Book keeping & Business Management Training Manual

7/24/2019 Book keeping & Business Management Training Manual

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RAFR/WID/002/94

SIMPLE BOOKKEEPINGAND

BUSINESS MANAGEMENT SKILLS

Facilitator! G"i#$

Ria M$i%$ri&' No($)*$r +994


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RAFR/WID/002/94

SIMPLE BOOKKEEPINGAND

BUSINESS MANAGEMENT SKILLS

,or !)all !cal$ $&tr$-r$&$"r!

Facilitator! G"i#$

Ria M$i%$ri&' No($)*$r +994


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The designations employed and the presentation of material in this publication do notimply the expression of any opinion whatsoever on the part of the Food andAgriculture Organization of the United Nations concerning the legal status of anycountry, territory, city or area or of its authorities, or concerning the delimitation of itsfrontiers or boundaries

This document was developed and illustrated by !s "ia !ei#erin$ %"AF"&onsultant' under the guidance of !s (iana Tempelman, "egional Officer, )omen in(evelopment %"AF"' The wor$ was co*funded by FAO+s "egional Office forAfrica and the )omen in Agricultural roduction and "ural (evelopment -ervice%.-/)' of FAO /ead0uarters

FO" &O1.- )"1T. TO2 (iana . Tempelman-enior Officer3ender and (evelopmentFAO "egional Office for AfricaO 4ox 5678Accra

(ianaTempelman9faoorg

rinted by Asemblies of 3od :iterature &entre :td * Accra

First printing2 November 5;;e#i and A$ropong Facilitators and their supervisors fromthese villages were trained in the use of the material, before they embar$ed upon theactual training A big than$ you 4oes to the facilitators, for their commitment and

hard wor$ in ma$ing the course a success

The field testing too$ place in collaboration with various national organisations2 theNonFormal .ducation (ivision of the !inistry of .ducation, the Freedom from/unger &ampaign?Action for (evelopment, the 1ntegrated (evelopment of ArtisanalFisheries pro#ect and the National 4oard for -mall -cale 1ndustries 1 would li$e to

than$ the following persons from the above*mentioned organisations for their

pleasant co*operation2 !r "o#o !ettle Nunoo, !r .TA Abbey, !rs :ydia-asu, !r 4raimah, !r -am !anu and !r aul Ntaanu

:ast but not least my sincere gratitude goes to !r Nartey, "egional &oordinatorNon*Formal .ducation, 3reater Accra "egion, for the excellent facilitation of thewor$shops held to train the facilitators and for his contribution to the material


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SIMPLE BOOKKEEPING AND BUSINESS MANAGEMENT SKILLS

.ONTENTS

age2

1ntroduction 5

5 The importance of boo$$eeping ;

7 The use of symbols in boo$$eeping 5ou may also as$ some of the fast learners to spend some time helping the slowlearners

St$-


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Ti)$

The material provides guidelines for eleven lessons 1f a group meets twice a wee$ forone and a half hour, the eleven lessons can be covered in about five months

(iscuss with the participants how many times in a wee$ they want to meet, and whichtime is most suitable for them :essons should be given at least two times per wee$, butpreferably more often 3ood progress in the lessons will stimulate the participants andlimit the total duration of the course After two or three days people usually start to

forget what they learned during the previous lesson "epetition is very important to asuccessful courseThe sessions should not ta$e more than one and a half hours at a time, as theparticipants are not used to concentrate for a long time and they probably have alreadyfinished a days wor$

1t is also possible to run the course on a full*time basis The duration will then be about

three wee$s

=$&"$

The training can be given anywhere, in the courtyard of one of the participants homes,under a tree, in a classroom, in a community centre or wherever it is convenient for theparticipants and not too far away from their homes Try to avoid the lessons becomingtoo much of a +public affair+ with bystanders watching The participants should be able tofeel at ease and not be distracted by remar$s from people not attending lessons

La&"a$

)hile the manual is written in .nglish, the training can best be given in the locallanguage of the participants

Pr$-aratio&

repare yourself before each meeting "ead the lesson and prepare the exercises Thiswill ma$e it easier for you to lead the discussions and it will save time during the

lessons


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FA.ILITATORS OUTLOOK

This paragraph will illustrate what is expected from you and what you can expect from theparticipants

Fir!t 1at 7o" !o"l# r$)$)*$r a*o"t t$ -artici-a&t!

5 The participants are adults and not children, therefore treat them with respect, asyou would do with your eldersD

7 The participants have experience in life and are intelligent There are many thingsthey do not need to be told because they already $now them They haveexperience and they can reason

@ The participants have many responsibilities and commitments outside the course(uring the lessons they may be tired from having completed a days wor$ and thesecommitments may still occupy their minds &onse0uently they may be slower inlearning and they may have a tendency to forget more easilyD


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6 Not all participants will understand the lessons with the same speed Ta$e time toexplain all topics thoroughly and repeat examples and exercises regularly On theother hand, be aware that extreme slowness of some of the participants may createan uneasy atmosphere in the group 1t may hinder the progress of the group and itcan cause a certain lassitude among the others 1t is important to carefully choosethe pace of the lessons or you might +loose+ learners 1f necessary give extralessons to those who are much slower in understanding

B 4e in time for the lessons and inform the participants if you are not able to come"emember that your behaviour will set an example for your participants+ behaviourC

B


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E=ALUATION

.valuation is used as a tool to find out how the training course is progressing 1t will helpyou to $now what your participants li$e and what they do not li$e about the course, whatthey have learned and understood, and what they find difficult 4y doing regularevaluation you will $now where you will have to improve your lessons, so that thetraining course will be successful

(uring the evaluation you may want to as$ the participants 0uestions li$e2* )hat did your learn so far* )hat did you find easy* )hat did you find difficult* /ow can you use what you have learned so far in your own business

>ou may also want to find out how the participants feel about the group and about yourway of teaching

.valuation can be carried out by way of a plenary discussion with the participants,

home*visits or written exercises The tests that are included in some of the lessons willalso give you an idea of whether the participants have understood the lessons

1f you conclude that there is a difference in the level of understanding, team up betterand slower learners As$ those who are more advanced than the others to explain thedifficult issues

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LESSON + TE IMPORTAN.E OF BOOKKEEPING

Bac'ro" i&,or)atio& ,or t$ ,acilitator

!ost small scale entrepreneurs do not write down how much money comes in andgoes out of their business They $eep everything in their head As a result they donot really $now how much money they are earning, how much they buy and sell oncredit and how they could improve their business The aim of this lesson is toma$e the participants aware of the importance of boo$$eeping, and to raise interestin the course

STEP + DIS.USSION

> Wat #o 7o" ti&' a *"!i&$!! i!?:et the participants discuss the answers first, before giving suggestions

Any answer resembling the following is good%answer' All activities whereby you try to earn an income on a regularbasis are called businesses A business can be producing and sellinggoods, buying and selling goods, but also giving a service to people

.xamples are smo$ing and selling fish, selling farm produce, selling rice

and sugar in the mar$et, building houses, sewing clothes for other peopleor driving a taxi

> Wat t7-$ o, *"!i&$!! #o 7o" #o? %as a group, and?or as an individual'1f your participants are wor$ing together in a co*operative business, as$individual participants what additional income*generating activities they doat home

>Wat -ro*l$)! #o 7o" $&co"&t$r 1iti& 7o"r o1& *"!i&$!!?All answers are good 1f not mentioned remind them of2* lac$ of capital to buy stoc$D

* problems with selling %G mar$eting'D* money needed for emergency casesD* people not paying their debtsD* money needed for ceremonies

> o1 #o 7o" r$)$)*$r o1 )"c )o&$7 co)$! i& a o$! o"t?Accept all answers 1f somebody has a method on how to remember howmuch money comes in and goes out, let her explain how she does it

> Wat a--$&! i, 7o" ,or$t !o)$ti&?

> Wat #o 7o" ti&' *oo''$$-i& )$a&!?

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%answer' 4oo$$eeping means writing down all the money that comes in andgoes out of your business

> o1 #o 7o" ti&' *oo''$$-i& co"l# $l- 7o"r *"!i&$!!?%answer' 1t will help you to ta$e better decisions about your business, so

that you can earn more money

> Wat #o 7o" $8-$ct to l$ar& ,ro) ti! co"r!$?Accept all answers Tell them that you are going to explain what they canexpect from the training course

STEP 2 E@PLANATION

W7 *oo''$$-i&?

!any people do not write down how much money comes in and how much

money goes out of their business This is because they do not $now how to do it,and they do not $now that it can help their business Therefore people do notreally $now how much money they are earning, which customers have bought oncredit and how much stoc$ they have bought on credit)here groups of people wor$ together, lac$ of a proper boo$$eeping systemoften leads to mistrust and accusations between group members

Boo''$$-i& )$a&! tat 7o" 1rit$ #o1& all t$ )o&$7 tat co)$!i&to 7o"r *"!i&$!! a all t$ )o&$7 tat o$! o"t o, 7o"r *"!i&$!!5

4oo$$eeping is important because you cannot $eep everything in your headeople are forgetful by nature

T$ a#(a&ta$! o, r$"lar *oo''$$-i& ar$

you will $now how much money you have received, how much moneyyou have spent and how you have spent itD

you can calculate whether you are ma$ing a profit or a lossD

you will be able to ma$e better decisions on what to buy and sellD

you can $eep records of buying and selling on credit, so that peoplecan not cheat youD

you can $eep records of money coming in and going out of a group*pro#ect, and therefore prevent misuse of the money and avoid mistrustamongst group members

All t2i! 1ill 2$l- 7o" to i)-ro($ 7o"r *"!i&$!! a to i&cr$a!$ 7o"r

-ro6t

5=


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STEP : E@AMPLE ROLE3PLACS

Tell the participants that you would li$e them to perform a role*play, as it willhelp them to understand what this lesson is about (ivide the class into threegroups "ead the themes to each group

T$)$ ,or ro"- +A woman has a business %choose a business that is familiar to your

participants' -he does not write down how much money comes in and goes outOne day her son comes home from school with a letter from the head masterThe school has increased the school fees, and it has to be paid immediately

The woman gets very worried -he $nows she has no money -he desperatelytries to remember how much money she received in the past wee$ and how shespent it

T$)$ ,or ro"- 2A carpenter has sold a cupboard for H5,=== to a customer )hen the

customer collected the cupboard, he told the carpenter that he did not have

money at that moment, but he promised to pay at the end of the monthAt the end of the month the carpenter tries to get his money The customer

tells him that he only owes him H5@,===, and he will not pay him more than thatCA very angry discussion between the two persons follows 4ut the carpenter hasno proof that he has sold the cupboard on credit for H5,===, and he has toaccept the H5@,===

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T$)$ ,or ro"- :A group of women in your village has a ba$ery They have divided the tas$s as

following2* one person always buys the ingredients for the bread and the firewoodD

* one person is responsible for selling the breadD* all the other members of the group assist in $neading the dough and

ba$ing the breadD* the treasurer of the group is responsible for $eeping the money safe

The sales woman does not write down how much money comes in )heneverthere is cash money she gives it to the treasurer of the group, who $eeps it in acash box The treasurer in turn gives money to the person who buys theingredients and the firewood The treasurer is a very reliable person, but shedoes not $now how to read and write

At the end of the month the group wants to $now how much money they havemade by selling bread )hen they open the cash box they find out that there isless money than they expected Nobody $nows what happened to the moneyAfter a discussion they accuse the sales woman of stealing money

A,t$r -$r,or)i& $ac rol$3-la7 a!' t$ -artici-a&t! a "$!tio&

I lay 52 )hat is the woman+s problem )hat could she have done to avoidthis problem

%answer' -he had spent all her money without thin$ing about the school

fees that she had to pay -he does not even remember what she hasspent her money on -he could have $ept records of her income andexpenses and planned for the payment of the school fees I

lay 72 )hy was the carpenter cheated%answer' 4ecause he had no written proof of how much money the

customer owed him

I lay @2 )hy were the group members angry )hat could they have done toavoid this problem

%answer' The group members were angry because nobody $new whathad happened with the money of the ba$ery 1f they had $ept records,

they would have $nown how much money came in and went out of theirbusiness 1t would also have helped them to $now whether they wherema$ing a profit with the ba$ery or not

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STEP 4 PRA.TISE

As$ the participants to prepare an additional role*play on a business that iscommon in the local situation, including the issues that were discussed in theprevious role*plays

STEP ; .ON.LUSION

At the end of this lesson, as$ the following 0uestions to find outwhether the participants have understood the lesson2

I )hat is a businessI )hat is boo$$eepingI /ow can boo$$eeping help your business

STEP


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LESSON 2 TE USE OF SCMBOLS IN BOOKKEEPING

R$(i!io&

As$ participants the following 0uestions2I )hat did you learn in the previous lesson I)hat is boo$$eeping

I )hy is it important


)hen $eeping boo$s, you have to write down all the money that comes in toyour business and all the money that goes out of your business All participants$now how to write figures and do calculations but some participants may not beable to read and write %yet' Therefore we shall be ma$ing use of symbols anddrawings

(Note: if all your participants are literate, you can simply replace the symbols by words. Where the

course is being used together with literacy classes (reading and writing) the symbols can also be used

to illustrate the words.)

STEP + DIS.USSION

> .a& 7o" )$&tio& tr$$ !o"rc$! ,ro) 1ic 7o" r$c$i($ )o&$7? Atr$$ ti&! o& 1ic 7o" !-$ )o&$7?

> I, *oo''$$-i& )$a&! tat 7o" 1rit$ #o1& all t$ )o&$7 tat co)$!i&

a o$! o"t o1 1o"l# 7o" #o it?All answers are good .xplain the following>ou all $now how to write figures -o that will be no problem 4ecause

some of the participants are not able to read and write yet we shall bema$ing use of very simple symbols and drawings

> I&(it$ !o)$ o, t$ -artici-a&t! to co)$ to t$ cal'*oar# a )a'$ a

($r7 !i)-l$ #ra1i& o, t$ ,ollo1i&* money* fish* food* transport* firewood

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STEP 2 E@PLANATION

Dra1i& o, !7)*ol!

(raw examples of symbols on the chal$board as shown below As$ theparticipants what they see in the pictures

E8-lai& tat t$7 ca& "!$ a&7 !7)*ol tat t$7 6 $a!7 to #ra1 a!lo&a! t$7 '&o1 tat t$7 1ill r$)$)*$r it ti! r$!$)*l$! a 6! ,or )$5It!o"l# *$ a ($r7 !i)-l$ #ra1i& !o tat it i! $a!7 ,or t$) to 1rit$ iti&t$ $8$rci!$ *oo'!5 T$7 !o"l# '$$- t$ !a)$ !7)*ol ,or t$ !a)$ti&tro"o"t5

-pend sufficient time with the participants drawing different symbols on thechal$board They should also try to draw things that they see in theirsurroundings %matches, cup, chair' in their exercise boo$s

(Note: in Appendix you will find a list and explanation of all the symbols that are being usedin this boo!. "owe#er, if your participants find it easier to use another symbol, please adopt that

symbol.)


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5


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S7)*ol! ,or )o&$7 i& a )o&$7 o"t

4oo$$eeping means that you write down all the money that comes in and themoney that goes out The following symbols will be used2

I Mo&$7 i& G money becomes moreso we use the addition sign

I Mo&$7 o"t G money becomes lessso we use the subtraction sign

T$ ca! *oo'

The boo$ in which we write all the money that comes in and goes out is called a+ca! *oo'+>ou can use an ordinary arithmetic exercise boo$ as a +cash boo$+

I All )o&$7 tat co)$! i&is written on the l$,t -a$

I All )o&$7 tat o$! o"tis written on the rit -a$

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STEP : E@AMPLE

(raw a +cash boo$+ on the chal$board As$ the following 0uestions and inviteparticipants to illustrate the answers by drawing a symbol on the correct side of the+cash boo$+

(Note: the symbols in this example are meant to gi#e you an idea. $o not %ust copy them, but use the

symbols that your participants indicate.)

> Fro) 1ic !o"rc$! #o 7o" r$c$i($ )o&$7?

%money becomes moreD '

Accept all answers 1f not mentioned remind them of2

* income from sales* gifts from husband, relatives or friends* loans from ban$s, money lenders or others* collections from savings group %susu'

> Wat #o 7o" !-$ 7o"r )o&$7 o&?

%money becomes less D '

Accept all answers 1f not mentioned, remind them of2* buying of materials %fish, rice, seed'* firewood* transport %taxi, bus'* school fees, school uniforms* medicines, hospital bills* food* cloth* beauty*products %nail polish, pomade'* hairdresser* ceremonies %funerals, weddings, outdoorings'* sweets, snac$s, ice cream* church, fetish

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At the end of this example your chal$board may loo$ li$e this2

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STEP 4 PRA.TISE INDI=IDUAL [email protected]

This is an individual exercise for all participants All participants are to ta$e theirexercise boo$s and do the following exercises2

I (raw the symbol for +money in+ on the left side, and the symbol for +money out+on the right side

I Thin$ about the sources from which you receive money and draw a symbolunder +money in+

I Thin$ about the money that you spend and draw a symbol under +money out+

/elp the participants where they have difficulties

STEP ; .ON.LUSION

At the end of this lesson the participants should be able to draw symbols intheir exercise boo$s to indicate the money that comes in and the money goesout

As$ the following 0uestions to find out whether they understood the lesson2 I)hat is a cash boo$I )here in the cash boo$ do you write the money that comes in, and

where the money that goes out

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LESSON : IN.OME AND E@PENDITURE

R$(i!io&

(raw a cash boo$ on the chal$board and as$ the participants to come and drawsymbols of +money in+ and +money out+ in the correct column


!ost small scale entrepreneurs do not $eep their business and private moneyseparate, but this is necessary to $now whether you are ma$ing a profit or a loss

1n this lesson we will be loo$ing at the money that comes in and goes out of yourbusiness This is called income and expenditure

STEP + DIS.USSION

1n the previous lesson we tal$ed about all the money received, and all the moneyspent From now on a difference will be made between2* money that comes in and goes out of your businessD* money that goes out of your business for your household and yourself

-how the picture of the cash boo$ with +money in+ and +money out+ from lesson 7again and as$ the following 0uestions2

> Wic )o&$7 ,ro) t$ -ict"r$ *$lo&! to 7o"r *"!i&$!! a 1ic)o&$7 *$lo&! to 7o"r o"!$ol# or 7o"r!$l,?

> W7 #o 7o" ti&' it i! i)-orta&t to !$-arat$ t$ t1o?%answer' 1t is important to $eep the two separate, otherwise you will not beable to calculate whether your business gives profit or not

> o1 co"l# 7o" '$$- t$ *"!i&$!! a o"!$ol# )o&$7 !$-arat$?

All answers are good 3ive the following ti-2>ou could use a box %tin, purse, or piece of cloth' to $eep your businessmoney and household money separate

> Wat i! i&co)$?%answer' !oney that comes in to your business

> Wat i! $8-$it"r$?%answer' !oney that goes out of your business

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STEP 2 E@PLANATION

Mo&$7 i& to 7o"r *"!i&$!! i&co)$

> o1 #o$! )o&$7 co)$ i& to 7o"r *"!i&$!!?

* by producing and selling goodsD* by buying and selling goodsD* by giving a service %li$e a taxi driver who provides transport'D* by receiving gifts from friends or family membersD* by getting a loanD* by inheritance

Mo&$7 o"t o, 7o"r *"!i&$!! $8-$it"r$

> o1 #o$! )o&$7 o o"t o, 7o"r *"!i&$!!?

5 !aterials or ingredients %li$e fish and firewood for fish smo$ing, cloth fordressma$ing, flour for bread ba$ing'D

7 -ervices li$e2* transport %taxi, bus'D* mar$et tollD* electricityD* rent

@ )ages21f people are helping you in your business they will have to be paid a

salary 1f household members are assisting you, you may decide not to paythem, but you will have to pay for their food and clothing >ou also have tothin$ about the amount of money you will be able to ta$e from yourbusiness money as your own +salary+ %or pay', so that you do not mix up yourprivate and business expenses1n a group business, you will have to decide how you will share thebenefits between the group*members


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STEP : E@AMPLES

E8a)-l$ +

"ead the following example to the group

A women+s group is running a poultry pro#ect They buy chic$s and feed themuntil they are mature The chic$en food can easily be bought in the village-ometimes chic$ens get sic$ and they have to buy medicinesThe chic$ens are sold on mar$et days in town, about 5 $ilometres from theirvillage They always ta$e the bus to get there 1n town they pay a porter forcarrying the chic$ens from the bus station to the mar$etAt the end of the day all the chic$ens are sold

(raw a cash boo$ on the chal$board Tell the story again, item by item :et the

participants tell you which actions bring in money and which actions needmoney As$ individual participants to draw the appropriate symbols in the correctcolumns on the chal$board

/ave a discussion on the following 0uestion to ma$e your participants aware of the

importance of 1a$!2

I )hich of the following group*members in the poultry pro#ect should be paid fortheir wor$* the members who feed the chic$ens and clean the chic$en house* the members who sell the chic$ens in town* the members who are part of the group but do not do any wor$ in the

pro#ect

%answer' All members that do 1or'in the pro#ect should be paid for their

wor$

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E8a)-l$ 2

4rainstorm with the participants on the following 0uestions, or choose other

examples of businesses that are more familiar to your participants2

I )hat is the income and the expenditure concerned with operating a ba$ery

I )hat is the income and the expenditure involved in buying and selling softdrin$s

3o through the following process2* )hat materials do you buy* )hat services do you pay for* To whom do you pay wages* (o you need money for replacements and repair

For both examples draw a cash boo$ on the chal$board and draw the symbols inthe correct columns

STEP 4 DIS.USSION

After explaining income and expenditure and going through the examples, have adiscussion with the participants on "&&$c$!!ar7 $8-$&!$!

> Wat ar$ "&&$c$!!ar7 $8-$&!$!?

Unnecessary expenses are expenses that people ma$e out of temptation, butthey are not really necessaryeople often forget about these expenses when they calculate theirbusiness expenditure, and therefore their income is less than theyexpected

> Co" ar$ &o1 a1ar$ ,ro) 1ic !o"rc$! 7o" r$c$i($ )o&$7 a 1at

7o" !-$ 7o"r )o&$7 o&5 .a& 7o" )$&tio& !o)$ $8-$&!$! tat ar$

"&&$c$!!ar7 or 1ic 7o" co"l# r$#"c$?Accept all answers -uggest the following2* Are you tempted to buy snac$s, drin$s or ice*cream when you go tothe mar$et* (o people expect you to wear a new cloth at every ceremony* (o you regularly buy nailpolish and other beauty products

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STEP ; PRA.TISEH [email protected] IN PAIRS

The participants should sit together in pairs of two and do an exercise Theyshould ta$e their exercise boo$s and write the symbol for +money in+ on the leftpage and the symbol for +money out+ on the right page

.ach pair should choose a business that is familiar to them They should discussthe expenditure involved in ma$ing and selling their product %or giving theirservice' They should draw symbols of the items that bring in money on the leftpage, and symbols of the items on which they spend money on the right page

)hen everybody has finished as$ some of the participants to draw a cash boo$ onthe chal$board, explain the outcome of their discussion, and write thesymbols in the cash boo$ on the chal$board

STEP


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TEST IN.OME AND E@PENDITURE

I Thin$ of a business that you $now well2* :ist all the items that bring in money %income'

%draw symbols'D

* :ist all the items that you spend your money on%expenditure' %draw symbols'

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LESSON 4 TE USE OF TE .AS BOOK

R$(i!io&

As$ the group the following 0uestions2I /ow does money come in to your business %your income'I /ow does money go out of your business %your expenditure'


:esson < is a continuation of the introduction of a cash boo$ and the recording of

income and expenditure in a cash boo$ as was discussed in the previouslessons

STEP + DIS.USSION

> Wat i! a ca! *oo'?%answer' A cash boo$ is a boo$ in which you write all the cash money thatcomes in and goes out of your business

> W27 i! it i)-orta&t to 1rit$ #o1& 7o"r i&co)$ a $8-$it"r$ i&a

ca! *oo'?%answer' 1t is easy to remember events that have #ust happened 4ut

when more items are bought or sold over a period of time, it becomesdifficult to remember everything Therefore it is important to write down allthe money that comes in and goes out of a business in a cash boo$

STEP 2 E@PLANATION

(raw a cash boo$ on the chal$board as shown below2

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.xplain the following2

L$,t -a$ Mo&$7 i& or i&co)$

5st &olumn G (ate2 the day that you receive money

7nd &olumn G -ource of income %symbol'

@rd &olumn G /ow much money

Rit -a$ Mo&$7 o"t or $8-$it"r$'

5st &olumn G (ate2 the day that you pay money

7nd &olumn G )hat the money was spent on %symbol'@rd &olumn G /ow much money

STEP : E@AMPLES

Use the following examples to explain how to write the details of income andexpenditure in the correct columns in the cash boo$ "ead the examples item byitem Use the cash boo$ on the chal$board to draw the symbols Ta$e the

following steps2

5 The first entry in the cash boo$ is the amount of money in hand at thebeginning This is written under +money in+

7 As$ the participants to tell you which item should go to +money in+ and whichitem should go to +money out+1llustrate it on the chal$board Agree on which symbol is to be used for

each item )rite the date, the symbol and the amount

@ After writing all the income and expenditure in the cash boo$2

* add up both columnsD* subtract +money out+ from +money in+D* that will give you the money that you have leftThis is called the *ala&c$ This should be the same as the money that youhave cash in handD


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NOTE !tr$!! tat -artici-a&t! !o"l# 1rit$ t$ 6"r$! -ro-$rl7 "$r$ac ot$r t$ "&it! t$&! "r$#! a to"!a! i& t$ ritcol")& !o tat t$7 #o &ot )a'$ )i!ta'$! i& t$ir a##itio& o, t$ totali&co)$ a total $8-$it"r$5

E8a)-l$ +

.lizabeth sells tomatoes, onions and o$ra in the mar$eto On 5*;*5;;@ she starts with H8=== cash moneyo 1n the morning she buys the following vegetables2

* 7 bas$ets of tomatoes at H7=== eachD 7 x H7=== GH


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The money .lizabeth has left cash in hand should be the same as the balance inher boo$

.lizabeth first writes the balance under +money out+

-he then writes the balance in the +money in+ column on the next page, as this isthe cash money with which she will start the new page

The next page will loo$ li$e this2

7;


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E8a)-l$ 2

John is a carpentero On *B*5;;@ he starts his business with H5=,===o On the same day a customer as$s him to ma$e a table John buys the

following materials2* @ pieces of wood at H5=== eachD @ x H5=== GH@===* 5 box of nails at H==

o On B*B*5;;@ he sells the table for H==o On 8*B*5;;@ he buys a new saw for H7===o On ;*B*5;;@ he ma$es four chairs of left*over wood /e sells the chairs on

the same day at H5== eachD < x H5== GH6===%< x H5== G H6==='

o On 5=*B*5;;@ he pays the apprentice H5===o /e also ta$es H7=== out of his business money for his own salary

John writes his income and expenditure every day in the cash boo$ /ecalculates the balance at the end of the wee$

Follow the same procedure as with example 5 1n the end the cash boo$ will loo$li$e this2

@=


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STEP 4 E@PLANATION

3ive the following ti-! ,or ca! co&trol2

I )rite all money that comes in and goes out immediately in your cash boo$D I

&ount your cash when the day begins and again when the day endsD

I )hen you ta$e money for the household or yourself from the businessmoney, write it in your cash boo$ under +money out+, because it is money thatgoes out of the business

I )rite in the cash boo$ only the items that are paid for in cash 4uying andselling on credit will be recorded in a separate boo$2 the credit boo$ This willbe explained in :esson 8

I >ou can calculate the balance every day, every wee$ or every month,whenever it is most convenient for your business 4ut it will always have to bedone before you close a page in your cash boo$ "emember the balance

should always be written at the start of a new page

@5


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STEP ; PRA.TISE

4efore starting the exercises as$ all participants to draw the lines in the exerciseboo$ !a$e sure +money in+ is on the left side and +money out+ on the right side,and that each page is correctly divided into the three columns At least four

pages

E8$rci!$ + -l$&ar7 #i!c"!!io&

As$ a participant to draw a cash boo$ on the chal$board As$ individualparticipants to write the details of the following exercise in the cash boo$

I &hoose a business that you $now well2* -tart with writing an amount of cash money on the +money in+ sideD* (iscuss the process2

* what materials do you usually buyD* what services do you pay forD* what wages do you payD* how much do you spend on replacements and repairD* how much do you sell your goods forD

* )rite the income and expenditure in the cash boo$ on the chal$board%using symbols'D

* Add up both columns and find out how much cash is left

I As$ participants to copy the example from the chal$board in their exerciseboo$s

E8$rci!$ 2 $8$rci!$ i& -air!

(ivide the group into pairs .ach pair is to do the following exercise

"ead the exercise "epeat it item by item and write the dates, symbols and

amounts on the chal$board as shown on the next page

Amina sells groceries %li$e tea and matches' from a $ios$ at the road side oOn *B*5;;@ she has H6=== cash in hando -he goes to town and buys the following items2

* tins of sardines for H


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.ach pair is to answer the following 0uestions, and write the details in anexercise boo$2I )rite all the money that Amina spent, and all the money that she received in a

cash boo$I /ow much money did she spend in total, how much did she receive in total,

and how much money has she left

1n the end the cash boo$ will loo$ li$e this2

@@


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STEP


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LESSON ; PROFIT AND LOSS

R$(i!io&

I /ow will writing your income and expenditure in a cash boo$ help you in yourbusiness

I )hat did you find difficult about writing the income and expenditure of yourown business in a cash boo$


The cash boo$ is used to write down all the money that comes in and goes out4ut the cash boo$ does not show whether you have made a profit or a loss /ow tocalculate profit or loss will be explained in this lesson

STEP + DIS.USSION

> Wat i! 7o"r i&co)$?%answer' !oney that comes in from the sale of your product or the

provision of your services

> Wat i! -ro6t?%answer' rofit is the difference between the money that comes in from yoursales %or your services' and the money that went out to produce thosegoods or provide the service rofit is not same as incomeC

STEP 2 E@PLANATION

4rainstorm with the participants about the symbol to be used for profit and loss

Then explain the following and draw the symbols on the chal$board2

Mo&$7 i& 3 Mo&$7 o"t PROFIT or LOSS,ro) 7o"r !al$! ,or -ro#"ctio&

PROFIT means that there is more money coming in than there is going out

@6


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LOSSmeans that you spend more money on producing or buying your goodsthan you receive by selling the goods

o1 to calc"lat$ -ro6t or lo!!

To find out whether you are ma$ing a profit or a loss, we will go through the

process as was discussed in lesson @2

I )hat is the money that goes out of your business to produce your goods %orprovide your service'* what materials do you buyD* what services do you pay forD* how much do you pay for wagesD

* how much do you need for replacements and repair of your tools ande0uipment

I /ow much do you receive by selling the same goods %or providing theservice'

The cash boo$ will help you to remember how you have spent the money thathas gone out of your business and how much money has come in from yoursales

@B


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STEP : E@AMPLES

3ive the following examples of profit and loss As$ the participants to assist inwriting the income and expenditure on the chal$board and calculating the profitor loss

E8a)-l$ +

4eatrice buys and sells orangeso On 7*5=*5;;< she buys @ bas$ets of 5== oranges at H== eachD

%@ x H== GH5=='o -he pays a porter H5== for each bas$et that she carriesD

%@ x H5== GH@=='o -he pays HB== for transportDo -he pays her assistant H5=D

o On 76*5=*5;;< she sells the @== oranges at H7= per orange

I /ow much money does she spend before she can sell the oranges

I /ow much is the money that comes in from selling the @== oranges atH 7= each

I /ow much profit does 4eatrice ma$e

@8


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I 1f 7== oranges get rotten and 4eatrice can only sell 5== oranges at H7= each,what will be her income

I (oes she ma$e a profit or a loss

E8-lai& t$ ,ollo1i&

4ecause the money out is more than the money in, we ta$e the subtraction sign%*' and put it before the amount This means that there is a loss

@;


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E8a)-l$ 2

(Note: the following examples of profit and loss are familiar to people who smo!e and sell fish.

"owe#er, the facilitator could use another example of a business that is more common in his&her

community.)

!ary is a fishmonger -he buys fish on the beach, smo$es it and sells it in thevillage

o -he goes to the beach and buys one bas$et of fresh fish for H@==o -he pays one porter to carry the fish from the beach to her house The porter

charges her H7== for a bas$eto -he buys one load of firewood for H5===o -he pays a girl to help her with cleaning and smo$ing the fish H7==o -he goes to the mar$et to sell the fish and pays H5== for transport of one

bas$et of fisho At the mar$et she pays H5== mar$et toll

o On 7@*57*5;;@ she sells the smo$ed fish for H6===

I /ow much money does !ary spend before she can sell the fish


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I !ary sells one bas$et of smo$ed fish for H6=== )hat is the money thatcomes in

I /ow much profit does !ary ma$e when she sells the fish for H6===

I 1f !ary, at the end of the day, had decided to reduce the price and sell her fishfor only H===, would she have made a profit or a loss

I 1f !ary had stored one bas$et of smo$ed fish until the lean season and sold itwhen the price was HB===, what would have been her profit


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E8a)-l$ :

This time !ary buys and smo$es bas$ets of fresh fish-he sells the smo$ed fish in the mar$et on @*5*5;;


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I 1f !ary sells her bas$ets of fish for H6=== each % x H6=== GH@=,===', how much profit does she ma$e on the bas$ets of fish

I /ow much profit is that for one bas$et of fish

R$)$)*$r 1$& Mar7 !)o'$# o&$ *a!'$t o, 6! $r -ro6t 1a! o&l7

J900 -$r *a!'$t

I 1f !ary stores the bas$ets of fish until the lean season and sells it when theprice is HB=== per bas$et, what will be her profit

STEP 4 DIS.USSION

> Wat #o 7o" o*!$r($ ,ro) t$ $8a)-l$!?Accept all answers -tress the following2* 1f you are selling your goods for a price that is lower than the costs you

have made to produce or buy those goods, you are selling at a loss

* 1f you are able to buy your materials when they are cheap %li$e buyingfresh fish during good catches', store the goods %smo$ed fish' and sellwhen the prices are high, you can ma$e more profit

> W7 i! t$ -ro6t -$r *a!'$t i$r 1$& !$ i! !)o'i& a !$lli&6($

*a!'$t! i&!t$a# o, o&$?.ncourage discussion and bring out the following2* -he needs less firewood per crate of fish2

%to heat the oven sufficiently she needs an amount of firewood worthH5=== )ith this amount of fish she can smo$e one, two of three

crates of fish at the same time'


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STEP ; PRA.TISE GROUP [email protected]

(ivide the participants in small groups of three persons "ead the exercises to theparticipants and write the details on the chal$board as shown belowThe participants should copy the details in their exercise boo$s and do the

exercises in their small groups

E8$rci!$ +

!ary buys two bas$ets of fresh fish for H@== each, smo$es it and sells it forH6=== each on 7=*@*5;;


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E8$rci!$ 2

Joyce sells doughnuts -he buys the following ingredients2

o flour H 6==o sugar H @=

o yeast H 5==o oil H 5==o she pays H5== for transporto she also buys charcoal for H7==

On 7*@*5;;< she ba$es 8= doughnuts -he sells 6= doughnuts at H= each %6= xH= GH@===' -he gives 7= doughnuts to her children and some friendsNote2 Joyce does not use all the oil, about one third of the bottle is left over,

worth H== )hen calculating the profit the left*over oil should not be included, asshe can still use it another time

I /ow much money did Joyce spend to fry 8= doughnutsI /ow much money did she receive by selling 6= doughnuts I(id she ma$e a profit or a lossI /ow could she have made more profit

%-tress that she has given away some of the doughnuts'


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E8$rci!$ : -l$&ar7 #i!c"!!io&

(o a profit and loss calculation of a business that is familiar to the participants

I (iscuss all the money that goes out to produce your goods %expenditure' and

write it on the chal$board2* what materials do you usually buy %ta$e an average amount of materials

that people produce or buy and use average prices'D* what services do you pay for %thin$ of transport, mar$et toll electricity'D* what wages do you pay %labourers, own salary'D* how much money do you have to set aside for replacements and repair of

tools and e0uipment

I (iscuss for what price the goods are being sold and write your income on thechal$board

I &alculate the profit or loss

I As$ participants to copy the example from the chal$board in their exerciseboo$s

STEP


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TEST PROFIT AND LOSS

I Thin$ of a business that you $now wellDI (ecide on an amount of goods that you are going

to sellD

I )rite down all the money you have to spendbefore you can sell your goods %expenditure'D

I )rite down how much money you receive for sellingyour goods %income'D

I Find out whether you are ma$ing a profit or a loss


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LESSON < OW TO USE TE PROFIT

R$(i!io&

As$ participants the following 0uestions2 I)hat is profitI )hat is lossI /ow do you $now whether you are ma$ing a profit or a loss


1n the profit and loss exercises it was explained that profit is the money that is leftover after selling the product 1t was left to the entrepreneur to decide whether touse the profit for herself or the household or for savings

!ost people have so little money that they easily spend it on daily needs Theyfind it very difficult to $eep money apart and not to touch it /owever, savingmoney to plan for future needs will help people to improve their business andtheir lives

STEP + DIS.USSION

> Wat ca& 7o" #o 1it t$ )o&$7 i, 7o" a($ a -ro6t?Accept all answers 4ring out the following21f you have not ta$en any money from the business money for yourselfand your household, then you will have to ta$e some money out foryourself first The rest of the money can be put into savings, until youneed it

> Wat ar$ !a(i&!?

-avings means that you $eep money apart and you do not spend it,unless you have planned to use it for some purpose

> For 1at -"r-o!$ 1o"l# 7o" !a($ )o&$7Accept all answers, and proceed with the explanation


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STEP 2 E@PLANATION

> W7 !a(i&?

5 To replace or repair old or damaged e0uipment and utensilsD

7 To expand your businessD.xamples are2* The doughnut seller is saving to buy a bigger cast iron pot, so that she

can fry more doughnuts at a time and thus sell more 1n future she alsowants to ba$e ca$es, so she is saving to buy an ovenD

* The poultry farmer wants to save money so that she will be able to buymore chic$sD

* The fishmonger wants to be able to buy more cheap fish during thepea$ season, so that she can store it and sell it during the season

when fish is scarce and the prices are high -he wants to save somemoney, so that she is not forced to sell the fish beforehandD

* The driver wants to save money so that he can buy his own taxi

@ To prepare for emergency casesD.xamples are 2* The school fees have suddenly been increasedD* >ou child is sic$ and is admitted to the hospitalD* >our father dies, and you have to contribute to the funeral


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I o1 to !a($ t$ )o&$7?

5 At home2I Advantages2

* you do not have to travel I

(isadvantages2* you are tempted to use the moneyD* it may not be safe

7 At the ban$2I Advantages2

* the money is safeD* you will get interest on the money I

(isadvantagesD* you may have to travelD

* ban$s are formal institutions, that may discourage people

@ )ith a savings group2I Advantages2

* you do not have to travelD* you are encouraged by other group*members to save I

(isadvantage2* the money*collector may not always be reliable

STEP : E@AMPLE

"ead the following story to the participants2

Joyce has discovered that she can ma$e profit by selling doughnuts 4ut she$nows that if she does not $eep some money apart in a separate place she willspend it 0uic$ly Therefore she decides to save some money as followsFrom every H5=== income from the sales of doughnuts, she will need H6== forbuying new ingredients and charcoal, and paying for transport -he will ta$eH7== for herself and her household expenses The remaining H7== she will $eepapart as savings -he would li$e to bring it to a ban$, but there is none in hervillage Therefore she uses a small wooden box with a padloc$, that she hides inher room

> Wat #o 7o" o*!$r($ ,ro) ti! !tor7All answers are good

> W7 #o$! o7c$ ta'$ !o)$ )o&$7 o"t o, $r *"!i&$!! ,or $r!$l,?4ring out the following answer -he ta$es the money as her own +salary+-he does not want to mix up her household expenses with her businessmoney

> W7 !o"l# !$ 1a&t to !a($ )o&$7?

Accept all answers

=


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STEP 4 PRA.TISE ROLE 3 PLACS

(ivide the participants in groups of persons 3ive each group the following0uestions to answer2

I &hoose a business that is familiar to you )hat do you want to use your profitfor

I )hat are the things you would want to save money for

I /ow would you save the moneyAt home At a ban$ )ith a savings group Otherwise3ive reasons why

After the discussions as$ each group to present the outcome of the discussion in theform of a role*play

STEP ; =ISIT TO A BANK

Arrange for a visit to the nearest ban$ :et the ban$ manager explain theprocedures and advantages of saving money at the ban$ 1f your participants areinterested in getting a loan, you could also as$ him to explain the advantagesand disadvantages of getting a loan from the ban$

-imilarly, if there is a credit*union, credit association or savings group operating inyour area, you could invite them to give a tal$ to your group about theirprocedures and experiences

STEP


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LESSON BUCING AND SELLING ON .REDIT

R$(i!io&

/ave a discussion on2I )hat will you do with the profit of your business


4uying and selling on credit is very common 1t can be very profitable, but it can

also be very ris$y, as people do not always remember who owes them money andto whom they owe money, and how much -ome people may only pay after a longtime, or not pay at all -ome understanding of credit management will help peopleto control their businesses better

STEP + DIS.USSION

1ntroduce the sub#ect by as$ing the following 0uestions2

> W7 #o 7o" !$ll 7o"r oo#! o& cr$#it?All answers are good

> Wat -ro*l$)! ca& a--$& 1$& !$lli& o& cr$#it?%answer' >ou may have difficulties getting your money bac$ >ou cannot usethe money that somebody still has to repay to continue or to improve yourbusiness

> W7 #o 7o" *"7 o& cr$#it?All answers are good

> Wat -ro*l$)! ca& a--$& 1$& *"7i& o& cr$#it?%answer' >ou may have difficulties in paying bac$ your debt

7


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STEP 2 E@PLANATION

S$lli& o& cr$#it

The main advantage of selling on credit is that it is a service to your customers,and will attract some customers

4ut there are more disadvantages than advantages to selling on credit2* your customers may delay in repaying, or may not repay you at allD* there may be 0uarrels over repaymentD* selling small items on credit to people %5 bread, 7 bottles of soft drin$s', easily

adds to a lot of money, which ma$es it difficult for you to remember whoshould repay you and how much moneyD

* the money that your customers still have to repay cannot be used to buy

materials or improve your business

Therefore it i! *$!t &ot to !$ll o& cr$#itat all

4ut if you have to sell on credit, $eep the following r"l$!25 Only sell on credit to regular customers who you are sure will pay you bac$

on timeD7 (emand payment of part of the amountD@ Always $eep sufficient cash money to buy new stoc$D


63/92

4uying goods on credit for yourself or your household could put you in trouble)ill your business ma$e enough profit to pay for the goods that you have bought oncredit for your household

Pla&&i& ,or !$lli& o& cr$#it

As long as you have not received the money that people have to repay you, it is notyet yours >ou cannot spend money that you do not have For example, you cannotuse the money to buy materials >ou can only plan for expenses after you havereceived your money

Pla&&i& ,or *"7i& o& cr$#it

The same thing applies when you have to repay other people >ou have boughtsomething on credit and you are now ma$ing a profit with your business/owever, not all the profit is yours >ou have to $eep some money separate torepay your credit

Try by all means to repay your credit on time, so that people will be prepared togive you credit again This is what is called cr$#it 1orti&$!!

STEP : E@AMPLE

/ave a discussion with the group on the following examples of buying andselling on credit2

> I& 1ic o, t$ ,ollo1i& ca!$! 1ill 7o" !$ll o& cr$#it to a c"!to)$r?

* !ary comes to your $ios$ and wants to buy oil on credit -he is not aregular customer %answer2 no'

* &harles buys vegetables from you every -aturday /e usually pays cashThis time he did not bring enough money to pay for everything he needs/e promises to pay next wee$ %answer2 yes'

* Joyce wants to buy two loafs of bread -he did not bring money -he hasnot paid you yet for four loafs that she bought in the previous wee$

* >ou are selling fifty loafs of bread twice a wee$ to a shop They always pay

you at the end of the month %answer2 yes'

* >ou sell your fish sometimes to a trader in the mar$et The agreement isthat she pays you after she has sold the fish again 4ut she is not very

reliable 1t often ta$es a number of wee$s before she repays you the

money %answer2 no'


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> I& 1ic o, t$ ,ollo1i& ca!$! 1ill 7o" *"7 o& cr$#it?

* >ou have seen a beautiful pair of shoes in the shop, but you do not have

money %answer2 no'

* There has been a bumper catch of fish, which is being sold cheaply >ouare sure that you will be able to smo$e and sell a lot of fish and you havecalculated that you will ma$e a profit >ou thin$ you will be able to pay bac$

in two wee$s %answer2 yes'

* eggy is selling $en$ey and fish -he is also thin$ing about selling rice andstew -he will have to buy a bag of rice on credit )hen she calculates theprofit, she finds out that it is not sufficient to repay the credit

* 4uying sugar and flour in bul$ from the wholesale is much cheaper thanbuying it from the mar$et 4ut you do not have enough money to buy inbul$ >ou have calculated that you can ma$e profit with your ba$ery, andyou can even ma$e more profit when you buy the stoc$ in bul$ from the

wholesale %answer2 yes'

STEP 4 PRA.TISE SMALL GROUP DIS.USSIONS

(ivide the participants in small groups of three to four persons

:et each group thin$ of a business whereby it is common to buy or sell on creditThey should try to thin$ of the advantages and disadvantages of buying and?orselling on credit in this particular business

After the discussions one person of each small group should present their case tothe other participants

STEP ; .ON.LUSION

As$ the following 0uestions to find out whether your participants haveunderstood the lesson2

I )hen and to whom do you sell on creditI )hen and from whom do you buy on creditI /ow do you plan for buying and selling on credit


65/92

LESSON TE .REDIT BOOK

R$(i!io&

/ave a discussion with the group on the following 0uestions2 I)hen do sell on credit to a customerI )hen do you buy on credit


!any small scale entrepreneurs buy and sell on credit but they do not $eeprecords of it They $eep everything in their head roblems with repayments ofcredit often cause a loss of money Keeping records of buying and selling on creditwill help to avoid this problem

STEP + DIS.USSION

> o1 #o 7o" r$)$)*$r 1o a! to r$-a7 7o" a o1 )"c?All answers are good 1f someone has a method let her explain how shedoes it

> o1 #o 7o" r$)$)*$r ,or o1 )"c )o&$7 a ,ro) 1o) 7o" a($

*o"t o& cr$#it?All answers are good As$ for examples

STEP 2 E@PLANATION

.r$#it *oo'

T$ cr$#it *oo' '$$-! r$cor# o, all t$ )o&$7 tat c"!to)$r! a($ tor$-a7 7o" a all t$ )o&$7 7o" a($ to r$-a7 to ot$r!5

>ou can $eep two credit boo$sD one for the goods that you have !ol# o& cr$#it,and one of the goods that you *o"t o& cr$#itOr2 you can use the first part of an exercise boo$ for +sold on credit+, and thesecond part for +bought on credit+

6


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+5 Sol# o& cr$#it

(raw the boo$ for +sold on credit+ as shown below on the chal$board

The customer is the person who buys from you Use one page in your creditboo$ for each customer, and begin by writing a symbol to represent the name ofthe customer on the top of the page For example, if you have a ba$ery and onecustomer always collects her bread in a basin, you may draw a symbol of a

basin

5st column G (ate

7nd column G 3oods %use a symbol to represent the goodsthat you sellD in this example bread'

@rd column G Amount sold on credit on that date


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25 Bo"t o& cr$#it

(raw the boo$ for +bought on credit+ on the chal$board as shown below

The supplier is the shop or the person from whom you have bought on creditUse one page for each supplier, and begin by writing a symbol to represent thename of the supplier on the top of the page

5st column G (ate

7nd column G 3oods %use symbolsD in this example flour'

@rd column G Amount bought on credit on that date


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O&$ -a$ ,or $ac c"!to)$r/!"--li$r

Keep one page in the credit boo$ for each person buying regularly on credit.very time that person buys something on credit or repays part of the debt youwrite this on his?her page and calculate the new balance This way you can

always see whether this person repays regularly and whether he?she still has topay a balance

1n the same way, if you are always buying on credit from the same supplier, youshould also $eep one page for each supplier in the boo$)hen a particular customer?supplier page is full you continue the record on thenext available free page

1f you do not have regular customers or suppliers, then you should enter eachtransaction as it occurs on a day to day basis Then you will have to add an extra

column for the names of the different people /owever, it is not advisable to sell oncredit to people who do not buy from you regularly

BEWARE cr$#it tra&!actio&! a($ to *$ r$cor#$# i& 7o"r ca! *oo' a!,ollo1!

.very time someone is paying you for the goods that she?he bought from you oncredit, you write it in your cash boo$ under +money in+, as it is cash money thatgoes into your business

1n the same way, every time you pay for the goods that you bought on credit,you write it in your cash boo$ under +money out+, as it is cash money that goes outof your business

;


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STEP : E@AMPLES

E8a)-l$ +

-how the following example to the participants Use the boo$ for +sold on credit+ onthe chal$board Use the appropriate symbols

!ary has a regular customer in the mar$et to whom she sells her smo$ed fish/er name is A$osuao On 5


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E8a)-l$ 2

!ary usually buys her fresh fish from the same fisherman on credit Only afterselling the smo$ed fish, she pays the fisherman for the fish

.very time she buys a load of fish she writes it in her +bought on credit+ boo$, so thatshe will not forget the amount that she has to pay the fisherman

o On 7=*55*5;;@ she buys @ crates of fish for H


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STEP 4 PRA.TISE

E8$rci!$ +

(raw a +sold on credit+ boo$ on the chal$board "ead the following story and

write the details as shown below in the credit boo$ As$ participants to come to thechal$board and write the amounts in the correct columns

Aba is a farmer -he sells tomatoes and onions -he has a regular customer/er name is "eginao On 5*B*5;;@ Aba sells tomatoes for H=== and onions for H


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E8$rci!$ 2

(raw a +bought on credit+ boo$ on the chal$ board "ead the following story and letthe participants write the details in the credit boo$ on the chal$board

Amina is a ba$er -he often buys bags of flour on credit from the wholesale

shop The name of the shop is +O$ay store+ -he always writes everything shebuys on credit in her credit boo$, so that she cannot forget anything

o On 5*7*5;;< Amina buys 7 bags of flour of H5,=== each -he pays cash foronly one bag and agrees to pay the remaining H5,=== in two wee$s time

o On 7*7*5;;< she pays H5,===o On 7*7*5;;< she buys another 7 bags of flour on credit at H5,=== each %7 x

H5,=== GH@=,==='

After writing the exercise on the chal$board, the participants should copy it intheir exercise boo$s

1n the end the chal$board will loo$ li$e this2

Note2 On 5*7*5;;< Amina bought two bags of flour -he paid cash for one bag,and bought the other one on credit -he therefore records one bag in her cashboo$ and the other one in her credit boo$

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E8$rci!$ :

&hoose a business that is familiar to the participants, whereby it is common to buyand sell on credit

I (raw a boo$ for +sold on credit+ on the chal$board and invite participants tocome to the chal$board and write the details of some credit sales andpayments

I (o the same exercise with a +bought on credit+ boo$

STEP ; .ON.LUSION

At the end of this lesson participants should be able to do the following2

I )rite the details of the goods that they have sold on credit in a+sold on credit+ boo$DI )rite the details of the goods that they have bought on credit in a+bought on credit+ boo$

TEST

.xplain the test about the +sold on credit+ boo$ on the next page to yourparticipants As$ them to do the test in their exercise boo$s &orrect theirmista$es and tell the participants to $eep the test as an example

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TEST TE .REDIT BOOK

I Thin$ of a business whereby it is common to sell oncreditDI (raw the correct columns of a +sold on credit+ boo$D I

)rite the details of a customer to whom you regularly sellon credit in the +sold on credit+ boo$

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LESSON 9 .OSTING AND PRI.ING

R$(i!io&

/ave a discussion with the group on the following 0uestions2 I)hat do you write in a boo$ for +bought on credit+I )hat do you write in a boo$ for +sold on credit+


!any business people do not $now their costs and thin$ that they are less thanthey really are Therefore many people sell at a price that is too low and theyma$e little or no profitOnly by $nowing the costs will you be able to set your price The price finallydetermines the profit

STEP + DIS.USSION

> o1 #o 7o" #$t$r)i&$ t$ -ric$ ,or t$ -ro#"ct! tat 7o" ar$ !$lli&?:et the participants explain how they usually do it

STEP 2 E@PLANATION

.o!ti&is the way you calculate how much each individual product costs you toproduce and sell

Prici&means deciding on the price that you charge for your products

To be able to determine your price, you will have to $now all the costs that are

involved in ma$ing and selling your product

)hen you sell your product for a price that is i$rthan the costs to ma$e andsell your product, then you are ma$ing a profit

)hen you sell your product for a price that is lo1$rthan your costs, then you areselling at a loss

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Factor! #$t$r)i&i& t$ -ric$

)hen you decide on your price you will have to thin$ of the following factors2

* the costs of each product %G your expenditure'D

* the profit you would li$e to ma$eD

* the price other people are selling the same product forD

* the maximum price people are prepared to payD

* the price determined by the mar$et

To calculate the costs of each product you will have to add up the total amount ofmoney going out of your business before you sell the product This will be donein the same way that you calculated your profit and loss %:esson '

STEP : E@AMPLE

"ead the following example to your participants and write all the costs involved onthe chal$board, with the appropriate symbols

.lizabeth is a seamstress The manager of a clothing shop is interested in her

clothes and as$s her for the prices -he has no idea, but she promises to ma$e a0uotation

.lizabeth calculates all the costs of ma$ing a dress, thin$s about the profit shewants to ma$e and the price the customers are willing to pay

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Mat$rial! a !$r(ic$!

o @ yards of material %@ x H5==' H


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!aterials and services2

)ages2

"eplacement and repair2

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STEP 4 PRA.TISE

Ta$e an example that is familiar to the participants %for example a carpenter whoma$es a cupboard, somebody who sells coo$ed food or someone who

processes and sells palm oil'

:et the participants tell you the process and write all the costs involved with theirappropriate symbols on the chal$board

(ecide on the price

As$ participants to copy the example from the chal$board in their exercise

boo$s

STEP ; .ON.LUSION

At the end of this lesson as$ the participants the following 0uestions to find outwhether they have understood the lesson2

I /ow do you set the price for your productI )hat happens when your price is lower than your costs

TEST

"ead the test about pricing on the next page to the participants, and let themwrite the test in their exercise boo$s &orrect the test and tell the participants to$eep the test as an example

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TEST .OSTING AND PRI.ING

I Thin$ of a business that you $now wellDI &alculate the expenditureDI (ecide on your profitD

I (etermine your price

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LESSON +0 BUSINESS PLANNING

R$(i!io&

/ave a discussion with the group on the following 0uestions2 I)hat did you learn from the previous lessonI /ow will you determine the price for your product


!ost people are used to running small scale enterprises where they wor$ withsmall sums of money on a day to day basis They do not ta$e advantage of

wholesale and bul$ purchasing 1n this way they spend more money thannecessary 4etter planning of their business will help them to reduce their costsand increase their sales, thus ma$ing more profit

STEP + DIS.USSION

1ntroduce the idea of planning by as$ing the following 0uestions2

> Wat i! *"!i&$!! -la&&i&?%answer' 4usiness planning means thin$ing about the future of yourbusiness 1t not only means thin$ing about how to expand your businessin the long term, but also how to organise your business in the short term

> .oo!$ a *"!i&$!! tat 7o" '&o1 1$ll 1at ar$ t$ ti&! 7o" a($to

-la& ,or?1f not mentioned remind your participants of the following activities2* when, where and how much material you will buy and for what priceD

* how much you will produceD* and when and where you will sell it

> Wat ar$ 7o"r ,"t"r$ -la&! ,or t$ *"!i&$!!?Accept all answers -timulate discussion about ideas on how to expandtheir own businesses in future

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STEP 2 E@PLANATION

!any people ta$e decisions about their businesses on a day*to*day basis as itoccurs /owever, good planning of your business will help you to reduce yourcosts and therefore increase your profit 3ood planning will also help you to

prepare for the future

(raw the following pictures on the chal$ board2

R$#"c$ 7o"r co!t! *7 oo# -la&&i& ,or *"7i&

* buying at the lowest possible price %compare the prices of different suppliersand?or buy during the season when the price is very low'D

* buying in bul$, if they are goods that can be storedD

* buying the right 0uantity of perishable products %li$e tomatoes'D

* reducing travel and transport costs

R$#"c$ 7o"r co!t! *7 oo# -la&&i& ,or -ro#"ctio&

* producing the 0uantity %of perishable goods' that people will buyD

* inspect the 0uality of the goods you produced, and pac$ it in a neat wayD

* prevent wasting materialsD

* producing a lot at one time may be more profitable than producing small

amounts at different times

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STEP : E@AMPLES

E8a)-l$ +

"ead the following story to the group The participants should listen carefully,

because you will as$ them how the women in the story can reduce their costs

A group of women has a small ba$ery in a village They ba$e sugar bread, teabread and buns The group members ta$e turns in ba$ing the bread They alsota$e turns in buying the stoc$ .very other day someone goes to town to buy thebags of flour that are needed plus the other ingredients -he is given the money forthe bus fare and food during the #ourneyThey buy coo$ing oil, sugar and yeast in small 0uantities from the $ios$ in thevillage-ometimes members of the group give bread for free to their relatives On some

days they are ba$ing more bread than they can sell -ome of it gets spoiled andthey have to throw it away

> .a& 7o" ti&' o, a&7 1a7! tat t$ ro"- i& t$ !tor7 co"l# -la&t$ir

*"!i&$!! *$tt$r !o tat t$7 1ill r$#"c$ co!t!?

The discussion should lead to the advantage of2

buying the flour in bul$ so that the price will be cheaperD buying the coo$ing oil, sugar and yeast in large 0uantities for the lowest

possible priceD

reducing transport costs by travelling to town to buy the ingredientsonce per wee$ or once per monthD

not giving away bread for freeD avoiding waste by ba$ing the amount of bread of which they $now they

will be able to sell

E8a)-l$ 2

&opy the two pictures as shown below on the chal$board

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As$ the following 0uestions about the pictures2

I )hat do you observe from the two pictures%answer' "educe waste

I &an you give examples of waste in other businesses that you $now

STEP 4 PRA.TISE GROUP3DIS.USSIONS

(ivide the participants in three groups and as$ them to draw up a plan forreducing costs in a business that they $now

After the discussions as$ each group to present the outcome of the discussion

STEP ; .ON.LUSION

At the end of this lesson as$ the participants the following 0uestions to find outwhether they have understood the lesson2

I )hat do you have to plan for in a business I/ow can you reduce your costs

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LESSON ++ BUSINESS MANAGEMENT

R$(i!io&

As$ the participants the following 0uestion2I !ention five points of planning your business which will reduce costs


All the previous lessons are part of good business management2 $eeping

records of income and expenditure and credit transactions, calculating your profit orloss, setting a good price and good planning will all help to improve yourbusiness This last lesson summarizes the characteristics of a good businessand highlights some techni0ues that will help a business person to attract morecustomers and increase the sales

STEP + DIS.USSION

> Wat i! oo# *"!i&$!! )a&a$)$&t?%answer' .verything you learned in the previous lessons is part of goodbusiness management2 $eeping records of income and expenditure andbuying and selling on credit, calculating your profit or loss, setting a goodprice and good planning

> o1 ca& a *"!i&$!! 1o)a&/)a& attract )or$ c"!to)$r! ai&cr$a!$

t$ !al$!?All answers are good .ncourage discussion

STEP 2 E@PLANATION

3ood business management means organising your business in such a way thatyou ma$e as much profit as possible 1t therefore includes all the issues that youlearned in the previous lessons

3ood business management can be represented by four +s2 roduct, lace,rice and romotion

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T$ ,o"r P! o, a oo# *"!i&$!!

-how the picture of the chair with < legs .xplain that a business contains fourelements2

* roduct2 choose a product that people want and need and ma$esure it is good 0ualityD

* lace2 decide on a place where there will be many customersand few other sellers with the same productD

* rice2 set a price that covers your costs, gives you profit andwhich customers are prepared to payD

* romotion2 attract customers to buy the product

.ach leg of the chair represents a 1f one leg is bro$en, you will no longer beable to sit on the chair The four +s always go together 1f no attention is paid to oneof the four +s, the business will fall apart

Ta$e time to explain the four +s

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To )a'$ 7o"r *"!i&$!! !"cc$!!,"l 7o" 2a($ to co&!i#$r t2$ ,ollo1i&0"$!tio&!

+5 Pro#"ct

)hat is your product 1s it what the people in your village need and willbuy

1s somebody else already selling a similar product )ill people still beinterested in your product )hat ma$es your product different fromothers

)hat is the 0uality that the people expect from your product

25 Plac$* )ill there be many people at the place you want to sell your product* )here will you buy everything you need

:5 Pric$

/ow much does it cost to produce your product For what price are other people selling the same product )hat price do you have to set to ma$e a profit

45 Pro)otio&

(o you have a friendly approach to your customers 1s your product of good 0uality (o you always have your products available and do you finish your orders

in time

/ow can you ma$e the place where you sell your product loo$ clean andattractive

1s it possible to advertise your business in the papers or on the radio

> Wat ar$ t$ caract$ri!tic! o, a oo# !al$! -$r!o&?

A good sales person should2* be friendly and helpful,* be polite and understanding,* be clean and neat,* ma$e sure that the product is always available and of good 0uality

1t is not only the product that ma$es a person to return and buy more The

customer also comes bac$ because he?she is pleased with the !$r(ic$

Sati!6$# c"!to)$r! 1ill r$t"r& to *"7 )or$ a 1ill t$ll ot$r! a*o"tt$ *"!i&$!!5 R$)$)*$r it i! t$ c"!to)$r 1o )att$r! )o!t5

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> Wat #o 7o" a($ to 6 o"t *$,or$ !tarti& a *"!i&$!!?

&hoose a business that suits your ability and experienceD

Find out whether it is profitable by observing people who are already inthe business and by finding out about the costs of production and theselling priceD

!a$e a calculation of all the costs involved, and the profit you will ma$eD

Find out all the details involved to ma$e this business successful, byconsidering t$ ,o"r P!H

&alculate how much you will have to invest in setting up the business%constructions, materials, tools'D

Find out where you will get the money from %savings, loan, gift'

STEP : E@AMPLE

3o through the following exercise with the participantsMictoria is a seamstress and she wants to start a sewing centre in her village)hat are the things she has to consider before starting her business

!a$e sure the participants tal$ about the issues mentioned under the < +sDproduct, place, price and promotion

-tress that she may have competition 1n a situation of competition it is the*$!tseamstress and sales person who will get the customers

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STEP 4 PRA.TISE ROLE3PLACS

(ivide the participants in two groups .ach group is to perform a role*play.ach role*play should highlight some of the issues that they have learned in the

previous lessons

Gro"- +&hoose a business that is familiar to you repare a role play on a very badbusiness woman -ome ideas that you could include in your role*play are2

* her prices are very highD* her place is far from the villageD* her products are often not ready in timeD* her products are of bad 0ualityD

* she is unfriendly to customersD* she does not $eep records of income and expenditure

Gro"- 2Ta$e somebody in mind who you consider to be a very good businesswoman Thin$ of what ma$es her a good business woman and prepare a

role*play on that -ome ideas for your role*play are2

* the product is what people need and are prepared to pay forD* she produces good 0uality and in timeD* she gives good service to customersD

* she $eeps records of her income and expenditure in a cash boo$D* she $eeps a credit boo$

STEP ; .ON.LUSION

At the end of this lesson as$ the following 0uestions to find out whether yourparticipants have understood the lesson2

I )hat is good business management I

)hat are the four +sI )hat is a good sales personI )hat do you have to find out before starting a business

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APPENDI@ + SCMBOLS

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87


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LIST OF REFREN.ES

4asic -$ills Unit, Number Themes and -$ills, published by &areers andOccupational 1nformation &entre, -heffield, UK 5;8

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Book keeping & Business Management Training Manual

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