Introduction to Entrepreneurship

UCU 104: Dr. Linda Kimencu

 Course Outline
1. Introduction ( Your context, goals, thoughts
about business)
2. Definition and concept in entrepreneurship
3. Entrepreneurial motivation
4. Characteristics, types, and roles of
entrepreneurs
5. Idea generation and evaluation
6. Creative Process
7. Technology, innovation process ( product
prototypes)
8. Intellectual property rights
9. Process of intellectual property rights in Kenya
10. Entrepreneurial awareness
11. Business Planning
 Context of entrepreneurship
• What comes to your mind when you hear the
term entrepreneurship?
• Who is an entrepreneur?
• Do you know of an entrepreneur in your
neighborhood?
• What are the characteristics of an
entrepreneur?
• Why do people engage in entrepreneurship?
• Would you like to be an entrepreneur
 Entrepreneurs in Nairobi
• Ex-Ranalo Chef launches a 30M restaurant:
Joab Okeya worked with humility and
servitude at Ronalo foods specializing with
traditional dishes, after 9 years he began a
similar business called the Branch at Kenya
Cinema
• Emma Kamotho began selling clothes at Toi
market with a capital of 2,500 and makes
profit of 300,00 per month
• Samuel Njenga after graduating from JKUAT in
2003 with a degree in computer science joined
hands with five other students to form a savings
scheme contributing 5,000 per month. With the
money they began a multi million real estate
business: Itrade
• Mannasseh odhiambo and Benson O’lang and
seven other managers of Nakummatt began a
supermarket called Lemigo Dala supermarkate in
Kisumu after its closure
• Moses Mureithi a KU graduate got into business
immediately after finishing high school. He saved part
of his HELP loan for business. His company is called
Fanaka.
• While in the university he did online jobs such as data
entry and website design and was paid through
paypal. His savings went to purchase land investment.
• By the time he was starting Fanaka in 2015 he already
had several plots to start with. His earnings and saved
money amounted to 40K
• He used part of that money to acquire an
online account which he used to source
contracts from foreign organizations for IT
related tasks
• Webdesigning and data entry earned him
100,000 per month.
• In four years he had accumulated 50*100
plots worth 1.4 million.
Wk 1: Concept of entrepreneurship
• A. explain the concept of entrepreneurship
• B. Distinguish between small business and
entrepreneural ventures
• C. Explain the theories of entrepreneurship
 Entrepreneurship
• The term “entrepreneur” is derived from the
French word: “ entrprendre” meaning to
undertake.
• Hence, an entrepreneur is any person who
undertakes the risk of establishing and running
new types of entreprises.
• There are different types of entrepreneurs on
modes, objectives, ventures.
• Entrepreneurship is multidisciplinary and its meaning
and use varies
• Can defined as:
• Process of starting a new business
• Process of identifying opportunities in the market and
filing them
• Process of taking risks by pursuing business ventures
with aim of making profits
• Process of creating new and unique combination of
factors of production to produce economic growth
• Entrepreneurship is a style of management in which a
manager is willing to venture, to create change and to
pursue opportunities rather than just maintain the
status quo and conserve resources.
• Opportunity refer to a situation in which a person can
exploit a new business idea that has potential to
generate profits.
• A good entrepreneur is constantly searching for new
opportunities, searching for different ways of doing
things, different ways of satisfying needs of the
customers, and ways of providing various types of
utilities to the consumer.
• Think about entrepreneurship in any of those
categories
Entrepreneurs around the world
Entrepreneurs in Kenya
 Types of entrepreneurial ventures
• Small business ventures: These are also referred to
as low growth ventures. Low growth is started with
an intention of remaining small for subsistent living.
• They are interested in miximising their returns from
short term deals.
• They include technical craftsmen who make a living
by privately selling their trade or the products they
produce.
• They prefer personal selling based on their own
expertise ( means oriented)
Scalable Start Up Entrepreneurship
• Scalable start up entrepreneurship. These are also
referred to as high growth ventures.
• The entrepreneurs begin the business knowing that
one day their vision will change the world. They
attract investment from equally crazy financial
investors. i.e. venture capitalist.
• The businesses are highly scable. Their focus on scale
requires more venture capital to fuel rapid expansion
• Mostly innovative ventures e.g. uber, silicon valley
entrepreneurs,
 Innovative Entrepreneurship
• Innovation definition in business is the process through which an individual or
organization embarks on creating entirely fresh products, processes, and
concepts, or reimagining existing products, processes, and concepts in novel
ways

• The entrepreneur comes up with a completely new idea and turns them into
viable business.

• An innovative entrepreneur uses creative thinking and willingness to take risks

to develop business models with the potential to bring financial gains while
effectively solving their target audiences specific needs.

• The ever changing market conditions and swift progress of technology requires
companies to perpetually adjust and introduce innovation to stay ahead of
competition.
 Types of innovations
• Product innovation: development of new products
or enhancement of existing ones. E.g. electric cars,
smart home technologies, advancement in medical
devices. Etc.

• Process innovation: creating and implementing new

and improved processes with enhanced capabilities,
functionalities and efficiencies. To find better ways
to do things, offering useful improvements over
previous methods
• Business Model Innovations: Empowers companies to
distinguish themselves from competitors through the
provision of distinctive value proposition, exploring
new market segments, and utilizing technology.

• Value proposition is what makes your

products/services different from those of competitors.
• It communicates the unique value a business offers its
customers.
 Questions of an innovator?
• What processes can be done differently?
• What products can be added to the existing
product lines?
• What inefficiencies can be reduced?
 Large Company Entrepreneurship
• Large company entrepreneurship: large companies
have finite lifecycles.
• Most grow through sustaining innovation, offering new
products that are variant around the core products.
• Changes in customer tastes, new technologies,
legislations, new competitors, can create pressure for
more disruptive innovation.
• The destructive technologies may require that large
companies create entirely new products sold into new
customers in new markets.
• Existing companies can do this by acquiring
innovative companies or attempting to build a
disruptive product within the company.
• Unfortunately, the larger the company the less
the likelihood that it can be flexible enough to
allow for disruptive technologies

• E.g. M-Pesa innovation

 Social entrepreneurship
• Social entrepreneurs are innovators who focus
on creating products and services that solve
social needs and problems.
• Their goal is to make the world a better place,
not to take market share or create wealth for
the founders. They may be non profit, for
profit, or hybrid.
• Social entrepreneurs in Africa
 Differences between entrepreneurship and
corporate management
Attitude towards Entrepreneurship Corporate management

Risk Risk seeking/ risk assuming: Takes actions Risk averse/ risk minimizing;
to measure risks and identify actions to goal is to reduce risk to
offset the risk minimum while being
productive and profitable as
possible. Heavily budget
oriented

Drivers Opportunity driven Resource driven

Decision making Action oriented- entrepreneurship Analytical and
involves urgency in decision making methodological- committee
making well
studied/researched decisions

Management Lean management- lean multitasked, Heavy personnel

team overworked employees
 Differences between entrepreneurial
ventures and small business
Entrepreneural Ventures Small businesses
• Concerned with the future, • Concerned with daily
hence plans a lot for the future operations of the firm
• Spends time learning new • Prefers tried methods of doing
things and different ways of things
doing things • Concerned with details-
• Time conscious and concerned preoccupied with the tasks
with the big picture not operations
minimal details • Prefer routine decisions that
• Make calculated risks may not put the business into
• Creative and innovative for risks
new business ideas • Lacks innovation and creativity
• The main distinguishing factor is that
• Entrepreneurship is a mindset while a small business is a
form of business.
• Entrepreneurs are capitalist and they look into ways of
increasing their savings through which capital
accumulation results to stimulated investments.
• Entrepreneurs save to start up the business, to expand
their business, to reduce the need for borrowing, and for
precautionary reasons.
• Entrepreneurs provide an environment that nurture
human capital.
 Entrepreneurs vs. intrapreneurs
• Entrepreneurs refer to the people who begin a
business undertaking. They take the risk to begin the
business by identifying the opportunities that are
within the business environment.
• Intrapreneurs on the other hand, refers to the people
who work within an existing organization as the
employees of that organization. They enable the
organization to maximise on the opportunities
available in that organization by creating something
new or different that the organization can benefit
from.
 Entrepreneurship theories
• Economic
• Social
• Psychological
 Economic theory
• The theory was proposed by Richard Cantallion.
• Entrepreneurs exists to make money or profits.
• Entrepreneurs act as producers and exchangers.
• An entrepreneurs' actions affect the supply chain of raw
products being collected and the end product for the consumer.
• Economic situations motivates people to engage in business e.g.
– Taxation policies
– Industrial policies
– Sources of finance and raw materials
– Good infrastructure
– Investment and market opportunities
– Access to information
– technology
 Innovative Entrepreneurship Theory
• Theory was formulated by Joseph Schumpter.
• He conceptualized the term: Creative destruction.
• The role of the entrepreneur is to find innovative solutions
and foresight.
• The entrepreneur finds ways of reducing costs, becoming
more efficient and diversifying.
– Entrepreneurship is a creative act.
– Entrepreneurs are innovators
– They bring new products or processes
– Entrepreneurship is disruptive
– Believes in creative destruction
 Sociological Theory
• The theory was proposed by Max Weber.
• It considers all social aspects such as social
taboos, culture, religion to establish a business
that aligns with the values of the people. Some
societies are more entrepreneurial than others.
– Societal effects
– Involves the social values
– Religious beliefs
– Customs
 Psychological theory
• Based on personality traits of the entrepreneur.
• The entrepreneur has locus of control. Relies on
the theory of personality. The entrepreneur has
an innate need for achievement.
• Personal characteristics that make people
engage in entrepreneurship
– Personal motives
– Risk taking tendencies
– Internal locus of control
Personality traits and entrepreneurship
• OCEAN
• Openness- The degree of intellectual curiosity,
creativity, and novelty. Opposite to openness is
dogmatism: dogmatism is negatively correlated
with entrepreneurship.

• Conscientiousness: Organized, dependable,

industrious, and orderliness. Ability to wither
difficult situations, action focused and can do
attitude, problem solver.
• Extroversion: Tendency to seek the company of
others. Some entrepreneurial ventures require one
to be extraverted, while there are those that
require one to be introverted.

• Agreableness: There is a negative correlation

between agreeableness and entrepreneurship.
While an entrepreneur should be compassionate
and polite, he/she must be comfortable with
disgreements and conflicts.
• Neuroticism: Term associated with distress
and dissatisfaction. High neurotic people are
predisposed to nervousness and anxiety.
 Opportunity based theory
• This was proposed by Peter Drucker.
• Entrepreneurs search for change, respond to it
and exploits it as an opportunity.
• Entrepreneurship is the act of discovery
• An entrepreneur perceives an opportunity in
the market and acts on it.
• Perceives the difference between what is and
what could be
Resource Based Entrepreneurship Theory

• Entrepreneurs need resources to start and

carry out their businesses.
 Theory of Entrepreneurial Risk
• Frank Knight:
• Entrepreneurship involves risks rather than
uncertainties
• Risks involves probabilities
• Entrepreneur bears all risks and uncertainties
of the enterprise
• The entrepreneurs motivation to business is to
minimize risks
Entrepreneur Schumpter Knight Krushner
ial attitude
Entrepreneur creativity Risk taking Opportunity
ship act of identification
Entrepreneur Rarely frequently Frequently
ship
occurrences
Effect on the Disrupts the Provides Provides
market market equilibrium to equilibrium
the market
Who can be Anyone Shareholder/ Marketer
an owner anyone with
entrepreneur access to the
markets
 Entrepreneurial Motivation
• We explore internal and external factors that
motivate people to become entrepreneurs
• Entrepreneurial motivations are cognitive,
biological, and external factors that prompt
certain actions in individuals and societies to
act in creative and innovative manner.
• A persons orientation can determine their
success as entrepreneurs
 Motivation
• Motivation is a set of forces that causes
people to engage in one behavior rather than
some alternative behavior.
• Comes from a Latin word: “Movere”, meaning
“to move”
• To move from present situation to a better
situation.
• Motivation is the willingness to do something
and is conditioned by this action’s ability to
satisfy some need for the individual.
• It is an inner state that energises, activates, or
moves and that directs or channels behaviors
towards a goal
• External environment such as access to capital,
extent of skills gap, and government policies
can encourage or inhibit entrepreneurial spirit.

• Explain the extrinsic and intrinsic factors that

motivate entrepreneurs
• Compare and contrast advantages of self
employment and other employment
 Intrinsic and extrinsic motivations
• Intrinsic ( Internal)
• Extrinsic ( External)
• Internally refers to a persons inner drive e.g.
need for achievement, independence, personal
satisfaction, and self actualization.
• Extrinsic: external environment: supportive
government policies, enterprising culture,
availability of incubation centers, access to
credit
• What factors nurture entrepreneural
behavior?
• What factors direct those behaviors?
• How do entrepreneurs maintain such
behaviors?
 Entrepreneurial behavior
• The bahavior varies between people
• It is an internal condition
• An inspiration process to do work
• A goal oriented process
• Aims at serving people: Solving people
problems.
• Entrepreneurship is achieving satisfaction
through serving other innovatively
 Motivating factors
• Achievement motivation- Need for
achievement
• Sociological and psychological factors:
Individual possesses some psychological
factors
• Economic factors: Favorable economic
conditions favor entrepreneurship
 Motivating factors
Internal External
• Educational qualifications • Assistance from
• Occupational experience governments
• Desire to work • Access to capital and credit
independently • Availability of technology
• Family background • Demand for a particular
• Possess social prestige product
• Desire to achieve freedom • Financial aid from other
sources
 Characteristics of entrepreneurs
• High need for achievement- High degree of
individual responsibility and initiative
• Appetite for risk- risk taking propensity.
Entrepreneurs must accept uncertainty with
respect to financial well being, psychic well
being, career security, and family relations.
• Tolerance to ambiguity: entrepreneurs face
challenges that are unprecedented and
unpredictable
• Business ventures can start in two different
ways: problem orientation or solution
orientation.
• Problem orientation: addresses a market
need. Addresses a stated need
• Solution orientation: innovative product or
technology breakthrough: addresses a silent
need
• Internal Locus of control: The belief that their
actions or personal characteristics affect the
outcome. Entrepreneurs want to engage in
enterprises in which they can see the contribution
of their efforts to the outcome.
• Self efficacy: A belief in ones ability to muster and
implement the necessary resources and
competencies to attain a certain level of
achievement in a task. People with high self
efficacy take negative report positively.
• Goal setting- Entrepreneurs are very detailed
and goal oriented. They develop quantifiable,
specific, measurable goals that can be
accomplished within a period of time.
• High need for independence
• Greater drive in terms of ambition, goals,
energy, stamina, passion and perseverance.
• Entrepreneurs have the INNER Eye to spot
opportunities
 Entrepreneurial readiness
• Key areas:
• Mindset:
Independent minded- seeks conformity
Risk tolerance- security oriented
Innovator- adapter
Individual achievement- organization achievement
Optimistic- pragmatic
• Dealing with others:
– Initiating- Accomodating
– Exploratory oriented- role oriented
– Expansive- directive
• Business orientation
– Opportunistic- realistic
– Strategic- tactical
– Proactive-steady
• Self management
– Action oriented- methodological
– Analytical- procedure oriented
– Multi tasking- single tasking
– Stress tolerance- stress management
• Life/ Work orientation
– Self directed- career pathing
– Knowledge seeking- information management
– Family history of entrepreneurs- conventional
upbringing
 Assignment
• Businesses exists to serve human needs. In groups of ten visit an entrepreneur in your neighbourhood. Do a personalized
interview with the business owner to understand their entrepreneurial journey.
• Write a brief case study of the entrepreneurial venture that you visited. ( Some of questions to consider- you are not limited to
these)
• What kind of entrepreneurial venture did you visit (social enterprise, highly scalable venture, small business etc.)
• What problems does the entrepreneurial venture seek to solve?
• What was the origin of the business idea and the motivations of the entrepreneur?
• Whose problems do they solve ( who are their target clients, how do they reach them, why did they choose them?)
• What has been their journey for the last five years ( successes, challenges, milestones, etc)
• What advice/lessons could their share with an aspiring entrepreneur like yourselves(s)
• Include a group photo of the group members as they do the assignment as appendices. More photos of the business can be
included: Ensure you have the consent of the owner before taking and publishing photos.
• The case study can be in a reported format or in an interview format as preferred by the group members.
•
• Assignment Requirements.
• Assignments should be typed Times Roman 12 font; 1.15 spacing.
• All assignments should have a proper cover page that include all the essential details.
• All the names of the students should belong to E37 ( without exception) and should include the students accurate registration
numbers.
• No late assignments/ CATs will be accepted past the due date.
• Every group to have at least 5 members and no more than 10 members.
• Each of the groups to name their group and include the group name on the cover page.
•
Topic 2: Opportunity identification
• Problem oriented businesses starts with the
discovery of an unsolved problem of sufficient
magnitude.
• It has the awareness that the solution to that
problem represents some value.
• Problems indicate a need that has not been met
hence becoming a business opportunity
• The entrepreneur is able to come up with a product
that solves customer needs hence able to get a
market.
• It is not enough that something is a problem.
• The opportunity only arises if the problem is
able to be solved innovatively.
• Many unsolved problems are not important
enough and therefor may not present a
business opportunity.
• Often customers do not know the have a
problem or have grown accustomed to the
discrepancy between the actual situation and
possible situation. E.g. congestion on the
roads, waste management
 Problem oriented business
• Problem oriented entrepreneurship has to do
with knowing ore about what the customers
need more than themselves.
• They require imagination, forward looking,.
• It aims at asking this question: if it was
possible would it entail value for the customer
 Example of problem oriented businesses

• Twiga foods:
• Twiga links farmers and vendors to fair trusted
modern markets.
• They source quality produce from Kenyan
farmers and deliver to vendors in urban areas.
• IFC and Tlcom invest $10M in Twiga foods an
m-commerce start up supporting kenyan
farmers.
 Idea Generation and Evaluation
• Distinguish a business idea from a business
from a business opportunity
• Identify sources of business opportunity
• Evaluate viability of business ideas
• Opportunity involves the potential to create
something new that has potential to generate
economic value
• Opportunity gap: is the gap between what is
available on the market at present and the
potential to introduce new or significantly
improved products or services.
• Opportunity gaps present the potential to serve
customer better that they are currently being
served.
• An entrepreneurial opportunity is the
possibility to do things both differently from
and better than how they are being done at
the moment.

• Innovation is a way of doing something

differently and better

• Wickham, 2006
• Entrepreneurship opportunities can be discovered
meaning the market exists and is known in advance and is
just waiting to be discovered and exploited by the
unusually alert individual.
• Entrepreneurs find ways of discovering unsatisfied needs
and wants in the economy.
• These opportunities arise from the stated needs or the
complaints that current customers have and are looking for
someone to satisfy them.
• These types of business involve mostly differentiation
where the business offers unique solutions to the market
• Entrepreneurship opportunities can be created This are
situations in which there is no existing market for the
products, however the entrepreneur creates the market.
• This school of thought believes that people often do not
know what they need hence it suggests that ignorance is
a key to creating opportunities.
• For these types of business ventures the entrepreneur
addresses the silent needs. E.g. Safaricom and M-pesa
platform
• These types of businesses are usually innovative
• A business idea is something that entrepreneurs develop
in order to solve a problem in an existing market.
• Business opportunity is a concept that can be used to
make money.
• It can be in form of a product or service developed to
solve a need.
• A business opportunity emerges from a business idea
that has been researched on, evaluated, and packaged
into a product or service to solve market problems
through a business venture
• An opportunity is described as the change for
the entrepreneur to meet market needs
through creative combination of resources
whereby exceptional value is generated.
• Business opportunities do not just exist. They
are created by alertness, creativity, networks,
and a systematic methodology.
Criteria to establish an opportunity
• Does the need exist?
• Do we have the required competencies or
requirements to make the venture feasible?
• Are we skillful enough? Do we know enough?
• Have we got the guts? Do we have the
networks?
• An opportunity calls for combination of the
elements.
• It answers this question: have we got a chance
of meeting a market need and create
exceptional value by means of creating new
combination of resources
• Business opportunity requires: Need,
Competence, and exceptional value.
• There are four types of windows of
opportunities
Business venture typology
 Dream window of opportunity
• Dreams of the window of opportunity: situations
where needs and competencies are unclear.
• The ability to think completely unconventionally
could lead to surprising results than may generate
value.
• Extermely visionary entrepreneur who aims to
answer questions such as: if it was possible to… it
could be exciting to… or imagine if this were ever
possibe
• E.g. signal vehicles…
 Problem solution window of opportunity

• Problem solutions window of opportunity- You have

conceived the idea but do not have the knowhow
and experience to execute the idea.
• An innovative problem solutions aims at defining a
customer need.
• It is a purely market opportunity.
• It may face problems of commercialization or the
lack of competencies could result to the
entrepreneur now being able to fully conceptualize
the solution.
• Problem solving entrepreneurs are however
quite agile and react to customers needs in a
proactive manner. As customer needs are at
the center.
Technology transfer window of opportunity

• The entrepreneur has the requisite skill sets

but the need or problem is now well defined.
• It may not always present an entrepreneurial
opportunity.
• Only if you are creative, knowledgeable and
stubborn enough and you overlook the threats
and only if benefits to the customers are
significant can the window of opportunity be
realized.
 Enterprise formation window of
opportunity
• This happens when the entrepreneur has well
defined competencies which meet similarly
well defined customer needs.
• The level of uncertainty is significantly lower.
 Ten big businesses in Africa excluding SA
• Marocom telcom ( weighting of 17%)( Morrocco)
• CIB ( Bank in Egypt) ( 12.11%)
• Gt Bank ( Nigeria) (5.9%)
• Lafarg cement ( Morocco) ( 5.44%)
• Safaricom ( Kenya) 4.45%
• Nigerian breweries ( Nigeria) 4.26%
• MBC ( Mauratian) 4.09%
• Tanzania Breweries ( Tanzania) 3.93%
• Global Telecom holdings ( 2.71%)
• Delta corporations- industrial ( Zibambwe) (2.73%
 Business Opportunities in Africa
• Identify the countries in Africa, Come up with
opportunities available in the East, West,
central, North, and South Africa
• Food processing and agriculture
• Pharmaceuticals ( production of essential
drugs, production of raw materials)
• Building and construction supplies
• Fashion and beauty
 Identifying a need
• Using the Humanistic hierarchy of needs:
– A need can be an opportunity and indeed a consumer buys to
satisfy need. Abraham Maslow in his humanistic hierarchy of
needs, physical needs to very high personalized needs.
– Therefore identifying an unidentified or unserved need is a sure
way of generating business ideas.
• Using the brainstorming approach
- Lay out the problem you want to solve
- Identify the objectives of the solutions you want to provide
- Brainstorm the various possible solutions to the problem
individually
- Once it is clear what problems need to be solved, what objectives
the solution intends to provide, and individually coming up with a
solution brainstorm a session will be productive
 Idea generation
• Opportunity identification- Branstorming, building
on ones skill, sporting a market niche, gaining from
waste, importing an idea, listening and observing
the clients pain/passion points.
• Using the motivational theories such as Maslow
Hierarchy of needs to identify business
opportunities
• Effectuation- This is a way of thinking that assists
the entrepreneurs to make the best use of their
resources while minimizing uncertainities
 Four principles of effectuation
• Bird in Hand- Articulate the available resources at your
disposal
• Affordable loss- What are you willing and able to loose?
This helps in minimizing the risk. As an entrepreneur,
you need to maintain control by taking small steps in
one direction rather than working towards long term
goals with unpredictable outcomes.
• Lemonade- This refers to leveraging contingencies. Once
you begin the venture, unexpected things happen,
lemonade is taking the unexpected occurrence and
using it to your advantage.
• Pilot in the plane principle- Make the future happen
by working with things that are within your control
and people who want to help co-create it. You don’t
need to predict the future, determining the perfect
opportunity or finding the optimal opportunity.
Future is not predicted, but created through actions.

• Crazy Quilt- Entering into collaborations with people,

partners, organizations from who have mutual
benefits from the venture.
• Empathy with the customers needs is the
primary and crucial condition for the success
of the business venture.
• Identify business ideas from the Maslows
need hierachy of needs.
 Exercise
• Develop a value mapping, competency mapping, and
network mapping.
• Using the five principles of effectuation, identify the
business venture that you can start.
• Identify what you have ( bird in hand)
• Identify who you have in your networks ( patched quilt)
• Identify what you can loose ( affordable loss)
• Identify what you can do today to control for tomorrow
( pilot in the plane)
• Identify some of the challenges that you may have and how
you can turn them to your advantage ( lemonade)
 Market Evaluation: Identifying
problems worth solving
Consumer demand analysis
What problems are in the market place
Number of competitors in the market
Analyzing the availability of the raw materials
Return on investment ( financial projections and
analysis)
Risk evaluation
Business environment analysis
 Idea Evaluation process
• After generating a business idea it is important that
some evaluation is made through a screening
process.
• The screening process is a systematic evaluation of
ideas so as to ensure that only the most viable
ideas are chosen.
• The screening process must be done carefully,
objectively, soberly, and without emotions.
• The idea screening is done even when there is only
one idea to consider.
 Screening process
• Personal evaluation- what is your motive to engage in that
business; what are your personal interests/values etc. ; what is
your degree of commitment to the business ( time, money,
networks etc)
• Personal skills and attributes ( what are your strong points,
what are your competences, ?)
• Self SWOT analysis
• Market evaluation- are you addressing a stated/silent need
• Competitor analysis- How is the market already satisfying the
need that you intend to satisfy ( who is my competitor? What is
their SWOT?)
• A business model canvas
 Characteristics of a good business idea
• Easy to manage and involves manageable risk
• Offers a good return to investment
• Has a scope for growth, expansion, and
diversification
• In line with the goals, interests, and passion of
the owner
• Within legal and societal expectations
• Has a short gestation period
Step 5: develop an Idea evaluation form
 Creative Process
• In the previous lesson we explored ways of
identifying business opportunities.
• We distinguished a business idea from an
opportunity
• What is the creative process of bringing your
idea to life?
 New Venture Creation Process
• 1. Discovering entrepreneurial potential ie entrepreneurs self
evaluation of strengths and weaknesses before entering into the
new business venture
• 2. Identifying a problem and potential solution-a new venture has
to solve a problem and meet a new need. Here one selects an
idea.
• 3. Evaluating an idea as a business opportunity- find out whether
the business idea can be turned into a business opportunity.
• 4. Investigating and gathering the resource- this involves analyzing
and gathering the resources required launching the new venture.
• 5. Implementation – this is the actual launching of the new
venture
 Creative Process: Design Thinking
• Design thinking is the cognitive process from which
ideas of a product emerge. It is related to problem
solving, decision making, creativity, sketching, and
developing a prototype.
• It is a method of developing designs as mechanisms
to provide solutions to existing problems.
• It involves emphathy, imagination, intuition to explore
possibilities that benefit the end user.
• Design thinking is not just how the product looks or
feels… it is how the product works
• The goal of design thinking is to ensure that the
entrepreneur provides a product that solves the
end users problems and satisfies their needs.
• Most outsiders see design thinking as an
applied art as having to do with aesthetics with
no technical knowledge, skills and
responsibilities to rely on.
• However, design thinking refers to innovatively
finding solutions to customer needs.
• Design thinking involves three principles:
• Observation
• Empathy
• User centric
Brazilian Artist Transforms Used Tires From The
Streets Into Beds For Animals
Hippo water roller:
 New Venture Creation Process
• 1. Discovering entrepreneurial potential ie entrepreneurs self
evaluation of strengths and weaknesses before entering into the
new business venture
• 2. Identifying a problem and potential solution-a new venture has
to solve a problem and meet a new need. Here one selects an
idea.
• 3. Evaluating an idea as a business opportunity- find out whether
the business idea can be turned into a business opportunity.
• 4. Investigating and gathering the resource- this involves analyzing
and gathering the resources required launching the new venture.
• 5. Implementation – this is the actual launching of the new
venture
 Creating a product/ service of value: value
proposition
• Why do your customers buy from you?
• What motivates people to choose your
products over hundreds of alternatives?
• What makes your company or product better
than everyone elses?
• The answer is VALUE PROPOSITION
• Value Proposition is the value you promise to
deliver to your customers. It is what makes your
product the preferred choice.
Value Proposition
Value proposition model
 Customer jobs
• Describe what a specific customer segment is trying to
get done. It could be tasks they are trying to perform and
complete, problems they are trying to solve, or needs
they are trying to satisfy
• What functional jobs are you helping your customer get
done?
• What social jobs are you helping your customer get
done?
• What basic needs are you helping your customer satisfy?
• What emotional jobs are you helping your customer get
done?
 Pains and Gains
Pains Gains
• Describe the negative • Describe the benefits your
emotions, undesired costs customer expect, desires or
would be surprise by. This include
and situations and risks that functional utility, social gains,
your customer experience positive emotions, cost saving.
or could experience before, • Which savings could make your
during, or after getting the customer happy, what could
job done. make your customers life better?
What are their expectations,
• What does your customer
what are their passion and
find costly, irritating, desires, what are the customers
difficult, challenging, fear looking for?
What are you offering ( products and services
that could relieve the pain or create a gain?)
Pain relievers Gain creators
• Describe how your products • Describe how your products
and services that are and services create
available alleviate customers customer gains.
pains. How do they • How do they create the
eliminate or reduce negative benefits that customers
emotions, undesired costs expect, desire, or could be
and situations, and risk your surprised by. They include
customer experiences functional utility, social
before, during and after utility, social gains, positive
getting the job done emotions, and cost savings
 Examples of value proposition
Uber Car Safaricom
• One tap and a car comes • Money transactions made
directly to you easier
• Your driver knows exactly • Convenience calling
where to go • Can pay utilities and other
• Payment is completely bills
cashless
 Business Canvas Model
• A business canvas model is a strategic tool that describes the
firms products value proposition.
• It assists the firm in aligning their activities, the problems
they are trying to solve, the solutions the company is trying
to provide, the unique value that the product is providing,
the customer segments that the company is targeting, the
means in which they will reach those customer segments,
the unfair advantage that the company has over competition
how it will measure their success and finally the financials
( revenues and costs)
How the business canvas model work

• No. 1: Customer segments- Who are the customers?

Who they think, feel, see, do, work, be..
• No.2. Customer problem- What customer problem are
your trying to solve? What pains are you relieving?
What gains are your creating? Who will be my key
partners in solving the problem
• No. 3. Revenue Stream- How will I make money from
the pain relievers and gain creators
• No. 4. Solutions- What possible solutions am I offering
to the customer problems
• No. 5. Unique Value Proposition- What is compelling
about my product? Why should the customers buy?
• No.6. Distribution- How will I make sure that the
product or information get to the customer?
• No.7. Key Metrics- How will I measure how my
business is doing?
• No.8 Cost Structure- What are the businesses
major cost drivers? What are the fixed costs and
the variable costs associated with the business?
• No.9. Unfair advantage- What unique strategic
asset do I have that my competitors do not have?
 Business Model Canvas -

Key Key Value Customer Customer

Partners Activities Propositions Segments
Relationships

KICD Customized
Enlighten the Holistic
officials parents on the view to seminars and Parents with
trainings to
Ministry of new CBC education children
curriculum parents between 3
Education
Trainings years old and
Primary Workshops 12 years old
Schools Seminars
Key Channels
Churches Resources Social Media
WhatsApp
KICD Messaging
curriculum Head teachers
contents School visits
Projectors
Laptops
Learning
Technology and Innovation Process
• You have already developed a business canvas
model that outlines the key components of
what constitutes your great idea.
• In this lesson, we learn about the technical
aspects of how developing the actual product
that you will sell to your customer to relieve
their pains and give them the gains that will
result to them wanting to come over and over
again
• Define the concepts of technology and
innovation
• Discuss the concept of product prototype
• Develop a product prototype for a product of
your choice
Concepts of technology and innovation
• Technologies are rules and ideas that direct
the way goods and services are produced.
• Technological innovations result when new
rules and ideas find practical use through
being applied and or commercialized by
entrepreneurs
• Innovation management is the management
of the innovation processes.
• It refers to both organization and product
innovations
• They are a set of rules that allow the
managers, engineers, and entrepreneurs to
cooperate in the common understanding of
processes and goals
• They allow organizations to respond to external or
internal opportunities and use that creativity to
introduce new ideas, processes or products.
• Tools in innovation:
• - brainstorming
• - virtual prototyping
• - lifecycle management
• - idea management
• - project management
• - portfolio management
• The process is evolutionary of the organization
through intergration of the organizations
management, marketing, and manufacturing
levels
• Involves steps: search, select, implement, and
capture.
• Innovation processes can either be pull or
push
• Push process: existing or newly invented
products/processes/ technology that the organization has
access to and tries to find practical applications for.
• Pull process: finding areas where customers needs are not
met. Then find solutions to those needs.
• To succeed there is need to understand the market and the
technical processes.
• Innovation process is also involved in creative destruction.
• Creativity is the basis of innovation management.
• Innovative ideas come from two steps: invention or
immitation
 Product prototype
• Once we have understood the concept of technology
and innovation, the concept of prototypes tries to
evaluate the functionality and usability of the product
to solve customers needs.
• It is the draft version of the product that is used to get
feedback from the customers on the functionality and
usability of the product once it reaches the market.
• Before a product gets to the market it is important for
the entrepreneurs to get some feedback from
customers
• Instead of building an entire project and small version is
created in a shorter period of time to simulate how the
actual product is to work.
• Providing a prototype saves money, time, resources, and
gives real time feedback from wannabe users that
enhance idea generation, better at communicating
designs, user friendly,
• They play a critical role in user experience design
• They show the intention behind any design.
• The allow feedback, make changes easily and improve on
the design
• Go through 6.2.3. and work on building
something through the stages of prototyping
provided in the notes.
 Intellectual Property Rights
• Once you have invented your original invention or
idea, you would want to protect it.
• Intellectual property rights are the rights given to
persons over the creations of their minds. They
usually give the creator an exclusive right over the
use of his/her creation for a certain period of time.
• Intellectual property rights are divided into two main
areas:
– Copyrights and rights related to copyrights
– Industrial property rights
Types of intellectual property rights
 Copy Rights
• The rights of authors of literary and artistic works (such as books
and other writings, musical compositions, paintings, sculpture,
computer programs and films) are protected by copyright, for a
minimum period of 50 years after the death of the author.

• Also protected through copyright and related (sometimes

referred to as “neighbouring”) rights are the rights of
performers (e.g. actors, singers and musicians), producers of
phonograms (sound recordings) and broadcasting organizations.
The main social purpose of protection of copyright and related
rights is to encourage and reward creative work.
• Administered in Kenya by Kenya Copyright board ( KECOBO)
• It protects the expression of an idea from
being copied.
• Copyrights are automatic
• Economic rights- right to sell import.
• Related rights- broadcasters rights
• Moral rights- right to object to distortion and
mutilation
 Industrial Property Rights
• Industrial property rights is divided into three:
• Trademarks
• Trade Secrets
• Patent Rights
• A trade mark can be a word, symbol, design or a combination of
the three. Used to distinguish the goods or services of one
person or organization from those of others in the market place.
• Trade-marks can be names used in commerce such as KCA it can
be a symbol or any distinguishing device artistic in nature.
• Service mark Is similar to at trademark and can be registered in
the same way with the sale protection A service market can be a
name, wording used in advertising symbols or artistic figures
that create a distinctive service concept.
 Trade Secrets
• Any proprietary information that is used in the course of
business to gain an advantage in manufacturing or
commercialization of products or services. E.g. formulaes,
patterns, list of customers, data bases, chemical compounds,
combination of ingredients, process of manufacturing,
compiled information etc.
• An entrepreneur may decide to maintain an idea or process as
confidential and eventually sell or license it as a trade secret.
• The trade secrets lives as long as it remains a secret, the
entrepreneur must provide contractual agreements that
various people such employees, manufacturers, etc. must
comply with to preserve the trade secret.
 Ways of protecting trade secrets
• Train employees to refer sensitive questions to
designated personnel
• Provide proper security measures such as escort to
visitors
• Use simple security measures such as locked file
cabinets, passwords paper shredders etc.
• Have employees, consultants, manufacturers, sign non
disclosure agreements
• Avoid faxing sensitive information
• Mark documents confidential when needed.
 Patent Rights
• A patent is a property right by the government
to an inventor. They are exclusive property
rights that can be sold, transferred, or used as
collateral much like other valuable assets.
• Patents rights are provided for new inventions
or discoveries of useful processes, machine
manufacture, composition of matter, or any
new and useful improvement.
• Kenya’s Industrial Property Act,2001 does not define a
patent, however it defines invention and what actually
a patentable invention is.
• Patent application must meet the statutory
requirement stated in Part III of the Industrial Property
Act, 2001. Invention for the purpose of the Act means a
solution to a specific problem. The invention must fit
one of the general categories of patentable subject
matter; it has not been preceded in identical form in
the public prior art; it is useful and industrially
applicable.
• Patentable inventions include: processes ( new methods of
manufacturing or new technological procedures that can be
validated as unique e.g. charcoal briquette began in US by
Kingsford charcoal
• Machines- In patent law means that the patent application if
for a specific physical item. E.g. designs of sewing machines,
vacuum cleaners
• Manufacture- refer to physical items that have been fabricated
through new combinations of material or technical applications
• Composition of matter- patent laws as relates to chemical
compounds such as synthetic materials, medicine, cosmetics
etc. These ones last for 20 years
• Kenyans kiondos, kikoys, and shukas patented
by Japan: Kenyan jua kali sector loosing the
opportunities to sell their intellectual property
assets because of failure to patent or register
their inventions.
 Patent procedure
1. Disclosure – When the idea is first reduced to sketches on paper or
when it is mocked up, a disclosure should be filed.
• This is measure of insuarance that precedes the actual patent and
provides legal recognition for all aspiring inventors
2. Patent Sketch- This is required to determine whether an inventors
creation already exists and remains actively protected under the law.
3. Preliminary section- Preliminary search scans the patent summaries for
prior claims or inventions
4. Collecting search documents- the application can collect the approved
documents for further processing.
5. Making the patent application- A formal application is now made at the
search and is sent to the commissioner of patents and trade market
 How to apply for patent in Kenya
• An application may be filed with either a provisional or complete
specification. The application should contain:
• a request (Form IP 3);
• a description ;
• one or more claims;
• one or more drawings (where necessary); and
• an abstract (See descriptions below)
• The following apply if an application is filed with a provisional specification
• unless the applicant files a final specification within one year after the
application is filed, the application should be deemed to have been
withdrawn;
• the final specification should not go beyond the disclosure in the provisional
specification; and
• the filing of the final specification should not affect the filing date accorded.
• http://
www.kipi.go.ke/index.php/how-to-apply-for-a-
patent

• Application requires three sections

– Description of the item
– Set of drawings
– Formal oath or declaration
– Payment of patent filing ideas
 Why protect your idea? Advantages of
intellectual property rights
• Intellectual property rights don’t protect ideas or concepts,
they protect genuine business assets that can be vital to your
product or service, or the success and profitability of your
business.
a. enhance the market value of your business- IP can generate
income for your business through licensing, sale or
commercialization of protected products or services. In case
of mergers, the IP can increase the value of the business.
b. Turn ideas into profit making assets- ideas on their own
have no value, however, IP can help turn ideas into
commercially successful products and services.
• C. Market your business products and services- IP is essential
in creating an image for your business. The trademarks can
help the organization differentiate its products and services
• D. Access or raise capital for the business- You can monetize
the IP assets through sale, licensing, or using them as
collateral for debt financing. Ca also be used when applying
for public or government grants, funding etc.
• E. enhance export opportunities for your business- IP can
increase the competitiveness of your products in the export
market. You can use brands and designs to market goods and
services abroad, seek franchising agreements, or export
patented products.
 Sources of Business Finance
• The following are ways of financing start-ups
• Personal investments- When starting a business, the first
nvestor is yourself. Use of personal savings
• Friends/family loans-money can be loaned by a family
member or friends. Always be careful of the strings
attached when borrowing money from friends and
family.
• Venture capital- venture capitalist are investors looking
for equity in companies or businesses with high growth
potential e.g. those that are technologically driven, e.g.
KCB lion den investors
• Angels- Angels are generally wealthy individuals or retired
company executives who invest directly in small firms owned by
others. They are often lenders in their own field who not only
contribute their experiences and network of contacts but also
their technical or managerial knowledge. E.g. National Angel
Capital Organization
• Business incubators- Business incubators or accelerators
generally focus on high tech sectors by providing support for new
businesses in various stages of development. They may assist
when developing prototypes by providing administrative,
logistical, and technical resources. Most preferred for businesses
that operate in state of the art sectors such as biotechnology,
information technology, multimedia, or industrial technology.
• Government grants and subsidies- Government
agencies may provide grants such as youth funds,
uwezo funds, applying for these funds is generally
difficult and quite competitive. They may require a
detailed project description
• Bank loans- These are most commonly used by
SME’s. Be aware of the interests rates charged by
banks, also banks look for entrepreneurs who not
only have good ideas but have good credit history
 Legal forms of business
• Sole proprietorship
• Partnership
• Companies
• Cooperatives
Read on your own
 characteristics of each form of enterprise
 types of documentation needed for each form of
enterprise
 advantages and disadvantages of each enterprise
 An actual example of an enterprise
 Business Planning
• A business plan is a formal statement of business goals, reasons they are
attainable and plans on how to reach them.
• Planning is a predetermine cause of action. It is a statement outlining an
organizational mission and future direction, short and long term performance,
targets and strategies

• Planning as a formal document contain a mission statement description of the

firm’s goods and services, a market analysis, financial projections and
description of management strategies together with policies for attain the
goals.

• Planning is a process of determining the goals and objectives of the

enterprises for a future period of time developing the strategies guiding the
firms operational and utilizing the available resources towards achieving the
set goals and objectives.
 Planning involves

• Predicting into the future by defining the enterprise

mission statement
• Determining the organizational goals and objectives
• Formulating strategies towards achieving and
objectives.
• Assigning of responsibilities and functions
• Allocating resources
• Monitoring and evaluation
• Taking corrective action or re-designing the original.
 Why entrepreneurs should plan
• To develop the most effective way of achieving
maximum growth.
• To properly informed about the competitors and the
able to predict their next cause of action
• To meet up with the consumers needs and income
• To meet up with the frequent changes in the market
• To be acquitted with the market forces of
fluctuations.
• To have adequate knowledge of the financial
requirements of the business.
 Planning function
• The planning function covers all activities of the
business i.e. finance, sales, marketing, personnel
management, research and development.
• Planning functions involve formulation of the
enterprise goals, objectives, strategies, policies
standards, budgets, procedures and programs to be
embarked upon towards fulfilling the business mission
statement.
• Components of a plan include: Objectives, Strategies,
Policies, Standards, Budgets, Procedures, and Programs
 Business Plan
• A business plan is a document that convincingly demonstrate
that your business idea.
• It demonstrates the ability of the business to sell enough of
its products and services so as attain satisfactory profit and
attract to potential financiers.
• A business plan is a road map you can follow to start and
manage a successful business.
• It shows step by step on how to start, fund, manage,
monitor, and evaluate a successful business.
• It defines the focus of business objectives and goals
• Clearly communicates the vision and ideas to others within
and outside the organization
 Business Plan is a tool for
• Management training tool
• Promotion tool
• Fund raising tool
• Staffing tool
• Monitoring and evaluation tool
• Business creation tool
• SWOT analysis tool
• PESTLE analysis tool
• Performance and control measurement tool
 Components of a business plan
• Executive summary
• Business description
• Marketing plan
• Competitor analysis
• Management plan
• Business operations
• Financial plan
• Appendices
• Executive summary
This is your five-minute elevator pitch. It may
include a table of contents, company
background, market opportunity, management
overviews, competitive advantages, and financial
highlights. It’s probably easiest to write the
detailed sections first and then extract the cream
to create the executive summary. Try to keep it
to just a couple of pages.
• Business description and structure
This is where you explain why you're in business and
what you're selling. If you sell products, describe your
manufacturing process, availability of materials, how
you handle inventory and fulfillment, and other
operational details. If you provide services, describe
them and their value proposition to customers. Include
other details such as strategic relationships,
administrative issues, intellectual property you may
own, expenses, and the legal structure of your
company.
• Market research and strategies
Spell out your market analysis and describe your marketing
strategy, including sales forecasts, deadlines and milestones,
advertising, public relations and how you stack up against
your competition. If you can’t produce a lot of data analysis,
you can provide testimonials from existing customers.

• Management and personnel

Provide bios of your company executives and managers and
explain how their expertise will help you meet business goals.
Investors need to evaluate risk, and often, a management
team with lots of experience may lower perceived risk.
• Financial documents
This is where you provide the numbers that
back up everything you described in your
organizational and marketing sections. Include
conservative projections of your profit and
loss statements, balance sheet, and your cash
flow statements for the next three years.
These are forward-looking projections, not
your current accounting outputs.
 A good business plans should answer the
following questions
• What is your big idea? Why does your company
exists, what does it do for customers? Why does it
matter?
• What products or services are your providing?
• Who is your TARGET market?
• What problems are you solving and what is your big
SOLUTION?
• What accomplishments have you achieved?
• What objectives/milestones do you hope to meet in
the growth of your business
 Exercise
• Develop a business plan from the business models
that you have been developing over the semester.

• Share your business plan with the team in Chandaria

Incubation center for a possible business idea.

• Remember, it is the passion and persistence that

counts. You don’t have to have the best idea the very
first time!
 Problem _ solution paradigm
• Even though you have not got anything else from this
class…. This is the MUST have lesson for the class.
• Entrepreneurs identify problems and seek to provide
solutions to the problems they have identified.
• Problem: What is the single greatest problem my
customers face? How do other solutions fail to alleviate
the problem? Thus creating a major need for my product
• Solution: What solution are you providing? How is your
solution superior to what is already available in the
market? How does it work? How does it solve the
customers painful problems