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MODULE 1

What is entrepreneurship?

Part 1: Key features of an entrepreneur


ENTREPRENEUR - one who undertakes an endeavor.
This is the meaning of the French word
entrepreneur. It is really all about starting
something and making it prosper while offering
people the services and products they need.
When you decide to become an entrepreneur your
life changes or at least it should. In order to become
a successful entrepreneur it is important that you develop your entrepreneurial skills
through education, networking and research.
Entrepreneurialism is a career long endeavor, but only for those who choose to stick with it and
develop their skills in their respective fields.

According to some theories, the entrepreneur is one


who is willing to bear the risk of a new venture if there
is a significant chance for profit. Other economists
emphasize the entrepreneurs role as an innovator
who markets his innovation. Still others say that
entrepreneurs develop new goods or processes that
the market demands and are not currently being
supplied.

WHO CAN BE AN ENTREPRENEUR?


There is not one single quality or skill to define an entrepreneur.
Successful entrepreneurs come in various ages, gender, race and social status. They also differ in
education and experience. However, research indicates that most successful entrepreneurs share
certain personal attributes, including: creativity, dedication, determination, flexibility, leadership,
passion, self-confidence, and smarts.
o Creativity is the spark that drives the development of new products ideas or ways to do
business. It is the push for innovation and improvement.
o Dedication is what motivates the person to work hard to get the endeavor off the ground.
Planning and ideas must be joined by hard work to succeed. Dedication makes it happen.
o Determination is the extremely strong desire to achieve success. It includes persistence
and the ability to bounce back after rough times. It persuades the entrepreneur to make
the 10th phone call, after nine have yielded nothing. For the true entrepreneur, money is
not the motivation.
o Flexibility is the ability to move quickly in response to changing market needs. It is being
true to a dream while also being mindful of market realities.
A story is told about an entrepreneur who started a fancy shop selling only French pastries. But
customers wanted to buy muffins as well. Rather than risking the loss of these customers, the
entrepreneur modified his vision to accommodate these needs.
o Leadership is the ability to create rules and to set goals. It is the capacity to follow through
to see that rules are followed and goals are accomplished.
o Passion is what gets entrepreneurs started and keeps them there. It gives entrepreneurs
the ability to convince others to believe in their vision. It cant substitute for planning, but
it will help them to stay focused and to get others to look at their plans.
o Self-confidence comes from thorough planning, which reduces uncertainty and the level of
risk. It also comes from expertise. Self-confidence gives the entrepreneur the ability to
listen without being easily swayed or intimidated.
o Smarts consists of common sense joined with knowledge or experience in a related
business or endeavor. The former gives a person good instincts, the latter, expertise. Many
people have smarts they dont recognize. A person who successfully keeps a household on
a budget has organizational and financial skills. Employment, education, and life
experiences all contribute to smarts.
Every entrepreneur has these qualities in different degrees. However, many skills can be learned.
Or, someone can be hired who has strengths that the entrepreneur lacks.
The most important strategy is to be aware of strengths and to build on them.
Part 2: Risks and benefits
WHAT LEADS A PERSON TO STRIKE OUT ON HIS OWN AND START A BUSINESS?

Sometimes a person is frustrated with his or her current job and doesnt see any better career
prospects on the horizon. Sometimes a person realises that his or her job is in jeopardy. Some
people are actually repulsed by the idea of working for someone else. They object to a system
where reward is often based on seniority rather than accomplishment, or where they have to
conform to a corporate culture. Other people decide to become entrepreneurs because they are
disillusioned by the bureaucracy or politics involved in getting ahead in an established business or
profession.
Those who are attracted to entrepreneurship by the advantages of starting their own thing.
These include:
o Entrepreneurs are their own bosses. They make the decisions. They choose whom to do
business with and what work they will do. They decide what hours to work, as well as what
to pay and whether to take vacations.
o Entrepreneurship offers a greater possibility of achieving significant financial rewards than
working for someone else.
o It provides the ability to be involved in the whole lifecycle of the business, from concept to
design and creation, from sales to business operations and customer response.
o It offers the prestige of being the person in charge.
o It gives an individual the opportunity to build equity, which can be kept, sold, or passed on
to the next generation.
o Entrepreneurship creates an opportunity for a person to make a contribution. Most new
entrepreneurs help the local economy. A fewthrough their innovationscontribute to
society as a whole.
One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and the subsequent
revolution in desktop computers.
However, it is important to note that to every single advantage there is a matching disadvantage
which should be carefully analysed. Here is an example of the most common pros and cons to
entrepreneurship:
SALARY

Advantage Disadvantage

Often people do not feel fully compensated Becoming an entrepreneur means you have to
for the work they do. Becoming an leave behind the security of being paid each
entrepreneur means you can reap the month.
benefits of all your hard work.

FLEXIBILITY

Advantage Disadvantage

Having control over your work schedule Although entrepreneurs benefit from a flexible
means that you can choose when to take schedule they often have to work very long
time off and work the schedule that suits you hours particularly in the start-up phase.
best. Furthermore entrepreneurs work schedules
are never predictable and they must deal with
emergencies that may occur at any time.

DECISIONS

Advantage Disadvantage

Entrepreneurs are able to make all of the Being responsible for all decisions can be quite
decisions relating to their company stressful and handling such responsibility can
themselves; they have complete control. be difficult.
This allows for a huge degree of
independence and a chance to shape ones
own career.

EXCITEMENT

Advantage Disadvantage
Becoming an entrepreneur is a very exciting There is also great risk attached to
time, from the idea and start-up to the entrepreneurship. The success or failure of the
development and realisation of the product business rests with the entrepreneur.
or service.

After comparing the advantages and disadvantages, you will have to decide if you can realistically
handle the responsibility of running your own business. Being an entrepreneur is a huge
responsibility with many risks attached. In business decisions should be carefully considered.
Risk assessment (giving thoughtful consideration to potential costs and benefits) and the collection
of relevant information are key to successful decision making.
Nothing splendid has ever been achieved except by those who dared believe that something inside
them was superior to circumstance.
Part 3: Historic background
One of the first entrepreneurs was Marco Polo. He had ideas of
trading with Asia in the 13th century and was sure of how he could
get there and the materials he could trade. His expeditions were
financed by venture capitalists in Venice with an assurance that he
would share his profits with them. These loose associations
continued to flourish in Europe and other parts of the world where
people with money were willing to back ideas and new schemes
when they were convinced that there was some pecuniary
advantage in the end.
Entrepreneurship first took off when production levels exceeded
local consumption and people were left with surpluses of the things
they produced, whether in the form of agricultural produce, dairy products, livestock and quite a
few manufactured items.
This initially led to a barter system that allowed people exchanged things to satisfy their own
requirements. This further led to the development of the market place where people gathered to
barter or sell their excess production in order to profit themselves. This came about with the
realization that they could not wait indefinitely for a coincidence of wants before they could barter
their own products. Government agencies stepped into the act in the 17th century and made
capital available to people to finance production ventures. The risk involved in such ventures was
the sole responsibility of the entrepreneur and they had to make a fixed payment to the
government, irrespective of any profit they made from the venture. Governments considered this
as a source of revenue.
The concept of entrepreneurship was first established in the 1700s. There are many concepts and
theories about its genesis. However, based on its key features, there were three basic ideas that
explain the appearance of entrepreneurial activity.
o The first focuses on the individual, in other words, entrepreneurial action is conceived as a
human attribute, such as the willingness to face uncertainty, accepting risks, the need for
achievement, which differentiate entrepreneurs from the rest of society.
o The second fundamental idea emphasizes economic and environmental factors that
motivate and enable entrepreneurial activity, such as the dimension of markets, the
dynamic of technological changes, the structure of the market or merely the industrial
dynamic.
o The third factor is linked to the functioning of institutions, culture and societal values. This
approach is not exclusive given that entrepreneurial activity is also a human activity and
does not spontaneously occur solely due to the economic environment or technological,
normative or demographic changes.
The present development of entrepreneurship started after the Second World War in the 1950s
when nations were looking to build up their economies from the ravages of the war. People had
new ideas for business or jobs as individuals and started in small ways with limited capital to form
businesses which went on to challenge the well established companies.
In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the
entrepreneurs drive for innovation and improvement creates upheaval and change. Schumpeter
viewed entrepreneurship as a force of creative destruction. The entrepreneur carries out new
combinations, thereby helping render old industries obsolete. Established ways of doing business
are destroyed by the creation of new and better ways to do them. Business expert Peter
Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually
searches for change, responds to it, and exploits change as an opportunity.

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