THE ORIGINS OF ENTREPRENEURSHIP

Entrepreneurship is derived from the French word ‘Entreprendre,’ which means ‘to undertake,’
‘to pursue opportunities’, or ‘to fulfill needs and wants through innovation and starting
businesses.’ The word first appeared in the French dictionary in 1723.

The first instances of entrepreneurship centered on the exchange of goods between ancient tribal
societies. The development of agricultural skills created the opportunity for even more
entrepreneurship, and this eventually evolved into more specialized skills and tasks, from
crafting jewelry to making weapons to crafting tools for working with crops. Exchanging these
goods and services with others was the birth of entrepreneurship.

The concept of entrepreneurship is understood in different manners by different scholars and

authors. There is no one consensual definition of the term among the experts.

Different dimensions have been used to explain the term. The definitions also vary with the
passing of time.

Therefore, a chronological description of the movement path of the definitional changes of

entrepreneurship would make the understanding clear to the readers.

“Entrepreneurship entails bearing the risk of buying at a certain price and selling at uncertain
prices.”- Ricardo Cantillon.

The concept focuses on the trading of goods and bearing its associated risk as to the act of
entrepreneurship.

“Entrepreneurship is any kind of innovative function that could have a bearing on the welfare of
an entrepreneur.”-Joseph A. Schumpeter (1934).

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Schumpeter recognizes entrepreneurship as a rewarding activity that involves any form of
innovation. Innovation is doing things in a new and better way. It adds utility to existing
operations or products.

Entrepreneurship is that form of social decision-making performed by economic innovators.” -

Robert K. Lamb (1952).

Lamb describes entrepreneurship as an act of economic activity engaged in innovation. He also

points out the social orientation of entrepreneurship as it is involved with social good and
welfare.

“Entrepreneurship is the purposeful activity of an individual or a group of associated individuals,

undertaken to initiate, maintain or aggrandize profit by production or distribution of economic
goods and services.” – A.H. Cole (1959).

The definition recognizes entrepreneurship as a deliberate human activity for earning profit
through economic activities of production and distribution of goods and services.

It may be an individual or a group activity. But the central focus is profit-making. That is. to
initiate, maintain or increase profit, entrepreneurship is undertaken.

“Entrepreneurship is the dynamic process of creating incremental wealth.” – Robert C. Ronstadt

(1984)

Ronstadt explains that wealth is created by individuals who assume the major risks in terms of
equity, time, and/or career commitment or provide value for some product or service.

The product or service may or may not be new or unique, but the entrepreneur must somehow
infuse value by receiving and locating the necessary skills and resources.

Entrepreneurship is the process of creating something new with value by devoting the necessary
time and effort, assuming the accompanying financial, psychic, and social risks, and receiving
the resulting rewards of monetary and personal satisfaction and independence.

ENTREPRENEURSHIP DEVELOPMENT AND TRAING

Entrepreneurship: This is the process through which an individual identify business
opportunities, gather the necessary resources, starts a business and takes appropriate action to
ensure its success.
An Entrepreneur is a person who has the ability to spot and evaluate business opportunities,
gathers the necessary resources, starts a business and takes appropriate activities to ensure its
success. An entrepreneur is a person who operates and assumes the risks of business venture. Is a
person who organizes, operates and takes up risks in a business. An entrepreneur is a person who
produces new or better goods and services with view of selling them to customers and making
profits. She/he starts up a business with the main aim of making profits.
Difference Between Entrepreneur, Intrapreneur And Enterprising Person
An Entrepreneur is a person who organizes, operates and assumes the risks for business
ventures.
An Intrapreneur is a person who focuses on innovation and creativity and transforms a dream/
idea into a profitable venture by operating within the organization’s environment. Is a person
who operates a business within another business.
An Enterprising Person. Is someone who takes on imaginative and risky projects.
TYPES OF ENTREPRENEURS
1. Innovating Entrepreneur: This is an entrepreneur who introduces new goods, inaugurates
new methods of production , discovers new markets e.t.c
2. Imitative Entrepreneurs: These are characterized by readiness to adopt successful
innovations inaugurated by successful innovating entrepreneurs , i.e they do not innovate the
changes themselves, but only imitate the techniques and technology innovated by others.
3. Fabian Entrepreneurs: These ones are characterized by very great caution in trying or
experimenting any change in their business, they only lack the will to new methods of
production.
4. Drone Entrepreneurs: Such entrepreneurs do not adopt to new opportunities / changes in
production methods, even if they are to experience loses , they may refuse to change in their
existing methods. such entrepreneurs struggle to exist but not to grow, in such a way they are
laggards as they continue to operate in their traditional way and resist changes.

Entrepreneurial Characteristics

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Successful entrepreneurs possess the following features
 Hard working: This involves putting in extra efforts e.g. working for long hours in order to
achieve the set goals.
 Goal oriented: They set goals and work hard towards achieving them.
 Risk taking: They take calculated risks with a higher chance of success.
 Self-confidence: They believe in themselves and their ability to achieve set goals.
 Profit oriented: They aim at earning profits through maximising sales and minimizing costs.
 Creativity and innovation: They come up with new ideas of doing things and new products.
 Persistent. They have a strong desire to continue doing something even if they face problems.
They do not easily give up.
 Demonstrate initiatives: They are self-driven. They make own/independent decisions without
waiting for someone to tell them what to do.
 Building for the future: They create long term enterprises that provide secure job and income
for themselves and their families.
 Respond to feed back: They are concerned to know how well they are doing and keep track of
their performance. They keep monitoring their general performance.
 Willing to listen: They seek and listen to advice from people such as, customers, suppliers,
bankers and banks.
 Cope with failures: They recognize failures, learn from them and look for new opportunities.
 Set own standards: They set performance standards for income, quality or sales and work
towards achieving them.
 Build on strengths: They build their businesses basing on their strong abilities. For example,
enter personal skills, marketing and selling skills, quality management skills, among others.
 Reliability and integrity: They are honest and usually fulfill their promises.

Copes with uncertainty. Entrepreneurs deal with a lot of unknowns without becoming too
stressed. Uncertainties such as amount of sales, cash flow, price changes, labour turnover,
competition, among others.

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Role of entrepreneurship in the economic development of the economy and society
 Creation of employment opportunities. Entrepreneurs start business enterprises that need
people to work in the different departments e.g. accountants, managers etc
 Improvement in the Standard of Living. this is due to increased access to good
quality products
 Promoting small enterprises in a society. This encourages self-reliance.

 Encouraging creativity and innovation. This leads to more wealth,

 Using locally available resources. This avoids resource wastage.
 Correcting regional imbalances/income inequalities. This is as a result of establishing
businesses in previously less developed areas.
 Developing an entrepreneurial culture. More people get encouraged to start their own
businesses.
 Increasing tax revenue collected. Such as rental tax, pay as you earn tax, profit tax,
among others.
 Promoting linkages. For example, factories buy agricultural products as raw materials
and farming businesses buy agricultural inputs from factories.
 Improvement of balance of payment position /international trade. More products are sold
on the international market and this improves foreign exchange earnings.
 Development of infrastructure such as roads, buildings, among others.
 Developing entrepreneurship skills through practical business training.
 Reducing country’s dependence on foreign products. This is because more products can
be manufactured locally.
 Facilitating technological advancement. For example, craftsmanship skills
 Increasing access to goods and services. This improves people’s welfare,
 Providing a source of information/research/study purpose. Such as allowing students field
visits
 Providing market for local products. This increases people’s incomes.
 Conserving the environment. For example, tree planting projects
 Preserving/promoting culture. For example, music and drama businesses

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  Participating in community development prrogrammes such as improving access to clean
water
 Preventing rural urban migration. This is through starting up businesses even in rural
areas.
 Promoting international relations. This is through signing international trade agreements.
 Promoting urbanization. More businesses lead to development of towns.
 Acting as a basis for further industrialization. Small businesses provide ground for
developing large industries.
 Diversifying the economy. Different businesses are developed in a variety of sectors.

Factors promoting / facilitating entrepreneurship in Uganda.

 Presence of market i.e. availability of customers and consumers to buy the products.
 Favourable government policies of rewarding entrepreneurial effort e.g. tax holidays by
the government that promotes the enterprising spirit.
 Availability of financial institutions that provide the capital required in form of borrowed
funds to form and run businesses.
 favourable political climate and presence of security in the country
 Existence of good transport networks that ease movement of both resources and goods to
the market.
 Government support e.g. through the Entandikwa and Bonnabagagaware schemes that
provide initial capital to begin businesses.
 Possession of entrepreneurship skills like creativity, risk taking, endurance, flexibility etc.

 Mobility and exposure which offers the entrepreneurs the chance to develop new ideas
which shape creativity that saves entrepreneurship.
 Command of business and existence of technical skills in marketing, finance,
management etc which helps to effectively exploit the full potential of business.
 presence of role models in the community
 presence of resources like raw materials, labour and capital

ENTREPRENEURSHIP PROCESS

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1. Discovery: An entrepreneurial process begins with the idea generation, wherein the
entrepreneur identifies and evaluates the business opportunities. The identification and
the evaluation of opportunities is a difficult task; an entrepreneur seeks inputs from all the
persons including employees, consumers, channel partners, technical people, etc. to reach
to an optimum business opportunity. Once the opportunity has been decided upon, the
next step is to evaluate it.

An entrepreneur can evaluate the efficiency of an opportunity by continuously asking

certain questions to himself, such as, whether the opportunity is worth investing in, is it
sufficiently attractive, are the proposed solutions feasible, is there any competitive
advantage, what are the risk associated with it. Above all, an entrepreneur must analyze
his personal skills and hobbies, whether these coincides with the entrepreneurial goals or
not.

2. Developing a Business Plan: Once the opportunity is identified, an entrepreneur needs

to create a comprehensive business plan. A business plan is critical to the success of any

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 new venture since it acts as a benchmark and the evaluation criteria to see if the
organization is moving towards its set goals.

An entrepreneur must dedicate his sufficient time towards its creation, the major
components of a business plan are mission and vision statement, goals and objectives,
capital requirement, a description of products and services, etc.

3. Resourcing: The third step in the entrepreneurial process is resourcing, wherein the
entrepreneur identifies the sources from where the finance and the human resource can be
arranged. Here, the entrepreneur finds the investors for its new venture and the personnel
to carry out the business activities.
4. Managing the company: Once the funds are raised and the employees are hired, the next
step is to initiate the business operations to achieve the set goals. First of all, an
entrepreneur must decide the management structure or the hierarchy that is required to
solve the operational problems when they arise.
5. Harvesting: The final step in the entrepreneurial process is harvesting wherein, an
entrepreneur decides on the future prospects of the business, i.e. its growth and
development. Here, the actual growth is compared against the planned growth and then
the decision regarding the stability or the expansion of business operations is undertaken
accordingly, by an entrepreneur.

The entrepreneurial process is to be followed, again and again, whenever any new
venture is taken up by an entrepreneur, therefore, its an ever ending process.

BARRIERS TO ENTREPRENEURSHIP
Barriers to entrepreneurship are factors that hinder the development of the entrepreneurship; they
hinder people from acquiring and practicing entrepreneurial skills, but also prevent practicing
entrepreneurs from achieving the full benefits that entrepreneurship has to offer.
 Poor entrepreneurial skills. Most entrepreneurs and potential entrepreneurs are short on
entrepreneurial skills. They are risk averse, lack creativity, innovation, endurance,
flexibility and other entrepreneurial characteristics.

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 Lack of role models in entrepreneurship. Uganda is seriously short of role models in
the field of entrepreneurship, which limits the number of people who willingly aspire for
a career in entrepreneurship
 Lack of business ethics. Unpaid loans, unpaid or highly exploited employees, unpaid
suppliers, substandard goods, tax evasion, corruption, smuggling etc. characterize many
business ventures in Uganda today. While such tendencies may sometimes result in a
quick profit, many times these ill come back to haunt the entrepreneur, many time
crippling them completely.
 Low mobility and exposure. Mobility and exposure normally offers the biggest
revelation for new ideas that shape creativity and innovations to entrepreneurship.
However, Ugandans, generally do not travel widely, do not read widely and do not
explore, ask or investigate.
 Lack of business and technical skills. Business skills in marketing, accounting,
management, planning are required by all practicing entrepreneurs to effectively manage
their entrepreneurial ventures.
 Career dependency. Ugandans especially the educated have long been dependent on
their careers to provide for their livelihoods. Entrepreneurship has for long been regarded
as a last resort effort mainly reserved for the under educated.
 Lack of continuity. Very few firms in Uganda are known to survive the death of their
founders. Very few entrepreneurs have the opportunity to pass on their enterprises to new
generations and watch from a side as the enterprise continues to prosper.
 Lack of motivation. Because of lack of role models and limited exposure, entrepreneurs
in Uganda tend to be satisfied with relatively small and modest achievements.
 Political instability. This state of affairs has robbed Uganda of many entrepreneurs and
many more entrepreneurs have lost life time savings and business assets, while others
have been forced by instability to close.
 Business administrative procedures. In many cases, the business environment is
dominated by complex and burdensome regulations, favouritism, corruption and weak
enforcement mechanism.

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  Insensitive government institutions and departments. Entrepreneurs blame
government institutions for having little qualification and a poor understanding of the
importance of business and entrepreneurial processes.
 Excessive, complex and arbitrary taxation. The tax administration is arbitrary and
many times misunderstood, resulting in adoc tax administrative solution which foster
rampant corruption, very many taxes also serve to discourage potential entrepreneurs.
 Lack of access to finance. Banking system and practices in Uganda impose impossible
demands on entrepreneurs’ banks have little incentives to extend credits. The term of
credit are unreasonable, requiring difficult collateral and guarantees to secure the loan.
 Low purchasing power. Low incomes and high rate of unemployment limit the
purchasing power of relatively small Ugandan population. This makes it hard for
businesses in general and entrepreneurs in particular to acquire the necessary economies
of scale.
 Under developed infrastructure. Uganda is still played with very poor physical and
social infrastructures in terms of roads, electricity, water, bridges, schools and hospitals.
These hinder business development in many parts of the country, and acts as barriers to
entrepreneurs.
 Economic instability. Due to over reliance on donor assistance borrowing, the import
bill that far outweighs the export earnings, and over reliance on imports, the Ugandan
economy is very fragile and easily destabilized by any small shocks in the international
environment.

CHALLENGES FACED BY ENTREPRENEURS IN UGANDA

 Uncertainty of income.

 Risk of losing your entire investment

 Long hour and hard work

 Low quality of life until the business get established

 High levels of stress

 Complete responsibility

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  Discouragement and disillusionment

 Limited viable ideas and misconception

 Pandemics and Epidemics such as COVID 19

 Limited access to finance

 High cost of finance (interest rate).

 Under developed transport system

 Limited incentives

 Discriminatory interventions such as, discriminatory land give away to investors.

 Macro economic instability e.g. inflation, price fluctuation

 High corruption rates/bureaucracy. This increases the cost of doing business.

 Insecurity/political instabilities

 Un favorable tax policy and administration

 Limited access to finance

MEASURES BEING TAKEN BY THE GOVERNMENT TO DEVELOP

ENTREPRENEURSHIP
 Carrying out education reforms such as changing curriculum, vocationalisation of
education,

 Introduction of training programs such as skilling Uganda

 Providing initial capita/loans such as through operation wealth creation

 Promoting rural development such as rural electrification

 Carrying out land reform policies.

 Conducting trade exhibitions and trade fairs

 Carrying out fair taxation

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  Improving the political climate

 Creating a wider market for products. For example, joining the East African Community

 Encouraging development and use of appropriate technology

 Promoting savings. For example through SACCOs

 Developing infrastructure such as roads

 Promoting further privatization. This facilitates private sector led development.

 Liberalizing of trade. This reduces trade restrictions among entrepreneurs.

 Encouraging creativity and innovation.

 Recognizing/rewarding successful entrepreneurs

 Modernizing of agriculture such as use of tractors

 Promoting gender partnerships. This has encouraged more women to join business

 Gazzetting areas for business such as business parks

 Setting up organizations that support entrepreneur such as Uganda Investment Authority

 Simplifying business start up processes. For example, reducing the time taken for
registering a business

 Enacting laws that protect entrepreneurs.

 Ensuring economic stability. Such as stable exchange rates, low inflation rates,

THE CONCEPT OF CREATIVITY

Creativity is the ability to bring something new into existence. It is the ability to come up with
innovative solutions to needs and to market them. It is the ability to produce work that is both
unique and appropriate. In business an entrepreneur’s creativity is often the different between
success and failure hence creativity is allowing yourself to make mistakes.
One’s creative potential

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Most people speak of creativity without knowing quite what it means. Creativity a basic
characteristic built into all human beings and almost completely absent in animals. It involves
seeing novel relationship between things and as such it is closely related to intelligence. It
involves converting the random, the mediocre or the dull into something with form, style and
originality
CHARACTERISTICS OF CREATIVE INDIVIDUALS
Creative people usually possess the following characteristic as listed below.
 They usually have originality. Creative people are capable of doing something that no
one else has done. They think of an idea, redesign it and make something new out of it.
 They are independent thinkers. Creative people always think for themselves. They are
observers and analysts who gather all the information they can and then analyse it to
come up with their own analysis.
 They promote growth and change. Creative people search for change constantly. They
do not restrict themselves to using the same old way of doing things. They learn to
change for the better, so that they can grow and prosper.
 They are flexible. Creative people are flexible and always learn the current
inventions.People are challenged daily to be flexible in work, relationships, life and
learning new things in general.
 They are innovative. They have the courage to try new things and build something out
of the ordinary. Innovation and having courage are necessary for creativity.
 They normally ask questions. They always ask questions and ask people to explain
what they mean and the things they don’t understand. They don’t accept things as they
are.
 They are Sensitive, people who are creative are sensitive to the world and their
environment so as to raise their creativity
 Search for better ways to do tasks, they focus on what they do and find new
possibilities and new ways of doing things

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CREATIVITY PROCESS
 Preparation/immersion (knowledge accumulation). This involves gathering data,
opinions and speculation to obtain an inner depth grasp of the problem at hand.It is kind
of brainstorming exercise eg if you are a writer, this means looking at old pieces of work
and trying to decide where to go from there.
 Investigation, involves developing a solid understanding of the problem, situation or
decision at hand.
 Transformation, involves viewing the similarities and differences in the information
collected
 Incubation/gestation. It involves allowing the mind to continue thinking over the
problem and possible solutions. It involves making the necessary connections that are
made in order to lay the idea.
 Illumination / insight. It involves building inspiration. This may come abruptly by
revelation. E.g. this is the moment for a writer when an idea just hits them and they need
to grab a piece of paper in order to remember it.
 Verification and application. This involves testing the ideas, alternative solutions,
possibility for their applicability before picking the most suitable solution.
 Implementation, this involves transforming the idea into reality

OBSTACLES TO CREATIVITY IN BUSINESS

 Negativity/negative thinking. This involves the tendency to focus on the negative
aspects of problems and expand energy on worry.
 Thinking that you are not creative This results from the lack of self confidence
 Fear of failure. Fear of looking foolish or being laughed at hinders creativity. Failure is a
necessary condition of and stepping stone to success.
 Limited or lack of quality thinking time. The over-stressed person finds it difficult to
think objectively at all. Unwanted stress reduces the quality of all mental processes.
 Over-conformance with rules and regulations. A tendency to confirm to accepted
patterns of belief or thought i.e. the rules and regulations hampers creative thinking.
Some rules are necessary, but others encourage mental laziness.

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  Wrong assumptions. This hinders creativity such as assuming that the failure of a
business is due witch craft, inherited bad lack from parents etc
 Application of too much logic to a problem or situation slows down or hinders
creativity.
 Dehumanising mass media. This involves spending a lot of time immersed in popular
culture i.e. televisions or listening to pop music
 Unfavourable or poor working conditions or limiting the freedom of workers in the
business also limits their creativity.
 Competition in the present environment hampers motives for creative output.
Concerns with job advancement or opportunities as opposed to job stability or security
affect motives to be creative at work.
 High conflicting goals and objectives. These also hinder creativity.
 Noisy environment, which do not provide quite enough time for reflection and
introspection.
 Competition. In the present environment hampers motives for creative output, concerns
with job advancement or opportunities as opposed to job stability or security affect
motives to be creative at work.
 Demands for quick production of results
 Belief, having a strong belief in something limits response options and the way things are
perceived from outside world

TECHNIQUES FOR DEVELOPING A CREATIVE ABILITY

 Thinking beyond the invisible frame works that surround problems/situations
 Recognizing when assumptions are being made and challenge them
 Developing/adapting ideas from more than one source
 Transferring technology from one field to another
 Being open and prepared to use chance on unpredictable things/events to Advantage
 Drawing on the experience’s of other individuals business to widen the field of Vision.
 Practicing for tune i.e. having a wide attention span and range of interests
 Exploring thoughts processes and the key elements of the mind at work in analysis,
valuing and synthesing

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  Note down thoughts/ideas that apparently drop into the mind unsolicited so that they are
not forgotten
 Using analogy i.e. improve imaginative thinking to find models or solutions in nature, in
existing products/services or in other organisations
 Trying as appropriate to sometimes make the strange familiar and the familiar strange to
spark new ideas
 Knowing when to leave a problem i.e. remain aware but detailed
 Tolerating ambiguity and occasionally live with doubt and uncertainty
 Stimulating own curiosity in everything and the skills of observation, listening, reading
and recording

IMPORTANCE OF CREATIVITY
i. It increases awareness by paying attention to insights and sounds that are ordinary
ignored
ii. It leads to development of new and original ideas and using the existing ideas as an initial
point
iii. It is used to update products and services
iv. It enables an entrepreneur to make proper use of limited resources
v. It is used to promote products and services of a business
vi. It solves everyday problems in business

INNOVATION IN BUSINESS
Innovation is the way of transforming resources of an enterprise through the
creativity of people into new resources and wealth.
The goal of innovation is positive change to make someone or something better.
Innovation and the introduction of it that leads to productivity is a fundamental
source of increasing wealth in an economy.
TYPES OF INNOVATIONS
 Business model innovation. This involves changing the way the business is being
done in terms of capturing value e.g Nile Breweries Vs. Uganda Breweries.

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  Marketing innovation. This is the development of new marketing methods with
improvement in product, design, packaging, product promotion or pricing e.g soft
drinks firms to change to plastic packing of their products.
 Organisational innovation. This involves creation of new business structures,
practices and models and may include process, marketing and business model
innovation.
 Process innovation. This involves implementation of a new or significantly
improved production or delivery method.
 Product innovation. This involves a good or service that is new or improved
substantially. This might include improvements in functional characteristics, technical
abilities, ease of use etc. today firms that manufacture mobile phones are
continuously coming up with phones that are not only serving oral communication
but also phones with other functional characteristics like those with radios, television,
those that can work as computers, those with cameras etc.
 Financial innovation. This involves the development of new financial attributed i.e.
risk sharing liquidity and credit in innovative ways as well as exploiting the weakness
of the tax law.
 Supply chain innovation. This is an improvement in a way of getting inputs (raw
materials) from suppliers and delivery of output of products to the customers
 Service innovation. This is an improvement in a way services are provided e.g use of
ATM machines to withdraw and deposit money, yaka system of UMEME, mobile
money services, internet banking

SOURCES OF INNOVATION
Internal sources (innovations within the society)
 Un expected occurrences. Unexpected success; unexpected failure of unexpected outside
event can be as symptom of a unique opportunity. It is often through such unexpected
occurrences that new ideas are born from new information brought to light.
 Incongruities. A discrepancy/difference between reality and what companies or the
industry assumes it to be or between what is and what ought to be can be an innovative
opportunities.

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  Process needs. Here, innovators are inspired by missing links in the production process
that need to be created to support some other product or process.
 Industry and market changes. These are mainly shifts in the industry and market
conditions for example changes in demand, technology etc that result into changes in
products or services delivery.
External sources (societal environment sources)
 Demographic changes. Changes in population size, age structure, sex composition,
employment, level of education and income can generate innovative in the level of
education in Uganda has resulted in qualified workers going for somehow good paying
jobs.
 Changes on perception mood and meaning. Innovative opportunities can develop when a
society’s general assumptions attitudes and beliefs change. For instance despite the fact
that health care in Uganda has continually become better andmore accessible, people
have become increasingly concerned about their health and the need for better and more
accessible care.
 New knowledge. Advances in scientific and non-scientific knowledge can create new
products and new skills and markets.

CHARACTERISTICS/FEATURES OF INNOVATION (INNOVATORS)

 They have a compelling vision. Innovative people believe that they are part of
something better to come and that their willingness to contribute to the vision will
make it happen.
 They are opportunity oriented. Innovators are constantly thinking about new ways of
doing things and they are not afraid of doing something new.
 They are self-disciplined. Innovators are able to prioritize their time so that they are
doing the important work first. They have the ability to do the hard work to make them
happen.
 They are inner-directed. Innovators are inner directed and goal oriented and do not need
any one else to motivate them because of the self-discipline and ability to focus.

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  They are extra ordinary persistent. Innovators are committed to achieving their goals.
They keep going and do not let obstacles get in their way.
 They are passionate about belief. Innovative people are truly passionate about what they
believe, they give in everything they have. They are passionate about a thing and they go
after that with all their hearts and souls.
 They are trend spotters. Innovators are trend spotters they are able to identify something
new and its social responsibility
 They associate with positive people. Innovative people usually surround themselves with
people with positive attitudes towards creating something new.

PRINCIPLES OF INNOVATION
Below are five principles that can help you take advantage of new innovation that you may have
discovered
 Begin with an analysis of the opportunity
 Analyse the opportunity to see people will be interested in using the innovation
 To be effective, the innovation must be simple and clearly focused on a specific need
 Effective innovators start small. By appealing to a small, limited market, a product or
service requires little money and few people to produce and sell it.
 Aim at market leadership. Leadership here means dominating a small market niche. If an
innovation does not aim at leadership in the beginning, it is unlikely to be innovative
enough to successfully establish itself
WAYS TO FOSTER / PROMOTE INNOVATION IN A SMALL BUSINESS or WAYS
OF ENCOURAGING INNOVATON IN SMALL BUSINESSES
 Expecting change at all times: This helps the entrepreneur to always be ready to come up
with new things that ensures that businesses cope up with change.
 Developing innovative strategies: e.g. trying out new technology through research.
 Implementing new rules: i.e. an entrepreneur needs to learn to go beyond the existing
indicators of competition in the business environment by looking for new ways of doing
things.
 Thinking globally: this enables an entrepreneur to look for new market for its products
abroad, look for new technology abroad among others.

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  Avoiding barriers that limit innovators: i.e. entrepreneurs need to put in place measures
that ensure good internal co-operation among departments to promote good relations with
each other and other outside parties so as to create a good environment for innovations.
 Acting fast to take advantage of any new business opportunity: i.e. by coming up with
new things that utilize the identified opportunity.
 Being always a learner: through listening to other people.
 Measuring performance indicator: the entrepreneur needs to concentrate on key strategic
and profitable indicators by focusing energies on new things that drive the future success
of the business.
 Doing things well for others: for example for customers, suppliers etc. this help small
business to stay ahead of competitors.
 Always thinking like entrepreneur: this helps one to always have ideas and even go ahead
to improve on them in case of failure to start

ADVANTAGES OF INNOVATION
 It helps in locating new technologies and become a foundation of a new set of customers.
This improves product design and quality
 It assists a company in packaging and repositioning its products for global distribution
 It helps in developing new distribution channels and added value to make the
organization’s products /services stand out
 It helps in reviewing the company’s objectives and comparing them with customers
needs to find out what to offer to customers. This creates greater responsiveness to
customer’s demands
 Innovation alternative approaches create alliances with venture partners. This enables a
company to position its opportunity to match the interest of investors which improves the
focus and objectives of the organisations
 It lowers organizational research and development and operating costs
 It streamlines relationships with suppliers and customers
 It leads to production of variety of products which expends the product range

ENTREPRENEURSHIP DEVELOPMENT AND TRAING

5.0: BUSINESS OPPORTUNITY
Overview: This topic equips a learner with abilities to test the feasibility and viability of a
business idea so as to make a profitable business.
A Business opportunity refers to an attractive investment idea that provides the possibility of a
monetary return for the person taking the risk.
Characteristics of a good business opportunity
Sizeable market gap. Many people are willing and able to buy the business products.

Good income potential. The business is able to generate reasonable amount of money.

Low or moderate startup capital. It requires fewer amounts of money to start/ for investment.

Properly timed. A business is started at a time when customers need the product so as to
solve their problems.

Good growth potential. The business has the ability to expand in size.

Ease of entry into the market. It is simple for the business to enter the market due to less
restriction.

Related to ones’ skills and experience. This enables smooth/ effective running of the business

Reasonable return on investment. The business is able to make enough profits.

Able to use locally available resources. E.g. labour, raw materials, among others.

Acceptability by the community. The business activities are allowed in the community.

NB: Before investing in a business, ones needs to find out whether it is both feasible and viable.
Feasibility And Viability
A feasible business is one that can easily be implemented using the available resources.
While A viable business is one that is profitable.
A feasibility study is one carried out to find out the extent to which a business idea can be
implemented using the available resources, while a viability study is one carried out to find out
the extent to which a business idea is profitable.
Indicators/ manifestations of a viable or feasible business

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 Presence of enough market/real demand. Many people are willing and able to buy products of
the business.

 Availability of required resources for example, capital, raw materials, labour and land

 Reasonable return on investment. the business is able to make enough profits.

 Presence of required technical skills. These include machines and skilled labour needed to
produce the required goods and services.

 Acceptability by the community. The business operations are allowed within society.

 Favourable government policy of taxation for example low tax rates, tax exemptions, and so
forth.

 Availability of well developed infrastructure such as roads, power, telecommunication

network, among others.

 Presence of well developed infrastructure like roads, buildings, electricity, among others.

Types of feasibility study

1. Market feasibility study. This is a study aimed at finding out the market available (demand)
for the product and potential market growth.

Components of a market feasibility study

 potential current market

potential market growth

 business competitors

 product details like quantity, quality, and packaging

 prices charged by competitors

 sales promotion methods to use

 distribution channels to use

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2. Technical feasibility study; Is a study that shows the ability of the production facility (plant
and machinery or technology) to produce the required products without expensive breakdowns.
Components/elements of a technical feasibility study
Raw materials requirements

Labour requirements

Technology requirements

Utility requirements like water and power

Possible business location

Cost of buildings

Transport requirements

Waste management requirements

3. Financial viability study. This shows how attractive or hopeless a business idea is from a
financial point of view.

Components of a financial viability study

 Estimated total business costs. E.g. fixed capital costs, working capital costs, startup capital
costs

 Sources of finance. E.g. personal savings, bank loans, sell of shares

Capacity utilization of the project. This is the ability of the business to use the available
resources to bring productivity.

 Income estimates. That is, how much revenue to receive in a given period of time.

 Expenditure estimates. That is, how much money to spend out in a given period of time.

 Profitability estimates. That is, the expected return on investment in a given period of time.

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 Risk analysis. Involves finding out the potential business risks.

 Risk mitigation/risk control. Involves coming up with potential ways of reducing business
risks.

 Estimated cash flow. Involves identifying the possible sources of cash inflow and cash
outflow.

4. Legal feasibility study. This shows the ability of the business to operate within the available
business laws.

5. Environmental feasibility study. This shows the ability of the business to be implemented
while observing the set environmental standards.

6. Cultural feasibility study. This shows the ability of the business to be implemented while
observing existing cultural beliefs and practices.
Purpose of carrying out a feasibility study
 To find out the potential current market

 To identify the potential market growth

 To establish business competitors

 To come up with product details like quantity, quality, and packaging

 To identify prices charged by competitors

 To establish sales promotion methods to use

 to identify the distribution channels to use in selling business products.

 To find out Raw materials requirements

 To establish different Labour requirements

To establish different Technology requirements

 To find out Utility requirements like water and power

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 To identify Possible business location

 To establish Cost of buildings

 To find out the Transport requirements for the business

 To establish Waste management requirements

 To establish the inventory plan such as, re-order levels

 To find out the Estimated total business costs. E.g. fixed capital costs, working capital costs,
startup capital costs

 To identify the Sources of finance. E.g. personal savings, bank loans, sell of shares

 To establish the Capacity utilization of the project

 To establish income estimates. That is, how much revenue to receive in a given period of time.

 To come up with Expenditure estimates. That is, how much money to spend out in a given
period of time.

 To establish Profitability estimates. That is, the expected return on investment in a given
period of time.

 To carry out a Risk analysis. Involves finding out the potential business risks.

 To come up with different Risk mitigation/risk control measures. Involves coming up with
potential ways of reducing business risks.

 To identify the estimated cash flow of the business. Involves identifying the possible sources
of cash inflow and cash outflow.
Evaluating of a business opportunity
This involves determining whether it is profitable to start a given business
Steps involved in determining the profitability of a potential business
1. Deciding on the type of business. That is, manufacturing or service business and the respective
products to deal in.

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2. Choosing the location. The business needs to be near the market and raw materials especially
for manufacturing business.

3. Estimating sales. That is, how much you revenue is expected from the sale of business
products.

4. Estimating costs. That is, expenses for running the business such as rent, power, salaries and
so forth.

5. Estimating profits. This involves subtracting estimated costs from estimated sales.

ENTREPRENEURSHIP DEVELOPMENT AND TRAING