ENTREPRENEURSHIP

EEE 509
ENGR. K. Z. CINFWAT
 Entrepreneurship
• The process of conceptualizing, starting and
running a new business with the aim of profit
or social good, which is often initially a small
business. The people who create businesses
are called entrepreneurs.[1]
• Entrepreneurship is the foundation of most
enterprises!
1 AK Yetisen; LR Volpatti; AF Coskun; S Cho; E Kamrani; H Butt; A Khademhos\\seini; SH Yun (2015). "Entrepreneurship". Lab Chip. 15 (18): 3638–3660. doi:10.1039/c5lc00577a. PMID 26245815.
 TYPES & FORMS OF BUSINESSES
Types of Business
• There are three major types of businesses:
1. Service Business
• A business that provides intangible products (products with no physical form) is a service business. Service type firms offer professional
skills, expertise, advice, and other similar products. An engineering consulting firm is often considered to be a service business. Other
xxamples of service businesses are: repair shops, schools, banks, accounting firms, and law firms.
2. Merchandising Business
• When a business is based on the purchase of products at wholesale price and sold at a retail price. They make profit by selling the
products at prices higher than their purchase costs. A merchandising business sells a product without changing its form; no value
addition often a change in location suffices. Examples are: grocery stores, convenience stores etc..
3. Manufacturing Business
• A manufacturing business buys products (raw materials or inputs) with the intention of using them in making a new product. Thus,
there is a products are then be sold to customers.
Hybrid Business
• Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines
ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).
• Nonetheless, these companies may be classified according to their major business interest. In that case, restaurants are more of the
service type – they provide dining services.
 FORMS OF BUSINESS ORGANIZATION
These are the basic forms of business ownership:
1. Sole Proprietorship
• A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business
cannot pay them. The sole proprietorship form is usually adopted by small business entities.
2. Partnership
• A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of
the business among themselves. In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go
after the personal assets of the limited partners.
3. Corporation
• A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is
represented by shares of stock. The owners (stockholders) enjoy limited liability but have limited involvement in the company's
operations. The board of directors, an elected group from the stockholders, controls the activities of the corporation.
In addition to those basic forms of business ownership, these are some other types of organizations that are common today:
Limited Liability Company
• Limited Liability companies (LLCs), are typically hybrid forms of business that have characteristics of both a corporation and a
partnership. A LLC is not incorporated; hence, it is not considered a corporation. Nonetheless, the owners enjoy limited liability like in a
corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a corporation.
Cooperative
• A cooperative is a business organization owned by a group of individuals; often those with common needs or interests and is operated
for their mutual benefit. The persons making up the group are called members. Cooperatives may be incorporated or unincorporated.
Some examples of cooperatives are: cooperative banking, credit unions, and housing cooperatives.
 CHARACTERISTICS OF AN ENTREPRENEUR
CHARACTERISTICS

• According to a study [3] the seven

most highly ranked characteristics
of an entrepreneur were:
– Perseverance
– The desire and willingness to take
the initiative
– Competitiveness
– Self-reliance
– A strong need to achieve (Passion)
– Self-confidence
– Good physical health
Source: https://www.thebalancesmb.com/entrepreneur-what-is-an-entrepreneur-1794303

3 William E. Jennings, "A Profile of the Entrepreneur" in Entrepreneurship: A Primer for Canadians
HOW TO BECOME AN ENTREPRENEUR
• Develop characteristics mentioned above
• Find a great idea that people will pay money for
• Articulate a plan of success
– Write a Business plan
– Find Capital
• Execute the plan
• Delay gratification
• Know when to quit!
BUSINESS GROWTH STAGES

Source:https://corporatefinanceinstitute.com/resources/knowledge/finance/business-life-cycle/
 SOURCES OF CAPITAL OR FINANCING FOR
ENTREPRENEURS
• Personal Investment or Personal Savings
• Venture Capital
• Business Angels
• Assistant of Government or NGO’s
– Grants
• Commercial Bank Loans and Overdrafts
• Financial Bootstrapping
– "a collection of methods used to minimize the amount of outside debt and
equity financing needed from banks and investors"
• Buyouts
• Equity crowdfunding
 Business Plans
Why make business plans? Short Business Plans
1. Clarity • A description of the problem your
2. Gain a Deep Understanding of Your Market customers have.
3. Organization • Your solution (your product or service)
4. Practice Makes Perfect • Business model (how you make money)
5. Confirm the Math • Target market (who is your customer
6. Iron Out Possible Kinks
and how many of them are there)
7. Foster Alignment
• Competitive advantage
8. Hold Yourself Accountable
• Management team
9. Know Your Message
• Financial summary
10. Establish Benchmarks

Source: https://smallbiztrends.com/2013/01/10-reasons-write-business-plan.html
 Rules for writing a business plan:
Source: https://articles.bplans.com/how-to-write-a-business-plan/

1. Keep it short
– Business plans should be short and concise.
• The reasoning for that is twofold:
– First, you want your business plan to be read. Shorter
is easier to read.
– Your business plan should be a tool you use to run and
grow your business, something you continue to use
and refine over time. A long biz plan is difficult to
revise.
 Rules for writing a business plan 2
2. Know your audience
– Write your plan using language that your audience will understand.
• For example, if your company is developing a complex scientific process, but your
prospective investors aren’t scientists, avoid jargon, or acronyms that won’t be
familiar.
• Instead of this:
– “Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When
attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”
• Write this:
– “Our patent-pending product is a no power, easy-to-use device that replaces traditional
ventilator machines used in hospitals at 1/100th the cost.”
• Accommodate your investors, and keep explanations of your product simple and
direct, using terms that everyone can understand.
• You can always use the appendix of your plan to provide the full specs if needed.
Rules for writing a business plan 3
3. Don’t be intimidated
• The vast majority of business owners and entrepreneurs aren’t
business experts. Just like you, they’re learning as they go and may
not have degrees in business.
• Investors (if financing is a goal) often know a good idea when they
see it and will be willing to fund the business!
• Writing a business plan may seem like a big hurdle, but it doesn’t
have to be.
• You know your business—you’re the expert.
• Lots of templates are available, just search online!