CEN 311

WEEK 3
The Entrepreneur
Who is an entrepreneur? Or who becomes an entrepreneur?
An Entrepreneur is a person who:
A. undertakes the formation of an organization for commercial purposes
B. Creates a new or different business in the face of risk and uncertainty for the
purpose of achieving economic and social value by identifying opportunities
and assembling resources.
According to Richard Cantillon the word entrepreneur means a person who takes
the risk of starting a new organization or introducing a new idea, product or
service to society
According to J.B. Say, an entrepreneur is the economic agent who unites all
means of production; land of one, the labour of another and the capital of yet
another and thus produces a product. By selling the product in the market to pays
rent of land, wages to labour, interest on capital and what remains is his profit.
Later definition of the term entrepreneur:
Pinson (2010) visualized the entrepreneur as a person who starts a business to
follow a vision, to make money, to be the master of his/her own soul (both
financially and spiritually) and is an "educated" risk taker
Murphy (2010) conceives an entrepreneur as a person who is dynamic and
continues to seek opportunities and/or different methods of operation and will do
whatever it takes to be successful in business.
Reiss (2010), views the entrepreneur as the person that recognizes and pursues
opportunities without regard to the resources he/she is currently controlling, with
confidence that he/she can succeed, with the flexibility to change course as
necessary, and with the will to rebound from setbacks

Traits of an Entrepreneur
Studies of the entrepreneurial personality find that entrepreneurs share certain key
traits or characteristics which include the following:
1) Desire and willingness to take initiative.
Entrepreneurs feel a personal responsibility for the outcome of the ventures they
start. They prefer to be in control of their resources and to use those resources to

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achieve self-determined goals. They are willing to step forward and build businesses
based on their creative ideas.
2) Preference for moderate risk.
Entrepreneurs are not wild risk-takers but are instead calculating risk-takers. They
rarely gamble. Entrepreneurs often have a different perception of the risk involved
in a business situation.
3) Confidence in their ability to succeed.
Entrepreneurs have an abundance of confidence in their ability to succeed, and
they tend to be optimistic about the chances of business success. Entrepreneurs
believe they can do anything.
4) Perseverance
Even when things do not work out as they planned, entrepreneurs do not give up.
They simply keep trying. Real entrepreneurs follow the advice contained in the
Japanese proverb, “Fall seven times; stand up eight.
5) Desire for immediate feedback.
Entrepreneurs like to know how they are doing and are constantly looking for
information. Nothing gives you feedback like your own business
6) Visionary.
Their ability to spot trends and act on them sets entrepreneurs apart from small-
business owners and managers. They decide the direction the business should
follow
7) Energetic.
Entrepreneurs are more energetic than the average person. Starting and operating
a business takes long hours and hard work. In addition, building a successful
business requires a great deal of stamina
8) Passionate.
Entrepreneurs love their work, despite the odds against it achieving success in
business.
9) Internal locus of control.
Entrepreneurs’ belief that they are in control of their own destiny
a) Discuss the term “Entrepreneur ‘‘according to four different scholars
b) List and explain the characteristics of an entrepreneur
c) Give a fully detailed explanation of an entrepreneur
d) Who becomes an entrepreneur?

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Types of Entrepreneurs
According to the level of willingness to create innovate ideas; there exists the
following types of entrepreneurs
1. Innovative entrepreneurs:
 are characteristized by the smell of innovativeness
 Have the ability to sense opportunities for introduction of new ideas, new
technology, opening of new markets and creation of new organizations, they
produce new possibilities
2. Imitative entrepreneurs:
 They follow the path of innovative entrepreneurs usually copying technology
and techniques of innovative entrepreneurs. They imitate because the
environment in which they operate does not permit them be creative and
innovative in their own way. They themselves do not make dynamic
innovations. They adopt techniques and methods initiated by others.
3. Fabian entrepreneurs
 Fabian entrepreneurs do not show initiative in visualizing and implementing
new ideas and innovations
 They respond very slowly to changes in the market, and this affects their
growth and competitiveness. Hence, grow very slowly or do not grow at all
because they fail to exploit new innovations that are normally more
profitable. They take extreme care while making any type of experiment in
their business. They are skeptical (pessimistic).
4. Drone entrepreneurs:
 Drone entrepreneurs are more satisfied with the existing mode and speed of
business activity
 they are more conservative and feel comfortable with their old-fashioned
technology and methods of doing business and totally refuse to adopt change
under any circumstances.
 They reject any opportunity to make improvements in the techniques of
production even if returns have decreased
 Slowly but surely, this entrepreneur will be forced out of business
5. Social Entrepreneur:
 drive social innovation and transformation in various fields including
education, health, human rights, workers’ rights, environment and enterprise
development, and in poverty alleviation
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Other types include:
1. Young Entrepreneurs
 Young people are setting the pace in entrepreneurship as are choosing
entrepreneurship as their primary career path due to massive unemployment.
They are willing to take a chance to control their own destinies.
 They are showing strong entrepreneurial tendencies which are a clear
indication that age is not a barrier to becoming an entrepreneur.
2. Women Entrepreneurs
 An increasing number of women are discovering that the best way to break
the “glass ceiling” that prevents them from rising to the top of many
organizations is to start their own enterprises.
 Women now own small enterprises and many of them are in fields that
traditionally have been male dominated.
3. Immigrant Entrepreneurs
 Immigrants have shown strong dedication, desire to succeed and survive in
foreign setting by establishing small businesses in the host countries.
4. Part-Time Entrepreneurs
 Part-time business is a popular gateway to entrepreneurship as it provides for
use of extra time as well as in providing alternative sources of income
5. Home-Based Business Owners
 More households are opening and operating home-based businesses.
 Today’s home-based businesses are more diverse and because of their low
set-up costs, they generate reasonable profit margins compared to enterprise
that have locations outside the home.
 home-based businesses offer entrepreneurs cost savings in not having to
lease or buy an external location, and are flexible to operate
6. Family Business Owners
 A family-owned business is one that includes two or more members of a
family with financial control of the enterprise.

MYTHS IN ENTREPRENEURSHIP
Throughout the years, many myths have arisen about entrepreneurship primarily
because of a lack of research on the subject. As many researchers in the field have
noted, the study of entrepreneurship is still emerging, and thus “folklore” tends to
prevail until it is dispelled with contemporary research findings. Ten of the most
notable myths (and an explanation to dispel each myth) are as follows.
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  Myth 1: Entrepreneurs Are Doers, Not Thinkers
Although it is true that entrepreneurs tend toward action, they are also thinkers.
Indeed, they are often very methodical people who plan their moves carefully. The
emphasis today on the creation of clear and complete business plans is an
indication that “thinking” entrepreneurs are as important as “doing” entrepreneurs.
 Myth 2: Entrepreneurs Are Born, Not Made
The idea that the characteristics of entrepreneurs cannot be taught or learned that
they are innate traits b one must be born with has long been prevalent. These traits
include aggressiveness, initiative, and drive, a willingness to take risks, analytical
ability, and skill in human relations. Today, however, the recognition of
entrepreneurship as a discipline is helping to dispel this myth. Like all disciplines,
entrepreneurship has models, processes, and case studies that allow the topic to be
studied and the knowledge to be acquired.
Myth 3: Entrepreneurs Are Always Inventors
The idea that entrepreneurs are inventors is a result of misunderstanding and
tunnel vision. Although many inventors are also entrepreneurs, numerous
entrepreneurs encompass all sorts of innovative activity. For example, Ray Kroc did
not invent the fast-food franchise, but his innovative ideas made McDonald are the
largest fast-food enterprise in the world. A contemporary understanding of
entrepreneurship covers more than just invention; it requires a complete
understanding of innovative behavior in all its forms.
Myth 4: Entrepreneurs Are Academic and Social Misfits
The belief that entrepreneurs are academically and socially ineffective is a result of
some business owners having started successful enterprises after dropping out of
school or quitting a job. In many cases, such an event has been blown out of
proportion in an attempt to “profile” the typical entrepreneur. Historically, in fact,
educational and social organizations did not recognize the entrepreneur. They
abandoned him or her as a misfit in a world of corporate giants. Business education,
for example, was aimed primarily at the study of corporate activity. Today the
entrepreneur is considered a hero—socially, economically, and academically. No
longer a misfit, the entrepreneur is now viewed as a professional role model.
Myth 5: Entrepreneurs Must Fit the Profile
Many books and articles have presented checklists of characteristics of the
successful entrepreneur. These lists were neither validated nor complete; they were
based on case studies and on research findings among achievement-oriented
people. Today we realize that a standard entrepreneurial profile is hard to compile.
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The environment, the venture, and the entrepreneur have interactive effects, which
result in many different types of profiles. Contemporary studies conducted at
universities across the United States will, in the future, provide more accurate
insights into the various profiles of successful entrepreneurs.
Myth 6: All Entrepreneurs Need Is Money
It is true that a venture needs capital to survive; it is also true that a large number
of business failures occur because of a lack of adequate financing. However, money
is not the only bulwark against failure. Failure due to a lack of proper financing is
often an indicator of other problems: managerial incompetence, lack of financial
understanding, poor investments, poor planning, and the like. Many successful
entrepreneurs have overcome a lack of money while establishing their ventures. To
those entrepreneurs, money is a resource but never an end in itself.
Myth 7: All Entrepreneurs Need Is Luck
Being in “the right place at the right time” is always an advantage but “luck
happens when preparation meets opportunity” is an equally appropriate adage.
Prepared entrepreneurs who seize the opportunity when it arises often seem
“lucky.” They are, in fact, simply better prepared to deal with situations and turn
them into successes. What appears to be luck is actually preparation,
determination, desire, knowledge, and innovativeness.
Myth 8: Entrepreneurship Is Unstructured and Chaotic
There is a tendency to think of entrepreneurs as gunslingers people who shoot from
the hip and ask questions later. They are assumed by some to be disorganized and
unstructured, leaving it to others to keep things on track. The reality is that
entrepreneurs are heavily involved in all facets of their ventures and they usually
have a number of balls in the air at the same time. As a result, they are typically
wellorganized individuals. They tend to have a system perhaps elaborate, perhaps
not—that is personally designed to keep things straight and maintain priorities. In
fact, their system may seem strange to the casual observer, but it works.
Myth 9: Most Entrepreneurial Initiatives Fail
Many entrepreneurs do suffer a number of failures before they are successful. They
follow the adage “If at first you don’t succeed, try, and try, again.” In fact, failure
can teach many lessons to those willing to learn, and often it leads to future
successes. This is clearly shown by the corridor principle, which states that, with
every venture launched, new and unintended opportunities often arise. The 3M
Corporation invented Post-it Notes using glue that had not been strong enough for
its intended use. Rather than throwing away the glue, the company focused on
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finding another use for it and, in the process, developed a multimillion dollar
product. However, the statistics of entrepreneurial failure rates have been
misleading over the years. In fact, one researcher, Bruce A. Kirchoff, has reported
that the “high failure rate” most commonly accepted might be misleading. In 1993,
Kirchoff traced 814,000 businesses started in 1977 and found that more than 50
percent were still surviving under their original owners or new owners. Additionally,
28 percent voluntarily closed down, and only 18 percent actually “failed” in the
sense of leaving behind outstanding liabilities.
Myth 10: Entrepreneurs Are Extreme Risk Takers . . . the Gamblers!
The concept of risk is a major element in the entrepreneurial process. However, the
public’s perception of the risk most entrepreneurs assume is distorted. Although it
may appear that an entrepreneur is “gambling” on a wild chance, the entrepreneur
is usually working on a moderate or “calculated” risk. Most successful
entrepreneurs work hard through planning and preparation to minimize the risk
involved and better control the destiny of their vision.

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