................................................................................................................................... 47 - 49 Module 6.1: Research and Analysis ............................................................................................................................................................................................................ 47 Chapter 7: Money Matters ...................................................................................................................................................................................................................... 50 - 67 Module 7.1: Budgeting ............................................................................................................................................................................................................................................... 50 Module 7.2: Cost and Pricing ............................................................................................................................................................................................................................. 56 7.2.1 Cost versus Price ......................................................................................................................................................................................................................... 56 7.2.2 Calculating Your Cost ............................................................................................................................................................................................................. 56 7.2.3 Pricing Methods ........................................................................................................................................................................................................................... 56 7.2.4 Cost Plus/Cost Based ............................................................................................................................................................................................................. 56 7.2.5 Competitive/Competitor Based Or Market Orientation ................................................................................................................... 57 7.2.6 Getting Creative with Pricing ......................................................................................................................................................................................... 57 7.2.7 Break Even Analysis ................................................................................................................................................................................................................. 57 Module 7.3: Financial Projections/Forecast ..................................................................................................................................................................................... 61 Module 7.4: Funding The Business .............................................................................................................................................................................................................. 63 7.4.1 Getting Money from Friends and Family ........................................................................................................................................................... 63 Module 7.5: Personal Money Management ....................................................................................................................................................................................... 64

Section 3. Let’s Goooo!

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hapter 8: Sell, Sell, Sell For Success!!! ..................................................................................................................................................................................... 70 - 75 Module 8.1: Product Development, Negotiations and Sales ........................................................................................................................................ 69 8.1.1 Product Development ........................................................................................................................................................................................................... 63 8.1.2 Negotiation ....................................................................................................................................................................................................................................... 63 8.1.3 Effective Selling ............................................................................................................................................................................................................................ 63 Module 8.2: Advertising/Promotion .......................................................................................................................................................................................................... 70 Module 8.3: Branding .................................................................................................................................................................................................................................................. 70 Module 8.4: Exploiting ICT For Business ............................................................................................................................................................................................... 72 Chapter 9: Plan For Success .............................................................................................................................................................................................................................. 75

Annexes ....................................................................................................................................................................................................................................................................76 - 80 Annex I: Documents Usually Required For Bank Loans .............................................................................................................................................. 76 Annex II: Business Plan Outline With Guidance .................................................................................................................................................................... 77

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ABBREVIATIONS AND ACRONYMS BE

Break Even

BYBT

Barbados Youth Business Trust

CAD/CAM

Computer Aided Design/ Computer Aided Manufacturing

CBSI

Caribbean Basin Security Initiative

CCYD

CARICOM Commission on Youth Development

CEBO

Creativity for Employment and Business Opportunity

CGYBTs

Caribbean Group of Youth Business Trusts

CIM

Common Information Model

CSME

CARICOM Single Market and Economy

CVQ

Caribbean Vocational Qualifications

DYBT

Dominica Youth Business Trust

EPJC

Eastern Peace and Justice Centre

FC

Fixed Costs

GoI

Government of Italy

ICT

Information and Communication Technology

IDPs

International Development Partners

P Profit TR

Total Revenue

TWG

Technical Working Group

UNDP

United Nations Development Programme

USAID

United States Agency for International Development

VAT

Value Added Tax

VC

Variable Costs

WFM

Workshop Facilitation Manual

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

INTRODUCTION

W

elcome to the Creativity for Employment and Business Opportunity (CEBO) Participants’ Training Manual!

The manual is a tool to guide young persons in establising businesses within the Caribbean Community.

CEBO GOALS AND OBJECTIVES By the end of the CEBO training workshop, you will have: Better understood why as an entrepreneur you could be important to your country and the CARICOM region; Practiced effective communication, decision making and conflict resolution skills; Developed short- to medium-term self-improvement plans; Structured a simulated company, assigned personnel and developed a basic business plan; Created, marketed and sold an excellent product or service and shared profits; Shared experiences with your peers in another CARICOM Member State; and Evaluated

the training experience and received information and guidance to support your future plans.

The journey to entrepreneurship can be likened to a race, usually more like a marathon than a sprint! The race begins with a single step. With a good start and an even pace following a strategy and with the right guidance, there is a good chance that you will finish and do well. The CEBO Training Manual contains nine (9) Chapters in three (3) sections to guide you on this journey, according to the typical stages of the business cycle.

Section One is entitled ON YOUR MARK

Section Two is entitled GET SET!

Section Three is entitled LET’S GOOOO!

Let’s begin our preparation for the race, with a look at the contents of each section ▶

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INTRODUCTION

SECTION 1: ON YOUR MARK

ON YOUR MARK is the first section of this Manual, representing the initial/ preparatory stage of the Business Cycle.

This section takes participants on a three (3) chapter journey from -

CHAPTER 1

Getting to know you: where participants build team spirit, better understand CARICOM’s role and function, explore the national and regional context for entrepreneurship development and formulate a self development plan ▶

CHAPTER 2

Together each achieves more (TEAM): where participants develop interpersonal awareness and build conflict resolution knowledge and skills ▶

CHAPTER 3

Starting the Race: Getting good ideas for business; where teams explore feasible business ideas and appropriate names, develop a preliminary business concept and examine business codes of conduct■

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

SECTION 2: GET SET! GET SET is the second section of the CEBO Manual. Having established the foundation in the first three (3) chapters of the Manual, the participants are now getting set for business. This section takes you through the following four (4) chapter journey;

Getting on the Track to Business’ where you structure the company and assign personnel and obtain a briefing on good customer service ▶

CHAPTER 5

Understanding the Market’ where you explore how to access leisure and business opportunities through market analysis and research ▶

Thinking Smart’ in which you develop a preliminary basic business plan ▶

CHAPTER 6

CHAPTER 4

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CHAPTER 7

Money Matters’ where you develop, cost and price business products ■

INTRODUCTION

SECTION 3: LET’S GOOOO! LET’S GOOOO is the third and final section of the CEBO Manual. It is that stage of the business cycle where the pieces of the business puzzle are beginning to make sense and take shape.

CHAPTER 8 Sell, Sell, Sell for Success which guides participants in developing, selling and promoting their products as well as using ICT for Business ▶

CHAPTER 9 Plan for Success, where they reflect and evaluate workshop lessons, successes, impact and challenges and receive guidance in terms of post-workshop goals ■

NOW IT IS TIME TO BEGIN!!! ▶ 12

The program concludes with an evaluation exercise and closing ceremony ▼

SECTION 1.

ON YOUR MARK

ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

CHAPTER 1: GETTING TO KNOW YOU OBJECTIVES To help you the participants: Develop an understanding of the purpose of training; Gain an appreciation of entrepreneurship as a strategy for personal, national and regional development; Obtain insight into personal attitudes, values and characteristics; and Develop an understanding and appreciation of the CARICOM role, function and context for entrepreneurship development; Acquire basic knowledge and information about the CSME role, structure, opportunities and risks.

By the end of the session you will have: established a sense of camaraderie with your teammates and race opponents clarified the purpose, scope, nature and expected outcomes of the workshop; understood entrepreneurship benefits, opportunities and risks; created a profile of the successful entrepreneur; developed short- to medium-term self-improvement plans; and Better understood and appreciated the CARICOM role, function and context for entrepreneurship development.

Enhanced your knowledge and appreciation of CSME benefits, opportunities and risks.

Identified opportunities for establishing a business or service under the Right of Establishment Regime.

Module 1.1: The Caribbean Community (CARICOM) - United We Stand 1.1.1 CARICOM Role, Structure and Membership The Caribbean region is a multi-lingual, multi-cultural melting pot of indigenous persons and descendants of Africa, Asia, Europe and other continents. The Region’s rich and diverse culture, sandy beaches, blue seas, pleasant climate and festivals are sought after by tourists from all around the world.

The Caribbean Community CARICOM), established in 1973, is a regional organization made up of fifteen (15) small developing Member States (primarily sovereign countries) and five (5) Associate Members . CARICOM States were once colonies of Europe and all speak English except for Suriname (Dutch) and Haiti (French). All of the countries are islands except for Belize which is in Central America and Guyana and Suriname which are situated on the South American continent. All of the citizens of these countries are also citizens of the Caribbean Community (CARICOM), as shown in the Figure below.

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CHAPTER 1, MODULE 1.1: THE CARIBBEAN COMMUNITY (CARICOM) - UNITED WE STAND

Figure (below): Belonging to the Caribbean Community

Member States (15): Antigua and Barbuda, Barbados, The Bahamas, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago.

Associate Members (5): Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Turks and Caicos Islands.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

1.1.2 Objectives of the Community CARICOM countries are independent countries that have chosen to collaborate on a number of social, financial, political and economic matters, such as trade, education, health and foreign relations, which affect their citizens, in order to increase their chances of gaining influence internationally and using resources wisely. This is the focus of the movement towards regional integration. The objectives of CARICOM are to promote full employment and improve standards of living and work for all; accelerate, coordinate and sustain trade and economic development; enhance levels of international competitiveness; coordinate foreign and economic policies; and enhance functional co-operation to increase the efficiency of common services and activities and to advance social, cultural and technological development.

The CARICOM Secretariat is the administrative arm of the Community.

1.1.2 Regional Youth Vision of the Ideal Caribbean Community Young leaders across the Community have developed the vision below of the type of Community in which they would like to live. Entrepreneurship can play a large part in achieving this ideal vision. Through entrepreneurship, youth can be anything they want to be. They can create jobs for themselves and others, become their own bosses, earn their own money, develop their own ideas and gain the respect of their families, community and their country.

Regional Youth Vision of The Ideal Caribbean Community (Abridged) A productive, knowledge-based and diverse society that: ▶▶ Is united, strong, stable, recognized and respected by First World countries; ▶▶ is sensitive to the problems of other countries in the Caribbean, assists each other, is conscious that what concerns one concerns all; ▶▶ exploits a unique niche, is self-sufficient, fair, open-minded, friendly, caring; ▶▶ is safe, secure and free from discrimination, corruption, drugs and HIV and AIDS; ▶▶ provides all nationals a good quality of life and reasonable cost of living; affordable inter-island travel with no restrictions; quality education and decent employment for all; ▶▶ protects the interests of smaller States and affords all the same rights, privileges and benefits; ▶▶ recognizes, appreciates and keeps the power of culture alive; ▶▶ empowers youth to be politically aware and involved in development; ▶▶ puts in place foundations for economic, political and social unity.

(CARICOM Commission on Youth Development, 2010) 16

CHAPTER 1, MODULE 1.1: THE CARIBBEAN COMMUNITY (CARICOM) - UNITED WE STAND

1.1.3 Creating the CARICOM Single Market and Economy: Towards further regional integration CARICOM countries historically received favourable prices in international markets for sugar, rice and other agricultural products but found themselves unable to compete on a level playing field in a global world.

Globalization brought about increased competition which resulted in a loss of favourable prices and international markets. Many Member States still depend on agriculture and tourism as the main source of revenue The CARICOM Single Market and Economy (CSME) is the Community’s strategy to reverse the negative impact of globalization, deepen social and economic development and improve the quality of life of all nationals. The CSME transforms thirteen (13) participating countries2 into a single economic space with enhanced social and economic benefits and opportunities.

The CSME presumes the existence of a strong sense of regional identity, commitment to the goals of regional integration and confidence that the Community can fulfill the dreams and aspirations of all nationals, in particular young people. Successful implementation requires ready access to a creative, competitive and productive workforce equipped with appropriate knowledge, skills, attitudes and values. Entrepreneurship has the potential to contribute to the goals of the CSME by increasing national competitiveness, productivity and employment, particularly in the areas of tourism, manufacturing, entertainment, information technology and trade in goods and services

The Promise of the CSME A single, enlarged economic space characterized by: a. free movement of goods, capital, labour and the right to establishment; b. non-discriminatory access to the Region’s resources and markets for CARICOM nationals; and c. common external trade policy; CSME aims to improve standards of living through greater opportunities for: 1. investment, production and trade; 2. cheaper and better quality goods and services; 3. travel to study and work in CARICOM countries; and 4. business development, employment and growth.

2

Haiti, The Bahamas and the five (5) Associate Members do NOT participate in the CSME.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

1.1.4 Free Movement of People, Goods, Services and Capital The vision of the CSME is to allow nationals of participating countries orderly free movement privileges while enjoying non-discriminatory (or national) treatment, in order to: • create, establish and operate a company/ legal entity in any part of CSME; • be involved in legal trade in goods, provision of services and movement of capital3 (finance); • accept, seek and compete for employment without a work permit (priority assigned to university graduates, sports persons, media workers, entrepreneurs, cultural workers and other workers on a phased basis); and • travel within the Community (automatic six (6) month stay).

Nationals may also remain in their homes and countries and use information and communication technologies (ICT) to establish a business in another country.

Free movement is currently being granted on a phased basis, implemented through the issue of Skills Certificates of Recognition4 and facilitated by the removal of the requirement for work permits for certain categories of workers, starting with university graduates and eventually including all categories. The categories of persons approved for free movement to date are listed below5 : •

University graduates, sports persons, media workers, artistes, nurses, teachers and artisans with Caribbean Vocational Qualifications (CVQ) and their families may move to accept/look for employment without a work permit6;

•

Holders of Associate Degrees or equivalent qualifications such as: 2 CAPE/ “A” Levels, Certified Accounting Technician Qualification and National Technician Certificate based on two (2) years study at the postsecondary level;

•

Self-employed persons/ Entrepreneurs – (1) to establish a business under the Right of Establishment regime and (2) service providers within the CSME;

•

Household Domestics with a CVQ or equivalent qualification.

Member States are to remove all restrictions on the movement of managerial, technical and supervisory staff of economic enterprises and on establishing agencies, branches and subsidiaries of companies and other entities.

3

Commonly referred to as Skills Certificates.

4

5 The free movement of skills policy is supported by provisions such as contingent rights (e.g. access to education and health services) for staff and family members and transfer of social security benefits from one country to another.

A Certificate of Recognition of CARICOM Skills Qualification, commonly referred to as a “skills certificate”, is required.

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CHAPTER 1, MODULE 1.1: THE CARIBBEAN COMMUNITY (CARICOM) - UNITED WE STAND

CSME nationals are also entitled to “Hassle free” travel” through the following: • A CARICOM passport; • One immigration line for CARICOM nationals at the airport; • Permission for visitors to remain in a country for six (6) months in the first instance.

Business persons are charged a common reduced tariff to move their goods and services.

1.1.5 Youth knowledge and perceptions of the CSME The majority of Caribbean youth have never heard of the CSME; of those who have few can cite concrete opportunities and benefits. There are those who understand the CSME perceive it to be “the best thing to ever happen to the Caribbean”, giving youth a second chance and providing opportunities for them to: • build regional relationships and to travel; • seek or create employment; • learn social and cultural history and better appreciate their own; • reduce inter-island discrimination and stigmatization; • market the Caribbean and boost tourism; • respond to shortages in labour and skill in other Member States; open up borders, unify the region and populate under-developed areas; and reduce the impact of the brain drain; • access education not available at home; and • compete with trading blocs; create a bigger market; access better quality goods and services; • reverse greater productivity and prosperity and an affordable cost of living.

1.1.6 Challenges to the process of regional integration In general, the free movement of labour policy evokes suspicion and fear among nationals young and old and in smaller and more economically stable islands of an influx of Caribbean nationals seeking jobs, housing, education and other services that are in short supply, creating overcrowded conditions, displacing nationals and overburdening education and health systems. This often overshadows the potential for individual and collective advancement of people and countries through free circulation.

Every citizen of the Caribbean Community should understand the benefits of integration in providing for free movement and circulation of persons, goods and services throughout a bigger market than their home country market. This will create expanded opportunities for employment, business and trade. Regional integration is a gradual process that has been happening over time. The issues below are some challenges in the process of achieving the goals of regional integration: • Nationals have insufficient knowledge and appreciation of the role and function of regional integration and the opportunities which they provide; • absence of a shared sense of regional destiny and identity; 19

ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

• increasing levels of poverty, unemployment/un-under employment, alienation and racial intolerance, crime, gun and gang violence which heighten the vulnerability of women, children, and youth; • the Region is increasingly vulnerable to natural disasters; and • there is little interest among younger adolescents in exploring or residing in another CARICOM country or being part of the regional integration movement; • insufficient opportunities for employment, education, leisure and business, inadequate knowledge of those that do exist; • growing insularity, discrimination and social inequalities; • many young people are frustrated, alienated, marginalized and hopeless; • high levels of migration (legal and illegal) within and outside of the Region.

Module 1.2: Entrepreneurship and Me - Definitions and Opportunities The terms below are central to the CEBO Training Manual and their definition ensures a common understanding.

Entrepreneur: one who develops a new idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs. All entrepreneurs are business persons, but not all business persons are entrepreneurs.

Entrepreneur: one who develops a new idea and takes the risk of setting up an enterprise to produce a product/service which satisfies customer needs. All entrepreneurs are business persons, but not all business persons are entrepreneurs.

Entrepreneurship: the capacity and willingness to develop, organise and manage a business venture along with any of its risks in order to make a profit.

Entrepreneurship development: a holistic, complex, multi-faceted, multidimensional and integrated process of developing entrepreneurs.

Entrepreneurial culture: one in which citizens are creative, rather than passive; capable of self-initiated action; know how to learn rather than expect to be taught; and are enterprising in their outlook instead of thinking and acting like an “employee” or a “client”.

Business Mentor: an experienced entrepreneur, business leader, manager or community leader who volunteers his/her time to guide a young entrepreneur in establishing a business.

Business Mentorship: the act of encouraging, acting as a sounding board, providing business support and guidance and transferring knowledge.

Entrepreneurs may from time to time experience failure and financial challenges. They are resilient, invariably work long hours and readily accept responsibility. Benefits and opportunities include social and economic development through legitimate business activity, new relationships, changed mindsets and behaviors and new employment, wealth, jobs, products and services. Entrepreneurship leads to personal satisfaction and economic independence and contributes to nation building.

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CHAPTER 1, MODULE 1.3: UNDERSTAND YOURSELF – YOU CAN DO IT!

Module 1.3: Understand Yourself - You Can Do It! In today’s busy world we spend most of our time dealing with situations and challenges that prevent us from finding out who we truly are, or from being what we want to be. Who we are at any point in time is the result of a complex interaction between: • genetics (what we inherited from our ancestors); and • the environment (external factors and life experiences such as the community and home in which we grew up, the school that we attended, our friends, the birth of child, a positive or life threatening experience).

Many people are generally happy and satisfied with their lives, whereas others experience excessive sadness or unhappiness due to: • a lack of self-confidence or self-esteem • concern for the future • marginalization and discrimination • a difficult relationship • no money • ill health or • a general sense of hopelessness, anger and frustration.

Stress and disappointment can give some people the extra will and determination to succeed, whereas others may become consumed or involved in doing things that may have negative results just to take their minds off their problems. We cannot change genetics but we CAN change our lives.

Changing our behaviour and our life circumstances can be difficult but it CAN happen. Indeed, I am sure that we can all think of at least one example where it HAS been achieved. We can begin to take control of our lives by first looking deep within to better understand WHO we are, WHY we do the things that we do and WHAT our values, attitudes and beliefs are; and then developing and implementing a self-improvement plan. The process of behavior change is outlined below.

• develop self-awareness (get in touch with your attitudes, values, beliefs and characteristics); • set a vision/goal of where you want to be in two (2) years (short-term) or five (5) years (medium-term); • identify the gaps or areas in which you currently fall short; • short list priorities and set goals (what you want to achieve/change in the short- and medium-term); • develop concrete actions to achieve those goals; • continuously monitor and evaluate progress towards those goals and make adjustments as necessary.

Establishing a successful business can help young people to realize their dreams and ambitions. Remember, if you don’t know where you are going any road will lead you there!

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

✓ End of Module Review CheckList Yes

No

Do I understand what is meant by CARICOM and the CSME? Am I clear on the objectives of the CARICOM Community and the CSME? Do I understand the importance of regional integration?

Do I see how youth can help to achieve the objectives of the Community?

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CHAPTER 1, MODULE 1.3: UNDERSTAND YOURSELF – YOU CAN DO IT!

End of Module Review A. Myself 1. What is an entrepreneur?

2. Do I think I can be an entrepreneur?

3. What motivates me towards becoming an entrepreneur?

4. What are my dreams?

B. My Goals and Vision

What are my goals and my vision for me?

Where do gaps exist between my vision and where I am now?

What can I do now to get closer to my vision?

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

CHAPTER 2: TOGETHER EACH ACHIEVES MORE OBJECTIVES To help you the participants: Gain interpersonal knowledge and appreciation; Practice conflict resolution knowledge and skills; Build a local networking base; and Develop an understanding of your role as a member of a team working together to achieve a common goal.

By the end of the session you will have: enhanced Interpersonal skills; explored conflict resolution issues and approaches and practiced alternative strategies; better understood the strengths and values of the other participants; and understood the role that you are each best suited for as a member of a team.

Module 2.1: Building My Team A team is a group of persons working towards a common goal, for example families, communities and organizations; and each team member performs a specific task. If entrepreneurs are to run a profitable business they must form relationships with teams of customers, suppliers, employees, investors – in fact everyone with whom they come into contact.

Interpersonal skills are the life skills that we use every day to communicate and interact with other people, individually and in groups. They speak to confidence and our ability to do things such as listen and understand, solve problems/conflicts, make decisions and manage anger; and become easier with practice or performance.

Being more aware of and practicing/developing our interpersonal skills can help us build supportive teams and maintain effective relationships in our communities, families and businesses. Some key strategies are briefly discussed below.

2.1.1 Conflict Resolution It is natural for the goals, values and experience of the individuals who make up teams to differ and for conflicts/ disputes to arise in the course of day to day affairs. The term conflict resolution covers a range of strategies for effectively managing conflict in community, business and relationships that allow for problems to be understood, solutions explored, and agreement negotiated within a relatively constructive environment. Conflicts or disputes • are disagreements between at least two (2) people who perceive their individual needs, interests or concerns to be threatened;

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CHAPTER 2, MODULE 2.1: BUILDING MY TEAM

• a normal experience as we go about managing complex and stressful issues in our relationships or community can have negative or productive consequences for self or others; • can be experienced emotionally (feelings), cognitively (thoughts) and physically (e.g. stress, bodily tension, increased perspiration, rapid heartbeat); • are dealt with differently by each person according to their needs values, culture, beliefs, experience and gender.

Conflict resolution is best undertaken by an independent mediator who uses a variety of strategies to get persons to reflect on the experience in ways that help to – • identify the problem, its triggers (what preceded it) and results/consequences; • identify and practice alternative actions/solutions; and • negotiate agreement on an effective solution.

2.1.2 Effective Communication Effective communication takes place when a message has been sent and correctly received through written, verbal or non-verbal means.

Non-verbal Communication It is said that more than 80% of communication is non-verbal.

Cues (Body Language)

How To Improve

Eye Contact

Know your topic, know your audience, know yourself

Tone of Voice, Words Used

Think positive thoughts, be calm, prepare ahead of time

Empathy

Focus on your message, not yourself

Posture

Practice concepts, not words, make notes

Facial Expression

Practice in front of the mirror, get someone to help

Style/Type of Dress

Dress for success (appropriately); wear comfortable shoes

Grooming Hair Nails Etc

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

Verbal Communication (Speaking and Presentations) Active Listening The ability to listen actively can improve personal relationships through reducing conflicts, strengthening cooperation, and fostering understanding. Critical techniques in active listening are: • suspend judgments • paraphrase message received to check accuracy • body language: maintain soft eye contact, relaxed attentiveness • stay focused on the person who is speaking; • concentrate on what is being said; • listen with an open mind and an open heart; • take notes to reflect on later; • try not to interrupt the speaker; ask questions in a respectful tone when appropriate.

Feedback Communication Employees need to know what they are doing well and not so well - giving positive and negative feedback effectively is a skill that aims to improve the situation or performance. The main message should be that you care and want to help the person grow and develop. You should know how to give feedback effectively and receive it constructively and actively seek feedback from your boss, colleagues, and customers. Some tips are listed below.

• the closer to the event you address the issue, the better; • establish a safe place to talk where you won’t be interrupted or overheard; • if the situation is highly emotional wait until everyone has calmed down before you engage in feedback; • pick no more than two (2) issues and prepare your comments beforehand; • start off and end with something positive; • tell the person exactly what they need to improve on and be sure that they can; • stick to what you know first hand; • avoid words like “never”, “all,” and “always”; • don’t get personal or seek to blame; and • set goals and make plans to monitor and evaluate progress.

Principles of Good Business Communication Good business communication has the following characteristics: 26

CHAPTER 2, MODULE 2.1: BUILDING MY TEAM

• clarity • conciseness • accuracy • completed feedback cycle • timely • simple • specific/ concrete • courteous • active listening.

2.1.3 Anger Management Anger is a normal, healthy emotion that normally surfaces when you have been mistreated or wronged. The feeling isn’t the problem—anger becomes a problem when it harms you or others. If mismanaged, anger and rage can spiral out of control with serious consequences for your health, state of mind and personal and professional relationships, including domestic abuse, road rage, homicide, divorce and substance abuse. Learning to control and express anger appropriately can help you build better relationships, achieve your goals, and lead to a healthier, more satisfying life. The more you practice anger management techniques, the easier it will get.

Myths and Facts about Anger7 The ability to listen actively can improve personal relationships through reducing conflicts, strengthening cooperation, and fostering understanding. Critical techniques in active listening are: Myth: I shouldn’t “hold in” my anger. It’s healthy to vent and let it out.

Fact: While it’s true that suppressing and ignoring anger is unhealthy, venting is no better. Anger is not something you have to “let out” in an aggressive way in order to avoid blowing up. In fact, outbursts and tirades only fuel the fire and reinforce your anger problem.

Myth: Anger, aggression, and intimidation help me earn respect and get what I want.

Fact: True power doesn’t come from bullying others. People may be afraid of you, but they won’t respect you if you can’t control yourself or handle opposing viewpoints. Others will be more willing to listen to you and accommodate your needs if you communicate in a respectful way.

Myth: I can’t help myself. Anger isn’t something you can control.

Fact: You can’t always control the situation you’re in or how it makes you feel, but you can control how you express your anger. And you can express your anger without being verbally or physically abusive. Even if someone is pushing your buttons, you always have a choice about how to respond.

7

Joanna Saisan, M.S.W., Jeanne Segal, Ph.D., and Melinda Smith, M.A. 2012

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

Myth: I shouldn’t “hold in” my anger. It’s healthy to vent and let it out.

Fact: While it’s true that suppressing and ignoring anger is unhealthy, venting is no better. Anger is not something you have to “let out” in an aggressive way in order to avoid blowing up. In fact, outbursts and tirades only fuel the fire and reinforce your anger problem.

2.1.4 Decision-Making We all make decisions of varying importance every day, very often without thinking of the consequences (especially in the long term) and without consciously weighing the pros and cons (positives and negatives) of each possible course of action. Effective decision-making is a process that involves identifying as many alternative choices as possible and choosing the one that (1) is most likely to be successful or effective and (2) best fits with our goals, desires, lifestyle and values. Decision-making is therefore both a mental and problem solving activity which is concluded when a satisfactory solution is reached.

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CHAPTER 2, MODULE 2.1: BUILDING MY TEAM

End of Module Review A. What Is Your Communication Style?

Our accomplishments in the workplace often depend on how well we can communicate our needs and objectives to others. Truly effective communication requires an understanding of other people’s styles as well as our own.

B. Communication Style Quiz Take the following quiz to /determine your personal dominant communication style- Listener (Relator), Creator (Expresser), Doer (Driver) or Thinker (Analytical). Read each phrase and check the word that best describes you. Then add the check marks in each of the four columns and consult the Scoring Key for some insight into each style.

1. My manner is basically

☐ Accepting

☐ Friendly

☐ Controlling

☐ Evaluative

2. My decision making

☐ Slow

☐ Emotional

☐ Impulsive

☐ Fact Based

☐ People

☐ Achievements ☐ Organisation

3. I talk about

☐ Personal Things

4. Using time

☐ Not Rushed ☐ Socialiser

☐ Rushed

☐ Run Late

5. I relate to others

☐ Accepting

☐ Empathizer

☐ Commands

☐ Accessing

6. My gestures

☐ Very Few

☐ Open

☐ Impatient

☐ Closed

7. My clothing

☐ Conforms

☐ Very Stylish

☐ Formal

☐ Conservative

8. My work pace

☐ Steady

☐ Enthusiastic

☐ Fast

☐ Controlled

9. My listening

☐ Interested

☐ Distracted

☐ Impatient

☐ Selective

10. My work area has

☐ Keepsakes

☐ Pictures

☐ Awards

☐ Charts

11. I’m oriented toward

☐ Support

☐ People

☐ Results

☐ Facts

12. My basic personality

☐ Easygoing

☐ Outgoing

☐ Dominating

☐ No-Nonsense

13. My communication

☐ Low-Key

☐ Animated

☐ Direct

☐ Reserved

☐ Friendly

☐ Restless

☐ Distant

14. My responsiveness to others ☐ Steady Totals

I. Listener:__

II. Creator: __

III. Doer: __

IV. Thinker: __

Source: American Management Association (AMA), adapted from How to Become a Better Negotiator by James G. Patterson, retrieved from http://www.asme.org/Jobs/Manage/Whats_Communication_Style.cfm

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

End of Module Review Scoring Key 7 or more = Strong Preference, 3-6 = Moderate Preference, 0-2 = Low Preference

Characteristics of Each Communication Style

The Listener/Relator ✓✓ People oriented ✓✓ Believe there is more than one method to achieve the same results ✓✓ Demand a voice in decisions that affect them ✓✓ Place a high premium on relationships ✓✓ Can be slow decision makers ✓✓ Don’t delegate well ✓✓ Seek security; don’t take risks Conflict: Mainly with Doers Improvement: Try to be more assertive.

Focus less on relationships and more on tasks. Learn to make observations based on facts, not subjective judgments.

The Creator/ Expresser ✓✓ Enthusiastic, excitement driven ✓✓ Like public speaking and attention ✓✓ May be too talkative ✓✓ Persuasive and optimisticCreative ✓✓ Good sense of humor ✓✓ Can be impulsive, make snap decisions ✓✓ Have problems following through with an idea

Conflict: Mainly with Thinkers Improvement: Slow down. Try to be less intense.

The Doer/Driver

The Analytical Thinker

✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓

Pragmatic Assertive Results oriented Competitive Competent Very verbal Excellent problem solver ✓✓ Risk taker ✓✓ Can be arrogant and domineering ✓✓ Can be poor listener and impatient

✓✓ Detail oriented ✓✓ Can be slow decision makers ✓✓ Like rules and predictability ✓✓ Lowest risk taker ✓✓ Analytical ✓✓ Conservative ✓✓ Can be rigid, overly serious and indecisive

Conflict: Mainly with Listeners

Conflict: Mainly with Creators

Improvement: Slow down. Count to ten before responding.

Learn to listen more.

Work at showing your feelings, being more interested in relationships and being more open.

Improvement: Try to move faster, show less need for endless detail, be less rigid about following policies. Take more risks. Show more personal concern for others.

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CHAPTER 3, MODULE 3.1: SELECTING A VIABLE BUSINESS IDEA AND NAME

CHAPTER 3: STARTING “THE RACE”: GETTING GOOD IDEAS FOR YOUR BUSINESS

OBJECTIVES To help you the participants: create viable business ideas and appropriate names; understand the importance and principles behind market research; Increase awareness of business codes of conduct.

By the end of the session you will have: increased awareness of the importance of negotiating and business codes of conduct; and formed simulated companies of 5 or 6 members and developed creative business ideas and names using principles of market research.

Module 3.1: Selecting A Viable Business Idea and Name Entrepreneurs go into business for a number of reasons. Most need to or want to make money. To be successful they must: • have a viable idea which can be developed into a business • be prepared to take risks • be creative and innovative and • have the confidence and the persistence over the long term to keep learning, trying and improving.

There are too many businesses with low barriers to entry, which are selling the same products or services sometimes in the same places; and too many entrepreneurs who have to lower their price and make a loss just to make a sale. These businesses have little chance of surviving over the long term.

Social entrepreneurship is the process of pursuing suitable solutions to social problems.

More specifically, social entrepreneurs adopt a mission to create and sustain social value. They pursue opportunities to serve this mission, while continuously adapting and learning. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in all kinds of organizations.

Business entrepreneurs typically measure performance in profit and return, but social entrepreneurs also take into account a positive return to society. Social entrepreneurship typically furthers broad social, cultural, and environmental goals and is commonly associated with the voluntary and not-for-profit sectors. Profit can at times also be a consideration for certain companies or other enterprises.

- Adapted from Wikipedia 31

ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

Creativity for Employment and Business Opportunity Here is a list of potential careers and business ideas. There are many businesses that are not on this list so feel free to choose your own idea for the CEBO training. ))Event planner

))Teacher/tutor

))Private nurse

))Chef/cook

))Jewellery maker

))Fashion model

))Entertainer

))Caterer

))Mechanic

))Producer

))Boutique owner

))Welder

))Songwriter

))Photographer

))Repair shop owner

))Dancer

))Wedding consultant

))Fashion designer

))Musician

))Owner of a Janitorial/ cleaning service

))Health food retailer

))Artist/gallery owner ))Sound engineer ))Painter ))Graphic designer ))Artisan/craftworker ))Baker ))Farmer ))Electrician ))Barber/hairdresser

))Babysitter ))Owner of childcare service ))Owner of elderly caretaking service ))Bar owner ))Restaurant owner ))Hotel owner

))Software developer ))Lawyer ))Doctor ))Carpenter ))Computer technician ))Private Investigator ))Brand manager

))Distributor/wholesaler

Selecting a business name Prospective entrepreneurs should select a unique business name that will represent the image and character of the enterprise and tell the customers, investors and advisors what the business does, sells, or makes. The name should: • be positive, short and easy to remember; • have a visual element, e.g. symbols, slogans, logos (colors often have strong emotional association. e.g. Red – aggressive, speed, excitement and passion. Green – calming, growth, renewal and nature); • be appropriate and suggest success; • convey strength and reliability (e.g. Weak links jewelry store); • fit on business cards, signs, letterheads together with domain name; and • be different from other names (Research patents and copyright).

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CHAPTER 3, MODULE 3.2: BUSINESS CODES OF CONDUCT

It is alright to name the businesses after the entrepreneur. However, if: • the surname is common the business will not be distinctly identified; • the business fails, the name becomes associated with failure; • the business succeeds and the owner decides to sell the former owner’s name will still be associated with the business.

A brand is a name, logo, slogan, and/or design scheme associated with a product or service.

Brand management is the application of marketing techniques to a specific product, product line, or brand. Brands and brand management help to distinguish goods and services in a crowded marketplace as being uniquely produced by an enterprise. This generates customer loyalty and over time can create significant value for a business.

A trademark is a recognizable sign, design or expression which distinguishes a product or service from others.

A brand becomes a trademark when it is registered as intellectual property with the relevant authorities. This enables it to be licensed (rented) or sold, just as other forms of property such as cars and houses.

- Adapted from Wikipedia

Module 3.2: Business Codes of Conduct For success in business, it is not enough to have aptitude or resources. Business opportunities are created based on codes of conduct centered on how the entrepreneur looks, thinks, talks and acts; and first impressions are lasting. The manner in which entrepreneurs negotiate opportunities, behave and run their businesses can also raise questions of business ethics and etiquette which can propel them and their employees towards success or failure.

3.2.1 Business Etiquette Business etiquette is treating each other with respect and courtesy, in particular: • Behavior – politeness, respectful attitude; stand and sit at the right time; • Honesty – do what you say, say what you do; don’t exaggerate, be about your product or service; • Character – positive qualities such as loyalty, reliability; • Sensitivity – thoughtfulness and consideration; • Diplomacy – positive approaches to situations and tactfulness; and • Appearance – dress appropriately at all times, good posture, good grooming.

• Maintain effective verbal (e.g., telephone courtesy), written (letters, memos, e-mail) and non-verbal (strong handshakes, a smile, eye contact); • Communication.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

3.2.2 Business Etiquette Business ethics refers to written and unwritten principles and values that govern the actions of individuals or organizations, e.g. The Rotary Four Way Test of the things we think, say or do: 1. Is it the Truth?

2. Is it fair to all concerned?

3. Will it build goodwill and better friendships?

4. Will it be beneficial to all concerned?

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CHAPTER 3, MODULE 3.2: BUSINESS CODES OF CONDUCT

End of Module Review CEBO Practical Activity Within the five (5) day workshop, participants are required to form simulated companies and establish, run and wrap-up a business through creative, innovate and mutually supportive mechanisms and strategies. Below is the brainstorming process to select a business idea.

A. Look around you, look within yourself and make a list of businesses that: ✓✓ are not too complicated; ✓✓ you can do well; ✓✓ are small but can grow; ✓✓ have low input costs; ✓✓ you will enjoy producing or selling and are passionate about; ✓✓ that stands out from others; ✓✓ are creative - address a problem or fill a gap.

B. Assess the viability of the business ideas in terms of the time remaining in the workshop; the time required to produce the product/service; the knowledge, skills, and expertise within the company; and the amount of start-up capital (budget) available.

C. Select a business name that will represent the image and character of the enterprise and tell the customers, investors and advisors what the business does, sells, or makes.

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SECTION 2.

GET SET!

ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

CHAPTER 4: GETTING ON THE TRACK TO BUSINESS OBJECTIVES To help you the participants: differentiate between business structure, category, functions and personnel; and make decisions about the business structure, category, functions and personnel.

By the end of the session you will have: structured and staffed the simulated business; and understood legal business structures and their roles.

Module 4.1: Business Categories and Functions Having decided on the business idea and name, companies identify the businesses categories, functions and personnel to manage each of the functions.

4.1.1 Basic Business Categories i. Manufacturing – a business that makes a tangible product; ii. Wholesale – a business that buys products from manufacturers and sells them to retailers; iii. Retail – a business that sells directly to the final consumer; and iv. Service – a business that sells intangibles such as time, assistance or expertise.

4.1.2 The four (4) functions of a business are: i. Production/ Operations – making or obtaining the product or service; ii. Financing – securing and efficiently using money to develop the business; iii. Marketing – developing strategies to get the consumer interested in the product or service; and iv. Customer service - the art of keeping customers happy and loyal to the business while maintaining a product or service once it has been sold.

Young entrepreneurs normally have to manage all these functions alone, unlike large businesses which can afford to hire experts to assist.

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CHAPTER 4, MODULE 4.1: BUSINESS CATEGORIES AND FUNCTIONS

4.1.3 Staffing the Business An organizational chart is a diagram of the business that summarizes the roles and hierarchy of responsibilities within a business. It is different for various types of businesses. The example below identifies key employees and their reporting arrangements/lines of responsibility.

Figure (below): A Basic Organizational Chart showing Roles and Functions

General Manager

Operation Managers

Subordinate

Subordinate

Financial Manager

Subordinate

Human Resource Manager

Subordinate

Subordinate

In the case of this business, the General Manager is the most senior person and oversees the operation, financial and human resource managers. They in turn have several subordinates who report to them in carrying out the functions of the business.

Module 4.2: Legal Business Structures Various options exist for the formation of a business structure (or “track”) to guide the development of the business. Business structures are formalized through a process of incorporation, which involves registering the business with the local Registrar of Companies office. It is a legal registration process which identifies the owners of the business, who are the responsible parties for its operations. The main legal business structures are: • Sole proprietorships • Partnerships • Limited Liability Companies • Not for profit/ non-governmental organizations (NGOs).

There are slight variances in legislation among CARICOM Member States, however, in general, the advantages and disadvantages of business structures are summarized in the chart below:

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

CHAPTER 4: GETTING ON THE TRACK TO BUSINESS Business Types

Advantages

Disadvantages

cc Sole Trader - an individual runs cceasy to form; a business alone (the case for cclow startup costs; most young entrepreneurs). cceasy to set up, simple to run; ccowner is in direct control and all profits made go to the owner; cclegal structure can be changed later; cceasy to wind up (stop) if needed; ccmaximum privacy; and ccyou can trade under your own name.

vv Partnerships - a group of people pool their time, talents, and money towards a common goal. Agreements should: ✓✓ be written, signed; ✓✓ outline each partner’s role, workload and contribution; and ✓✓ specify financial and other contributions.

ccunlimited liability: you are personally liable for all debts; cclimited resources (cash) for growth; cchard to raise capital to invest in your business); ccthe business is threatened if anything happens to the owner; and ccskills base is limited to the owner.

vveasy to form, start-up costs are shared; vvbroader skills and capital base; vvprivate competitors do not have access to your books; vvlimited outside regulation; vvlegal structure can be changed later; and vvshared responsibilities and profits.

vvunlimited liability - partners are personally liable for all business debt; vvdivided authority among the partners; vvless flexibility in transferring ownership; and vvevery partner is liable for the actions of the other partner.

Limited Liability Company - a one general partner, who flexible form of enterprise that assumes unlimited liability; blends elements of partnership liability of the shareholders and corporate structures and is limited to the amount they provides limited liability to invested; its owners. The company is a partner’s personal assets separate legal entity. protected if company fails; ownership through shares; management may be run by board of independent experts; tax advantages; easier to attract capital to grow the business; and employees can be owners.

close regulation by government and courts (this can be good and bad); must be over eighteen (18) to be a director; expensive to form and maintain; management restricted by constitution; regulated under Corporations Law, many obligations for the company and high compliance costs for directors; and complex structure and cost.

<< Not for Profit/NGO - (can be a company or incorporated association): • The objective of the business is not to make profit - there are no personal gains; and • objectives of the organization are achieved through all monies earned or donated.

<<financial statements must be audited annually (tedious, intensive); and <<potential for increased reporting to members/donors.

<<partial or full exemption from income tax; <<profits stay within the organization; <<eligible for fringe benefits, employee tax exemptions; and <<eligible for grant funding.

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CHAPTER 4, MODULE 4.3: CUSTOMER CARE

Module 4.3: Customer Care It is difficult to remain in business without an understanding of the principles of good customer service. Without customers, there is no business and obtaining customer loyalty is important to creating and maintaining healthy cash flows. It is important to define who the customer of a business is (see Chapter 6 on Market Segmentation); so that the business can focus on satisfying the customers’ needs and wants.

Good Customer Service Means Money in the Bank Good customer service is not just good for reducing tensions and boosting employee morale. It is practically money in the bank. The University of Cambridge (2006)8 provides the following statistics on the customer service experience.

• Customers will spend up to 10% more for the same product with better service.

• When customers receive good service they tell 10-12 people on average.

• When customers receive poor service they tell upwards of 20 people.

• There is an 80 percent chance that customers will repurchase from a company if their complaint is handled quickly and pleasantly • If the service is really poor, 90 percent of customers won’t come back.

Solving the Customer’s Problems • When you listen to the customer’s complaint you take responsibility to solve the problem.

• Listen without interruption and with full attention.

• Respond without aggression, and without arguing.

• Do not give excuses for the problem, and thank the customer for drawing attention to it and helping solve it.

• Express sympathy and full understanding.

Customer service problem solving involves: • Asking the necessary questions to get more information and a complete picture of a situation • Finding exactly what the customer needs you to do for them • Explain first what you can do, and then gently adding what you cannot do

University of Cambridge (2006), Customer Service Training Manual: IFTA Staff Training Part 1, http://www.geog.cam.ac.uk/ research/projects/insectfarming/StaffCapacityBuilding.pdf 8

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

• Discussing in detail all opinions, and then deciding what needs to be done • Acting immediately on what was discussed • Check the result to make sure the customer is completely satisfied.

Do’s and Don’ts of Customer Service

Wrong Approach “I don’t know.”

Polite and Friendly Alternative “I’ll find out.”

“No.”

“What I can do is…”

“That’s not my job.”

“Let me find the right person who can help you with …”

“You’re right – this is bad.”

“I understand your frustrations.”

“That’s not my fault.”

“Let’s see what we can do about this.”

“You want it by when?”

“I’ll try my best.”

“Calm down.”

“I’m sorry.”

“I’m busy right now.”

“I’ll be with you in just a moment.”

“No.”

“What I can do is…”

“Call me back.”

“I will call you back, what is your telephone number.”

Most of the foregoing information was extracted from: University of Cambridge (2006), Customer Service Training Manual: IFTA Staff Training Part 1, retrieved from http://www.geog.cam.ac.uk/research/projects/insectfarming/StaffCapacityBuilding.pdf

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CHAPTER 4, MODULE 4.3: CUSTOMER CARE

End of Module Review CEBO Practical Activity ▶▶ Participants will be assigned to groups of approximately five persons each ▶▶ Each group will constitute an independent team charged with: ✓✓ selecting a business idea ✓✓ choosing a business name ✓✓ developing a management structure with assigned titles and responsibilities ✓✓ developing a business plan and marketing mix ✓✓ applying for a secured loan of up to EC$ 300.00 to start-up ✓✓ presenting collateral and identification when applying for the loan ✓✓ presenting and defending business proposals to the Bank of CEBO Loans Panel ✓✓ engaging in the practical application of a business plan (conduct business) ✓✓ maintaining a strict record of all purchases (collect and present receipts) ✓✓ earning a reasonable profit ✓✓ preparing financial statements (templates provided) ✓✓ presenting a performance report to the Bank of CEBO on day five ✓✓ making an initial loan payment of 25% of loan amount following sales on day six ✓✓ completing payment of loan by paying the remaining balance of 75% of loan amount on day six ✓✓ paying 10% interest on loan on day six ✓✓ presenting a business performance report at the closing ceremony on day six ✓✓ deciding on how to manage, reinvest, and/or distribute the profits following training ▶▶ Each group is expected to appoint a Chief Executive Officer (CEO) or General Manager to lead the group/ business; ▶▶ Participants are expected to give their CEO/ Manager full support and cooperation in pursuit of a successful business venture. Individuals who fail or refuse to contribute sufficiently shall, as in any other business environment be subject to termination from said business and the course in general.

Ineffective CEO/Managers may also be removed by the faciliatator. ▶▶ Guidance and advice will be afforded to all groups. However, strategy decisions are to be made by the group.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

CHAPTER 5: THINKING “SMART” OBJECTIVES To help you the participants: develop basic SMART objectives and a basic business plan.

By the end of the session you will have: developed a basic business plan.

Module 5.1: Developing A Basic Business Plan Strategic planning is the process of determining where you want the business to go and how you plan to get it there. The business plan does not run the business – it is a road map that provides direction for the organization and a tool to attract investments and support. The process of developing a business plan begins with expressing a vision of what you want to achieve and where the business should be in 5/10 years; and continues with determining related goals, purpose/mission, objectives, strategies and other elements.

Figure (below): Holistic Strategic Planning for Business

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CHAPTER 5, MODULE 5.1: DEVELOPING A BASIC BUSINESS PLAN

Setting Objectives Business objectives should be SMART: Specific (S), Measurable (M), Attainable (A), Realistic (R) and TimeBound (T). ✓✓ Specific objectives reveal exactly what the business will accomplish. ✓✓ Measurable objectives are practical ✓✓ Attainable objectives are those that may be challenging, but are possible within the scope of available resources, time, and money. ✓✓ Realistic objectives are both achievable and possible. ✓✓ Time-bound objectives have clear cut deadlines.

Adapted from http://www.focuspointeglobal.com/

Outline Business Plan The outline of a basic business plan is shown below. CEBO entrepreneurs should ask themselves the following questions: i. Where, broadly speaking, do you want the business to be at the end of the week (vision)? ii. What is your company, what does it do, what does it stand for and why? (brief mission/purpose statement capable of being expressed in less than fifteen (15) seconds or the time that it takes for an elevator ride as shown in the example of the Elevator Pitch overleaf), iii. What are the company’s core beliefs (values)? iv. What specific services/products will the company produce by the end of the workshop and what specific steps are required to produce them goals/ objectives)? v. What raw materials, people, business premises, equipment, finances and other resources do you need to achieve the goals/objectives (inputs)?

A more elaborate business plan template is shown in Annex II.

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ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

Outline of a Basic Business Plan I. Executive Summary GG

Vision Statement

GG

Mission Statement

II. Company Summary GG

Company Ownership

GG

Start-up Funding

GG

Company Location and Facility

III. Market Analysis Summary GG

Market Segmentation

GG

Market Analysis

GG

Target Market Segment Strategy

GG

Market Needs

GG

Industry Analysis

GG

Competition and Buying Patterns

IV. Strategy and Implementation Summary GG

Competitive Edge

GG

Marketing Strategy

GG

Sales Strategy

GG

Strategic Alliances

V. Management Summary GG

Management Team

GG

Personnel Plan

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CHAPTER 5, MODULE 5.1: DEVELOPING A BASIC BUSINESS PLAN

Business Plan Sample and Elevator Pitch Below are examples of a Basic Business Plan and an Elevator Pitch.

Roach Glass Company Elevator Pitch

Roach Glass Company Basic Business Plan

Hi, my name is Orlando Roach, CEO of the Roach glass company producing, the best glassware across the Caribbean. Our glasses are the best because they are made from the finest materials, thick, not thin as the usual glasses, and customized to suit customer preferences.

▶▶ Vision statement – by the end of the workshop the Roach Glass company would have made a profit of 100% through selling glassware; ▶▶ Mission/purpose statement – Roach Glass Company sells high quality glassware at competitive prices matched by excellent quality service to satisfy customer needs;

Our products are made from indigenous environmentally friendly materials and come in a wide range of colours and designs – we ship to every country in the world and you can order on line.

▶▶ Value statements – sustainable use of the environment; turning trash into cash; customer satisfaction matters;

I’m going to send you a sample and call your secretary for an appointment tomorrow.

▶▶ Goals – by the end of the week we will sell 50 customized pieces of glassware;

Here’s my card, and can I have one of yours, please?

▶▶ Objectives/Activities - precise steps that you will take to reach your goal 1. purchase glassware, paint and design tools, identify potential customers; 2. conduct a market survey to assess who is likely to buy, where and at what prices; 3. asses the cost of inputs and determine selling price that would generate a profit; 4. prepare and distribute flyers to market the product; 5. sell the product; 6. evaluate sales and calculate profit or loss.

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Module 5.2: Managing Risk and Contingency Planning Once a business is established it can be negatively impacted by economic recessions, natural and man-made disasters and many other events beyond the control of the entrepreneur. The business model should include a contingency plan as insurance for times of financial hardship. The contingency plan may be an independent document or smaller parts of the business plan that: i. Is, regularly practiced and revised as necessary on an ongoing basis; ii. protects okay electronic information from loss, theft or malfunction; iii. helps weather man-made and natural disasters; and iv. extends the life of the business in the event of illness, accident or death.

A sum equivalent to twenty to thirty per cent (20–30%) of the budget should be set aside for contingencies. Be prepared for the worst, although it may never happen.

Contingency Plan (Making a Plan B) Fires, floods, hurricanes – these are the things we often connect with contingency planning. Contingency planning is not just about major disasters. On a smaller scale, it’s about preparing for events such as the loss of data, people, customers, and suppliers, and other disruptive unknowns. That’s why it’s important to make contingency planning a normal part of your everyday business operations.

Figure (below): Simple Contingency Plan

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CHAPTER 5, MODULE 5.2: MANAGING RISK AND CONTINGENCY PLANNING

The need for contingency planning emerges from a thorough analysis of the risks that your organization faces.

It’s also useful in thinking about new and ongoing projects: what happens when ‘Plan A’ doesn’t go as expected?

Sometimes Plan A simply means ‘business as usual.’

Exit Planning Entrepreneurs should also have a clear vision of how and when they would exit the business. The timing and manner in which they exit (leave) the business can affect: • the value which they and their shareholders realize from the business, whether a cash deal or deferred/staged payments; • the future success of the business and its products or services; • continued involvement in or control of the business; and • tax liabilities.

It is best to exit the business at a time of one’s choosing, e.g. when the business is doing well and the market conditions are advantageous.

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CHAPTER 6: UNDERSTANDING THE MARKET OBJECTIVES To help you the participants in: developing, administering and analyzing the results of a basic marketing survey; and designing and distributing promotional materials.

By the end of the session you will have: developed and administered a marketing research instrument; and collected and analyzed data; developed and distributed promotional business cards and flyers.

Module 6.1: Market Research and Analysis The Five P’s of Marketing Market research helps entrepreneurs to visualize their customers, market their products/services and determine their competitive advantage. An understanding of the five (5) Ps below will help you to design a survey or questionnaire that asks the right questions.

• People - (your target market) - who would buy this product or service?

• Product - Does this product/service meet or create customer need?

• Price - Is it priced low enough for you to buy it and high enough for the business to make a profit?

• Place - Where would you expect to buy it? Where will there be a demand for it? Where will customers easily find it?

Promotion - Do the advertising and publicity strategies constantly remind you of the product’s unique ability to satisfy your need?

Doing Simple Market Research In order to make money, businesses need to appeal to customers and keep them coming to the business to purchase over and over again. Business is about more than a quick, one time sale. This is because there is need for a steady stream of income to the business in order to pay bills, develop products and services and maintain operations over an extended period of time. Many young people would like to start a business but may consider the target community too impoverished for the business to make a profit. No matter how disadvantaged the community, THERE IS SOMETHING THAT PEOPLE MUST SPEND MONEY ON FOR DAILY SURVIVAL, such as food, clothing, shelter, leisure and entertainment. Creativity and innovation can make the difference.

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CHAPTER 6, MODULE 6.1: MARKET RESEARCH AND ANALYSIS

Why do Market Research?

Market research will help you to: (a) Know your competition • Who else offers your product/service?

• What are the names of competitors?

• What are their prices?

• What quality is their product/service?

• What is your competitive advantage?

• How can information be collected from competitors? (b) Understand Consumer Behavior - when a potential customer recognizes a need he/she will: • seek information about a product/service to fill that need (awareness); • evaluate alternatives, i.e. compare products for price and content; • make a decision to purchase in order to test how well it performs; • evaluate the purchase to see if it performs well; and • develop brand loyalty if satisfied with the product.

Basic T Shirt Market Survey • If hand painted t/shirts were to come into the market would you purchase them?

• What would be your reason for purchase?

• What sizes and colours would you buy?

• How much would you pay for a hand painted t/shirt?

• Where would you expect to find this product?

Market Segmentation Market segmentation is about identifying groups of customers with common needs. For example, a market segment of students may have need of late night food delivery or laundry services. A market segment of homeowners may need window cleaning, while the segment of parents may need educational software apps.

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Market segmentation helps business owners target specific people with messages that focus on their needs as users of products and/or services. Once the segment and needs are identified, successful business owners often do market research on the target market.

Basic Market Research Techniques Market research techniques include the following.

• sampling and getting direct feedback from potential customers • Primary Research by observing the customer in action: telephone, face-to-face interviews; online/mail surveys/ questionnaires or focus groups; • analyzing published data to identify competitors and target segments and to establish benchmarks • Secondary Research: this includes reviewing complaints agaisnt existing businesses, using the internet, reviewing telephone directories and other on-line directories to see what the competition offers.

A combination of both types of research methods can also be used.

Steps in simple market research Here are some steps in simple market research.

• Identify potential growth market • Identify typical customers through marke segmentation • Determine needs and wants of customers using appropriate market research techniques • identify market trends • Make a product or develop a service quickly then test it on the target group • Gather feedback from interacting with customers and take corrective action.

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CHAPTER 7, MODULE 7.1: BUDGETING

CHAPTER 7: MONEY MATTERS OBJECTIVES To help you the participants: Gain the knowledge and skills to create a basic budget; Develop an awareness of various sources of funding your enterprises; Get hands on experience to cost and price your products/services; Gain the knowledge to procure raw materials; Gain the knowledge to prepare profit and loss statements; Gain the knowledge and skills to manage money.

By the end of the session you will have: gained practical knowledge and skills in the use of financial tools and materials; examined various sources of funding the business enterprise; understood the importance of • budgeting in business; • separating and managing personal income; • saving (as it relates to contingency planning); • money management; costed and priced products and developed a budget; practiced money management.

Module 7.1: Budgeting Procuring and Costing raw materials for the business Procurement is the acquisition of goods or services. Goods/services should be of the best quality and sourced at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location.

It is often better to purchase things in bulk (wholesale) as the unit costs in this case are normally lower than if you were purchasing small quantities (retail). Greater profits can be gained from wholesale purchases than retail purchases.

Building a Budget Budgeting helps in the procurement process. A budget is simply a plan for what you want to do with your money.

It sets restrictions on spending, but it does not have to be oppressive. Sticking to it, you will have the money for the things that are important to you, whether it be saving for a child’s college education or taking a nice vacation once a year. Though everybody’s budget is different, there is one consistent rule: expenses should never exceed income.

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✓✓ List and total your monthly net income; ✓✓ List and total your current monthly expenses; ✓✓ Subtract your current expenses from your current income; and ✓✓ Identify where you want to make budgetary changes.

Figure (below): Simple Contingency Plan

Step 1: Gather Information Collect all of your bank statements, receipts, and credit card statements for a given month. Create a number of categories for living expenses such as food, gas, rent/mortgage, utilities, clothing, loan payments, etc. Based on the information you gathered, make an educated estimate of the amount that you spend in each category. Also, figure out your take home income (total monthly income minus taxes).

Step 2: Write it Down!

The biggest mistake that so many businesses households make is that they skip the easiest step in the budgeting process — writing down the budget! This is a must. There is something powerful about seeing it on paper rather than keeping it in your head.

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CHAPTER 7, MODULE 7.1: BUDGETING

Step 3: Spend Your Money on Paper This is a very important step. There are two methods of budgeting: looking back and looking ahead budgeting.

Looking back budgeting involves spending all of your money and keeping track of where it all went at the end of the month. Looking ahead budgeting means spending the money on paper in the beginning of the month, and then spending within the designated amount in each category. The latter is the only method of budgeting that is effective. If you write down five hundred dollars ($500) for food for the month of February, then you have five hundred dollars ($500) to spend at the grocery store that month. You spend only that amount for the month.

Step 4: Create a System That Works For You Organization is the key to a successful budget. Make sure you have a system that you stick to for setting aside a certain amount of money for certain categories. One popular method for organizing a monthly budget is the envelope system. Take an envelope for the food category and pay yourself five hundred dollars ($500) (or whatever your amount is) by placing it into an envelope marked “Food Money”. Do the same for Gas, Entertainment, Miscellaneous Money, and Clothing. The rest of the money in your checking account will cover bills that need to be paid with a check or debit card.

Step 5: Be Proactive This step is what keeps a budget working every month. Obviously, your first budget will not be the most accurate when it comes to setting aside money for certain categories. At the end of the month, analyze your budget. If you spent fifty dollars ($50) dollars less for Gas, but you spent fifty dollars ($50) more for food, adjust accordingly for the next month. It’s never this easy, but you get the point. Also, be sure to analyze any categories where you spent much more than you budgeted. If you are spending $500 on entertainment when you budgeted two hundred dollars ($200), then ask yourself some questions. “Why did I spend this much on entertainment this month?” “Do I need to change my habits for going out?” Follow these steps for budgeting and you will start to see the rewards when you have extra money at the end of the month! It will feel like you gave yourself a pay raise! The idea is to budget in an efficient way to end up with extra money at the end of the month. This extra money should be used for paying off debt aggressively, saving long-term, and establishing an emergency/contingency fund.

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End of Module Review Basic Business Budget Business Name: _______________________________________________________________

A. Supplies and Raw Materials (bottles, flour, sugar etc.)

Description

Day 1 Cost

Units

Subtotal 55

Day 2 Total

Cost

Units

Total

CHAPTER 7, MODULE 7.1: BUDGETING

End of Module Review Basic Business Budget B. Equipment / Tools Acquired (tub, cooler etc.)

Description

Day 1 Cost

Day 2

Units

Total

Cost

Units

Total

Subtotal

C. Services and Utilities Acquired (bus fee, printing, advertising, electricity etc.)

Description

Day 1 Cost

Day 2

Units

Total

Subtotal 56

Cost

Units

Total

ENTREPRENEURSHIP MANUAL FOR YOUNG PEOPLE IN THE CARIBBEAN

End of Module Review Basic Business Budget D. Miscellaneous Description

Day 1 Cost

Units

Day 2 Total

Subtotal

TOTAL EXPENSES (add all sub-totals) Supplies / Raw Materials Equipment / Tools Services / Utilities Miscellaneous Total Signature: _______________________________________ Date: ___________________

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Cost

Units

Total

CHAPTER 7, MODULE 7.2: COSTING AND PRICING

Module 7.2: Costing and Pricing The major aim of a business is to make a profit so that the business can sustain itself. If a business continues to make a loss it will die. As a young entrepreneur you should be able to understand how to calculate the cost of your product so that you can price it in a way that enables you to make a profit.

7.2.1 Cost versus Price ✓✓ Cost or Cost Price (C) is what you pay to either buy a product or get it made; ✓✓ Price or Selling Price (P) is what you sell it for; ✓✓ The difference between price and cost is profit or loss; ✓✓ If Price is greater than Cost you make a profit and if Price is less than Cost you make a loss

7.2.2 Calculating your Cost • If buying the product for resale, include the Cost of the finished product and any other costs involved in getting the product ready for resale e.g. transportation costs; • If making the product for resale, include the Cost of Raw Materials and Labour (wages), Indirect Costs such as electricity, water, packaging; and Fixed Costs such as rent, salaries.

7.2.3 Pricing Methods There are two (2) basic pricing methods which we will consider: ✓✓ Cost Plus or Cost Based; ✓✓ Competitive/Competitor Based or Market Oriented.

7.2.4 Cost Plus/Cost Based This is the simplest pricing method. Price is calculated by using the cost and then adding a percentage (profit) to get the selling price.

Example: Cost - $100 Percentage Profit – 25% Selling Price - $100 x 1.25 = $125 Profit = Selling Price – Cost Price = $125 - $100 = $25 58

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7.2.5 Competitive/Competitor Based or Market Oriented This method is based on the information derived from your market research concerning what prices customers are willing to pay and also what prices are being charged by your competitors in the target market.

Penetration Pricing – initially you decide to set your prices lower than your competitors in order to gain market share and customers. Be very careful using this method as you cannot sustain a loss over a long period and it may be difficult to raise prices later as customers may get used to the initial lower price. This should only be used as a short-term measure.

Customer Based – this is where you base prices on what customers are willing to pay. If this is lower than your cost you will need to avoid that market, lower your costs, change your product attributes/qualities so that you can charge a higher price or adjust your production methods. For example: • Price Discrimination – set a different price for different segments of the market. This may be based on age, class or even opening hours; • Premium Pricing – pricing the product or service at a very high level so it becomes a luxury or “snob” good that people are willing to pay “top dollar” for.

7.2.6 Getting Creative with Pricing There are other ways to “increase your price” and revenue without actually increasing your prices such as: • revise the discount structure; • change the minimum order size; • charge for delivery and special services; • invoice for repairs on serviced equipment; • charge for engineering, installation; • charge for overtime on rushed orders; • collect interest on overdue accounts; • produce less of the lower margin models in the line; • write penalty clauses into contracts; and • change the physical characteristics of the products.

7.2.7 Break Even Analysis Most businesses start off making a loss before they make a profit. The point at which they stop making a loss is called the Break Even Point (BEP) and all entrepreneurs should ensure that they have a plan to sustain themselves until the BEP. In order to calculate your BEP you need to know about Fixed Costs and Variable Costs.

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Fixed Costs (FC) – those that do not vary with the number of products made; e.g. you pay the same amount every month for rent, salaries or loan repayment whether you make a profit or not.

Variable Costs (VC) – those that vary with the amount of products made or bought; e.g. raw materials, hourly wages, packaging , equipment and tools. FC and VC = Total Costs (TC).

Profit (P): In order to determine your Profit calculate Total Revenue (TR) or the amount of money made from selling each product or service. To find TR multiply the number of units of products sold or services offered by the price for each. TR = Selling Price (P) x Quantity (Q) = P x Q. Profit or loss is the difference between TC and TR. Profit occurs when TR is greater than TC. A Loss occurs when TC is greater than TR. For example, if your TC is $200 and you sell $150 you will make a loss because TC of $200 was greater than TR of $$150. If however your sales were $250 then you would make a profit of $50 ($250 - $200).

Since the ultimate aim of business is to make a profit, entrepreneurs must ensure that sales are greater than TC. Start by ensuring that sales first cover the FC and then the VC which is dependent on production levels.

Remember TC = FC + VC = $1000 + $4000 = $5000 And also Profit = Sales – TC = $5000 - $5000 = $0 (neither profit nor loss BEP) Therefore the BEP is where Profit = Total Cost If you are feeling adventurous there is even a BE chart (see an example below). As you can see the red indicates a loss, you get to the BEP and THEN you are into the green where you are making a profit… YIPPEE!!!

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End of Module Review Break Even Calculation Business Name:_______________________________________________________ For Period:__________________________________________________________

Fixed Costs Rent Utilities Interest Expenses ( 10% of Loan) Advertising Payroll Equipment / Tools

Total Fixed Costs

Variable Costs Supplies / Raw Materials (Cost of Goods Sold) Services / Utilities Miscellaneous

Total Variable Cost (TVC)

Costs Per Unit TFC / Total number of Units produced = Total Fixed Cost per unit TVC / Total number of Units produced = Total Variable Cost per unit

Break-Even Point Break-Even Sales: (fixed cost + variable cost) Break Even Units: (fixed cost + variable cost) / Units Produced 61

CHAPTER 7, MODULE 7.2: COSTING AND PRICING

End of Module Review Break Even Calculation Goods or services must not be sold at a price that is below the break even unit cost. This figure represents the cost of producing a single unit of product or service. Your desired profit per unit should be added to this figure in order to establish the final price that customers would pay per unit.

Signature: ______________________________________ Date:___________________

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Module 7.3: Financial Projections/Forecasts A cash flow statement outlines the expected movement of cash in and out of your business and helps the entrepreneur to assess the health of the business and to monitor the movement of cash. It is a tool to (a) analyse the differences between all receipts (money coming in) and payments (money going out) during a given period; and (b) to identify areas where there may be a shortage of cash as a basis for taking corrective measures.

Cash in hand is more favourable than delayed payment terms, especially in business startups. In preparing cash flow statements the entrepreneur should: • be aware of seasonal variations in sales and overheads e.g. Valentines, Christmas, carnival, high tourist season; • ensure cash withdrawals are realistic and cover your survival income needs;.

• be prepared for a delay between sales and income, i.e. sales in January may not be paid for until March; • be realistic and not over-estimate stock levels; • spread some costs over a 12-month period and pay monthly or quarterly; • be aware that some loan period commencement dates may vary; and • allow for Value Added Tax (VAT) or any other applicable taxes.

Figure (below): Monthly Cash Flow

January

February

March

£000

£000

£000

Receipts Sales revenue

£2,500

£2,500

£2,500

Payments Purchases of stock

£1,250

£1,250

£1,250

Running cost

£1,000

£1,000

£1,000

Total Payments

£2,250

£2,250

£2,250

Opening bank balance at Start of month

£1,000

£1,250

£1,500

And total receipts

£2,500

£2,500

£2,500

Minus total payments

£2,250

£2,250

£2,250

Bank balance at the end of the month

£1,250

£1,500

£1,750

CASH FLOW

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CHAPTER 7, MODULE 7.3: FINANCIAL PROJECTIONS/FORECASTS

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Module 7.4: Funding The Business 7.4.1 Getting Money from Friends and Family Family and friends may be the first persons you can convince to buy-in to your business idea because in most cases they should have a vested interest in your personal success. However, always remember that it is important to take a business approach. Asking friends and family to help you start your business, if not managed properly, can lead to challenges in future relationships. These are some steps to consider when asking friends and family to invest in your business. i. Understand why they are investing; ii. Create a “family and friends pitch”; iii. Ensure it is a loan, not an investment; and iv. Establish a loan agreement with a realistic repayment term and contingencies.

Other sources of startup funding include: Caribbean Group of Youth Business Trusts (CGYBTs), trademarked Centre of Excellence for Youth Entrepreneurship.

Youth Business Trusts (YBTs)8 are innovative, non-traditional mechanisms to create competitiveness, provide employment for youth, create jobs for others and ultimately build a culture of entrepreneurship in and among Caribbean countries. They offer an integrated package of business start-up support to regional, underserved, entrepreneurial youth, ages eighteen to thirty-five (18-35)9.

Credit unions: cooperative financial institutions established to make credit more available to people of small means and owned and controlled by the members. They are not-for-profit and provide a safe, convenient place for members to save money and get loans at reasonable rates. Young entrepreneurs are encouraged to become a member of their local credit unions - you can only access loans if you are a member and have good credit history and collateral (depending on whether the amount of money needed is more than the member’s savings).

Banks: profit making financial institutions, owned by groups of stockholders whose interests include earning a healthy return on their investments. There are many types of banking institutions including investment banks, central banks, credit unions, online banks, savings and loan institutions.

When you get to the stage where you can borrow money from a bank, you will need to be clear on: • What you need the money for; • How much money you need;

8 YBTs exist in Barbados, Trinidad and Tobago, Guyana, Belize, Dominica, Jamaica, Saint Lucia and St. Vincent and the Grenadines 9 Services include social intervention/analysis; Business start-up loans; Business affiliated grants; Business mentoring; Tailor made, needs based Personal Development and business start-up/development Training; Marketing and Promotion; Networking; Business to business linkages; Access to markets; Value chains; Exposure; Networking.

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• How much you can afford to repay; and • When you need the money.

Some loans can take a long time to be approved. In order to hasten the process, you should ensure that you prepare the documents that the Bank needs as detailed in Annex I, Documents Normally Required for Bank Loans.

Venture Capital/Equity - A venture capitalist (VC) provides equity financing (venture capital) to companies with high growth potential. Because of the high risks involved, VCs rigorously research business ideas before investing in one, and will take a share of any company they invest in. Any young entrepreneur wishing to attract equity financing should understand that VCs will assess their business ideas, the business plan, the market dynamics, etc., advise them and assist with customer contacts, market specific intelligence etc.

Micro-finance is the provision of financial services such as small loans, savings, insurance and training to poor and low-income clients by microfinance institutions. Micro-credit refers to very small loans for unsalaried borrowers with little or no collateral, provided by legally registered institutions. These loans are not just for business use but for household consumption and investment.

Angel Investors provide financial backing for small startups or entrepreneurs in the form of a one-time injection of seed money or ongoing support to carry the company through difficult times. Angel investors may be hedonistic, attracted by the excitement of creating something new; or altruistic, concerned about helping his/her community; or attracted by the potential of developing nvironmentally friendly technologies. Young entrepreneurs wanting to attract an Angel Investor will need a high growth business, a solid management team, solid business plan, opportunities for the investors to become involved in the business and a structured exit strategy.

Module 7.5: Personal Money Management Money management is the process of knowing where you are spending your money today and having a wellthought-out plan in place for where you want it to go in the future. For successful money management you will need to know how to: ✓✓ Set Goals; ✓✓ Get Organized; ✓✓ Track Spending; ✓✓ Build a Budget; and ✓✓ Save Money.

This is important as taking the time to set goals today allows you to achieve what you want in the future.

7.5.1 Set Specific Goals Financial goals should be specific. For example, wanting to save one Million ($1,000,000) for retirement by age sixty (60) is a goal, but wanting to be rich is just a wish. Before you start to save, determine exactly what you want, when you want it, and how much it will cost.

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There are three basic goal types: ✓✓ short-term (achievable in under a year), ✓✓ mid-term (achievable in one to five (5) years), and ✓✓ long-term (achievable in five-plus years).

If you have multiple goals, you may choose to work toward them all at once or concentrate on one and then move to the next.

7.5.2 Get Organized Being organized is essential to efficient money management. Once all of your information and paperwork is in order and accessible, you’ll never have to waste time searching for important documents, wonder about account balances, or miss bill-payment deadlines.

7.5.3 Designate a Personal Money Space Set up an area in your home where you can conduct all of your personal financial business. Ideally, it should be near your computer, file cabinet or some secure area for storage.

Ensure that you file receipts, warranties, tax returns and supporting documents, paid bills, and account statements so you can quickly access them. To guard against identity theft, ensure that you cut up or shred all personal and financial documents before you discard them. Pay keen attention to specific items such as ✓✓ ATM receipts; ✓✓ Account statements; ✓✓ Canceled and voided checks; ✓✓ Credit reports; ✓✓ Employment pay stubs and records; ✓✓ Expired passports and visas; ✓✓ Expired credit, debit, and ATM cards; ✓✓ Pre-approved credit card applications.

7.5.4 Go Paperless The more incoming paperwork you have, the harder it is to keep straight. A great way to simplify your system is to sign up for online statements or save work on the computer. It cuts down on mailed bills that can get lost in the mail or a shuffle of paperwork and reduces your vulnerability to identity theft. In the future you may want to consider scanning important documents, such as titles and receipts for large-ticket items, onto your computer.

This way, you will have a backup in case the original documents are destroyed or lost.

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7.5.5 Track Spending Many financial problems, such as not being able to pay bills, having credit card debt, and not being able to save, stem from not following the golden rule of money management: spending less than you earn.

Are you currently following the golden rule?

By tracking your purchases, you can see how much and what you are spending your money on.

Accuracy and commitment are vital. You should track your expenses for a minimum of one month. However, because expenses can fluctuate, the longer you do it, the better.

The following are some tracking techniques: • Write it down – Record your purchases in a small notebook you carry with you, or write them down using the Fritter Finder. At the end of the day, list your total purchases in the Tracking Worksheet or a computer spreadsheet.

• Keep receipts – Get and keep receipts for all of your purchases, and tally them at the end of the day.

Where Possible • Stick to plastic – Just use your credit cards, and refer to the statements your financial institutions provide. You can also check your account activity online.9 • Use budgeting software – If you have a computer with budgeting software, you can input the information you have gathered into it. Some programs even link to your checking and credit card accounts and automatically report your purchases.

Examine your findings After you have tracked your spending for at least a month, examine your findings. Begin to sort out your “wants” from your “needs”. If you are like most people, you’ll be able to identify areas of spending waste fairly quickly.

When you build your budget, you can use the results of your tracking work to make sensible and reasonable changes.

7.5.6 Build a Budget A budget is simply a plan for what you want to do with your money. It sets restrictions on spending, but it does not have to be oppressive. And by sticking to it, you will have the money for the things that are important to you, whether it be saving for a child’s college education or taking a nice vacation once a year. Though everybody’s budget is different, there is one consistent rule: expenses should never exceed income. ✓✓ List and total your monthly net income; ✓✓ List and total your current monthly expenses;

9 This is not necessarily the best option since you statement does not show what you purchased.) If you do ever use cash, it is important to record it.

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✓✓ Subtract your current expenses from your current income; and ✓✓ Identify where you want to make budgetary changes.

7.5.7 Save Money Setting aside cash on a regular basis is a habit worth getting into. It allows you to achieve your financial goals and provides a safety net during financially-challenging times.

How much should you save?

A general rule of thumb is that you should set aside ten per cent (10%) of your monthly net income. However, depending on your financial goals, you may want to save more. If you can afford to set aside ten per cent (10%), you typically do not want to save less, but if money is tight, begin with whatever you can afford, even if it’s only a few dollars.

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SECTION 3.

LET’S GOOOO!

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CHAPTER 8, MODULE 8.1: PRODUCT DEVELOPMENT, NEGOTIATIONS AND SALES

CHAPTER 8: SELL, SELL, SELL FOR SUCCESS!!!

OBJECTIVES To help you the participants: refine the sales element in the business plan; and develop basic negotiation skills.

By the end of the session you will have: refined the sales element in the business plan; sold excellent products or services; and developed basic negotiation skills.

Module 8.1: Production Development, Negotiation and Sales 8.1.1 Product Development Having conducted a marketing survey, companies analyze the results and, on that basis, finalize the selling plan.

They then develop or outsource new products in accordance with their business plans and offer them for sale; or modify existing products so that they appear new.

8.1.2 Negotiation Negotiation is the art of achieving goals through discussion and bargaining with another person – it is about compromise and not about winning. Young entrepreneurs often have the hardest time negotiating because they lack confidence that comes from years of experience. To negotiate, both parties must have something which will benefit the other. Styles differ - some people find success with disclosing little upfront; others by being transparent from the beginning; some get right down to business; whereas others prefer to build a personal relationship through informal meetings and conversations.

8.1.3 Effective Selling Effective selling is persuading and convincing the consumer that your product satisfies their needs. General principles of effective selling include: • make a good personal impression; always be prepared, neat and clean; • view selling as teaching; teach customers about the product/service; • know and believe in the product/service, understand how it can benefit customers; • prepare sales presentations in advance;

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• think positively and develop strategies to cope with criticism and rejection; • maintain an organized record keeping system; and • Stay in touch with your customers and potential customers; build relationships/repeat sales/referrals.

Module 8.2: Advertising/Promotion Publicity and advertising are promotional tools that attract customers and increase sales. Advertising is purchased but publicity (also referred to as public relations) is free. Promotional strategies include: • Unique branding; • Business cards; • Discount coupons; • Flyers/exhibitions/directory/internet; • Promotional items such as t-shirts/caps/bags; • Promotional prizes; • Trade shows/networking/flea markets • Use of websites/ internet, ecommerce and social media strategies.

Module 8.3: Branding Branding refers to a name, term, sign, symbol, design, colour, letters or combination of these used to identify products of a seller and differentiate them from those of competitors.

Successful brands create strong, positive and lasting impressions, all of which are perceived by audiences to be of value to them personally. Note that: • Brands should be memorable and easy to pronounce • Individuals perceive brands without purchasing or having direct experience with them.

Brand Equity: This is the value of a brand based on the extent to which there is: ✓✓ name awareness; ✓✓ perceived quality; ✓✓ strong positive brand associations; ✓✓ brand loyalty.

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Advantages of branding i. Tells buyers about the product; ii. calls buyer attention to new products; iii. promotes product consistency; iv. gives sellers legal protection for unique product featuresâ&#x20AC;&#x201D;otherwise copied by competitors; v. encourages lower price sensitivity; and vi. leads to better quality products and services.

Figure (below): Brand Personality

Module 8.4: Exploiting ICT for Business Information and Communication Technology (ICT) is concerned with storing, retrieving, manipulating, transmitting or receiving data electronically in a digital form (personal computers/tablets, digital television, email, cell phones and robots); and with the way these different uses can work with each other. In business, ICT is often categorized into two (2) broad types of products: i. traditional computer-based technologies for things you can typically do on a personal computer, using computers at home or at work; and 74

CHAPTER 8, MODULE 8.4: EXPLOITING ICT FOR BUSINESS

ii. communication technologies allowing people and organizations to communicate and share information.

Components of ICT systems include user interfaces, applications, operating systems and hardware, as shown at right.

The use of ICT can make routine or repetitive tasks easier and faster and therefore cheaper for businesses. They allow people to communicate with each other faster and more efficiently. The application of ICT in business can therefore improve productivity and reduce costs. When used in business, ICTs can: • increase revenue, productivity and profitability by reducing costs, lowering prices and increasing sales; • improve stock control, production, record keeping, marketing, customer service and other business functions; • facilitate more effective communication, e.g., fax, mobile phones, internet, intranet, emails, and social networks; • reduce times for delivery (GPS and route planning software); and • improve production through software such as Computer Aided Design/Computer Aided Manufacturing (CAD/ CAM)and Common Information Model (CIM); and through robotics.

PowerPoint PowerPoint is a Microsoft computer tool that allows you to put together an effective presentation on a particular subject in the form of a slideshow with text, pictures, charts, diagrams and even sounds. These are useful for pitching the business plan to potential investors, new product introductions, marketing and sales presentations.

An effective power point presentation begins with careful planning. Some tips for an effective presentation are provided below – • clarify the reason for the presentation and what you hope to accomplish from it; • outline the main points that you want to get across and sequence them logically; • use attractive colours that complement each other and show up the text clearly; • use a font large enough for the audience to read the text; • do not crowd too much information on one slide; • keep your slides to a maximum of ten (10); • practice the presentation - summarize slides as opposed to reading everything that they contain; and • print your presentation as a handout (six (6) slides to a page).

PowerPoint Electronic commerce is the paperless exchange of business information using e-mail, websites, electronic bulletin boards, fax transmissions, electronic funds transfer and other forms of electronic data interchange. It facilitates better and faster business by giving customers controlled access to business computer systems to 75

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conduct transactions without human intervention, such as to download and sell â&#x20AC;&#x153;soft merchandiseâ&#x20AC;? (software, documents, graphics, music, etc.), shop online and sell/buy stocks and bonds. E-commerce is a powerful, effective means of communicating and doing business online.

On-Line Business On-Line Business is conducted solely online and payments are made through secure electronic connections and special merchant accounts. Orders may be outsourced for more efficient and professional handling of processing and shipping/transportation. Online businesses use word of mouth, advertising and other traditional marketing strategies.

Social Media and Entrepreneurship The term social media applies to a group of internet-based applications (e.g. Twitter, Facebook blogs and Linked In) that allow organizations, communities and individuals to create and exchange content for the purpose of communication and social interaction.

Figure (below): ICT Applications for business

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CHAPTER 9: PLAN FOR BUSINESS

CHAPTER 9: PLAN FOR SUCCESS OBJECTIVES To help you the participants: assess your future plans evaluate the workshop; present and celebrate your accomplishments; and receive guidance and referrals

By the end of the session you will have: presented a professional looking business plan; prepared a professional portfolio and exhibited products and services; participated in a closing and awards ceremony; received information and/or guidance in other areas relevant to business.

This CEBO Session is intended to be an open session of conclusion to finalize plans for the way forward. Participants will receive additional information and guidance on the way forward, as needed, in areas such as: • taxation (sources, exemptions) and incentives; • insurance, e.g. national/health/life/limited liability; • savings (e.g. credit unions, banks, partners/drop-hand, securities and investments); • training, business registration, mentorship, funding (with and without collateral or guarantors) and other support services; and • intellectual property (IP) - protection of creations of the mind that have commercial value from unauthorized use, including inventions, trademarks, industrial designs and artistic works • other moral support.

Please take note of the Annexes to the manual.

Annex 1 -Documents normally required for bank loans Annex 2 – Business Plan outline with guidance.

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APPENDIX I Documents Usually Required for Bank Loans • Business profile. This document describes your business, including annual sales, number of employees, length of time in business, and ownership.

• Business plan. A business plan is particularly important for new businesses, as they lack a track record for lenders to go by. Your plan should convey all important facts about your business in a concise manner. Your business plan may range anywhere from five to twenty (5-20) pages, plus financial projections.

• Loan request. This should detail the amount of money requested, how the loan funds will be used, the type of loan, and the amount of working capital you have on hand.

• Collateral. Describe what will be used to secure the loan, including equity in the business, borrowed funds, and available cash.

• Personal and business financial statements. You will likely need to provide financial information for anyone who owns twenty per cent (20%) or more of the business, including owners, partners, officers, and stockholders.

Lenders will want to see a complete schedule of current debts with balances, payment schedules, maturity, and collateral used to secure other loans.

You may also be asked to provide: • Balance sheets from the last three (3) years.

• Profit and loss/ Income statements from the last three (3) years.

• Cash flow projections indicating how much cash you expect to generate.

• Accounts receivable and payables, breaking your receivables and payables in to 30-, 60-, 90- and past 90-dayold categories.

• Personal financial statements listing all personal assets, liabilities, and monthly payments, as well as your personal tax returns for the past three (3) years.

Lenders may also require: • Articles of incorporation/registration; • Proof of taxpayer ID number; • Legal descriptions of real property; • Leases; • Equipment inventories with serial numbers; or • Proof of insurance for collateralized items.

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APPENDIX II: BASIC BUSINESS PLAN OUTLINE

APPENDIX II Creativity for Employment and Business Opportunity (CEBO) Basic Business Plan Outline I. Executive Summary This section should: • Be written last.

• Provide an enthusiastic snapshot of your company, explaining who you are, what you do and why.

• Be less than 2 pages in length.

After reviewing this section the reader should: • Want to learn more about your business.

• Have a basic understanding about your company II. Company Summary: Business Description and Vision This section should include: • Mission statement (business purpose).

• Company vision (statement about company growth).

• Business goals and objectives.

• Brief history of the business.

• List of key company principals.

After reviewing this section the reader should know: • About the business is and what it stands for.

• The proposed company’s potential for growth.

• Specific goals and objectives of the business.

• Background information about the company.

• Company Ownership • Start-up Funding • Company Location and Facility

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APPENDIX II

III. Market Analysis Summary This section should: • Describe your business industry and outlook. (Industry Analysis, Competition) • Define the critical needs of your perceived or existing market.

• Identify your target market. (Market Segmentation) • Provide a general profile of your targeted clients. (Market Needs, Buying Patterns) • Describe what share of the market you currently have and/or anticipate.

After reviewing this section the reader should know: • Basic information about the industry you operate in and the customer needs you are fulfilling.

• The scope and share of your business market, as well as who your target customers are.

IV. Strategy and Implementation Summary This section should: • Identify and describe your market – who your customers are and what the demand is for your products & services.

• Describe your channels of distribution.

• Explain your sales strategy, specific to pricing, promotion, products and place (4Ps).

After reviewing this section the reader should know: • Who your market is and how you will reach it.

• How your company will apply pricing, promotion, product diversification and channel distribution to sell your products and services competitively.

• Competitive Edge • Marketing Strategy • Sales Strategy • Strategic Alliances

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APPENDIX II

V. Organization and Management Summary This section should: • Provide a description of how your company is organized as well as an organization chart, if available.

• Describe the legal structure of your business (proprietorship, partnership, corporation,

etc.).

• Identify necessary or special licenses and/or permits your business operates with.

• Provide a brief bio description of key managers within the company.

After reviewing this section the reader should know: • The legal form of ownership for your business.

• Who the leaders are in your business as well as their roles.

• The general flow of operations within the firm.

• Management Team • Personnel Plan VI. Description of Products and Services This section should: • Specifically describe all of your products and services.

• Explain how your products and services are competitive.

• If applicable, reference a picture or brochure of your products, which would be included in the plan’s appendix.

After reviewing this section the reader should know: • Why you are in business.

• What your products and services are and how much they sell for.

• How and why your products & services are competitive.

VII. Financial Management This section should include: • For a New Business 81

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APPENDIX II • Estimate of start-up costs.

• Projected balance sheet (1 year forward).

• Projected income statement (1 year forward).

• Projected cash flow statement (1 year forward).

After reviewing this section the reader should: • Have a good understanding regarding the financial capacity and/or projections for your company.

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