Entrepreneurship Development

Course Instructor: Yikealo D.[MSc]

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 Outline
• Introduction
• Advantages of Entrepreneurship
• Entrepreneurial Process
• Factors Favoring Entrepreneurship
• Characteristics of an Entrepreneur
• Entrepreneurial Decision Process
• Current Entrepreneurial Trends

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 Introduction

Who is an Entrepreneur?

• What are the profiles of Entrepreneurs?

• Are Entrepreneurs Born or Made?
• What is the distinction between Entrepreneurship and
Entrepreneurs?

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 Cont…
Entrepreneur is a person who owns, organizes, manages
and runs an enterprise assuming the risk of a business or
enterprise.
Hisrich:- “a person who estabilishes a new business
venture and is a visionary leader- a person who dreams
great dreams”
Entrepreneur is a person who has the ability to see and
evaluate business opportunities to gather the necessary
resources to take advantage of them, and to initiate
appropriate action to ensure success. (Meredith, 1982)

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 Cont…
• Entrepreneur is someone who is specialized in taking
judgmental decisions about the coordination of scarce
resources (Casson)
• Entrepreneur is an individual who:
– Has the ability to identify and pursue a business
opportunity
– Undertake a business venture
– Raises the capital to finance it
– Gathers the necessary resources
– Set goals for himself/herself and others
– Assumes major portion of the risk

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Entrepreneurship

Entrepreneurship is the process of creating

something different with value by devoting the
necessary time and effort, assuming the
accompanying financial, social risks and receiving
the resulting rewards of monetary and personal
satisfaction and independence.
 It is a philosophy or process through which an
entrepreneur seeks innovation and employment.

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 Cont…

Entrepreneur Entrepreneurship Enterprise

The person The process The outcome

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Forms of Entrepreneurship
Entrepreneurship can take three different forms

1. The individual entrepreneur

2. Intrapreneur: a person who does entrepreneurial
work within large organization
3. Social Entrepreneur: People who drive social
innovation and transformation in various fields
including education, health, environment and
enterprise development

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 Entrepreneurs Vs. Intrapreneurs
• Entrepreneurs are people that notice opportunities
and take the initiative to mobilize resources to make
new goods and services.
• Intrapreneurs also notice opportunities and take
initiative to mobilize resources, however they work in
large companies and contribute to the innovation of
the firm.
• Intrapreneurs often become entrepreneurs.

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 Entrepreneurial Skills
The following are foundational skills entrepreneurs need to run
and operate a successful business:
• Communication Skills
• Human Relations and negotiation Skills
• Math or financial Skills
• Problem Solving & Decision Making Skills
• Planning and leadership skills
• Technical Skills
• Basic Business / marketing Skills
• Project Management Skills

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 Advantages of Entrepreneurship
 To an Individual
(a) Provides Self Employment for the entrepreneur
(b) Entrepreneur can provide employment for near & dear one
(c) Entrepreneurship often provides an employment and
livelihood for next generations
(d) Freedom to use own ideas – Innovation and creativity
(e) Unlimited income / higher retained income
(f) Independence
(g) Satisfaction

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 Cont…
To the nation
(a) Provides larger employment
(b) Results in wider distribution of wealth
(c) Mobilizes local resources, skills and savings
(d) Accelerates the speed of economic development
(e) Stimulates innovation & efficiency

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 Wage Employment Vs Entrepreneurship
 Wage Employment • Entrepreneurship
 Work for Others  Own Boss
 Follow Instructions  Make own plans
 Routine Job  Creative activity
 Earning is fixed, never  Can be negative sometimes,
negative generally surplus
 Does not create wealth  Creates Wealth, contributes
 Can choose from- to GDP
 Government service  Can choose from-
 Public Sector  Industry
 Private Sector  Trade or Service Enterprise

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 Entrepreneurial Decision Process

• Pull Factors- the factor which attract a person

to become entrepreneur
– Perception of Advantages- If a person feels that he
can earn better or overall gains in terms of money.
– Spotting an Opportunity
– Government Policies
– Motivation
– Influenced by Culture, Community, Family
Background, Teachers, Peers, etc.

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 Cont…
• Push Factors- the factors that force him
– Job Dissatisfaction
– Relocation
– Joblessness
– Lay off
– Retirement
– Boredom- This is applicable to many ladies from well to do
families. With their army of servants to take care of home, they find
an opportunity to keep the boredom away and start ventures

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Factors Influencing Entrepreneurship

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 Deconstructing Entrepreneurs: Core
Competences
• Entrepreneurs have some competences, which distinguish
them from the general population and even from hired
professional manager. Some of the characteristics that
can be easily perceived are the following:

Commitment and Determination: Entrepreneurs are

highly committed in that they exert their utmost effort to
make their venture a reality. They often immerse
themselves completely in their businesses. It is often
suggested that many entrepreneurs are workaholics. Most
entrepreneurs have a strong appetite for hard work.
 Derive to achieve: Entrepreneurs are
internally driven by a strong desire to compete, to
excel against self imposed standards.
 Besides, they have the desire to achieve
something that they can be proud of.
 Individuals with a low need for achievement
are those who seem to be contented with their
present status.
 On the other hand, individuals with the high
need for achievement like to compete with some
standard of excellence and prefer to be personally
responsible to their own assigned tasks.
Information Seeking: Entrepreneurs take
action on own to get information to help reach
objectives or clarify problems. They does personal
research, consult experts for business and
technical advices and use their personal networks
for the same.
Opportunity Oriented: Entrepreneurs
start by finding a need and quickly satisfying it.
Successful growth minded entrepreneurs focus on
opportunities rather than on resources, structure,
and strategy. They look for and take action on
opportunities.
Initiative and Responsibility:
entrepreneurs take action that goes beyond job
requirement. They do things before being asked
or forced by others/ events. They morally, legally
and mentally accountable for their ventures.
Persistence Problem Solving:
entrepreneurs are not intimidated by difficult
situations. They attack problems/ obstacles that
are impeding to business operations. They take
repeated action to overcome obstacles. If tasks
are extremely easy/ unsolvable ones, they don’t
warrant their time.
Seeking Feedback: “How are we doing?”
The question is ever present in the entrepreneurs
mind. Unlike other people, entrepreneurs have a
strong desire to know how well they are doing
and how they are going to improve.
Internal Locus of Control: Successful
entrepreneurs believe success and failure of their
venture will be controlled and governed by their
accomplishment and they believe that they can
influence their outcomes and actions.
 Calculated Risk Taking: Entrepreneurs
are calculated/moderate risk-takers.
Risk taking is an inherent part of business
ownership. Staying safe rarely pays of in the long
run.
Risks are not taken blindly, careful research and
previous are taken into account.
With this in concern, they carefully think about
these four forms of risks: Financial risk, career
risk, family risk, and psychic risk.
Creativity and Innovation: The ability to
create new ideas, new concepts, and new ways of
viewing problems is at the heart of successful
entrepreneurs. The ability to see an opportunity
instead of a problem and a solution instead of a
dilemma is a fundamental skill associated with many
entrepreneurs.
Tolerance for Failure: Entrepreneurs do not
get disappointed, distressed or discouraged by
failures. Rather, they use failure as a learning
experience. Entrepreneurs learn more from their
failures than their successes. They use their willpower
to conquer the barriers that stand in their way.
Japanese proverb, “Fall seven times; stand up eight.”
 Independence: Entrepreneurs want to be
their own bosses. They don’t wish to be
commanded by others. They don’t like to be
ordered by others. They have a high need for
autonomy.
Persuasion: Successful entrepreneurs persuade
others. They are good at convincing others.
Convinces someone to buy a product
Convinces someone to provide financing
Convinces someone to do something else that he
would like that person to do.
Team building: entrepreneurs are good at
creating teams which comprises of highly
qualified and well motivated employees to ensure
the establishment of successful business
ventures.
Visionary: entrepreneurs have an enthusiastic
vision, the driving force of an enterprise. They
know where they want to go. They do have a
concept of what their firm can be in some years
to come.
 High Energy level: Entrepreneurs are
more energetic than the average person. That
energy may be a critical factor given the
incredible efforts required to launch a start-up
company.
Building a company requires a great deal of
stamina. It is obvious that entrepreneurs are
engaged in extraordinary work load and stressful
dedication that require great deal of energy.
Successful entrepreneurs fine-tune their energy
level by carefully monitoring what they eat, drink,
and know when to go away for relaxation.
Self Confidence : Individuals who possess
self-confidence feel that they can meet the
challenges which confront them. They have the
sense of mastery over the types of problems that
they might encounter. Entrepreneurs have a
strong belief in self and own abilities.
Optimism: they live by the philosophy that
this is the best of times, and that anything is
possible.
Flexible and able to adapt to change:
one characteristic of true entrepreneurs is their
ability to adapt to the changing demands of their
customers and their businesses. Entrepreneurs
understand that in this rapidly changing world
economy, rigidity often leads to failure.
Dynamic leaders: entrepreneurs are dynamic
leaders in the sense that they transform the pattern
of production or distribution to focus on catching
up with the changing demands of the environment
and the market. They are more of transformational
leaders than transitional ones.
Time management: Entrepreneurs know
that time is finite. They know how to manage
their time effectively in that they would be able
to live their lives, accomplish the tasks that they
need to accomplish, and enjoy lives.
Concern for High quality work:
Entrepreneurs act to do things that meet or beat
existing standards of excellence. They have high
desire to produce of work of high quality.
Roles of Entrepreneurship in an Economy
• Entrepreneurship raises productivity through
technical and other forms of innovation.
• Entrepreneurship is powerful tool of job
creation.
• Entrepreneurship facilitates the transfer of
technology.
• Entrepreneurs play a strategic role in
commercializing inventions and products.
• Entrepreneurs play a critical role in restructuring
and transformation of economy.
 Con…
• Entrepreneurship and entrepreneurial behavior
can breathe vitality into the life of large
corporations and government enterprises.
• Entrepreneurs make markets more competitive
and thereby reduce both static and dynamic
market inefficiencies.
• Entrepreneurs improve the social welfare of a
country by harnessing dormant, previously
overlooked talent.
• Entrepreneurs create new markets and facilitate
expansion into international markets.
 Entrepreneurial Myths-NOT facts
• Entrepreneurs are Lucky
• Entrepreneurs make or break on the first
venture
• Entrepreneurs are born not made
• Entrepreneurs are High-Tech wizards
• Entrepreneurs extreme risk takers (Gamblers)
• All Entrepreneur need to be successful is Money

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 Putting Failure Into Perspective
• Failure is a natural part of the creative process.
• Failures are simply stepping stones along the path to success.
• The “secret” to success is the ability to fail intelligently,
learning why you failed so that you can avoid making the same
mistake again.

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