, FIN2602
ASSIGNMENT 2 SEMESTER 2
2026
DUE SEPTEMBER 2026
Question 1 (10 marks)
1.1 Explain why Nandi should prepare a budget before starting her business. (2)
Nandi should prepare a budget before starting her business because it serves as a foundational
financial roadmap, enabling her to quantify her startup costs against her available savings. A
budget forces her to itemise all anticipated expenses—such as ingredients, equipment, packaging,
and utilities—against her projected income, thereby revealing whether her R40,000 is sufficient or
if she faces a shortfall (Brigham & Ehrhardt, 2020). Furthermore, a budget acts as a control tool
that allows her to monitor actual performance against her plan, helping her avoid overspending
and make informed adjustments early, which is critical for survival in the first few months of
operation (Gitman et al., 2018).
1.2 Identify two factors that Nandi should consider before starting her bakery business. (2)
First, Nandi must consider the market demand and competition within her rural community. She
needs to assess whether there is a consistent customer base willing to pay for her baked goods,
and she should analyse existing competitors, such as local spaza shops or other home bakers, to
identify a unique selling point, like speciality breads or custom cakes (Burns & Dewhurst, 2016).
Second, she should evaluate the availability and cost of reliable supplies and infrastructure. In a
rural setting, she must ensure consistent access to key ingredients (like flour and yeast) and
consider the reliability of essential services such as electricity for ovens and water for cleaning, as
disruptions can severely affect production and profitability (Nieman & Nieuwenhuizen, 2018).
1.3 State two sources of finance that Nandi could consider supplementing her R40 000 when
starting her business. (2)
Nandi could consider a small business loan from a development finance institution, such as South
Africa’s Small Enterprise Finance Agency (SEFA), which specifically targets micro-enterprises and
women entrepreneurs with accessible loan products (SEFA, 2023). Alternatively, she could explore
a government-backed grant or subsidy, such as the Department of Small Business Development’s
grant funding for women-owned businesses in rural areas, which does not require repayment and
can cover specific asset purchases or training costs (DSBD, 2022).
ASSIGNMENT 2 SEMESTER 2
2026
DUE SEPTEMBER 2026
Question 1 (10 marks)
1.1 Explain why Nandi should prepare a budget before starting her business. (2)
Nandi should prepare a budget before starting her business because it serves as a foundational
financial roadmap, enabling her to quantify her startup costs against her available savings. A
budget forces her to itemise all anticipated expenses—such as ingredients, equipment, packaging,
and utilities—against her projected income, thereby revealing whether her R40,000 is sufficient or
if she faces a shortfall (Brigham & Ehrhardt, 2020). Furthermore, a budget acts as a control tool
that allows her to monitor actual performance against her plan, helping her avoid overspending
and make informed adjustments early, which is critical for survival in the first few months of
operation (Gitman et al., 2018).
1.2 Identify two factors that Nandi should consider before starting her bakery business. (2)
First, Nandi must consider the market demand and competition within her rural community. She
needs to assess whether there is a consistent customer base willing to pay for her baked goods,
and she should analyse existing competitors, such as local spaza shops or other home bakers, to
identify a unique selling point, like speciality breads or custom cakes (Burns & Dewhurst, 2016).
Second, she should evaluate the availability and cost of reliable supplies and infrastructure. In a
rural setting, she must ensure consistent access to key ingredients (like flour and yeast) and
consider the reliability of essential services such as electricity for ovens and water for cleaning, as
disruptions can severely affect production and profitability (Nieman & Nieuwenhuizen, 2018).
1.3 State two sources of finance that Nandi could consider supplementing her R40 000 when
starting her business. (2)
Nandi could consider a small business loan from a development finance institution, such as South
Africa’s Small Enterprise Finance Agency (SEFA), which specifically targets micro-enterprises and
women entrepreneurs with accessible loan products (SEFA, 2023). Alternatively, she could explore
a government-backed grant or subsidy, such as the Department of Small Business Development’s
grant funding for women-owned businesses in rural areas, which does not require repayment and
can cover specific asset purchases or training costs (DSBD, 2022).
