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    12 views20 pages

    1.0+3.0 Entreprenuer Cocept+ Small Business Dev

    Uploaded by

    Gasper Shirima

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    © All Rights Reserved
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    ENTREPRENEURSHIP FOR ENGINEERS HANDOUT 1- ENTREPRENEURSHIP CONCEPTS Entrepreneurship concepts can be defined in different ways’ Entrepreneurship According to Schumpeter the essence of entrepreneurship lies in the perception and exploitation ofnnew opportunities. It always has to do with bringing about a different use of national resources in that they withdrawn from their traditional employ and subjected to new combinations. He identified five types of new combinations i.e. a new product, method of production, market, sources of materials or inputs and organization, “Entrepreneurship is e phenomenon in the economy by which individuals or companies assume tisks to create something new in order to obtain the benefits from the new venture”. “Entrepreneurship is a creative and innovative response to the environment. Such responses can take place in any field i.e engineering, technology, business, agriculture, education, social work and the like. This involves doing new things or doing things that are already being done in a new way, Entrepreneurship is also a process of exploring the opportunities in the market place and Smangmg resources required to exploit these opportunities for long term gain. It can be distinguished as an ability to take risk independently to make utmost earnings in the market. Intrapreneurship Intraprencurship is the entrepreneurial behaviours, attributes and skills that employees display in an established organization. Its essence is value addition, value adding employees exhibit the following: * Make work/tumover + Have good contacts/networks * Have total customer orientation + Aitract/find resources * Take independent actions ° Look after persona growth * Imagine customers for all initiatives, Enterprise An enterpriseis an entrepreneurial activity/ business undertaking. Entrepreneur An entrepreneur is a person who develops a new idea and takes the risk of setting up an cmerprise to produce a product or service which satisfies customer needs, Heishe is a person who can see opportunities, converts them into marketable ideas, mobilizes resources and bears risks for success. Helshe is the business person who is not satisfied with his/her performance and therefore always be business owners, managers, and employers, Intrapreneur organization. Entrepreneurial Characteristics/ Qualities/ Attributes Initiative An entrepreneur takes actions that goes beyond job requirements or the demand of the situation. Opportunity seeking An entrepreneur is opportunist so he/she quickly sees znd seize opportunities. He/she searches for change, responds to it and exploits it as an opportunity. Drive and Determination An entrepreneur is not discouraged by difficulties and problems that come up in the business or histher personal life, This persistence and determination is fueled by a burning desire to achieve the goal of succeeding in the chosen field of business and other activities and the belief that he/she can control his/her own destiny. Information seeking An entrepreneur undertakes personal research on how to satisfy customers and solve problems, He/she knows that different people have different capabilities that can be of help to them. He/she seeks relevant information from his/her clients, suppliers, competitors and others. He/she always ‘ants to leam things which will help the business to grow. Demand for quality and efficiency An entreprencur is always competing with others to do things better, faster, and at a less cost, he/she strives to achieve excellence, Risk taking H Z Anentrepreneur has a venture spirit and willingness to take risks which enable one to calculate their risks before taking action. They place themselves in situatiosis involving moderate risk so they are moderate risk takers Organized'and goal-oriented An entrepreneur sets meaningful and challenging goals for hinvherself He/she thinks and plans What he/she does. He/she knows the value of organization in business and/or other activities, Commitment to work An entrepreneur will work long hours after just to be able to keep his/her promise to his/her client. He/she does the work together with his/her workers to get a job done and is task oriented So dedicated to complete the tasks related to his/her business and. other important activities. Systematic planning and monitoring strategies to achieve what he/she aims at Honesty and Honor A good entrepreneur has to be honest and honorable in all business dealings and interpersonal "slationships - whether itis between business partners, employees, peers or investors Perseverance and Hard Work An entrepreneur is a person who shows determination and works very hard in carrying out his tasks in order to achieve his goals. He/she should have the capacity to cope with long and flexible hours required in carrying out business activities, Networking An entrepreneur acts to develop and maintain business contacts by-establishing good working relationship.. He/she builds networks with relevant stakeholders since know-who is important to build trust Independence Entrepreneurs have a sense of autonomy by being independent in thought and action. Since they have the need to control their future, so start business because they like to be their own boss, Self-confidence Entrepreneurs must demonstrate extreme self-confidence and positive self-concept in order to cope with all the risks of operating their own business. They tend to believe in their capabilities and so tend to be responsible for their own decisions. Belief in one's capabilities is very important in achieving any goal. High level of motivation Anenttepreneur is an individual who has a strong inner drive that makes him/her committed to Pursue the objective of setting up a business by assessing and developing one’s capabilites for setting up and running a business Excellent leadership qualities An entrepreneur is a person who has the ability to inspire and lead others, he/she can enlist Support oF others in the accomplishment of a common task such as business undertaking Good business and managerial expertise An entrepreneur is an individual who owns and manages a business for the principle of profit and growth. He/she employs strategic management practices in the business Problem solving attitude ‘An entrepreneur is able to Tespond and solve problems related to his/her business and other activities before seeking external help. Psychological explanation of entrepreneurial behavior Need for Achievement ‘This is the desire to do well for the sake of inner feeling of personal accomplishment. A person endowed with such a need will spend time considering how to do a job better or how to accomplish something important to them. Such persons like situations where they can take Personal responsibility for finding solutions to problems. They prefer striving to achieve targets which present both a challenge and are not beyond their capabilites, Locus of Control This is a measure of the extent to which people believe they can contol their own destinies, People with an intemal locus of control are those individuals who believe themselves to be in Control of their own destinies. In contrast people with an extemal locus of control believe that {ate in form of events, outside their control or powerful people has a dominating influence over their lives. Therefore people who believe they control their destinies would be more likely to Venture info uncertainties and challenges involves in running a business. In comparison, people who believe that most of what happens to them is outside their control are unlikely to venture into business. Risk-taking Propensity This is the tendency to choose more risky alternatives, the level of risk preference (low, ‘moderate, high) is thought to influence individuals to start business. Risk level is known to be specific to individuals due to differences in experiences, capital, resources, capability, ete, Successfull entrepreneurs tend to take moderate calculated risks. Creativity and Innovation Creativity is the-act of bringing something new into existence resulting in new products, new Processes. Entrepreneurs add value by using new ways of combining resources, create-new Products/processes, strategies, industries, new ways of organizing resources, Innovation is the process of converting opportunities into marketable ideas, Entrepreneurs are “Innovators because they use knowledge/information for creating new products/services and make them available to the market. Developing/Creating Entrepreneurial Attributes * Try to see something from a different perspective. * Challenge routine and custom * Observe others and copy + Experiment ¢ Exercise time management * See mistakes and failures as stops on the way to success * Identify yourself with successfit! people * Add value to everything you do + Expose yourself to challenging situations * Set both short and long term goals +. Finish what you start + Try to make things happen to yourself * Solve your own problems before seeking help * Feel proud about yourself and your work * Set times for completion of activities * Focus on leaming by doing * Consider different ways making an income ENG: AsHuU- HAND OUT 3: SMALL BUSINESS DEVELOPMENT Defi ion of a Small Business ‘A small business is defined in various ways by using terms: micro and small enterprises (MSE), small and medium scale enterprises (SMEs) interchangeably. The commonly used yardstick in categorizing small businesses include the total number of employees, total investment and sales turn over, Jn the context of Tanzania, micro enterprises are those engaging up to 4 people employing Gapital amounting up to Tsh. 5.0 million, The majority of miexo enterprises fall under the informal sector. Simall enterprises are mostly formalized undertakings engaging between 5 to 49 employees or with capital investment from TShs. 5 million to TShs.200 million, ‘Medium enterprises employ between 50 and 99 people or use capital investment from TShs.200 million to TShs,800 million. Large enterprises employ over 100 people or use capital investinent from above TShs.800 million + Table I: Categories of Enterprises in Tanzania Category Employees | Capital Investment in Machinery (IShs) Micro enterprise La Upto 5 million Small enterprise ]s49 Above 5 million to 200 million | Medium enterprise | 50-99 Above 200 million t 800 milifon | Large enterprise 100+ | Above 800 million Characteristics of Small businesses * Simple in organization structure ° Owner makes most decisions * Open communication at a persgnal levels + Employees do a variety of tasks Js Planning is primarily short term * Strong link between ownership and management Y © Low job security VY * High responsibility/accountability * Continuous problems in financial matters ve Flexible Y* Vulnerable * Decisions may be more subjective than objective © Less specialization 7 “6 Individual ideas/talents spotted and promoted : * , Privately owned/business owner cannot be separated from his/her business * Short decision making time * There are opportunities for cooperation Paid Employment And Self Employment Paid employment i Paid (wade) employment is the act of supplying some form of human labour to the production Process with the aim of getting remuneration. It is a type of employment where a person is employed in an organization public/private) for a specific monthly wage. Wage eamers Generally have little or no investment in the business they’ work for, The only form of investment Can be in form of insurance and provident fund where they (workers) contribute a minimum sum i) + There is job secufity for eniployees. This is covered in the labour laws which protect employees from employers’ unjust treatment, iii, Assurance of getting a uniform and pretlictable Salary regardless of whether the organization is working profitably or not. So there is minimal risk in terms of payment schedules. Employees have a potential for advancement based on how well their work performance is, how well they get along with the bogs and feliow workers, and whether the organization can give the employees opportunities o advance. There are some benefits accrued from being a wage employee, including paid holidays and vacations, maternity leave for females, sick leave, overtime, entitlement to pension and other social security funds at the end of employment period or death, ‘There are regular and fixed working hours. Working longer than the’ specified time leads, liability to overtime payments The employees do not bear a risk of losing income (in form. of capital) through business failure. Disadvantages of paid (wa 1ge) employment i vi ‘The work is organized in sucha way that every employee is fumished’ with responsibilities, rules and regulations. Employees are liable for punishrient if they fail to” Perform as required and are unable to comply Wwith the specified rules and regulations so there is no independence since the employees have to follow orders There is risk of losing job by being laid off, The employees do not have the right to any profit as they are not owners of the business and the income is fixed. ‘here is Hmitation of action, responsibility and decision making due to bureaucracy. This Hits personel freedom and professional growth of employees and makes it difficult to implement ideas 'nividual ability not easily recognized, . ‘There is high dependence on the employer. Self-Employment : | This is the type of employment where a person engages himself/herself in an economic activity | for gaining income in a profitable business, iii, v Aix. xi Xi Advantages of self-employment Being the boss and leader so enjoying the thrill of success, Being independent and experiencing pride in ownership. Deriving great satisfaction from offering a product or service which has a good market value and beneficial to the community, Implementation of own ideas: : . Uilizing @ unique skills related to modem technology as a personal initiative and ability * to respond to market opportunities, Dealing directly with people who are part of business stakeholders allows close business Contact on a personal basis which provides a good leaning ground for exchange of business information. Being better placed to cater for specific needs and tastes of specific ‘groups of customers Being creative Potential income is unlimited, , Owner can control work environment . Owner can give orders for implementation. Creation of jobs. 7 Disadvantages of self-employment Inherent management weaknesses due to lack of certain aspects of management skills Personally and also unavailability of adequate support services in different management areas, | Inadequate financial resources due to inability to raise funds required for capital for Proper establishment and/or operation of the business, Personal concerns which is exhibited in form of taking risks of possible business failure and its effect on oneself, family and gther stakeholders, 4 i Reasons for people to engage in self-employment: ns: There is a need to cope with a wide range of Independence versus dependence stakeholders ic. customers, employees, suppliers, tax-people, government authorities ete, most whom can dictate and/ or influence business operations, business status, and the marketability and. sale-ability of the products/service. So there is’ no complete independence because there is dependence on the stakeholders who have also to depend on the business. ‘There are long irregular hours of work. ‘There are broad responsibilities. Income is not stable or guaranteed, There are no fringe benefits Owner always involved in finances Hl ‘The future is uncertain‘due to perpetual changes in the business environment which is influenced by many factors such as the market trends, customer tastes, technological advancements ete. ‘The owner has to learn always Itis hard to delegate Involves a lot of paper work These reasons fall into two categories: The PUSHES and the PULLS. ‘The reasons that push people to go into business are: To utilize the skills and knowledge whith one possesses. To supplement income from salary for paying living expenses or invest in real estate To make a living and obtain the basic needs of life, ' To make move money so as to increase ov andor family wealth ; To engage oneself in an income generating activity due to lack of'fob placement after graduation. To do something one likes/enjoys most for personal satisfaction. o' Toengay ¢ oneself after retirement from a paid job or retrenchment * To continue with family background ie. inherit family business from parents or other close relatives. _* Ta develbp a common cause forthe family by creating Jobs for family members. be To avoid working for someone else. |* » To avoid|taking orders from other people, “The reasons tha ° To achie Pull people to go into business are: (© a specific status, fame and recognition in the society os. To utilize| the available resources, © To make xcess money, * To bea boss of oneself. * To ere which are required in the society/do something worthwhile : to the community. : To reap uhlimited profits = Tobe ales ider rather than a follower Experience shows that those who are pushed into business because of having no other option are not likely to go bj ‘yond an informal sector level. Those pulled into business are motiyated and decide to go into business voluntarily and they nommally go further in business. Stages of Business Development | Every business has to pass through various stages of development regardless of its size, These Stages include Start-up Phase, Survival Phase, Growth Phase and Stabilization Phase. Some _ businesses start fast, grow fast, and fail or succeed fast. Others start small and stay small, by _ design. Many small businesses start slowly, then build fast, grow faster, buy other companies, or “ get sold and bonded into larger organizations. Business Start-up Phase | Start-up phase is that phase during which a business comes into existence, The process begins {by acquiring motivation, finding jeneration business idea, validating the idea, identifying the’ Sources, ‘negotiating o get into business and birth ofthe business. In this process business -Fesources «Planning is carried out once a business idea is confirmed to be valid. Acquiring ‘Motivation (Shmulot FOrmmituend ) | So Finding the Idea : ee ‘Validating the Idea oe Identifying the Resources a Negotiating to get into Busihess | + ii, Acquiring motivation This is the process of finding the stimulus and commitment to pursue the objective of setting up a business. In this process it is important to assess and develop. one's Capabilities for setting up and running a business. Therefore there is a need to expose and familiarize oneself to entrepreneurial and managerial tasks and determine the rewards involved in setting up and running a small business, Finding the idea ® Business ideas come from: * Yourself guided by life/work experience, skills interests and hobbies : * —_ Discussions/brainstorming with ffiends and relatives‘family members * Copying other businesses . Utilizing available resources * Newspapers, radio, TV and trade fairs/exhibitions * Surveying to find out: Community needs not presently met," Inadequately met sub marketsidemands, Support needs of existing businesses in the are_e, contracting opportunities. Business Idea Validation : This is the act of justifying the strength of the business idea in terms of its viability, Practicablity and achievabilty when itis transformed into a business, The best method to

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