Today, as promised, we start the serialisation oF ENTREPRENEURSHIP -UNEMPLOYMENT SOLUTION- a book Written by Lawrence Akinkunle Fadeyi
Entrepreneurship book
Fadeyi, an alumnus of Federal University of Technology, Akure, Nigeria, The University of The State of New York, Albany, New York, USA, is Also President/CEO, Candova Limited (Financial and Management Consulting) ENTREPRENEURSHIP-UNEMPLOYMENT SOLUTION-An Instructional Manual for all aspiring business Builders and students on entrepreneurship courses. It Aims to Help Develop the Practical Skills, Habits, and Mindset Vital to Entrepreneurial Success. More Importantly, it Provides Invaluable Lessons and Advices for Traditional Businesses.
This edition is published by Candova Limited Website: www.candovabooks.comEmail: sales@candovabooks.comISBN 9781005450236©LAWRENCE AKINKUNLE FADEYI This book is copyright. All rights reserved. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under Copyright Act, no part of this publication may be reproduced, stored, in retrieval system or transmitted in any form or by any means, electrical, chemical, mechanical, optical, photocopying, recording or otherwise, without the prior written permission of the copyright owner and of the Candova Limited. D e d i c a t i o n To all the entrepreneurs who are desirous to succeed against all odds& To all my friends and family who bring me joy.AcknowledgementsThe Almighty God has been my refuge and strength since conception in my mother’s womb till date. Many people have helped in shaping my career but far too numerous to mention here individually, nonetheless, I am in their debt. My lovely wife, Dele, a virtuous woman of inestimable value had been my pillar of success since the consummation of our marital relationship at our youthful age.High Chief Michael Akintayo Fadeyi (of blessed memory) ensured that I received qualitative education at foundational stage of my life. Mr. Akinola Soname remains a motivational factor in my life and always available on several occasions when all hope seemed lost. The graphic works was done by Afeez Olatunji, who toiled day and night to put the book in readable format. I am indeed gratefully acknowledging the indispensable assistance of Mr. Adedoyin Adedeji, an IT specialist who worked tirelessly to put the manuscript into eBook version.Of great assistance is my hero and mentor, Mr. Ralph K.O.Osayameh, an astute and consummate banker, legal luminary and world class authority in international banking and finance, former Pro-Chancellor, University of Agriculture, Abeokuta, past President/Chairman of council of the Chartered Institute of Bankers of Nigeria, who played significant role in my career when I was growing up in the corporate world and when I assumed adulthood. Of course, all faults and inaccuracies are mine.AKIN FADEYIP r e f a c eThis book espoused the effects of entrepreneurship in remedying unemployment in Nigeria and by extension the world at large. In comparatively recently, entrepreneurship and innovation seem to be the direction followed by developed and developing nations of the world. It is well acknowledged that the rate of unemployment in Nigeria is escalating at an increasingly alarming rate with much emphasis on entrepreneurship by the private sector and government in varying levels. Obviously, it is also true that the government alone cannot provide jobs for all the unemployed people. This buttresses the fact that entrepreneurship is the solution to unemployment in Nigeria. The millennia brought about periods of serious economic downturns that are characterised by a rise in unemployment, reductions in income as well as in health and social care spending. Youth unemployment is potentially dangerous as it sends worrisome signal to all segments of the society and the global community. Youth entrepreneurship could help develop young people’s personality, identify new ways of employment and poverty reduction and transform the society in general. On this note, entrepreneurship has now become a widely recognised global concept. It is a dynamic process by which government at all levels and nongovernmental organisations tackle unemployment most especially among the teeming youths.When tackling unemployment, entrepreneurship is a solution. Unemployment can be reduced by direct jobs creation. This could be achieved through increase spending on government projects, as reflected in infrastructural development and economic stimulus programmes. Starting and operating a new business involves considerable risk and effort to overcome the inertia against creating something new. The theme of this book revolves around creating and maintaining a sustainable competitive advantage in a small business. Moreover, to provide an understanding of entrepreneurship and the process of creating and growing a new venture, the book: ENTREPRENEURSHIP – Unemployment Solution is divided into four major sections.Part 1 – The Entrepreneurship Perspective introduces the entrepreneur and entrepreneurial process from both historical and a research perspective. After a discussion of the economic implications of youth unemployment in Nigeria and entrepreneurship as the solution to youth unemployment, the knowledge, skills and attitude (KSA) required for an entrepreneur to navigate through the turbulent business environment were specifically addressed.Part 2 – Creating and Starting a Small Business focuses on all the elements in the entrepreneurial process that are part of creating a new venture. After a discussion of recognition of business ideas, and opportunity analysis, legal issues and government regulations for entrepreneur and small business owner are addressed. Business environment analysis, starting and operating a small business and each of the major components of business plan are presented in sequential order.Part 3 – Small Business Finance centres on one of the most critical aspects of creating and starting a new venture. After a discussion of the alternative sources of capital, specific attention is given to government intervention funds for MSMEs in Nigeria, grants and funding for entrepreneurs and business owners. The importance of financial information, computerised accounting systems and budgeting as a business strategy were given adequate coverage in this section.P r e f a c ePart 4 – Managing and Growing Small Business presents small business management and operations management in good perspective. Specific attention is given to modern production tools and techniques, supply chain management, global manufacturing competition and service operations management. This part also addresses small business human resource management, the changing role of information technology in business process, the electronic marketplace (e-marketplace), electronic commerce (e-commerce), and electronic business (e-business). Finally, the specific topics examined include small business designing new strategies in distribution and retail sales outlets, going to global marketplace, the major causes of small business failure and what to monitor to stay in control of the business.Entrepreneurship can become a solution to unemployment in Nigeria but everyone who wants to take route should make sure that they are fully equipped, it is on this pedestal that the book was written ostensibly to prepare aspiring business builders and students on entrepreneurship courses to have indepth understanding of basic but useful introduction to the “nuts and bolts” of the small business administration. Are you thinking about starting your own business some day? Every chapter in this book can be used to create your competitive advantage.Lawrence Akinkunle FadeyiEsa OkeOctober 2021About the Author Lawrence Akinkunle Fadeyi is the President/CEO of Candova Limited, a firm of financial and management consultants. A trained accountant, chartered banker and management consultant by profession. He authored many books on finance and banking and business management among are Practice and Management of Investment in Nigeria (Maiden Edition), 21st Century Business Management and Entrepreneurship -Unemployment Solution- published in 1992, 2021 and 2022 respectively. Akin Fadeyi worked previously with United Bank for Africa Plc for 11 years in varying capacity before joining Financial Spectrum Limited in 1991 as a consultant. He left the company to establish Candova Limited.The author specialished in entrepreneurship, management of change and innovation, strategy formulation and application, globalization, competition and collaboration, cooperation and synergy, organisational renewal, service operations management, marketing and branding strategy, strategic business alliance, online business management, bargaining and negotiation, merger and acquisition, human capital management, debt negotiation and settlement, commercial collections and receivable management. Akin Fadeyi was educated at The University of The State of New York, Albany, New York, United States and Federal University of Technology, Akure, Ondo State, Nigeria with Masters Degree in Business Administration coupled with an army of professional qualifications in accounting, banking and management. He is an embodiment of responsibilities and symbol of excellence.ContentsPart 1 The Entrepreneurial Perspective Chapter 1.1 The economic implications of youth unemployment in Nigeria. 1.2 The differences between employees and entrepreneurs. 1.3 Entrepreneurship as the solution to youth unemployment. 1.4 Meaning and definition of entrepreneur. 1.5 The concept of entrepreneur. 1.6 The knowledge, skills and attitude (KSA) required for an entrepreneur. 1.7 Self-employment programmes of entrepreneurs. 1.8 Ethics and social responsibility of entrepreneurs.Part 2 Creating and Starting a Small BusinessChapter 2.1 The importance of small business to the Nigerian economy. 2.2 The entrepreneurial process. 2.3 Recognizing business opportunity. 2.4 Creativity, business idea, and opportunity analysis. 2.5 Types of new businesses. 2.6 Business selection. 2.7 Legal issues and government regulations for entrepreneur and small business owner. 2.8 Business environment analysis. 2.9 Starting and operating a small business. 2.10 The National MSME Clinics. Part 3 Small Business FinanceChapter 3.1 Strategic finance for micro, small and medium enterprises. 3.2 Sources of capital. 3.3 Lease finance 3.4 A dozen ways to borrow money. 3.5 How to write a loan proposal. 3.6 Government intervention funds for MSMEs in Nigeria. 3.7 Small business grants and funding for entrepreneurs and business owners. 3.8 The importance of financial information. 3.9 Branches of Accounting. 3.10 The impact of computerized accounting systems. 3.11 Understanding the key financial statements. 3.12 Linking organisation’s annual budget and strategic planning. 3.13 Budgeting as a business strategy. 3.14 The fundamentals of cost accounting. 3.15 Cost-Volume-Profit (C-V-P) analysis. 3.16 The balanced scorecard as control metrics. Part 4 Managing and Growing Small BusinessChapter 4.1 Small business management. 4.2 Small business operations management. 4.3 The effective operations management in manufacturing enterprise. 4.4 Modern production tools and techniques. 4.5 Manufacturing planning, control systems and competitive strategy. 4.6 Supply chain management. 4.7 Global manufacturing competition. 4.8 Service operations management. 4.9 Small business human resource management. 4.10 The changing role of information technology in business process. 4.11 Transformation of business through information technology. 4.12 The electronic marketplace (e-marketplace), electronic commerce (e-commerce), and electronic business (e-business). 4.13 Small business marketing. 4.14 Marketing strategy and the marketing mix for small business. 4.15 The changing distribution landscape. 4.16 Designing new strategies in distribution and retail sales outlets. 4.17 Going to global marketplace. 4.18 The major causes of small business failure. 4.19 What to monitor to stay in control of the business. Part 1The Entrepreneurial PerspectiveCHAPTER 1The Economic Implications of Youth Unemployment in NigeriaThe millennia brought about periods of serious economic downturns that are characterized by a rise in unemployment, reductions in income as well as in health and social care spending. Obviously, the implications of youth unemployment in Nigeria are social, economic and political. Youth unemployment is potentially dangerous as it sends worrisome signal to all segments of the society. Youth unemployment has been correlated to decreased happiness, job satisfaction and other mental health issues that stemmed from consumption of hard drugs, cultism, ‘get rich quick’ syndrome, and reckless lifestyle. It is interesting to note that unemployment estimates throughout many poorer nations routinely underestimate the true degree of joblessness and, more significantly, the productivity of those who work. Many countries in Africa, Asia, and South America face more difficult problems of widespread underemployment.From the individual perspective, the greatest economic cost of youth unemployment is lost of income. On the other hand, the costs of youth unemployment on the society is the decrease in goods and services that occurs as a result of unproductive teeming youth population. Young adults and teenagers are engaged in work on a much smaller scale than older workers. The transition from school to employment is a process that involves searching and changing jobs before deciding on a more or less permanent employment. Today, more than ever, youths have a lower rate of employment, hence there has been much concern about youth populated labour market. A recent statistics have revealed that the financial crisis experienced since the beginning of economic recession of 2014 has resulted in an overall unemployment rate of 33.3% in Nigeria in the last quarter of 2020 as reported by National Bureau of Statistics (NBS). The youth unemployment in Nigeria is high, even at the period of economic normalcy of the 1970s and early 1980s. Evidently, youth unemployment has been with us for ages. Youth unemployment is a global crisis. In the next decade, the World Bank estimates one billion young people will try to enter the labour market, but less than half of them will secure formal jobs. According to a 2020 report from the International Labour Organization (ILO), a specialized agency of the United Nations, the global youth unemployed rate stands at 13.6%. The contributing factors to this high rate of global youth unemployment are largely due to the lack of job opportunities but also include barriers to entering the labour market, like limited experience and the increasing size of the population itself worldwide, there are approximately 1.3 billion young people between ages of 15 and 24, therefore youth employment remains a global challenge.Today, young people run into barriers to employment they can’t escape. They can’t rise above the challenges of poverty and instability without opportunities: such as education or a good job and they can’t access opportunities without the income or safety to pursue it. Young people in their miserable state, hangout in ‘red zones’ neighbourhoods known for being hot spots of drug-and gang-related violence. All these conspired together to keep young people from seeking opportunities to advance their futures.Another socio-economic effect of youth unemployment in Nigeria is the massive increase in rural-urban migration, leading to an increased congestion and criminal behaviour e.g. prostitution, armed robbery, etc in the urban areas. It also includes: fall in national output, waste of human resources, high rate of dependency ratio, poverty, depression, frustration, all sorts of immoral acts. Therefore, it is imperative to employ strategies that will lead to job creation for the teeming youths and social development is needed.Research findings showed that unemployment has an enormous effect (over 65%) on the making of the Nigerian GDP and there exist an inverse relationship between unemployment and gross domestic product, which implies that as unemployment increases, gross domestic product falls. Unemployment is the non-utilization of labour resources as a result of which the actual output of the economy is below its potential Gross National Products. Obviously, countries that are unable to create jobs for their citizens create a risky business environment. The case of militants that are disrupting operations of multinational oil companies in the Niger delta region of Nigeria readily comes to mind. Generally, people out of work and unable to find jobs depress economic growth, create social pressures, and provoke political uncertainty. As such, the proportion of unemployed workers in a country shows how well a country productively uses it human resources. Today, the youth of the world suffer the highest rates of unemployment in most countries; with rates triple that of adult unemployment. What is Youth Unemployment?In the context of this study, youth unemployment is exactly what it implies: it results when young people has defined by the United Nations as 15-24 year olds are looking for jobs but can’t find them. While unemployment itself is a problem, especially in the wake of COVID-19 pandemic, youth unemployment is quickly becoming a global crisis. In the first month of the COVID-19 crisis, it’s been estimated that the income of informal workers like these dropped by 81%. Without alternate sources of income, these workers and their families will have no way to survive. Majority of the youth working populations are in the informal sector of the economy, working in areas like tourism, transportation, and hospitality, where ‘work at home’ or ‘virtual work’ arrangement is not an option, young people are being especially hard hit by the lockdown and protocols of COVID-19 pandemic.Suffice it to mention that COVID-19’s impact on access to education and employment is setting the young generation up for a potentially devastating employment trajectory. As a matter of fact, young people with a history of unemployment face fewer career development opportunities, lower wage levels, poorer prospects for better jobs, and ultimately lower pensions, if any.The International Labour Organization (ILO) defines unemployment as the proportion of the labour force which was available for at least one hour in the week preceding the survey period. National Bureau of Statistics (NBS) defines unemployment as the proportion of the labour force that is available for work but did not work for at least thirty nine (39) hours in the week preceding survey period. Unemployment rate is measured by the proportion of the labour force that is unemployed divided by the total number of the labour force. The labour force consists of the number of people from 18 years and above who are employed (i.e. those who currently have jobs) and unemployed (those who do not have jobs but who are actively looking for work).Unemployment has been seen as a global economic problem and has been categorized as one of the serious impediments to social progress. Unemployment is generally seen as a macro-economic problem as well as socio-economic problem. Unemployment arises as a result of insufficient and non-availability of jobs to correspond with the growing population. What is the impact of unemployment on society? In general term, unemployment has both individual and social consequences that require public policy interventions. For the individual, unemployment can cause psychological distress, which can lead to a decline in life satisfaction, mood disorders and substance abuse. While the impact of unemployment on society is the decrease in goods and services that translates to low Gross Domestic Product (GDP). Another question that readily comes to mind: why giving attention to youth employment? Employment, entrepreneurship and other income-generating opportunities offer more than economic benefits. They provide youth with a purpose and a sense of status and belonging. A young university graduate’s entry into the labour market has life-long implications for their career opportunities and growth in the corporate world. The employers of labour in an attempt to cut cost engage contract workers to perform non-core jobs in their organizations. Almost half of all working young people are poorly remunerated which means their ‘take home’ pay cannot take them home in actual sense.1.2 The Difference between Employees and EntrepreneursMost Nigerian youths earn income by engaging in paid employment. Someone who earns a living by working for someone else’s business is an employee of that business. Suffice it to mention that there are many different kinds of employees. At Honeywell Flour Mills Plc, for instance, some employees produce and package Whole Wheat Meal and some distribute the Whole Wheat Meal and some manage the company. Evidently, employees all have one thing in common, they do not own a business, they work for others to earn income. In the same vein, some of the youths are engaged in vocational businesses and business of buying and selling of products or services in order to make a profit.There are people who create and start their own businesses and work for themselves. These categories of people are referred to as entrepreneurs. Entrepreneurs create value from “scarce” resources. Obviously, entrepreneurs are often both owners and employees. Running a business is not only a financial risk; it is an emotional risk as well. The advantage of working for others is that somebody else assumes the entrepreneurial risk and provides the employee with benefits such as paid vacation time and health insurance. An entrepreneur is expected to play a pivotal role in developing among the employees requisite knowledge, skills and suitable attitudes, and improve their performance. Entrepreneur is often associated with a person who starts his own new small business. More importantly, entrepreneur is an organizer and speculator of business enterprises. He/she is somebody who sets up a business or enterprise. An entrepreneur typically demonstrates effective application of a number of enterprising attributes, such as creativity, initiative, risk taking, problem solving ability, and autonomy, and will often risk his or her own capital to establish a business.Entrepreneurship as the Solution to Youth Unemployment.The real job potential, however; may be with small businesses – Lawrence Akinkunle FadeyiWhen tackling unemployment, entrepreneurship is a solution. Entrepreneurs open doors to new business, new alliances, new ventures, etc. When an investor puts money into a startup or a venture, the entrepreneur automatically gets to expand its team to scale the venture and hence providing employment to more people. Today, entrepreneurship is our greatest weapon to counteract the issue of unemployment and to empower our teeming youths. Youths by default are energized and empowered, they are willing to explore new frontiers and take up new challenges and risks. Research has shown that entrepreneurs are willing to hire people who do not have formal education or a degree but have the right attitude, skills and preparedness to learn new things.Entrepreneur is not money-driven venture but a passion-driven one that facilitates positive change in the society. The tremendous impact of Internet in business, which has changed the way business is being conducted and service is being dispensed has made business a lucrative career option. Youth entrepreneurship could help develop young people’s personality, identify new ways of employment and poverty reduction, and transform the society in general. For many young people affected by the lack of jobs, the alternative to unemployment is establishing their own business.The relation between entrepreneurship and unemployment has been an interesting subject for researchers in the recent past. In the time of global recession and mass layoffs occasioned by pandemic (such as COVID-19), different countries instituted stimulus for their citizens to sustain and grow their businesses. The international economic crisis has further accelerated the flow of restructuring, while unemployment continues to rise. It is therefore necessary to adopt measures that will help people with self-employment and, ultimately, guaranteeing a good living standard.Unemployment can be reduced by direct jobs creation. This could be achieved through increase spending on government projects, as reflected in infrastructural development and economic stimulus programmes. Obviously, the best unemployment solutions are increased spending on public works and entrepreneurship and vocational empowerment. More importantly, there are three major ways to tackle unemployment and improve the economy of Nigeria by opening of job opportunities, creation of new businesses, and increment in investments. Entrepreneurship is described as designing, launching, and running a new business process that is usually originally a small business. Entrepreneurship involves the startup process, that is, the process of identifying opportunities for which marketable needs exist and assuming the risk of creating an organization to satisfy them.The future of entrepreneurship appears to be very bright. We are living in the age of entrepreneur, with entrepreneurship endorsed by educational institutions, governments at different levels, society, and corporations. Entrepreneurship education throughout the world is also growing. Most universities and associations do research on entrepreneurship, followed by training courses and then educational courses. More importantly, governments at various levels are taking an increased interest in promoting the growth of entrepreneurship. Individuals are encouraged to form new businesses. The Companies and Allied Matters Act, 2020 make starting and running a business easier in the country, which invariably stimulates economic growth. The Act has altered the corporate, economic, and business landscape in Nigeria. The governments also provided supports in terms of tax incentives, grants, soft loans, road and rail transportation systems, communication system, etc to facilitate this creation process. Many state governments in Nigeria are developing their own innovative industrial strategies for fostering entrepreneurial activity and the timely development of the technology of the area. Meaning and Definition of EntrepreneurThe business world is filled with stories of companies, micro, small and large that started in a garage with an initial capital of a few hundred dollars. The term entrepreneurship means different things to different people, which can be viewed from different conceptual perspectives. Experts on this subject came up with different many definitions. However, in spite of the differences, there are some commonalities (such as risk taking, creativity, independence, and rewards) that will continue to be the driving force behind the notion of entrepreneurship today and in the age of entrepreneur as entrepreneurial education has now occupied the front burner in terms of higher learning and professional courses and academic research on entrepreneurships, followed by training courses and then education courses.The definition of an entrepreneur has evolved over time as the world’s economic structure has changed and become more complex. The notion of the concepts is related to the person rather than occupation. Risk taking, innovation, and creation of wealth are examples of the criteria that have been developed as the study of new business creation has evolved. In the context of this study, entrepreneurship is defined as the process of creating something new with value by devoting the necessary time and effort; and receiving the resultant rewards of monetary and personal satisfaction and independence.Interestingly, governments (federal, state and local) are playing an increased active role in promoting the growth of new businesses and are providing such support as soft loans, tax incentives, roads, communication network system to facilitate the creation process. The former US President George W. Bush in a speech acknowledged that the small business owners and their employees represent more than half of the private workforce in United States. He went further to say that the entrepreneurs created more than 75 per cent of net new jobs nationwide and generated more than 50 per cent of the nations’ gross domestic product (GDP). It is no gainsaying that entrepreneurship with its creation of new business offering new products and ideas has been the engine that runs economy of the United States. In August 2013, the Kaduna State Government set aside N400 million to support small-scale business in the 23 local government areas of the state as part of efforts to industrialise the state. The Executive Secretary of Kaduna State Industrialization Micro-credit Management Board, Mr. Edward Masha, said “We have various people that stand to benefit, which include the unemployed, people already in the business and those seeking for more capital expansion”. He said further that “We are not just interested in the distribution of the money that would be returned in six months, but we are interested in people that would get the loan, expand their businesses and employ others, as well as increase their wealth”.The Nation newspaper of Tuesday, August 29, 2017 reported on page 12 that Lagos State Government through its Employment Trust Fund has disbursed N4.5 billion to 5,527 micro, small and medium enterprises (MSMEs). The Secretary to the state government, Mr.Tunji Bello who represented Governor Akinwunmi Ambode at the opening ceremony of the second edition of MSMEs affirmed that Lagos State Government in collaboration with United Nations Development Programme (UNDP) will train 16,000 unemployed persons on technical and vocational jobs. Further, he said “The State Government would launch innovation driven enterprise framework to support business startups in the fourth quarter of this year”.One of the major issues in Nigeria today is the need to create more jobs. Taking the risks of starting a business can be scary and thrilling at the same time. There is a need to absorb the teeming unemployed graduates in the society as new enterprise create jobs and increase economic output in the area of operation, therefore it is imperative that the governments should continue in the future to create the enabling environment for the growth of entrepreneurship. The government should develop innovative industrial strategies for fostering entrepreneurial activity and timely development of the technology of their area. It goes to say that entrepreneurship is the process by which individuals either on their own or inside organizations pursue opportunities without regard to the resources they currently control. In effect, entrepreneurs look beyond current resource constraints when they envision new possibilities. At this point, this question readily comes to mind: what is the difference between a small business manager and an entrepreneur? The terms are often used interchangeably, and although some overlap exists between them, there are enough differences to warrant studying them separately. In business sense, entrepreneurship is the process of identifying opportunities for which marketable needs exist and assuming risk of creating an organization to satisfy them. In contrast, small business management is the process of owning and operating an established business. A small business manager must be able to deal with all the challenges of taking the business forward by engaging and retaining skilled/talented employees, responding to changing customer wants and needs, making sales and maintaining adequate cash flow.
