THE ENTREPRENEURIAL FUNCTIONS

Module 4

Objectives

At the end of this lesson, the students are able to

1. internalize the drivers for entrepreneurship
2. discuss the entrepreneurial culture and functions
3. connect daily life to entrepreneurship
4. research a case of successful entrepreneur
5. create an initial entrepreneurial ideas base on what they perceive in their environment

Introduction

As a student, you ought to think about your future career. Now is the best time to start thinking
seriously about it. Many people find themselves unhappy later in life because they had not
chosen the right careers for themselves when they are young. As a rule, the following steps
should be taken in assessing any career options: (a) find out the general nature of the job or task
being considered, (b) determine the requirements of the job in terms of skills or abilities,
interests or attitudes, and (c) determine the extent to which you fit into those requirements. As
entrepreneurship students, this lessons familiarize you with the task and functions of the
entrepreneur. These are the unique and diverse functions performed by entrepreneurs. The
entrepreneurial way of life combines creativity, challenges, hard work and satisfaction. An
entrepreneur must, like the artist or scientist, conceive an idea out of his own imagination .
The successful entrepreneur enjoys a position of prestige in the community because of his
many contributions to society especially in terms of providing jobs to people and providing
needed goods and services.

Key Myths in Entrepreneurship

There are many myths associated with Entrepreneurship that discourage individuals from
pursuing opportunities.

Myth 1: Successful entrepreneurs have to be born, not made. Whilst many are born with the
personality traits of successful entrepreneurs, wildly successful entrepreneurs can indeed be
made. In a project by TechCrunch, researchers found that over half of the 500 successful
entrepreneurs they studied, were the first in their families to start businesses, and almost 75% of
them were not interested in entrepreneurship until after they finished university.

Myth 2: Entrepreneurs are wild gamblers. Of course, becoming a successful entrepreneur

requires taking risks. However, successful entrepreneurs certainly aren’t wild gamblers.
Instead, they take a rational approach to risk identification, acceptance and mitigation, to ensure
that chance is taken out of the equation as much as possible.

Myth 3: Entrepreneurs are motivated primarily by money. Entrepreneurs do seek financial

rewards yes. However, money is very rarely the primary reason the most successful started out
in a venture. Consider this famous quote by Richard Branson, "I don't go into ventures to make
a fortune. I do it because I'm not satisfied with the way others are doing business.”

It’s important to understand these myths so you understand that indeed, entrepreneurship is
available to everybody.
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Drivers for Entrepreneurship

The idea of entrepreneurship is a romantic one for many. However, some of the most successful
entrepreneurs in history have come from circumstances that were anything but romantic. The
drivers for entrepreneurship can essentially be categorised into two categories: (a) Need
Entrepreneurship; and (b) Opportunity Entrepreneurship:

Need entrepreneurship considers those who have no option other than to go into business for
themselves. They need to become entrepreneurs to look after themselves and/or their families.
This is often the case in many developing nations in which employment opportunities are
scarce, but also occurs in situations where individuals lose their jobs and can’t find others, or,
unsuccessfully attempt to re-enter the workforce after an extended time away.

Opportunity entrepreneurship on the other hand, considers those that chase a dream, a passion
or an opportunity. Not because they have to, but because they want to. With this in mind, it is
easy to understand that opportunity entrepreneurship takes place in those nations that have
greater income levels, greater logistical development and greater access to education. In
summary, the developed nations.

Activity 1. Question to think about

Think through your personal reasons and write down the reasons why you want (or why you
do not want) to start a business (there is no correct or wrong answer). These reasons form the
basis for your initiative and the driving force for your hard work. Later they will form a
standard for measuring your success.

Small Business vs Entrepreneurship

Entrepreneurship and small business is often considered to be the same thing and, in many
ways, it is. After all, they are both about creating organisations to respond to opportunities.
However, there are some key differences that set the two apart:
1. The amount of wealth creation – While small businesses focus on simply generating an
income stream that replaces traditional employment, entrepreneurial ventures have a strong
focus on large wealth creation.
2. The speed of wealth creation - While a successful small business can generate several
million dollars of profit over a lifetime, entrepreneurial ventures typically aim for the same
result far more rapidly.
3. The risk involved - The risk of an entrepreneurial venture is often much higher, as it is this
risk that often facilitates the rapid rewards.
4. The innovation involved - Entrepreneurs will typically pursue substantially more innovation
than other small businesses, as a way to create unprecedented value to support the speed
and size of growth they require.

Entrepreneurial Functions

1. Perceive opportunities in the environment. It takes an entrepreneur to respond in a

concrete way to an opportunity in the environment. Others may see the opportunity, hear
about it, learn about it or even have some experience of it, but only the entrepreneur does
something about it.

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 The entrepreneur keenly observes the environment in search of ideas and opportunities that
can be turned into profit. For instance, he takes notes of the kinds of raw materials that are
abundant and cheaply available in the area and relates these materials to the needs of the
people around him.

According to Chinkee Tan, in his book :For Richer, For Poorer: Why the Rice Get
Richer and the Poor get Poorer” there are 3 types of people in the world:

The First type is the type that makes things happen. Entrepreneurs and thus rich
people are risk takers. They think of new ideas, new business, new projects and
new opportunities. Rich people are the doers

The second type is the type that waits for things to happen. Middle class people are
not willing to take risks. They value security and comfort in life. They like to wait
and see what rich people are doing. Once they see it work, they ride the
bandwagon. Middle class people are the followers.

The third type is the type that neither makes things happen or waits for things to
happen. They wonder what happened. Poor people are bystanders; they have no
2. idea regarding what is going on in the world. Poor people are the wonderers.
The
entrepreneur takes risks. The entrepreneur does not merely perceive ideas and
opportunities but also calculates the risks involved in implementing these ideas. Risk
denotes uncertainty or chance. This means that there is a chance that the business may fail
or succeed. When an entrepreneur calculates the risks in the business, it means he is
calculating the odds for success as well as failures – it is not one sided (say success/positive
only). When the entrepreneur decides to go on despite the chances of failure, he takes a risk.

In business, factors affecting success or failure are many and are difficult to calculate and
control. For example: the temperament of buyers of a product is difficult to predict, the
demand for a product is affected by several factors such as competition, needs, income,
preferences and other economic conditions. During this COVID-19, the demand for face
mask is high for changing health environment.

Because of the uncommon risks inherent in the entrepreneurial role, not many people end
up as entrepreneurs except the courageous ones who are willing to accept challenges. Most
people are afraid to fail, and therefore avoid the risk of any kind. Very few careers involve
as much as risk taking as entrepreneurship does. Those people who are afraid to fail and
avoid risk and will not go into venture that will not be 100% successful are called
seguristas. A segurista is only after the money and not at all the feeling of accomplishment
in having taken risks and emerging a winner. A segurista will make a poor entrepreneur
because he does not have the spirit that results in progress. A segurista will be happier of
doing traditional and low risk jobs like office work.

The entrepreneur, on the other hand, takes risk because they focus their attention on the
chances for success rather than the chances for failure. They are however alert to possibility
of failure in businesses and this makes the enterprise more challenging.

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 In life, it is not how many times you fail that counts. It is how many
times you picked yourself up. – Chinkee Tan

Do you now understand why entrepreneurs are a unique breed of men/women and why they
are so important to development?

Case: The story of the Manila Pest Control Company (MAPECON) – who saw an
opportunity of turning pest into a profitable product. –

3. The entrepreneur produces capital. There are people who are kept from going into
business simply because they have no capital. But real entrepreneurs never allow lack of
capital to stop them from getting ahead.

The entrepreneur produces capital in so many ways such as took for investors who will
believe in your project and share the risk with friends and relatives and establish a
partnership or a corporation with them, borrow fund from the bank, put up your own
capital.

4. The entrepreneur introduces innovations. Innovation implies newness, variation,

originality, novelty or uniqueness. Thus, the innovative person is open to change. The
entrepreneur introduces new products, new ways of doing things, new methods of
production. He/she exploits new sources of materials and discovers new markets – the
entrepreneur is creative.

It is the innovativeness of entrepreneurs which largely and continuously revolutionizes

everyday living – the comfort of life. They think of ways by which a product is put to other
uses, adapted, modified, magnified, substituted, reversed or combined.

Introducing innovation is the entrepreneur’s response to the needs of people or to perceive

economic opportunities. For example before, the clamour of people for energy-saving
devices and one entrepreneurs came up with an idea of energy saving stove, solar energy
and the like.
Being innovative is essential in order to survive ones business. If one’s products or
processes are antiquated, chances are that some other entrepreneurs who are more creative
will take the market away for themselves.

5. The entrepreneur organizes the business. The entrepreneur is the person responsible for
getting together all resources needed for the business to get started and going. The
entrepreneur is the one who thinks of what, how, where, when and how much land, labor
and capital are needed to transform an idea into a real functioning enterprise.

Once the entrepreneur sets up an enterprise, he/she (a) identifies the needs of the business in
terms of talents and abilities and then (b) look for people who have the drive and fit into the
requirements, (c) hires people to work with him/her (d) supervises these people and
coordinate their activities and be able to get them personally involved.

The entrepreneur monitors all activities of his/her workers so that when the output of one is
ready when the others need it. The entrepreneur sees to it that orders are fulfilled on time,
the products of good quality, the deliveries made as promised and the transactions well
recorded.
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6. The entrepreneur makes decisions. The business situation involves a lot of unknown and
uncontrollable factors which may affect the future success or failure of the firm. Under
these conditions of uncertainty, the entrepreneur considers all alternatives in terms of
usefulness to the business and chooses the course of action which is more useful for the
business. The entrepreneur has to continuously search his/her environment for possible
alternative solution. In business, several decisions are made each day. The entrepreneur and
nobody else accepts the responsibility to make decisions and joyfully organizes his/her time
and priorities so that he/she can meet the demand of his/her role as decision maker.

7. The entrepreneur plans ahead. The entrepreneur can act in emergency. This role however
demands that he/she be able to anticipate events in the future that will affect his/her
business. The entrepreneur should be able to prepare for consequences of his/her actions
well in advance. Planning ahead is limiting the factor of uncertainty and increase the
chances of success.

8. The entrepreneur sells his products at a profit. The entrepreneur is an economic man.
He/she sees to it that his/her products will sell and bring him money. The profit will be very
important for survival of the entrepreneur and enterprise. The profit is a concrete indicator
of how well an entrepreneur has managed his/her business from the start. The profit shows
how the market accepted or rejected his/her product, it also indicates that the entrepreneur is
moving in the right direction. Low profits prompt the entrepreneur to investigate whether
he/she is producing the right product or service for the right people at the right time and
place.

Pillars of entrepreneurship success

What makes a successful entrepreneur?

1. An idea and market
2. Skills/knowledge and experience
3. Resources
4. Motivation and hard work
Successful entrepreneurs have these four pillars. Without any of them, your business will be
unstable.
An Idea and Market: An idea is the kind of business you want to do and market is the people
who will buy your products or services. A good idea is the basis of a successful venture while
the availability of a market is the indicator of the sustainability of the business venture.

Skills/Knowledge: This refers to several business skills. (We need both theoretical and practical
skills). Do we know how to produce quality products for our market? We also need business
management skills. Do we know how to keep basic records so that can assess the profitability
of our business? In addition we know something about our MARKET. Do people want our
service or product? How are we going to inform people that we have what they want? Who will
be our customer? And how will our goods get to the market?

Hard Work: working consistently every day. Making money in business largely depends on
you. Are you there to open your business every day? Can people rely on you? Do you sell a
quality product or service?

Resources: How much money do you need to start your business? The money you use to start
your business is called your capital. It often takes a lot less money than you expect, the profits
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to be realized is what you should use to grow your business. Starting small is the key for great
entrepreneurs. Most people only talk about the business they want to start. Take some time and
reflect on these things before you start.

Application
.
Suppose you think you would like to sell quality dry firewood in a city where people staying
flats and apartments where wood fuel cannot be used? Why?
What do you think is lacking? Why?

Ideas are the building blocks in the establishment of a new small scale ventures. Ideas rarely
just pop into your head. You need to cultivate the skill of developing them. There are various
strategies and sources you can use to develop entrepreneurial ideas:
1. Keep an idea files or a note book: record any new business idea that comes to your mind
as and when you encounter it.
2. Newspapers and Magazines: read newspapers and magazines regularly and cut out and
keep any interesting business ideas.
3. Trade journals: identify business journals to which you can subscribe.
4. Friends, family members and relatives: discuss your business ideas with them and allow
their perspective to develop the idea further.
5. Interact with other entrepreneurs: evaluate their businesses to see which ideas could
work in your case.

Activity 2

1. Can you search a successful entrepreneur who perceive an opportunity then did something
about it? (this maybe done later after the home quarantine)
2. Write abundant resources in your community that can be turned into something else?
3. Outline the types of ideas you can identify or get from other entrepreneurs, family, relatives
and friends, trade journals and magazines. (not less than 5 ideas)
4. Read widely on your idea. Seek out as much background knowledge you can. Discuss your
idea with friends and family. What impact will it have on them and on you?
5. Just from your conversations with the group, family and friends, have you thought of any
new ideas?
6. Think further and maybe research the details on your idea. What needs to be done to get it
off the ground?
7. Test ideas on a limited scale.
8. What other source have you used to source ideas?

Ideas are abstract and need to be converted into reality. One needs to use specific methods to
walk the dream. You also require details.

References:

SERDEF AND UP-ISSI. Introduction to Entrepreneurship. Revised edition 1997

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Chinkee Tan, in his book :For Richer, For Poorer: Why the Rice Get Richer and the Poor get
Poorer”

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