entrepreneurship

Lesson 1: Entrepreneurial Theory

Entrepreneurship
• Entrepreneur – someone who starts a
business
• Entrepreneurship – the process of how they
find ideas, innovate, and get their business
running

The word entrepreneur comes from the French word

entreprende, which is usually translated to
“undertaker” or “adventurer.”

Entrepreneurship
 Entrepreneurship:
definitions across history
• 1755: Richard Cantillon – first used “entrepreneur” in his book, Essay on the
Nature of Commerce, applying it to traders who bought products at a certain
price and sold them at a higher price
• 1803: Jean-Baptiste Say – defined “entrepreneur” as someone who increases
the value of a resource in his Treatise on Political Economy

Entrepreneurship
 Entrepreneurship:
definitions across history
• 1911: Joseph Schumpeter – gave a more modern definition in his book, Theory of
Economic Development: “the [entrepreneur] destroys the existing economic order
by introducing new products and services, by creating new forms of organization,
or by exploiting new materials”
• Modern times: Peter Drucker – defines the entrepreneur as someone who always
searches for change, responds to it, and uses it as an opportunity

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs create jobs for people.
An entrepreneur may do all the work by
themselves in the beginning, but as the
business grows, they will be able to hire others
or provide business to other suppliers.

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs open new markets because of
the new products they create.
Take, for example, an apple farmer who can only
serve nearby villages who can buy his fresh
apples. If an entrepreneur processes these apples
into bottled juice that can be transported to other
cities, a whole new market segment will be
opened.

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs help with economic
development with their taxes.
Companies contribute to the national income.
Aside from creating jobs for people, the
company taxes also allow the government to
spend more on public services and projects.

Entrepreneurship
What makes one entrepreneurial?
The day-to-day tasks of entrepreneurs and managers are very similar.
What makes an entrepreneur different?
• Innovation – entrepreneurs think of ways to introduce revolutionary methods to
change an industry
• Influence – entrepreneurs influence others
• “First-mover advantage” – entrepreneurs look for ways to gain a big 'head start' in
a market that makes it difficult for competitors to catch up

Entrepreneurship
Myths about entrepreneurs
• They take wild risks – intelligent entrepreneurs understand the risks they
are trying to make
• They control their time – people think entrepreneurs have “more time” for
themselves because they don’t have to follow a company schedule
• They make more money than employees – not necessarily, as many top
company executives get high salaries, big bonuses, and retirement benefits

Entrepreneurship
Common mistakes of new entrepreneurs
• They try to sell their product or service to everyone – they should be clear
about who their target segment is
• They behave as freelancers – they should create jobs for other people, not just
themselves
• They do not pay themselves – they should keep personal and business money
separate, paying a set salary instead of freely dipping into business funds

Entrepreneurship