tff-B•H!

Entrepreneurship
and Ordinary Small
Business Activity
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At the end of this lesson, the learner should be able to
t distinguish between entrepreneurship artd ordinary small business
activity, and

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. determine the importance of knowing the distinction.
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Entrepreneurship is different from the activities of ordinary small businesses. This does
not mean, however, that entrepreneurship does not connote small business. It does because
entrepreneurship covers small- and medium-scale businesses. The distinction lies in the
descriptive word" ordinary."
This lesson outlines the differences between entrepreneurship and the activities of ordinary
small businesses. Knowing them will help you assess yourself if you are an entrepreneur
or a mere owner of an ordinary small business. You will be able to completely avoid the
perceptions or behavior similar to the latter and focus more on the perceptions or behavior of
the former.
~eneurship and the activities of ordinary small businesses differ in the following areas:
A . Motive in opening a business·
z. Perception of risk in the business
3. Reactions to changes in the environment
, 4. View on competition
,5. Vision for development and growth
6. Horizon of business operation
7. Sources of business funds
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;·- - - - - - - -Lesson
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4 I Entrepreneurship and Ordinary Small Business Activity 27
MOTIVE IN OPE NING A BUSINESS
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An entrepreneur starts a business \'entur e based on entrepreneurial concep ts and Princi l
and the aspiration to become successful. He/ She is constantly on the lookout for new~es
fresh ideas, which can be found in the business environmen t. The business environment ~
marked by creativity and innovation. It continuously changes and evolves. N ew and fresh
th
ideas for the entrepreneur lead to business opportunities. Likewise, e entrepreneur mak
use of entrepreneurship as a means to a happy and fruitful life. Entrepreneurship is percei\,:
as a wealth-creating venture that will ultimately improve the life of the entrepreneur.
On the other hand, the owner of an ordinary small business opens a business With
the primary goal of making it his/ her source of livelih_god. The business becomes a major
provider of the family for their financial requirements. The owner of an ordinary small
business operates with a basic motive of earning profit. However, the level of profitabilitv
15
sometimes neglected. The profitability aspect and the level of profitability are two distin~t
rmportant issues.
Now ask yourself these questions:
1. What small business would you engage in?
2. Why would you open your own small business?
3. When your next-door neighbor opens a small business and it attracts
good customers, are you also going to open your own small business?
Why do you say so?

PERCEPTION OF RISK IN THE BUSINESS

The entrepreneur takes and faces the business risk squarely. He/She considers it inherent
in the business venture, prepares the business for it, and finds ways to minimize its effects.
The owner of an ordinary small business, on the other hand, believ es that the b usiness risk is
a deterrent to the operation of the business and must be avoided.

Usually the owner is not concerned with corning up with appropriate strategies to handle it.
Now ask yourself these questions:

1. Would you expect risks in your business? Why?

2. How would you handle the risks in your business?

3. Would yo h h
u ave t e necessa l . -
would it be? ry P an in case business risks arise? What

Chapter 1 / Understanding Entrepreneurship

REACT IONS TO CH AN GES IN T H E EN VIRON M ENT
The ~ tnpreneur reacts positively to the changes in the environment. Changes in the
business environmen t bring new ideas for entrep_reneurial opportunities. The entrepreneur
considers changes in the environmen t a creative mechanism for develop ment and growth in
the enh·epreneurial activities. They become a new source of possible entrepreneurial venture.
Entrepreneurs do not simply wait for the changes to happen in the entrepreneurial
environment. They outline alternative courses of action in anticipation of the changes to
happen. On the other hand, the owner of an ordinary small business remains passive and static
to changes in the environment where his/her business operates. He/She usually believes that
change in .the environment is not a plus factor to the daily operations but rather a source of
neo-ative
C,
consequences.
Now ask yourself these questions:
1. What possible changes .may take place in the environment where your
business operates?
2. Would you consider them favorable or_unfavorable to your business?
Why? ,
3. What benefits can your business derive from the changes in the
environment?

VIEW ON CQM'. PETITION

For the entrepreneur · the presence of competition is a ! ign of a healthy economic
environment. The environment where the venture operates can be considered neutral or free-
trade because of healthy competition. Competition will undoubtedly force entrepreneurs to
continuously improve their present products or services. It will be one of the factors that w ill
make them creative in their endeavor.

The owner of an ordinary smalf business, however, views competition as an unhealthy

element in the business environment ·and tries to avoid it. He/She is very u n comfortable
working in a competitive environment and strongly discourages competition in th e business
community. ·

Now ask yourself these questions:

1. What is your -piew about competition?
2. Do you consider com petition in your community healthy? Why?
3. How should you treat your competitors?

Lesson 4 I Entrepreneurship and Ordinary Small Business Activity

 EVELOPM ENT AND GROWTH
V's' ON FO R D . f his/her entrepreneurial venture i
1 . ti e com se o h k n terrn
nd long-term plans of action. He/ S e ma es sure that t\,s
Tl e entrepreneur usua Uy outhnes
, d' um-term, a 1 .
I t -tenn, me I b iness is c ear. .
of s , 0 1 d n ission of his/ her us
.. ·on an I t'vities toward the attainment of the Pl
·1 b siness ac I . •~s
v1s1The entreprenem. aligns
. the da1 y u
the venture in sue a h way . that the operahons Wi]] Pro>1ct,
..
erly manages
He/She prop to the venture. .
I
deve op1nent and growth .
II b siness on th e o ther hand, rehes upon
h chance or luck.Iti
The owner of an ordinaryfsrna
h' /heru business.
. ' H e /She is not so muc . . concerned about its
aintaining the status quo o is he/she is satisfied with its earrungs.
m
development and gro wth as long as
if these questions: .
Now ask yourse E. ur business? Why or why
1. Would you have a deve zopment plan 1 or .yo. .

2. not? you const'der preparing a deve. 1opmen

Would · t plan a useless endeavor?
Why or why not?
3. Would you express your developmen t p Zan in concrete -terms? Why or
why not?

4. What would be the emphasis of your one-year d:velopment plan? How

about your three-or-f ive year development plan.

HORIZON OF BUSINESS OPERATION I

An entrepreneur thinks,glabally but acts locally. His/Her sight is always focused on
the stars above, while his/her feet are firmly ~~imr~d on .the ,ground. He/She is p rimarily
concerned with the major economic even~ !oh!}' in the local environment but also in the
global business market. The entrepreneur has a strong notion that the business venture will
be goingThe
market. outentrep
of the loca] market
h b andh will soon face healthy competition in the international
reneur as ot _loca] and global perspectives.
The owner of an ord. .. -- ~\
environment. He/Sh d mary _small busmess, meanwhile, is centered only on the local
· e oes not Intend tO t' · ·
or viewb of operating
never . outs·ct par icipate m the
l e the local market . . . global environment. The concept
een an idea Worth ent t . is 111conce1vable. In other w ords expansion has
N010 er all1ing for the Owner f . d.
0
•sk yourself these questions:
1. Toward UJh
. an or m ary small business.
at business hori ..
2. W,, . Zon UJou/d d.
Y 'lVou1a You choose that b . you trect your business?
. llsiness horizon?
Chapter 1 I -
Understand in
g Entrepren
· eurshio
SOURCES OF BUS INESS FUNDS
When the entrepreneur finds that the proposed business endeavor is a wealth-creating
venture, he/ she explores ways to generate the much-needed funds from both internal and
exte1:nal resources. He/She strongly believes that the wealth that the venture may crea~e is
more than enough to compensate for the sourced funds.
On the contrary, the owner of an ordinary small business tends to limit the funding of
his/ her business enterprise to personal •resources. Loans from external resources can be a
risky undertaking for him/her. He/She fears that financial institutions will not be willing to
extend financial assistance to the business. In other words, he/ she is already fully convinced
that he/ she is pursuing the hnprogressive type of business endeavor.
Now ask yourself these questions:

1. What will be the primary source offunds for your business?

2. Will financial institutions be willing to finance it? WhY_?

3. Do you strongly believe that your business venture is worth fu nding by

external sources? Why or why not?

4. Would you consider the cost of borrowtng before you actually borrow
the funds? Why?

. ·a . LESSON SUMMAR\' ...

J. The entrepreneur an d the owner of an ordinary small business
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are different
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,. in the following areas:

a. Motive in opening a business

b. Perception of risk in the business
c.
Reactions to changes in the environment
d. View on competition
e. Vision for development and growth
f. Horizon of business operation
g. Sources of business funds

2_ Knowing the differences between an entrepreneur and an owner of

an ordinary small business will help you assess yourself, if you are an
entrepreneur or a mere owner of an ordinary small ~business. Such
kno_wiedge will enable you to avoid completely the percept~ons or behavior
similar to the latter and focus more on the perception b h ·•
s or e av10r of the
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Lesson 4 I Entrepreneurship and Ord· . . .

- mary Small Business Activity