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Entrep 1 Introduction to Entrepreneurship – Student Workbook

Introduction to Entrepreneurship: What it takes to start your own
business?
Introduction:
This basic course will provide the student with an introduction to entrepreneurship,
the basic planning needed before starting your own business and the steps
necessary to create a business plan.
At the end of this module, you should be able to:
 Differentiate between four different business models
 Describe considerations for what it takes to start your own business
 Explain what to include in a business plan
Definitions
Entrepreneur (Oxford Dictionary) – Person who undertakes an enterprise with
chances of profit or loss. (Entrepreneur is a person who undertakes a business
activity of which he has no background and faces considerable risks in the process.
If either of the two elements, i.e., “no background” or “considerable risk” is missing
in the venture, it is no entrepreneurship).
Enterprise (Oxford Dictionary) – Bold Undertaking
Entrepreneur – (New Encyclopaedia Britannica) – An individual who bears the risk
of operating business in the face of uncertainty about the future conditions.
Common Meaning – one who starts his own, new and small business.
Entrepreneurship – It is a philosophy or process through which an entrepreneur
seeks innovation and employment.
Entrepreneurship can also be described as a creative and innovative response to
the environment.
Some other related facts about Entrepreneurship
• Entrepreneurs are made; they aren’t born. (This statement is more of public
posturing than fact. Essential characteristics of an entrepreneur, i.e., ambitiousness,
capacity to take moderate risks, organizing ability, persistence, vision, etc., cannot
be taught in any school. These are inborn characteristics of a person.).
• Incubator organization is an organization that supports entrepreneurs
• Venture Capitalists – VCs are like bankers, but since they aren’t subject to strict
regulations as bankers, they take greater risks in making investments – organized
as formal businesses, they expect to reap 25– 30% annually and get more actively
involved in the ventures than bankers do.

venturing to open a grocery or even ‘pan shop’ is an entrepreneur because he is stepping into an uncharted territory of which he has little/no training and therefore bears considerable risk. . Advantages of Entrepreneurship To an Individual (a) Provides Self Employment for the entrepreneur (b) Entrepreneur can provide employment for near & dear one as well (c) Entrepreneurship often provides an employment and livelihood for next generations as well. How do you define an entrepreneur in the 21s t Century? An entrepreneur of 21st century is a customer focused innovator. Standard (New) Definition Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort. professional and personal contacts and financial backing. (d) Freedom to use own ideas – Innovation and creativity (e) Unlimited income / higher retained income – Bill Gates has risen to become richest in the world in a single life time through entrepreneurship (f) Independence (g) Satisfaction To the nation (a) Provides larger employment – Entrepreneurs provide employment for self as well as other people and is source of employment creation. assuming the accompanying financial. He is a global thinker even though he may not necessarily be a global player. social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. He uses e– knowledge. New Definition involves four aspects – (a) The creation process (b) Devotion of time and efforts (c) Assumption of risks (d) Rewards of independence. With his training.• Angels are private individuals who invest directly in firms and receive equity stake in return – they act as advisers to founders. He has support of family and friends in terms of finance and advice should going gets tough. Advantage is speed. satisfaction. taker or go between. a farmer’s son. Word “Entrepreneur” stems from French Verb Entreprendre – means between. Every person launching a business is not an entrepreneur. risk element and uncertainty are almost missing in such business. A businessman’s son taking over his established family business or starting another factory in neighboring town is no entrepreneur because he is well trained in matters of that business by virtue of constant exposure since childhood. money. • Don’t confuse entrepreneurship with running a business. psychic. Whereas.

Self– confident 12.(b) Results in wider distribution of wealth – This is a logical sequel of above issue.R. Positive self-concept/Self Belief 12. Willingness to take moderate risks – (High risk takers are not entrepreneurs but gamblers). Future orientation – Vision 13. Who has ability to work hard 7. skills and savings (d) Accelerates the pace of economic development – Entrepreneurship is the govt’s one of the most trusted vehicles for economic development (e) Stimulates innovation & efficiency What makes a Successful Entrepreneur? 1. The urge for achievement (most often monetary ambitions) – Most Important 2. Win– Win Personality 5. Who does not have previous experience Characteristics of an Entrepreneur 1. female or even a Eunuch 11. Anyone – He can be male. Ethical 10. Higher the employment. Who can capitalize on opportunities 5. 3. Mental ability 2. Business secrecy 4. ability 5. Flexibility 9. Perseverance 9. Ethics and Values – Mission Who can be an Entrepreneur? 1. High energy level . Achievement– oriented 8. Capacity to plan and organize 10. Communication ability 6. Who gets stimulation by feedback 10. Who feels the need for achievement 2. Perseverance 8. Motivator 11. Who has a clear perception of probability of success 9. Preparedness to undergo physical and emotional stress 11. Determination to win 4. Ability to identify & explore opportunities 6. H. Clear objectives 3. Who has desire for responsibility 8. Who has some financial strength – On his own or borrowed 6. greater the distribution of wealth (c) Mobilizes local resources. Long term involvement 13. Who can take moderate risks 3. Who possess skills in organizing 4. Analytical ability to take strategic decisions 7. Technical knowledge 7.

For long long years. 2. It is only those who are unable to find a living for themselves eventually try their hands at new business. Lifestyle – Most entrepreneurs are fond of good things in life but are willing to wait till they strike rich. 7. money too. later generations also follow the step of their ancestors. 6. Harland David Sanders. 9. if a family has had a bad experience with entrepreneurship. Risk taker (Please note that all the three headings are necessarily the same) ENTREPRENEUR’S BACKGROUND & CHARACTERISTICS 1. If at all there is one. However. 5. But commonly.14. In the interim they are willing to rough it out. Initiator 16. Physical Attributes – Have absolutely no correlation with entrepreneurial spirit. most educated people preferred gov’t job. better known as Colonel Sanders (not an Army Colonel but an honorary one) started his famous Kentucky Fried Chicken business quite late in his varied career. Personal values 10. it seems to be inverse. Problem solver 15. trend is slowly changing. . So. people follow the footstep of father. it is unlikely that next generation will be very entrepreneurial. many educated people are also beginning to venture into entrepreneurship 3. comfort. men are often in the age group of 25 – 35 and women in the age group of 30– 45. Goal setter 17. Educated people who get decent job rarely prefer comfort of salaried job. for it symbolized power. most entrepreneurs are married. quota and inspector raj. if a family has had a tradition of entrepreneurship. due to problems of license. social status and for the people with low scruples. Working History – Entrepreneurs quite often have some working experience as a salaried employee in the field of their venture. Family Contacts – Family contacts in business world reduce the risks and help the entrepreneur. 8. It always helps to learn a little about business before putting your money in. Age – There are people who start as early as probably 10 and some others after their retirement. Family Environment – In most cases. 4. Professional Contacts – Professional contacts again help. Marital Status – No direct correlation but going by the age group. Most of the entrepreneurs come from low education background. Sindhi community follows this practice assiduously. A businessman’s son takes up business and a salaried person’s son tries to find a job. College graduates venturing into entrepreneurship often get help from their peer and seniors. Conversely. Education – Education has no correlation with entrepreneurial spirit. With business environment becoming easier and gov’t officials’ powers being on the wane.

Section 1: Business Models There are all kinds of small businesses that mature workers can start if they have the qualifications. home. It can be to provide services. or to sell products. Partnership 4.based business. Sole proprietorship 2. a partnership or an online business. When two or more individuals share ownership Also known as an e-business is a new venture that delivers services or products entirely online. It can be a sole proprietorship. and resources to do it. A small business that operates from the owner’s home and usually can have a small number of employees. Considerations before Starting your Own Business Section 2: Be clear about what you want Starting a new business may require a lot of hours of work and even 6-7 workdays a week. Online Business Definition A type of business that is owned and operated by one individual who is the one investing all the money and getting all the profits. skills. It may also include a business that uses the internet as an extension of the regular market. The proprietor of the business can have other people working for them. It will require monetary investments. . These are the most popular business models that fit mature small business owners: Business Model 1. who are most of the time family members. and support from family and friends. Home-based business 3. to manage information.

You can find an unfilled service or commodity in your community and look for a business that fills this vacancy. To succeed as a new small business owner. What is the business idea you want to start? . Ask yourself if there is something that you really like or enjoy doing. you do not necessarily need to invent something new or create something unique. Take into consideration if this kind of business is going to fit well with your lifestyle. You need to ask yourself:  What am I interested in?  What skills do I have that I can use in this business?  Do I see an opportunity in the market in my community or communities that I can fill with the business I have in mind? Activity #1: In this activity. you will answer the following questions regarding your business idea. It could be a hobby or a very particular set of skills you possess. family and finances. 1.(Answer here) Section 3: Choosing your business idea Choosing a business idea should be something that you like to do and are really good at.

Will it be in a separate location or will it be in your home? .2. Write down where you will have the business. 3. List other businesses in your community who provide similar services or products.

You need to have some financial guidance to help you define a good business path. This plan doesn’t need to be a scientific research. You may need to consider different ways to keep your start-up costs low. . finance. It can be simple and flexible. A business plan is like a road map for your business and its projections for the next 3-5 years.Section 4: Potential to Generate Good Income Does your business have the potential to generate good income? You want to make sure that your business is going to generate income that not only will help you recuperate what you invested in it including your salary. Section 5: Developing a Business Plan You must develop a business plan. Include what makes your business different or better than the existing ones (if there are other businesses like yours in that area). (a) Executive Summary: This will include a general overview of what you want your company to be and along with your business goals. or a local financial expert in your area. Look for advice from another small business owner. a Small Business Administration expert. and staffing. sales. (b)Company Description: Include information about what your business will do and who will be the clientele that your business will serve. but also give you a margin of profit. One plan will be needed per each aspect of your business such as: marketing. You will probably see that your business plan can turn into a group of mini-plans.

Company Description What your business will do? Who will be your clientele? What kind of services you will provide? List your business goals.Activity #2: In this activity. Make sure you include who the clientele will be in addition to any services you will provide. Also. list any business goals you have for your company. you will write down in detail what your business will do. .

list information on how your site will communicate your products or services to your clientele. 1. Describe who will be your customers? 2. competitors. and demographics or characteristics along with the characteristics of competitors in the market. and your the your Activity #3: In this activity. Decide what will be the size of company. Describe which services you will be providing or products you will be selling or creating: . Be very specific with regards to any services you will be providing or products you will be selling. trends for the local business industry. who will be your target clientele to serve. describe who will be your customers and what your business is going to do for them.(c) Market Analysis: Research your business market. If you are creating an online business.

Who does what in your business? What will be the composition of your business team and what will be their functions and responsibilities.(d) Organization and Management: You must find out what will be the best organizational and management model for you and your business. (e) Service or Product Line: Are you going to sell a product or a service? What will be the benefit for your customers? .

private investment money. furniture. or partnerships? You may need to calculate the cost of starting your own business. Activity #4: In this activity. equipment. This may include the expenses for starting up until you start to generate your own capital and also your assets such as property. and inventory. identify your funding sources. How are you going to obtain the capital to start your own business? Funds Needed Sources .(f) Marketing and Sales: How are you going to drive the sales in your business and keep your customer loyal? What will be your sales strategy? How are you going to advertise your business? (g) Funding Request: Do you have enough funding to start your business or are you going to seek other funding venues such as loans.

Activity #5: In this activity. Qualifications . you will list the types of certifications. experience or skills you have that will qualify you to start your ideal business. preparation.

Make sure that you will comply and complete all the necessary permits before starting your own business. . Get an orientation about all the steps you may need to follow in order to register your business and obtain the local licenses to operate.Section 6: Seek Legal Guidance You should seek legal assistance and guidance to register your business.

Wrap Up During this course you learned:  Four different business models  Five considerations for what it takes to start your own business  What to include in a business plan .