Entrepreneurship Development

ENTREPRENEURSHIP DEVELOPMENT
BY
RABIU ILIYA [MBA, MSc]
DEPARTMENT OF BUSINESS ADMINISTRATION
JIGAWA STATE POLYTECHNIC DUTSE
1 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

THE HISTORY OF ENTREPRENEURSHIP DEVELOPMENT IN NIGERIA
The development of entrepreneurship in Nigeria could be triggered by the political instability

as well as poor execution of socio economic policies of successive governments that resulted
to high level of unemployment in the country. As a result, the Nigerian economy collapsed in
the mid-80s whereas youth and graduates jobless took unprecedented directions. However,
there was massive redundancy of employees and early retirement as a consequence of excess
in the world petroleum market and the poorly employed structural adjustment programs
(SAP). These turn into a cause for decreasing productivity rather than bringing support to the
industries that were previously downsized (Emmanuel, et-al, 2012).
In an attempt to salvage the economy from total collapse, also to combat unemployment and
poverty, the federal government of Nigeria (FGN) with the technical assistance and other
multilateral institution such as United Nation Industrial Development Organization
(UNIDO), United National Development Program (UNDP), International Labor
Organization (ILO) and the Cooperation of the Organized Private Sector (OPS) implemented
certain number of entrepreneurship programs. Some of these entrepreneurship programs
started in the late 1980s which among them were Work for Yourself (WFYS) a programs
executed across Nigeria between 1987 and 1991 and the Work Improvement for Small
Enterprise (WISE) a program introduced in 1997.
Nevertheless in an attempt to reduce the problem of unemployment, the federal government

of Nigeria has taken a step through the establishment of the National Directorate of
Employment (NDE) in 1986 with the purpose of delivering of training opportunity through
guidance and management support services to youth, graduates, farmers and small scales
entrepreneurs, yet there is still massive unemployment.
Additionally, from 2003 to 2007, the government also introduced another economic reform
program known as the National Economic Empowerment Development Strategy (NEEDS)
in order to promote the country’s living standard through a range of reforms, comprising
macro-economic stability, degradation, liberation, privatization, transparency and
accountability. Hence, the government believed that, the program would provide 7 million
new jobs, diversity the economy and enhances
non energy export, boost industrial capacity utilization as well as developing agricultural
produced. All these attempts could not produce the expected result because the programs
were not adequate to give the necessary entrepreneurial training for the teeming unemployed
youths in the country.
Government will need to increasingly globalize education in two key areas, firstly
information and communication technology, secondly entrepreneurship education and
development. The main aim of this is to create a critical mass of graduates better prepared
for self-employment. In an effort to solve the problem of poverty and unemployment, the
federal government of Nigeria has directed all students regardless of their discipline to study
entrepreneurship before they qualify for their degrees and diplomas. The purpose of
introducing entrepreneurship education is for higher institution to provide graduates with the
proper or little entrepreneurship skills and attitudes for creativity, innovation and enterprise
while this will allow graduates to create rather than pursue jobs, thereby reducing the
percentage of graduate unemployment in the country.
It can be seen that presently, the Nigerian business environment offers many entrepreneurial
opportunities ranging from agricultural production, textiles, constructions, printing, ceramic,
steel and metal works, information technology, soft drinks, importation and exploration
among others. In addition, Nigeria’s business opportunities have increased tremendously as
the political environment become increasingly stable. Thus, the era of private sector driven
investment has just emerged. The federal government of Nigeria has set up an ambitious goal
to develop the economy in order to become one of the world’s top 20 economies by the year
2020 even though this dream is not actualized but it is believed that by 2050, Nigeria will
become one of the world largest economies.
It is imperative that the economic progress of a nation largely depends upon the availability
or development of the pool of entrepreneurs or people with entrepreneur skills. It is without
doubt that, small and medium scale industries form the foundations of any nation industrial
take off particularly in a typical developing country like Nigeria. Therefore, the role plays by
small and medium scales industry in emerging economy is so vast that this vital sector
cannot be downgraded.

Africa is the least developed continent in the world and in most of the African countries
government have systematically played important role in determining the course of
development. Many state owned enterprises in Africa were created when it was believed that
the faster way to development was when the government took on the role of the
entrepreneurs. Unfortunately, in most of the countries the performance of these governments
owned companies have been sub-standard. One of the problems with the state owned
enterprise is that, they are run by bureaucrats and poor services delivery. Most of these firms
are mostly run according to government procedures instead of established economic and
entrepreneurial consideration categorized by cost reduction, and profit maximization. In
Nigerian for example, the government owned companies traditionally monopolized business
opportunities with the government restricting entrepreneurs from participating in the market.
However in the mid-1980s Nigeria eradicated its marketing board that was created in 1972
which banned some business entry barriers and opened up markets to competition from
domestic entrepreneurs. Additional, lower taxes and tariffs induced many entrepreneurs to
take part in many business opportunities especially importation and exportation of goods,
automobiles and so on. But Nigeria is still plagued by many developmental problems.
Nigerian has thousands silent businessman in the informal sectors of the economy, pursuing
business interests ranging from the importation of refined crude oil to selling repackaged
table water. It is estimated that the informal sector accounts for over 60% of Nigerians GDP
and represents a source of livelihood of about 70% of Nigerians.
NIGERIANS VALUE IN RELATION TO ENTREPRENEURSHIP
The past and current records disclosed a long and strong history of family owned business in
Nigeria. There is evidence that the colonial legal and administrative policies purposefully
discouraged Nigerians from owning a business as well as attaining economic independence.
In spite of legal discrimination before independence, Nigerians throughout the region have a
track record in a full of commercial enterprises. They have distinguished themselves as
industrialist, skilled artisan, real estate developers, professionals, bankers, merchants, and as
player in every other feasible area of commercial enterprises. However, there is curiosity,
enthusiasm and entrepreneurial culture as well as political mandate among Nigerians for

enterprises development. Thus enterprises development is considered the answer to not only
personal wealth and achievement, but also the larger historical, political and social agenda of
national economic and community’s development.
Nowadays, Nigerians are uniquely positioned for the New Millennium business
environment. Larger percentages of today’s national entrepreneurs hold advanced degrees
are computer literate and are active in international and across cultural networks; and they
are important assets in the knowledge based networked economy. Also, the Nigerian
financial institutions and business assistance providers need the insights and tools to help
retain, grow and expand Nigerian owned business through granting financial supports to
promote and enhance local and economic objectives which include the provision of basic
goods and services, job creation, neighborhood improvement, wealth creation, among others.
This entails addressing some of the traditional obstacles to enterprises development which
include poor state of the country’s infrastructures, access to capital and market opportunities
along with New Millennium challenges, rapid demographic, micro and macro-economic
problems, security issues and poorly government support programs, corruption and poor
planning. The government must encourage business associations or higher educational
institution to address these challenges by providing the required funds for research. Such
applied research must also address ideas and policies needed to strengthen and enhances
government financial support funding and programs to SMEs for moving the economy in a
new directions.
WHAT IS ENTREPRENEUR AND ENTREPRENEURSHIP?
The world entrepreneur is a French word literally translated as “between taker” or “go
between”. According to Joseph Schumpher (1934) an entrepreneur is an innovator and
developer having untried technology. However Peter Drucker (1964) sees an entrepreneur as
one that maximizes opportunities. An entrepreneur is one who creates a new business in the
face of risk and uncertainty for the purpose of achieving profit and growth by identifying
significant opportunities and assembling the necessary resources to capitalize on it. By
Thomas W. Zimmerer

The oxford English dictionary defines an entrepreneur ‘as a person who attempt to get profit
by risk and initiatives’. This definition emphasis that entrepreneur exercise a higher degree
of initiatives and are willing to take a high degree of risk. Moreover it covers a wide range of
occupations. Back in the 1800s, Jean Baptist states that, the French economist said
entrepreneurs shift economic resources from an area of lower productivity into an area of
higher productivity and greater yield. In order worlds, entrepreneurs create value by
exploiting some form of change, for example in technology, art and craft, in religion,
academia, in the military and forces, or any form of human endeavors. We call this process
as creativity and innovation; and this is an essential tool for entrepreneurs.
ENTERPRENEURHIP
The concept of entrepreneurship rests on the state of mind of the investor whereas a lot of
variables usually come into play. These variables are: the environment, personality
attributes, capital and labour. Entrepreneurship is a process that is dynamic in the creation
and innovation of new value through time inference that centre on financial, psychological,
and social environment. In other word, entrepreneurship is the process of creating something
new with value by devoting the necessary time and effort, assuming the accompanying of
financial, physical, material resources and receiving the resulting rewards of monetary,
independence, psychological and personal satisfactions. By Robert D. Hisrich
In a nut shell, the term entrepreneurship refers to the ability and willingness of an individual
to identify an opportunity, pool resources and capitalized on it.
ENTERPRENEURIAL PROCESS
This is the process of pursuing new venture through evaluating and developing an
opportunity by overcoming all forces that may resist the creation of something new. The
entrepreneurial process has four phases as follow:
 Identification and evaluation of opportunity

 Development of business plan
 Determination of the required resources
 Management of the resulting enterprise

ENTERPRISE
Enterprise means the development of business by the people of a country rather by the
government. The enterprise may be micro, small, medium or large within a chosen industry
as follows:
 Micro enterprise: A micro enterprise has a full time labour force of not more than 10
with a total cost of working capital excluding cost of land of not more than 1million
naira.
 Small enterprise: A small enterprise has a full time labour force of 11-25 with a total
cost of working capital excluding cost of land of more than 1 million naira but not
more than 40 million naira.
 Medium enterprise: A medium enterprise has a full time labour force of 26-100 with
a total cost of working capital excluding cost of land of more than 40 million but not
more than 200 million naira.
 Large enterprise: A large enterprise has a full time labour force of more than 100
with a total cost of working capital excluding cost of land of more than 200 million.
DIVISION OF ENTERPRISES
 Leaders/giants: These are companies that possess strong capital base, competent
employees, new technology of machines and equipment, build brand and customer
loyalty, establish corporate reputations, having good policy and strategies and
maintain their corporate value.
 Emerging/challengers: These are companies that maintain consistence high growth
rate in terms of sales volume and market share due to their exceptional qualities that
are said to be attributed to their higher performances in relation to the application of
robust technology, flexibility and innovative commitments. These types of enterprises
usually compete with the giants and probably over take the giants or move to the same
level with the giants companies.
 Losers/followers: These are the types of enterprises that operate at the bottom line of
their chosen industry. They lack strong capital base, low level of technology and
innovation. They always try to operate but make little profit from their operations. It is
very difficult for these types of companies to move to the next level.
ENTREPRENEURIAL TRIGGERS
CHANGE FROM CURRENT SITUATION ROLE OF CREDIBLE EXAMPLE
 Losing Job  Culture

 New immigrant/refugee  Family
 Frustration in current job  Peers and friends
 Family crisis  Role models
ENABLING ENVIRONMENT
POSSESSION OF ENTREPRENEURIAL
COMPETENCES  Government policies
 Adequate infrastructure
 Personality traits
e.g.
 Knowledge
-Utilities
 Skills
-Finance
 Work experience
FEATURES AND CHARACTERISTICS OF AN ENTREPRENEUR

An entrepreneur must have some or all of the following traits:
1. Risk bearing: The concept of the entrepreneur means go between or risk taking. Risk
taking is a venture of life, because the art of project venturing usually involves risk.
Even life itself is full of risk.
2. Initiative involvement: An entrepreneur is a person who organizes and takes
decisions on the welfare of his business activity. In the event of an adverse decision or
undertaking he quickly develops a strategy in problem solving to ensure the safety of
this business. The success and failure of this business solely depend on his ability to
put things right.
3. Responsibility objective: The responsibility objectivity of an entrepreneur is
connected to the initiative involvement. This is connected with worthwhile decision to
ensure business continuity and success. S/he outlines objectives and ensures that all
strategies are implemented without delay. An entrepreneur takes responsibility of

his/her action in business wholly without attributing the success or failure to anyone or
circumstances.
4. Creativity goal: The creative goal is also very important feature of an entrepreneur.
An entrepreneur must be resourceful, creative and innovative in his plan because he is
usually faced with a lot of competitor. Part of the entrepreneur creativity goals is that,
s/he must be able to control business environment and apply flexibility in his/her
product or service choices to be able to determine the consumers need. Having
creative idea will keep entrepreneur in business for a long period of time.
5. Result oriented: The entrepreneurs being responsible in the formulation,
implementation, processing and execution of business policies, is also the determiner
of his/her product choice, s/he mobilizes the factors of production and takes decisions
on product quality, price and marketing activities.
6. Self-confidence: An entrepreneur having the drive and energy, creative objective,
responsibilities goal and good leadership traits should equally ensure the application of
being self-confidence to win the heart of customers. A self-confidence is a signal to
success while fear is a signal to failure.
OTHER CHARACTERISTICS OF AN ENTREPRENEUR

Psychological characteristics include:
1. They have high need for achievement and success.
2. They possess strong desire for responsibility and independence.
3. They have high degree of self confidence
4. They do not like routine work; they venture some and like to try out other trades.
 Sociological characteristics:
1. Entrepreneurs are goal oriented.
2. They have capacity to adapt to changing conditions.
3. They have ability to organize men, materials, money and machines to achieve goals.
 Economic characteristics:
1. Profit oriented.
2. Risk taking ability.
3. Ability to create and innovate something new.
QUALITIES OF AN ENTREPRENEUR
These are certain distinctive features that are required to be a successful entrepreneur. A
number of these qualities are probably in-built into your personality, whereas others may
need to be developed.
 Leadership: It is the ability to be in charge of people and exercise influence over
them to do something and guide them in order to achieved set out goals.
 Self-confidence: The best way to develop self-confidence is to get involved in an area
that you are good at. This involves long familiarity, passion and belief in whatever
business you start. Therefore, self-confidence means believed in one’s self to
discharge entrepreneurial exercise.
 Competitiveness: From the very beginning, your business will have to compete with
other similar ones. In fact the very nature of business demands a competitive mind set.
For any entrepreneur to be successful and survive in a business cycle, he needs to have
strong competitive mind and strategies.
ENTREPRENEURIAL TRAITS
 Initiative Dynamic leader
 Energy Optimistic
 Desire Innovative and creative
 Perseverance Committed
 Low support needs Hard working
 Acceptance of responsibility Decision taker
 Ego development Highly motivated
 Market awareness Flexible
 Persuasive Build for future
 Self-discipline Sees broad picture
 Self-confidence Persistence
 Problem solver Determination
 Knows value of money Independent
 Thrives on ambiguity Get along with others
THE CONTRIBUTION OF ENTREPRENEURS TO THE INDUSTRIAL AND
ECONOMIC DEVELOPMENT
The contribution of entrepreneurs in the promotion of economic development should not be
underestimated and there is a need to highlight their key essentials. Entrepreneurs are the
change agents and the prime movers of every economy. It has been established that no
country can grow economically without the positive support of the entrepreneurs and
entrepreneurship. Entrepreneurs use human and economic resources to help and implement
their ideas. Economic resources include money and equipment. Human resources include
energy, skills, knowledge and time. Therefore, entrepreneurial contribution to the national
economy might include:
 They increase Gross Domestic Product (GDP) which led to the overall raise in the
living standard of average Nigerian citizen.
 They reveal macro-economic fact pointing out development that would enhance more
incomes, increase per capital income, raised capacity utilization industries, lower
inflation by means of economic of scale production and creating competition.
 They provide more employment opportunities for each unit of capital invested because
they are generally labor intensive.
 They encourage indigenous entrepreneurship which develops manpower techniques,
knowledge, skills and specialization.
 They promote local agricultural farm produced by means of utilization the abundant
resources provided by nature into another form as finished product.
THE FUNCTIONS OF ENTREPRENEURSHIP
1. Promoters: Entrepreneurs are promoters because they scan the environment, identify
opportunities, organize resources and implement the business idea.
2. Partners: Entrepreneurs solicit the participating of other persons in a business project
because of the following reasons.
 The degree of success or failure factor involved.
 Complexity of a business idea may require more than one person to actualize.
 The influence, experience and capacity of others may be useful.

 Friendship or acquaintanceship may be consolidated through joint business
association.
3. Shareholder: Potential entrepreneurs could participate as shareholders under the
following circumstance:
 When the enterprise requires too much investment.
 When they do not want to commit their full time to the enterprise.
 When risk may be reduced by spreading their investment portfolio.
 When they do not have the capacity to manage such an enterprise.
4. Organizers: For an entrepreneur to effectively control or monitor operation and
facilities communication with workers, it is advisable to have an organizational
structure for the enterprise. Organizational structure can be formal or informal, for
example.
 Various members of a family are assigned various positions.
 Various employed assistants are assigned with administrative positions in the
running of the small business.
5. Initiating ideas: Entrepreneurs come up with new ideas. This is an important area for
an entrepreneurship as it determines his/her rate of expansion in business for example,
modification or rebranding, new product development and design.
6. Planning: Planning is the basic function of managing enterprise which begins with
setting objectives and specifying the steps needed to reach them. It is about deciding in
advance what to do? When to do? How to do? And who is capable and able to do?
7. Organizing: Organizing is the form of every human association needed for the
attainment of common purpose. It involves job designation which includes dividing
work into logical manner that can be handling by individuals or group of people to
achieve organizational goals.
8. Coordination: Coordination is the process of integrating the activities and objectives
of all separate units in an organization in order to achieve a desired goal.
9. Directing: Directing involves telling people what to do, ensuring and seeing that they
do it to the best of their abilities.

10.Controlling: Controlling involves the measurement and correcting the performance of
employees to make sure that the objectives of an enterprise are efficiently and
economically accomplished.
11.Staffing: Staffing is a process that concern with filling the vacant positions in an
organization with the most qualified people in order to ensure smooth running to meet
the present and future needs of an enterprise. This involved recruitment, selection,
promotion and motivation of workers.
12.Communication: Communication involves sending and receiving information from
superior officer to subordinates within the enterprise. Communication process usually
follows hierarchical order according to the decreasing of importance.
THE ROLES OF AN ENTREPRENEUR

 Managing control
The management functions of the entrepreneur involve responsibility for bored decisions on
policies and the ability to ensure that these decisions are executed. In companies or large
business entities, management functions are primarily delegate to specific individuals who
perform the work at lesser risk. It is important that the entrepreneurs should understand
human behaviors to ensure that scarce resources are being appropriately used to minimize
wastage and encourage beautiful production of goods and services. The management control
aspect of an entrepreneur is very essential if really the entrepreneur wants a successful
business venture and continuity of the venture.
 Uncertainty risk bearing

The concept of risk in business is paramount because of the involvement of liquidity. There
is a probability of loss in transit, fire and theft or any kind of natural disaster which may be a
result of unforeseen circumstance in the person handling the project. These generaly affect
the capital of an entrepreneur, and therefore, the success of the entire business might be at
risk.

ENTREPRENEURIAL ECONOMIC RISKS AND HAZARDS
A risk could be defined as objective doubt concerning the outcome of a given situation. It is
the doubt a person would have concerning the future even if s/he knew all the possible
outcomes and their probability or chance of occurrences. In other word, a risk situation
occurs when the future outcome is not known to person or an entrepreneur. Economic risks
and hazard can be classified in several ways according to their causes. Four important
methods classify economic risks according to their influences and they are: property, liability
and personal risks, physical, social and market risks, static and dynamic risks, and then
fundamental and particular risks.
Property, liability and personal risks
a. Property risks: Property risk exists when property in which the firm or family has a
financial interest may be damaged, destroyed, reduced in value or lost. For example,
property risk exists when a building may be destroyed by fire or when the value of a
business may be reduced by a change of government.
b. Liability risks: Liability risk exists when the firm or family may be held legally
responsible for the property or personal losses suffered by others. For example the
owner of an automobile may be held responsible for an injury suffers by a pedestrian,
or a business may have to pay the medical expenses of an injured worker.
c. Personal risk: Personal risk exists when the firm or family may suffer a loss to their
persons. For example, the family may fear the possible death of the breadwinner or a
firm may fear the death of a key engineer.
Physical, social and market risks
a. Physical risks: Physical risks refer to risks of destruction of property through the
physical hazards of nature such as storm, flood or a fire outbreak. Physical risk also
includes uncertainties in the production process such as variation in the strength of
material or the effectiveness of labour.
b. Social risks: Social risks is caused by derivations of individual conduct from what is
expected such as theft or negligence by the impossibility of predicting the behavior of
social group such as strikes, riots or war. Social risks can also be caused by the failure
or inability of individual to use knowledge, which is acceptable to them or failure to
conduct and use market research information which enables them to know about the
competing products and their activities.
c. Market risk: Market risks may include price reductions between the date of purchase
and the date of selling commodities.
Static and dynamic risks
Willet (1901) in his classic, the economic theory of risk and insurance, divided risks into
static and dynamic risks.
a. Static risks: These are risks connected with losses caused by the irregular action of
the forces of nature or the mistakes and error of human beings. These types of risks are
also natural because they cannot be prevented by an entrepreneur.
b. Dynamic risks: These are risks associated with changes, especially change in human
wants or changes resulted from technological advancement.
Fundamental and particular risks
Kulp (1956) distinguished between fundamental risks and particular risks. Although the
dividing line between the two risks is not always clear, the basic ideas are that:
a. Fundamental risks are group risks, impersonal in origin and effect, and at least for the
individual they are unpreventable. E.g. macro-economic problems or natural disasters.
b. Particular risks are personal in origin and more readily controlled. Example of
fundamental risks are those risks associated with uncertainties, and disharmonies in the
economic system such as the risk of death or disability from non-occupational causes,
the risk of property losses by such danger as fire, explosion, theft, and vandalism and the
risk of legal liability for personal injury or property damage to others.
DANGERS OF OVER RELIANCE ON WAGE EMPLOYMENT

2010 estimates states that 160 million men and women that were officially counted as
unemployed and another billion or more people are under employed. In 2012 there were 190
million unemployed youth. In 2014 there were 202 million unemployed youth. In 2016 there
were 225 million unemployed youth. Moreover, 500 million new entrants to the labor market
are expected over the next ten years, mostly youth. It was estimated by United Nation (UN)
that there are billion youth on this planet, 850 million in developing nations. How do you
cope with these large populations of youth?
The present serious and growing threats of unemployment in Nigeria, call for the need of
Nigerians graduates of today to seek avenues for self-employment and self-fulfillment which
is seems to be impelling. In the 1960s the problem of unemployment in Nigeria was basically
that of primary and secondary school leavers. One popular explanation then was that, these
school leavers were ill-equipped and lack specific skills to offer into the labour market. The
explanation however, is now largely irrelevant as today even the well-equipped graduates in
almost disciplines now find that, the Nigerian labour market no longer has enough jobs for
them. Thus, rather the employers vainly searching for skills that are not there, the situation
has become one of the skills vainly searching for the jobs that are not there.
Did you know that we have over 160 universities, over 100 colleges and polytechnics in
Nigeria producing more than 200,000 graduates each year?
Do you think, there will be any government or economy that can accommodate these chains
of graduate and unemployed youth? It is crystal clear that, generally unemployment is
unacceptably high and that it is here to stay except we do something about it. In fact, it is
here to increase as:
 Universities, polytechnics and colleges of education turn out thousands graduate every
year.
 The Nigerian economy as it presently run does not have the capacity to absorb
thousand chains of unemployed youth.
In other words, the Nigerian graduates of today can no longer rely on the Nigerian labour
market to provide him/her job. S/he has to concoct an alternative source of employment
known as self-reliance.
In addition of providing employment opportunity, the following includes the benefits of self-
employment:
 A self-employed do not need to undergo job selection interviews.
 S/he does not need to please boss or personnel manager in order to be promoted.

 S/he has job security without thinking of dismissal from job.
 A self-employed is thus, a creator and master of his fortunes. S/he decides his own
work programs, work hours, what to do, and what to produce.
 A self-employed generate monetary rewards which can be use satisfy socio-economic
needs.
The unemployed Nigerian graduate who wishes to go into business should further
understand that a business man/woman is a risk taker. In business, you either make profit or
lost. Besides, every firm in its gestation/initial years invariably makes losses, gradually
operate at a break-even point, and then it will eventually start making profits. All you need is
strong curiosity and enthusiasm, determination and hardworking are the key to
entrepreneurial greatness.
ENTREPRENEURIAL WISE SAYING

 S/he who decides to work for a living does nothing but decided to die poor. This
means, it is better you employed others than others employed you.
 The journey rather the destination is the entrepreneur’s greatest rewards. One problem
of Nigerian entrepreneurs is the desire in getting rich quick. Therefore, do not be so
ambitious in getting rich within short period of time because managing small
businesses is like nursing a new born baby.
ADVANTAGES OF SELF EMPLOYMENT OVER WAGE EMPLOYMENT

To the Owners of Enterprise
 Income and profit
 Independent
 Social, personal and psychological satisfactions
 Encourage creativity and innovation
To the Society
 Employment generation
 Reduction in social vices
 Utilization of resources

 Improve living standard
 Prevention of rural-urban migration
To the Larger Firms

 Supply of input e.g. raw-materials
To the Government
 Revenue generation
 Complement government effort in promoting socio-economic growth and
development.
 Increase in country’s gross domestic product (GDP).
OPPORTUINTIES OFFERED FOR SELF RELIANCE
 Unlimited opportunity to make money: This depends on how much time and effort
you put into your enterprise.
 Opportunity to create your own destiny: Owning a business provides entrepreneurs
the independence and the opportunity to achieve what is important to them.
Entrepreneurs use their business to make that desire reality.
 Opportunity to make a difference: Entrepreneurs are finding ways to combine their
concerns for social issue and a desire to earn a good living.
 Opportunity to reach your full potential: Too many people find their work boring,
unchallenging and unexciting but not entrepreneurs. Entrepreneurs business becomes
their instrument for self expression and self actualization.
 Opportunity to contribute to society: Most often entrepreneurs are among the most
respected and most trusted members of their committees. This is because they assist
their neighbor’s and other people in a community directly or indirectly.
 Opportunity of being self employed: These types of entrepreneurs are living Harvey
McKay’s advice: “find a job doing what you love and you will never have to work a
day in your life”.

ROLES OF COMMERCIAL AND DEVELOPMENT BANKS TOWARDS SMALL
AND MEDIUM SCALES INDUSTRIAL DEVELOPMENT IN NIGERIA
Commercial Banks (CB)

 Commercial banks grant loans and other credits facilities to entrepreneurs to enable
them purchase equipments, finance plant expansion, develop new products or market
and so on.
 Many of them are into leasing (helping business rent or acquire assets for economic
use operating and act as lessor) and factoring (arranging for debts to be bought by
business at a discount).
 They serve as an agent for the government loans and entrepreneurial development
financing.
 They advise and monitor business to ensure that financial credits are applied
efficiently and effectively for greater economic achievement.
 Commercial banks facilitate savings and payments through their various account
schemes.
 Banks are the media for foreign exchange transaction and transfers.
Development Banks (DB)

The developments banks usually provide funds for capital investment. An example of the
development banks in Nigerian Industrial Development Bank (NIBD). The NIBD
specialized in medium and long term financing and they grant loans to all categories of
business. Another example of DB is the Nigerian Banks for Commercial Industry (NBCI). It
was established by decree no: 22 of 1973 and its sole objectives are to promote the activities
of SMEs. They grant loans to SMEs. The NBCI get its funds various sources e.g. African
Development Bank (ADB) and other sources such as the World Bank for financial assistance
in addition from the federal government grand.
OTHER AGENCIES THAT PROVIDE SUPPORT FUNDING TO SME’s

These are government agencies established to provide support funding for small and medium
enterprises in order to encourage the creation of new enterprises as well as the promotion and
the survival of the existing businesses. These agencies include:
 Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB)
 Industrial Training Fund (ITF)
 Bank of Industry (BOI)
 Bank of agriculture (BOA)
 Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is aims
at identifying the potentials of the informal sector that engaged more than 80% of the
country’s population into various small and medium scale businesses, provide support
funding and render consultancy services.
FUNCTION OF VARIOUS AGENCIES TOWARDS PROMOTING SMEs IN THE

NIGERIAN INDUSTRIES
 National Economic Reconstruction Fund (NERFUND)
It was created in 1988 for SMEs to give them easy access to loans. The NERFUND was
administered by participating commercial and merchant bank. Its main target was the
promotion of cottage industry of which 4billion naira was made available to the
beneficiaries. Moreover NERFUND was administered by seven (7) men committee under
the chairmanship of minister of finance.
The functions of NERFUND includes
a. To provide medium and long term loans to SMES through participating commercial
and merchant banks.
b. To facilitate provision of loans with five ten years (5-10) maturity and a grace period
of 1-2 years.
c. The fund also provides such loan either in local or foreign currencies depending on the
nature and requirement of particular enterprise.
 National Directorate of Employment (NDE)

The NDE was set up in 1986 with the main function of providing employment opportunities.
It enables youth, graduates and other citizen of a country to be self reliance after passing
through various skill acquisition trainings.
The NDE is divided into the following programs
a. Agricultural programmed
b. Matured people programmed
c. Youth employment and vocational skills programmed
d. Special works programmed
 Industrial Development Center (IDC)

This is a set up by the government to assist SMEs; this centre is virtually established in all
states of the federation. The main function of IDC is to render free techno-managerial
assistance to SMEs towards the establishment of new enterprises development,
modernization, promotion and the growth of existing businesses.
 Raw Materials Research and Development Council (RMRDC)

This federal government agency has the following functions of interest to entrepreneurs:
a. It organizes workshops, seminar and symposia to enlighten people on new raw
material development and on how to solve raw material problems.
b. It assists entrepreneurs to develops and upgrade their own research and
development of suitable raw material especially as substitutes to the imported ones.
c. It promotes and publicizes the need for and the use of local sources of raw
materials.
d. It assists in the development of machinery for development and using local raw
materials.
THE ACTIVITIES OF DIFFERENT INDUSTRIAL ASSOCIATIONS IN RELATION

TO THE ENTREPRENEURSHIP PRACTICE IN NIGERIA
1. National Association of Small and Medium Scales Industries (NASME)

NASME is the apex organization that coordinates the activities of micro, small and medium
scale enterprise in Nigeria and helps them to interact, adopt and present a common approach
to government and other stakeholders. In specific, NASME have the following functions:
a. An affiliate of the World Association of Small and Medium Scale Enterprise

(WASME) by means of facilities interaction and cooperation between Nigerian SMEs
and their foreign counterparts.
b. It provides special training exhibition and consultancy services for SMEs.
c. It interacts with various agencies of government to encourage them to make Nigeria
SMEs friendly.
d. NASME also assists in reducing the obstacles SMEs encounter in accessing credit
facilities from financial institutions.
e. It promote the growth and development of SMEs in Nigeria
2. Manufacturers Association of Nigerian (MAN)
It is the industry association and the spokesman of more than 2000 manufacturing firms in
Nigeria. The functions of MAN include:
a. It enlightens government and the general public on the need to buy Nigerian made
products.
b. It leads the battle against government and their agencies to reduce interest rates, taxes
and leaves for manufacturers in order to make Nigerian made products affordable and
competitive.
c. It runs an economic data and information bank for the use of its members.
d. It provides professional advice to its member to help them overcome operational
problems.
e. It liaises with NAFDAC, SON and other quality and standards enforcement agencies
to ensure that its member produce goods of highest quality.
3. National Association of Small Scale Industries (NASSI)

This is an association of small scale entrepreneurs and industrialists from almost all sectors
of the economy. It functions and benefits include:
a. It liaises with government standard agencies to understand their standard and then
communicate them to members. This helps small scales industrialist to improve the
quality of their products.
b. Member gets local and international information on raw material sourcing and
technical assistances from NASSI.
c. NASSI advise it members on the best choice of plants and equipments for optimum
production.
d. It represents small scale industrialists in committees and on boards of federal and state
governments. NASSI will then communicate the information to its members.
e. NASSI has an efficient library service which serves as a source of information and
data for all stakeholders.
f. It organizes seminars, tour, workshop and other types of training to upgrade the
knowledge, skills and attitudes of industrialists.
g. It receives financial assistance from foreign agencies for disbursement to qualified
entrepreneurs.
4. National Association of Chambers of Commerce, Industry, Mines and

Agriculture (NACCIMA)
A chamber of commerce is an association of business persons with the aims of promoting

their common interests. It consist the association of chamber of commerce from all the states
of the federation and Abuja.
This umbrella association has the following functions:

a. It maintains a data bank of sources of fund, technical assistance, ready market and
possible by business investors for its members.
b. It trains and develops industrialists and business persons to enhance their ability to
produce and market quality products.
c. It promotes Nigerian investment opportunities to its members through cultural and
technological tours and ambitions.
d. The association receives foreign trade delegations on behalf of its members and briefs
them on the quality of made in Nigerian products.
5. Nigerian Employers Consultative Assembly (NECA)
NECA is an association of employers in Nigeria which looks after the interests of its
members in the same way the Nigerian Labour Congress (NLC) and the Trade Union
Congress (TUC). They do concern about the welfare of Nigerian employees.
The functions of NECA include:
a. It conducts research into the Nigerian economy and makes the result available to
employers to help them make good policies.
b. It is a consultant and adviser to employers in matters of employment, management,
labour relation, environmental issues, and challenges from government policies.
c. It also organizes workshops and seminars for employers to help them cope adequately
with the challenges and opportunities in the Nigerian and global business
environment.
d. It represents Nigerian employers in some federal government agencies like the NYSC
and ITF.
e. It coordinates the activities of employers nationwide; speak to its members about some
demands of organized labour through press conference, press release or press
interview and states it positions.
6. Research Institutions
Various research institutions were set up by the government to search into and develop new
products, new procedures and methods, new machines and models, import and export
substitutes, innovative policies for different agricultural, medical and industrial products.
Examples of such institutions are the Nigerian Institute for Oil Palm Research (NIFOR),
Federal Institute for Industrial Research Oshodi (FIIRO), Industrial Research Council of
Nigeria (IRCN), Centre for Industrial Research and Development Badagry (CIRDB) and
Rubber Research Institute of Nigeria (RRIN).

GOVERNMENT SUPPORT AGENCIES IN PROMOTING SMALL AND MEDIUM
SCALE ENTERPRISES IN NIGERIA
Government plays three (3) major roles in developing and promoting small and medium
enterprises (SMES) in Nigeria, namely;
 Participatory role
 Regulatory role
Participatory Role
Government has been stimulating the creation and sustenance of small and medium scale
business in Nigeria trough the following ways:
 Directives to Commercial Banks
The federal government through its monetary policies also issues directives to commercial
banks in liaison with central bank to grant financing credit to small and medium scale
business.
 Foreign Trade Measures
Several measures such as trade protection were adopted by the federal government to protect
indigenous business. Imposition of high tariffs on importation goods was meant to
discourage large importation and unfriendly trading such as dumping of imported goods are
examples of such measures.
 Extension of Subsidies
Such subsidies are always granted to farmers on fertilizers, seeds and seedlings as well as
some agricultural implement e.g. tractors, plough, harvester, sprayers etc.
 Provisions of Infrastructure Facilities
Infrastructural facilities being provided by government in Nigeria include roads, electricity,

pipe born water supply, industrial estate and commercial areas etc. This is aim at creating

enabling environment for the creation of new businesses, sustenance of the existing
businesses as well as attracting foreign direct investment into the country.
Regulatory Role
This includes rules and regulations that guide the establishment of new businesses as well as
control, monitor and regulate the operations of businesses in the country. These agencies also
direct court action to correct offending firms to ensure quality products are produce and
consume. They ensure that firms comply with environmental protection regulation. The main
objective of these agencies is to regulate business activities such as inspection of facilities,
laboratory and product test, given approval of facilities, registration and take up of new firms
etc.
These agencies include:
 Standard organization of Nigeria (SON)
 National Agency for Food and Drugs Administration and Control (NAFDAC)
 National Drugs Law Enforcement Agency (NDLEA)
 Federal Environment Protection Agency (FEPA)
 Corporate Affairs Commission (CAC)
Facilitating Role
These are government agencies established to provide support funding for small and medium
enterprises in order to encourage the creation of new enterprises as well as the promotion for
the survival of the existing businesses. These agencies include:
 Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB)
 Industrial Training Fund (ITF)
 Bank of Industry (BOI)
 Bank of agriculture
 Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is aims
identifying the potentials of the informal sector that engaged more than 80% of the
country’s population into various small and medium scale businesses, provide support
funding and render consultancy services.

KNOW THYSELF: PERSONAL REQUIREMENTS AND QUALITIES FOR
ENTREPRENEURIAL SUCCESS (SWOT)
Starting up a new business venture on your own is not like applying for a job in an existing
organization. There are no selections interviews, no one tell you what to do or how to do it. It
is green field in which you can choose what seeds to plant and what role you wish to play.
Therefore, in deciding what to do with your green field the most important influence is you:
what you want from it and what you start with. The starting point in thinking about any new
venture is therefore some personal analysis which attempt to answer the following questions:
a. Personal objectives
 How will you know if you will be successful?
 Where do you want to go in the future?
b. Personal resources
 Where do you start from?
 What are your personal strengths, weaknesses and resources?
c. Clues from the past
 What can you learn from your past?
 What lesson have you learned that may help you from where you are now to
where you wish to go?
d. Your specialty
 What are your unique qualities that could help you reach your personal
objectives?
 How can you see your uniqueness to give you enjoyment and satisfaction?
We are all different and therefore unique in some way. Use the following worksheet to help
you think about these questions.

Personal resources
Write down what you want in your life in the short, medium, and long term:
1. What do I want be?
In 1 years In 3 years In 10 years
2. What do I want to do?
3. What do I want to have?
Personal resources
Assess where you are now. Summarize your strengths and weaknesses in term of technical
skills; what you can do, knowledge of specific products or markets; management
competencies and specific business skills in area such as finance, marketing and human
relations; personal attribute (your personal characteristics in relation to key entrepreneurial
characteristics such as innovativeness, determination, team leadership and so on).
Strengths Weaknesses
1. Technical skills
2. Management skills
3. Personal skills

Clues from the past
Review your past life experiences and writes down some specific moments that you felt
important at the time and in remembrance.
Satisfying moments: ……………………………………………………………………….
Dissatisfying moments: …………………………………………………………………….
Personal qualities used or misused: ……………………………………………………….
Your specialty
Make an assessment of your knowledge, skills and qualities to try and discover something in
you that are unique and give you enjoyment and satisfaction. Review your personal
objective, personal resources, and clues from the past. Select those qualities and talents that
you feel make you stand out from the crowd. These are the talents that give you the greatest
sense of enjoyment and satisfaction when you make proper use of them well.
My special talents are:
1. ………………………………………………………………………………………
2. ………………………………………………………………………………………
3. ………………………………………………………………………………………
4. ………………………………………………………………………………………
5. ………………………………………………………………………………………

THE VARIOUS SOURCES OF INFORMATION FOR ENTREPRENEURS AND
ENTREPRENEURSHIP DEVELOPMENT
It is believed that information plays a vital role in laying a solid foundation for any form of
planning and other business decision.
Nature and type of Information Required by Entrepreneurs
 Marketing information
 Technical information
 Information and communication technology (ICT)
 Financial information
Where to Obtain Information and Assistance
 Industry data
Industry data is helpful in comparing a business to other similar business. This data may be
obtained from trade associations or government agencies. This type of information include
ratios e.g. stock turnover, return on capital employed, cash discounts, quick asset, gearing ,
percentage mark up and average sales and so on.
 Membership based organizations
This type of organizations can provide services such as conducting research, organizing
education and training programs, implementing new technology, responding to member’s
questions as well as disseminating information through newsletters, magazines and special
reports.
 Subscribing to trade newspapers and magazines
Entrepreneurs should set a side time to read articles in trade related magazines and
newspapers. This is very vital in understanding new market trends and developments in
relating to their business operations.

 Training programs
Training programs help entrepreneurs to develop formal plans for improving their
management skills and ability. Training courses and adult education programs are designed
by many institutions, agencies and associations. Hence, entrepreneurs should be aware of
these personal development possibilities and take full advantage of them.
 Consultants
Consultants can be of assistance both directly and indirectly. Entrepreneurs should pay
special attention to the approaches and techniques offered to them by a consultant to enable
solve their business problems. However, when working on solutions to future problems you
may have to acts as your own consultant and may want to use those same techniques.
 The library
Library is a primary resource for information. Libraries are a storehouse of information

which may be useful in operating a small business. Books, periodical reports and newspapers
may contain information which can be of helpful in solving some of the problems in
managing an enterprise. Government agencies do maintain libraries full of variety of
publications which may be helpful to entrepreneurs’ e.g. stock exchange, NAFDAC and so
on. However, universities, polytechnics and colleges have reference libraries which may
have a circulation section available to the public. Similarly, research institutions and some
large corporations have libraries with sections on specific topics. Trade associations and
labour organizations may also have libraries containing materials related to specific needs.
 Internet
Internet may be used to carry out research and to find some or full range of useful data and
information. E-mail can be used to communicate with providers of information who have
web sites on internet.

WHO CAN PROVIDE INFORMATION AND ASSISTANCE?
Those who provide information and assistance “for free” are:
 Customers: They can provide special information about the products and services
they buy. Customers should be asked about their opinions because they are excellent
sources of information about the relative strength and weakness of a business
operation.
 Suppliers: Many suppliers are able to give sound management advice because they
are able to explain how other successful businesses operates and can provide
suggestions about how business can improve in standard and product quality.
 Employees: Employees are in good position to give valuable advice providing they
know that their opinions and suggestions are valued. They can also provide answers to
specific problems in a business.
 Other business owners: Most business has common problems and owners are
generally willing to discuss their problems with one another. This will enable
entrepreneurs to share ideas concerning solutions to common problems
 Free web Sites: Information and communication technology specialist will direct you
to free web sites. Consult them.
Those who provide information and assistance “for a fee” are:
 Professionals and other related consultants: you can buy the talents of professionals
such as web designers, IT specialists, financial advisor, bankers, management
consultants, insurance agents, accountants, estate agents, surveyor, and lawyers.
Information from these professionals can assists in solving business problems. Try to
develop good questioning techniques to get as much advice and information as
possible from them.

BUSINESS OPPORTUINTY RECOGNITION
Some entrepreneurs have the ability to recognize business opportunity which is fundamental
towards entrepreneurial process or managing and growing business. A business opportunity
represents a possibility for an entrepreneur to successfully satisfy latent needs for generating
sales volume and market share among the competing firms.
Recognizing business opportunity often results from the knowledge and experience of an
entrepreneur in his/her own business. This prior knowledge is a result of the combination of
education and experience. The entrepreneur needs to be aware of this knowledge and
experience and must have the desire to make use of them. The other important factors in this
process are entrepreneurial alertness and entrepreneurs networks. There is an interaction
effect between entrepreneurial alertness and entrepreneur’s prior knowledge of market and
customers problems.
Those entrepreneurs who have the ability to recognize meaningful business opportunities are
in a good position to successfully achieve aims and select product or services to venture.
Below is a typical diagram of entrepreneurial opportunity recognition.
Education Prior knowledge of markets and customer

problems
Experience
Entrepreneurial
Outcome
alertness
Successful opportunity recognition
Personal Experience Work Experience Network

Business Opportunity Recognition Process
BUSINESS OPPORTUNITY ANALYSIS

The opportunity analysis or exploring opportunity is use as a basis for making decision on
either to act on the opportunity or wait until another better opportunity emerged. This
analysis is divided into four phases as follow:
1. Idea and competition

In this stage, the product or service needs to be described in details. A prototype will be
much helpful in understanding all aspect and features that make up a product. All competing
products in the product market space need to be listed and identified. The new product idea
should be compared with at least three competing products that are most similar in order to
identify the market need. This analysis will result in a description of how the product will be
unique and indicate its selling price.
2. Market opportunity
This section will address the size and the characteristics of the product market. Market data
should be collected for at least one to three years so as to know about the overall industry,
the overall market, the market segment and the target market. The data generated can be use
to answer the following questions:
 Is the market made up of large and small companies?
 Does the market respond quickly or slowly to a new product?
 How many new products are introduced each year?
 How large is the market?
 What social conditions underline the market?
 What are the nature and the size of international market?
3. Entrepreneur and team assessment

This section helps to assess the characteristics of entrepreneur and his team towards making
a successful venture. This will guide entrepreneur to determine indeed if he is really capable

to successfully move his idea and pool resources to venture into a new or existing market.
This can be useful by answering the followings questions:
 Did I have the knowledge, skills and experience?
 Did I have the resources available?
 Does my team member have potential and the skills needed for production?
4. The context
The environment should be favorable from regulatory and the economic issues. Such factors
include policies, rules and procedures, interest rates, inflation, exchange rate of which all
these factors can affect the viability of a new venture. The context can make it easier or
harder to establish and successfully operate a business venture. Importantly, an entrepreneur
should know that those factors can affect their operations.
5. Risk and rewards

Risk must be understood and evaluated as fully as possible. Describe what you will do to
avoid, minimizes or cope with such possibilities of key employees leaving, fluctuation in
interest rate, a key customer leaving or a powerful competitor responding ferociously. You
should also speak to the end of the process e.g. how to get money out of the business
ultimately? What are the possible sources of financing? Will you go public? Sell or
liquidate? What are the various possibilities for investors to realize their ultimate gains?
6. Making idea a reality

This is the critical step that needs to be evaluated and taken to make the idea a reality. An
entrepreneur should ascertain time and money needed for each step to go into business. If the
idea cannot be self-finance, then an alternative source of capital needs to be identified. It is
important to know that most entrepreneurs tend to underestimate both costs and time it will
take to establish a business.

BUSINESS PLAN AND FEASIBILITY STUDY
Business plan
A business plan is a guide or blue print for starting a business and can be drawn for on-
going enterprise or a new one. A business plan is helpful for the implementation of an
organized business idea that is intended to the establishment of a new business wishes to be
carried out by an entrepreneur. In planning, a person defined the specific goals and
objectives he want to achieve which will enable him to know what is expected to do. The
conception of business idea enables one to carry out what is known as “feasibility study”
which is a subset of a business plan.
Business plan provide detail information about a proposed investment opportunity. If it is

found promising then, there is no need of conducting feasibility study but whereas there is
doubt, then the need of conducting feasibility study seems impelling.
Feasibility Study
Feasibility study is the process of assessing the viability and profitability of the propose
business opportunity. It involves the analysis of market and market share, marketing
strategy, personnel, production process, pricing policy, production cost, transportation cost,
sources and application of fund, sales and profit analysis, nature of the competitive market,
environment analysis, enterprises registration and the name of the proposed business etc.
In short, a feasibility study is an investigation into the potential outcome of the project. It is a
planning document which is used to develop an acceptable business plan for a particular
selected project or business. Therefore, a business plan can be used to raise funds from
financial institutions and other development agencies that usually contribute towards
financing and promoting small and medium enterprises in Nigeria.
Component of a Good Business Plan
 The executive summary

Despite appearing first, this section of a business plan is written last. It summarizes the
key elements of the entire business plan.
 The industry
An over view of the industry or sector that your business will be part of, including the
industry trends, major players and the estimated industry sales. This section of the
business plan will also including a summary of your business position within the
industry.
 Market analysis
This involves an examination of the primary target market for your product or service,
including geographical locations, demographics, target market niche and how these
target customers will be served?
 Competitive analysis
This involves an investigation of competing products, an assessment of their
competitive advantages and the analysis of how you will overcome any entry barriers
of your chosen market?
 Financial plan
This includes a descriptive of your funding requirements, sources and application of
funds which can be short, medium or long term financing, analysis of your detailed
financial statement, cash in and out flow.
 Marketing plan
This comprises a detailed explanation of your sales strategy, pricing plan, proposed
advertising and promotional tools and the product or service benefits.
 Management plan
This includes an outline of your business structure including your internal
management team, external management resources if any and general human
resources needed.
 Production plan
This includes a descriptive of your business location, facilities and equipments, the
caliber of employees needed in the production line, inventory requirements and

suppliers, any other applicable operating details such as a descriptive manufacturing
process e.g. product or process layout.
 Appendices and exhibits

Any additional information that will establish the credibility of your business idea
such as marketing studies, photographs of your product or service, contractors or other
legal agreements pertinent to your business.
FUNCTIONAL AREAS OF A BUSINESS ORGANIZATION
The functional areas of a business include; finance, personnel, production and marketing
departments respectively. In a complex business there exist purchasing, research and
development departments.
FINANCE FUNCTIONS
Financial management is part of the managerial planning and control of financial resources
of a business in order to achieve the objectives of an enterprise. It involves a rigorous
analysis of investment opportunity, financing and divided policy in relation to the overall
market valuation of the firm.
Financial Objectives
 Maximization of shareholders wealth

 To maximize profit and survive automatically
 To improve output or productivity
 To give highest quality service to customers
 To maintain a contented work force
 To maintain a good relationship with customers and suppliers
 To be a market leader
Types of Financial Management Functions
There are three (3) major decisions of financial management, namely; financing, investment
and dividend decisions.

1. Financing Decision
This involves determining the appropriate finance mix or capital structure. Financial
manager or an entrepreneur should know where and how he can obtain funds and the effect
of using any particular source of funds. The term source of finance and investment may be
used interchangeably. To clarify this, it must be noted that a source of finance to an
organization is also an investment to an investor. We are looking from the viewpoint of a
firm. Therefore we are looking at source of finance rather than investments in this aspect.
The main source of business finance includes:
a. Personal Investment: Majority of small scale businesses rely on internal funds to

finance their business. 2/3 of small firms in Nigeria use retained profits and cash flow
from existing business to fund their development.
b. Banks: The main source of external funding is still conventional bank lending, with
more than 60% of external financing is coming from overdraft and term loans. Lack of
collateral is still cited by some owners of SMEs as a significant barrier to growth.
Bank loans are based in different angles, depending upon the lending and the person
collecting the loan. The namely include long term, medium term, and short terms
loans.
c. Hire Purchase Agreement: A hire purchase agreement is a credit sales agreement by
which the owner of the asset or supplier grant the purchaser or buyer the right to take
possession of the asset but ownership will not be passing until all the purchase
payments or installments have been made. The hiree will pay the hire purchase
payment to the hirer over agree period base on installments.
d. Lease Agreement: A lease agreement is a contract between the owner of an asset
(lessor) and the user of the asset (lessee) granting the lessee the exclusive right to use
the asset for certain agreed period in return for the payment of rent. The main
advantage of leasing to the lessee is the possession of an asset without having being
buying.
e. Factoring: This is a special form of finance that provides working capital to under-
capitalized businesses or entrepreneurs. The factoring company takes responsibility

for collection of debts and pays a percentage (usually up to 80%) of the value of the
invoice to the issuing company.
Financial needs of an enterprise
Usually, firms need money to finance their investment or to meet some obligations which
includes:
a. To actualize the investment dream of an enterprise.

b. To purchase raw-materials and or plant, equipment and machinery.
c. To create an expansion path in business organization.
d. To embark on capital projects for example, the development of infrastructures.
e. Maintenance of economic standard.
2. Investment Decision
This is concerned with the allocation of an organizational capital funds to investment in

business proposal that will yield a future benefits in order to meet the expectation of all
investors in the business. Because future is uncertain, investment proposal involve risks. This
could be achieved using capital budgeting decisions techniques e.g. Net Present Value, Pay
Back Period, Accounting Rate of Return and Discounted Pay Back Period.
3. Dividend Decision
This involves the decision on how the returns from the business operation would be shared to
the investors, which is the proportion of earnings to pay out as dividend or to retain within
the firm for future expansion as well as meeting other obligations.
PERSONNEL FUNCTIONS
Personnel administration of enterprise is saddled with the responsibility of staff and
management matter. It is the prime duty of the personal division to assist each departmental
manager to succeed in his task of making men towards optimal production within the
required time from the required quality of material obtained. Therefore, the functions of
personnel in any enterprise may include the following:
 Detecting staff function: The primary function of the personnel department is the
assigning staff responsibilities or job tasks to individual or group of employees.
 Setting standards: The personnel unit of an enterprise makes rule and regulation in
the organization and ensures that every employee adheres to those rules and
regulations.
 Discipline and promotion of staff: The personnel unit is burdened with the discipline
and promotion of staff. Carrot and stick can be used as a tool according Douglas
McGregor.
 Maintain good industrial ration: The maintenance of industrial peace and harmony
is the duty of the personnel department for greater production and service delivery.
 Staff training and development: No organization that can employ new staff that does
not require training. Technological advancement can cause the need for training in a
given enterprise.
The Need of Motivation in Business

In order to ensure optimal use of employees toward greater productivity, there exist
motivational pattern and incentives. Therefore, it is the responsibility of personnel
department to device possible and best means of employees’ encouragement so that they feel
part of their working environment. In this regards, an entrepreneur can play the role of
manager in his/her domain. This means, all entrepreneurs are managers but not all managers
are entrepreneurs. When management politics and practice likely are not favorable to
employees, then productivity tends to reduce. It is either the management fails to rewards
employees for working harder or the working environment is not conducive.
What is motivation?
Motivation is derived from a Latin word ‘movere’ meaning to move. Motivation is the
reinforcement in cash or kind to employees to enhance productivity and or increase
performances. According to Obisi (1999) stated that motivation is a pre potent state that
energizes a guided behavior.
Maslow in his motivational theory ‘Hierarchy of need’ categorized human needs in a
hierarchical ascending order from the lowest needs to the higher needs. He believed that the

early motivators and once satisfied, they stop to motivate and the next higher needs becomes
the motivator. He identified 5 categories of needs namely:
1. Physiology needs: Human needs consist of some basic physiological necessities such
as food, water, shelter and many otherwise. These needs are in-born and remain the
main focus upon which they emerged. This must be satisfied before meeting other
needs.
2. Safety needs: The satisfaction of physiological need gives room to more emerging
needs according to Maslow; therefore, the safety needs are the need for security that
the needs for security on jobs, life and property.
3. Social needs: The satisfaction of security needs gives birth to social needs. The social
need involves the needs of social affiliation, networking and interpersonal relationship
in the workplace which lead to an increase in productivity for greater efficiency.
4. Esteem needs: The satisfaction of social needs gives birth to esteem needs. Esteem
needs specifically involve the dignity recognition of man to his environment. These
type of needs are rarely satisfied, it make human begins to feel adequate in his
working environment.
5. Self-actualization needs: This is the highest level of needs in the hierarchy, it may be
described as the desire to become more and more of what one is. This involves
reaching one’s full potentials or occupying apex position in his working place.
The objectives of motivation
 It provide for dynamic model of human needs.

 It increases employee productivity.
 It increases organizational harmony.
PRODUCTION FUNCTIONS
This deals with all production aspects of an enterprise. It enables students to have an insight
on some activities involved in production. To understand production concept we should look
at the followings:
What is production?

Production refers to the process of transforming, changing or processing of raw materials
from its original form into finished goods. All items we buy for our daily use and
consumption are the results of production functions such as convenient goods, shopping
goods and specialty goods.
Production Management
This involves planning, designing, organizing of men and materials as well as controlling
organizational facilities to produce goods or services that satisfy individual and
organizational wants or goals.
Production planning and control

Production planning and control can be defined as an integration of the use of manpower,
machines and material to produce goods to meet customer needs.
What is production planning? Production planning determines how, where and when of
production and issue the order to manufacture and directs the uses of facilities, material and
labor to meet sales requirements.
What is production control?
Production control ensures that all planned activities are regularly checked, monitored and
adjusted to confirm to the plan. Specifically, it ensures that; all raw material, machines and
other resources are available and all the resources are used according to plan.
Quality and control
This concept is widely used by the business class and more often in the production unit of an
organization. Quality control manager is engaged to ensure that products (goods and
services) are properly produced or offered in full composition as prescribed.
Types of Production Process
 Fabrication Process
This refers to the act of converting raw materials into finished goods e.g. manufacturing
firms.
 Syntactic Process

This is a process where a number of raw materials are combined together to produce a single
product e.g. bread, cake, juice etc.
 Assembly Process
This refers to one or more separate manufacture parts that are joint together to produce a
single product e.g. automobile assembly.
 Analytical Process
This refers to the act of breaking down substances to produce different product that resemble
one another or the original substances e.g. crude oil is used to produce a number of products
such as kerosene, gas, Vaseline, diesel and so on.
Choice of Technology
The choice of technology depends on the management decision regarding the machines and
equipment and the method of operation to be used for production.
Choices of technology enable a company to take so many advantages such as optimal use of
time and resources, minimize damages, increase the volume of output and achieve greater
operational efficiency. Examples; some bakery factories may decides to use modern
technology by means of using gas, electric heating system or micro wave while others may
decides to maintain the traditional method by means of using charcoals. In block factories,
some of them maintain the traditional method by means of using energy and labor intensive
whereas some have already switch to the use of modern machines and technology.
However, in the banking industry, due to the changes of technology or business dynamic, the
use of E-banking or online operation becomes necessary over manual practice.
Plant Capacity
The determinant of plant production capacity depends on the plant size. The plant size
determines the company’s production capacity. Plant capacity can be defined as the
maximum number of outputs that a plant can produce per hour.
Peak versus Normal Load Capacity

There are four factors that compel machines or lead to the over stretching of plant and
machineries which includes;
1. Excessive demand of company’s product
2. Peak period or climatic changes
To avoid compelling of plant and machineries, the production manager should adopt the
following methods;
1. Standard level of production (normal capacity) during slack period with the aims of
building up-stock to meet future demand.
2. Maintaining of high cost absolute equipment to be use where necessary.
Plant and Machinery Maintenance
Plant and machinery requires consistence and regular services, lubrications to ensure
efficiency and effectiveness for smooth operation which will in turn prevent machine
breakdown during production hours.
Plant and Scheduling Preventive
It is obvious that plant and machineries needs replacement, therefore we must take necessary
preventive measures for the things that do not actually happen but we envisaged that
problems might happen in the process of production. Hence, we must make necessary
provision for that by replacing machine parts with some spare parts before problem occur.
MARKETING FUNCTIONS
American Marketing Association (AMA, 1995) defined marketing “as the process of
planning and execution the conception, pricing, promotion and distribution of ideas, goods
and services to create exchange that satisfy individual and organizational objectives”.
Marketing concept is fundamental the idea that the entire organization should be oriented
toward the satisfaction of consumers’ needs and wants. In order to survive, organizations
must take into account the entire market needs by answering the following question:
 Who are they?
 What they want?
 At what price?
Resources should be committed for production when the above questions were fully
understood. Marketing concept also refers to the principles that “customer is king”, that is
the satisfaction of customers’ needs and wants should be emphasized at all stages of
production and distribution. The principles express in marketing concepts include:
 Customer is king.
 Marketing begins and end with consumers.
All the above are statement expressed in marketing concept. As such good and service are
said to have valued only when they are desirable and capable of satisfying consumer’s needs.
The marketing concept is quite an idealistic philosophy that need to understood especially in
Nigeria where sellers have little interest or motivation in pleasing customers. Furthermore,
governments’ monopolies such as PHCN, NITEL and Rail services seem to be unconcerned
about customer’s needs, wants and complaints.
Therefore marketing concept is likely to be applied monopolistic competitive market.

Marketers who creatively cater to customers’ needs are likely to win a differential advantage
over less imaginative competitors and there by dominating market share with higher sales
volume and profit.
Elements of Marketing Concept
 Customer Orientation
The focal point of this element is the thorough understanding of the customer’s needs, wants
and behaviors.
 Integrated Effort
This is concerns with the coordination of all functional activities such as market research,
sales, production, advertising and distribution to enhance total effectiveness of an enterprise
or company.
 Profit Direction
Marketing concept is intended to make money for the company by focusing attention on
profit rather than upon sales volume.
Marketing Philosophies
There are five major competing concepts of marketing activities that can be use by a
business organization:

 Production concept
 Product concept
 Selling concept
 Marketing concept
 Societal marketing concept
Marketing Analysis for New Business Start Up
Product
 What customer needs will be satisfied?
 How can our product be unique?
Customer
 Who are our customers?
 Where do they live or work?
 What are their buying habits?
 What are their needs?
Competition
 Who are our competitors?
 What are their strengths and weaknesses?
 How they might respond to us?
Suppliers
 Who are our suppliers?
 What are their practices?
 What kind of relationship can we expect?
Location
 What are the location costs?
 What are the legal limitations?
Physical facilities
 What are the costs of renting/own/building or refurbishing facilities?
 What are the cost of hire purchase/leasing or purchasing equipment?
 What are the costs of maintenances?

Human resources
 Is there available manpower?
 What are the training costs?
Legal requirements
 What is the cost of obtaining licenses/permits/certification?
 What are the powers of the regulatory agencies against us?
 What are the penalties and liabilities of committing offence?
Cultural and social factors
 What are the cultural implications in the society?
 What are the social issues in the society?
Marketing Mix (4Ps of Marketing)
The marketing is divided into four; which in other is referred as 4Ps of marketing as follows:
1. Product
2. Price
3. Place
4. Promotion
 PRODUCT
A product is anything that is capable of satisfying customer needs. Product can be
tangible e.g. a car, bag of rice, bread and so on while intangible referred to as services
such as mechanic, lawyer, accountant, doctor, consulting firm and so on. As a
marketer it is important to know why customers are buying your product and the
features the customer like most.
 PRICING
Determining a good price for a product depends on many factors. It could be done to achieve
three main objectives;
 To ensure that the company’s profitability objectives are achieved.
 To ensure that consumers perceived the price as reasonable and affordable which will
in turn leads to a higher sales volume.
 To ensure that consumers perceived the product as superior to that of the competitor’s.
It goes with saying that correct pricing of a company’s product or service will enable a
company to cover both fixed and variable costs of production and make profit from its
operation so that the firm’s objectives could be achieve.
What is Price?
 A price is a value or sum of money at which a supplier of a product or service and
buyer agreed to carry out an exchange transaction.
 A price can be defined as the amount of money which a buyer of a product must offer
the seller with a view to getting possession of the product.
 A price can also be seen as any amount of money a customer is able and willing to pay
in exchange of a product or service.
Types of Pricing Strategies
There are many pricing strategies but we are going to limit our discussion to the followings:
 Cost Plus Pricing

It is the most common method in use today. Management determines the total costs of goods
produced and then add a percentage of profit margins to cover expenses in order to arrive at
a final selling price.
 Market Penetration Pricing

This is where a relatively low price is change in order to maximize or dominate market share
as quick as possible. It is mostly use for newly introduced goods in the market.
 Skimming Pricing
This is where a high price is charged to a product in order to recoup initial investment. In this
situation a firm may use this pricing method to create an impression in the mind of
consumers that its product is of higher quality.
Pricing Policies
 To sell higher than the competitors.
 To sell in line with the prevailing market price.
 To sell lower than the competitors.
 PLACE
Distribution is crucial to marketing for without good distribution no single product would
reach the ultimate consumers. Activities of middlemen otherwise referred to as
intermediaries or marketing channels are geared towards facilitating the movement of good
from the manufactures to the ultimate consumers.
Distribution is an important marketing function aimed at getting the right product, at the
price, at the right quality, at the quantity, at the right time and to the right people or place.
Types of Distribution Channels

 Direct Supply
The service of intermediaries here is defenses; manufactures can sell goods directly to the
final consumers.
 Short Channel
This channel dispenses the service of wholesalers; manufactures sell large consumers goods
directly to retailers who in turn sell to the final consumers.
 Long Channel
Manufactures sell goods to the wholesalers who sell to the retailers who in turn sell to the
final consumers.
 Merchant Supply
Manufactures allowed their agents known as brokers to keep custody of goods produced by
the manufactures and sell to the wholesalers who sell to the retailers who will sell the goods
to the final consumers.
Note: Agents do sell the manufactured goods to the retailers or direct to the final consumers.
An agent is someone who maintain depot and received a commission from the sale of goods;
and they are appointed by the manufacturers.
 PROMOTION

These are marketing activities aims at stimulating consumers purchasing behavior towards a
company’s products or services. These promotional tools include:
 Advertising
Advertising was defined by American marketing association as any form of non-personal
presentation of ideas, goods or services by an identified sponsor.
Role of Advertising
 To created awareness about the existence of a new product is the market.
 To arouse consumers interest in a product or service.
 To maintain existing customers as well as attract prospective ones.
 To enter new market and expand the exciting one.
 To create a brand or company’s image.
Types of Advertising Media

 Above-the-line advertising
This is a form of advertising for which a commission is payable to a recognized advertising
agency operating on behalf of its client e.g. newspaper, radio and television stations.
 Below-the-line advertising
This is any form of advertising for which no provision is made for a commission to be
payable to a recognized advertising agency e.g. trade fair and window display).
 Personal Selling
This involves direct face to face relationship between the seller and the prospect consumers.
According to Simpson (1992) defined personal selling as the “one on one” opportunity to
obtain an order for the seller to meet the needs of the buyer.
 Sales Promotion
This consists of a short term incentives offered to encourage purchases of the company’s
products on services. It consists of all activities aimed at promoting immediate sales. It is
designed to achieve fast sales response and consists of all activities by which a company
which carry message about its products.

 Publicity
Publicity is kind of unpaid form of promotion appearing in the mass media. It tries to
communicate with large number of people at the same-time. In reality publicity is free form
of promotion. When a new firm is opening or commercializing, publicity appears in the
local newspapers. When a business is remodeling or moving to a new location these also
form the basis of story in the local media. The use of Public Relation Officer (PRO) and
Customer Care Unit (CCU) is another example of publicity.

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ENTREPRENEURSHIP DEVELOPMENT

RABIU ILIYA [MBA, MSc]

DEPARTMENT OF BUSINESS ADMINISTRATION

JIGAWA STATE POLYTECHNIC DUTSE

1 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

The development of entrepreneurship in Nigeria could be triggered by the political instability

Nevertheless in an attempt to reduce the problem of unemployment, the federal government

3 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

NIGERIANS VALUE IN RELATION TO ENTREPRENEURSHIP

4 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

WHAT IS ENTREPRENEUR AND ENTREPRENEURSHIP?

5 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

 Identification and evaluation of opportunity

6 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

CHANGE FROM CURRENT SITUATION ROLE OF CREDIBLE EXAMPLE

 Losing Job  Culture

FEATURES AND CHARACTERISTICS OF AN ENTREPRENEUR

8 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

OTHER CHARACTERISTICS OF AN ENTREPRENEUR

THE FUNCTIONS OF ENTREPRENEURSHIP

11 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

12 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

THE ROLES OF AN ENTREPRENEUR

 Uncertainty risk bearing

13 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

Property, liability and personal risks

Physical, social and market risks

Static and dynamic risks

Fundamental and particular risks

DANGERS OF OVER RELIANCE ON WAGE EMPLOYMENT

16 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

ENTREPRENEURIAL WISE SAYING

ADVANTAGES OF SELF EMPLOYMENT OVER WAGE EMPLOYMENT

17 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

To the Larger Firms

OPPORTUINTIES OFFERED FOR SELF RELIANCE

18 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

Commercial Banks (CB)

Development Banks (DB)

OTHER AGENCIES THAT PROVIDE SUPPORT FUNDING TO SME’s

19 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

FUNCTION OF VARIOUS AGENCIES TOWARDS PROMOTING SMEs IN THE

 National Economic Reconstruction Fund (NERFUND)

The functions of NERFUND includes

 National Directorate of Employment (NDE)

20 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

The NDE is divided into the following programs

 Industrial Development Center (IDC)

 Raw Materials Research and Development Council (RMRDC)

THE ACTIVITIES OF DIFFERENT INDUSTRIAL ASSOCIATIONS IN RELATION

1. National Association of Small and Medium Scales Industries (NASME)

21 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

a. An affiliate of the World Association of Small and Medium Scale Enterprise

2. Manufacturers Association of Nigerian (MAN)

3. National Association of Small Scale Industries (NASSI)

22 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

4. National Association of Chambers of Commerce, Industry, Mines and

A chamber of commerce is an association of business persons with the aims of promoting

This umbrella association has the following functions:

5. Nigerian Employers Consultative Assembly (NECA)

The functions of NECA include:

24 | Prepaid by: Rabiu Iliya [MBA BUK, MSc Wolverhampton, UK]

 Directives to Commercial Banks