An idea for an enterprise  (Page 4/4)

This is what our calculation will look like:

Sales: 100 hot dogs @ R6,00 each = R600,00

Cost of products: 100 hot dogs @ R2,75 each, and sauce @ R25,00 = R300,00

Gross profit as first indicator (sales less cost of product) = R300,00

Operating costs: Stall @ R50,00 and 20 posters @ R8,00 each = R210,00

Operational profit = R 90,00

It seems, therefore, that the enterprise will be profitable. The selling price, as provisionally determined by taking the market indicators into account, can thus remain unchanged. If the calculation did not show a profit, we could have considered adjusting the selling price upwards.

There are important tests that have to be done to ensure that the project is truly viable: we have to determine where the breakeven point is in case we are not able to reach the goal of selling 100 hot dogs.

Assignment:

Determine the financial viability of your business idea by carrying out the above-mentioned steps, using your data.

Assessment

Memorandum

ACTIVITY 1

1. Seek and utilise new opportunities

Perseverance

Dedication

Takes chances (moved from Jhb to Cape Town)

Quality

1. Job creation

Improvement of quality of life

Training

• The aim of the research assignment is to make the learners realise that support opportunities do exist and that one does not necessarily have to fall back on one’s own resources. Learners must also realise that the government regards successful small business initiatives as important, and supports such initiatives.

The purpose of the class discussions is to make the learners

realise that opportunities exist where one does not expect to find them or that there are opportunities one might not have thought of before;

become accustomed to lateral thinking;

understand that ideas should be tested properly right from the start; that one cannot embark on something, and spend time and money on an enterprise just to realise later that it isn’t working.

A further aim is to generate work of a high quality in the classroom. Otherwise learners could easily keep themselves occupied with ideas that are not suitable for exercises later in the module.

ACTIVITY 2

• This activity has been set out in such a way that the learners can work through it on their own with some support from you. You do not need additional guidelines.
• A major part of the activity is the same as the work covered in Grade 8. However, it must be done again, seeing that it is the preamble to the following activity.
• The comments to the Grade 8 teacher are repeated here as they are very important:

• Testing the viability of the business idea allows the learner to deal with important concepts in the field of financial business management and you must make sure that they fully understand the concepts. The difference between product costs and operational costs and the meaning of gross profit must be fully understood. If the product cost is too high in relation to the selling price, the gross profit will be too low to be able to afford essential operational necessities such as salaries and marketing.
• The examples in the module can be used to check whether the learners’ calculations are correct.