Entrepreneurship and Small Business Management
This domain tests the entrepreneur's role in spotting opportunities, bearing risk and organising resources, plus the practical contents of a business plan and the real constraints facing small firms in Malawi.
Core rules
- An entrepreneur identifies an opportunity, bears risk, organises factors of production and makes decisions; an investor supplies funds and a manager runs operations - the roles can overlap but are not identical.
- Opportunities often come from unmet needs, shortages, new technology or changed regulations.
- A business plan covers the business idea and objectives, market analysis and competition, marketing plan, operations plan, management team, financial forecasts (start-up capital, cash flow, break-even) and risk assessment.
- Sources of finance: personal savings, family, microfinance, bank loans, government SME schemes and the Malawi Enterprise Development Fund.
- Support institutions: the Small and Medium Enterprise Development Institute (training and advisory), the Malawi Confederation of Chambers of Commerce and Industry (business representation) and the Malawi Bureau of Standards (quality certification).
- Typical SME problems: limited finance and collateral, poor infrastructure and power cuts, weak record-keeping, competition from imports and regulatory compliance costs.
Worked example
A graduate plans a poultry unit in Zomba. The plan surveys restaurants and households, estimates start-up costs (shed, 500 chicks, feed, vaccination), forecasts monthly cash flow, and calculates break-even from feed and chick costs against the selling price per bird. Risks are disease and feed price rises; controls are vaccination schedules, a veterinary contract and buying feed in bulk. Reasoning: the plan is a decision and control tool, not merely a loan application - it shows whether the venture is viable before money is committed.
Traps that cost marks
- Writing a business plan only to obtain a loan.
- Calling any business owner an entrepreneur regardless of risk-taking or innovation.
- Omitting competition, cash flow and risk.
- Confusing the roles of SMEDI, MEDF and the Bureau of Standards.