CHAPTER ONE

INTRODUCTION

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“It’s fine to celebrate success but it
is more important to heed the
lessons of failure.”
Bill Gates
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 I CREATE
I TAKE RISKS
I LIVE MY PASSION
I AM ENTREPRENEUR

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“Anything that won’t sell, I
don’t want to invent.” Thomas
Edison

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“When you cease to dream
you cease to live.”
-Malcolm Forbes

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“If you put Bananas and Money in front of monkeys, they will
choose Bananas because monkeys do not know that money
can buy more Bananas. If you offer job and Business to
people, they would choose job because most people do not
know that Business can bring more money than salaries.
Salary can make you living but profits can bring you a
fortune ” (Jack Ma)

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E.g.

• Who is this girl?

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Sole rebels

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 A concise and universally accepted definition has not yet emerged.
 The kind of entrepreneurial activity in a country is the reflection of the
economic development a country (GEM).
 Many people see entrepreneurship as an attractive career path.
Think about your friends and others you know.
 Probably, you are acquainted with at least one or two people who want
to become an entrepreneur—either now or at some point in the future.

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 The word entrepreneur derives from the French words entre, means to
“undertake”.
 The word was originally used to describe people who “take on the risk”
between buyers and sellers or who “undertake” a task such as starting a
new venture.
 An inventor creates something new.
 An entrepreneur assembles and then integrates all the resources needed
—the money, the people, the business model, the strategy, and the risk-
bearing ability—to transform the invention into a viable business.

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 Entrepreneurship can also be defined as an art of turning an idea into a
business.
 the process of creating something different and better with value
the dynamic process of creating incremental wealth
 a creative human act that builds something of value in pursuit of
opportunities.
 a force of “creative destruction” the process by which existing products,
processes, ideas and businesses are replaced with better ones.

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 Entrepreneurship involves innovation and untried technologies
 It requires devoting the necessary time and effort, assuming፡
- the accompanying financial,
- Psychic and social risk and
- Receiving the resulting rewards (money, personal satisfaction
and independence).
 From the above definition, we can understand that;
1) Entrepreneurship involves the creation of process.
i.e creating something new of value

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2) Entrepreneurship requires the devotion of the necessary time and
effort.
3) It involves the rewards of being entrepreneur .
i.e *Money-for profit oriented entrepreneurs
* independence –the most important
* personnel satisfaction
4) Assuming necessary risk is the final aspect of entrepreneurship

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 It is a process of identifying and pursuing opportunities.
 Ability to utilize opportunities to gainful ends.
Creativity and Innovation (‘creative destruction’,
revolutionizing, transforming , introducing radical or
incremental approaches).
The process of creating value
 The propensity of calculative risk taking

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 Entrepreneur: one who organizes, manages, and assumes the risks of a
business or enterprise.
 is an innovator or developer who recognizes and seizes opportunities,
converts those opportunities into workable/ marketable products, adds
value through time, effort, money or skill, assuming the risks to
implement those ideas and realizes the reward from these efforts.
 Engineering (or Technology) Entrepreneur: One who organizes,
manages, and assumes the risk of an engineering (or technology) business
or enterprise.

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 Some of the characteristics which are commonly exhibited by successful
entrepreneurs are:
1. Need for Achievement: a desire to succeed
 individuals with a low need for achievement are those who seem to be
contented with their present status.
2. Risk Taking: financial, social, or psychological/only calculated risks.
3. Hard Working: put a lot of physical and mental effort in to developing
their ventures.

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 The success of an entrepreneur demands on the ability to work long
hours for sustained periods of time.
4. Innovation: specific tool of entrepreneurs, the means by which they
exploit change as an opportunity
 lies at the heart of entrepreneurship.
 A successful entrepreneurial venture is usually based on a significant
innovation.

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Innovation can be:
 technological innovation,
In offering a new service
 in the way something is marketed or distributed,.
In the way the organization is structured and managed,
In the way relationships are maintained between organizations

5. Self Confidence: believe in themselves and the venture they are

pursuing.
 feel that they can meet the challenges that confront them

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6. Locus of Control: belief that their future is within their control and
that other external forces will have little influence.
 a belief that they can make things come out the way they want.
7. Good health: physically resilient and in good health
8. Personal Values: kindness, conformity, creativity, resource seeking and
ethics.
9. Sense of urgency: never – ending sense of urgency to develop their
ideas.

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10. Comprehensive Awareness: can comprehend complex situations that
may include planning, strategic decision making, and working on multiple
business ideas simultaneously.
11. Realism: the practice of accepting situation as it is and deal with them
accordingly.
12. Conceptual Ability: ability to identify relationships quickly, even in
complex situation.
13. Status Requirements : they like the business they have built to be
praised.

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 find their satisfaction of status needs in the performance of their
business.
14. Emotional Stability: self- control and can handle business pressures.
15. Attraction to challenges and Competition: attracted to challenges
and competition by nature.
16. Self- Esteem: have a high sense of one’s own self-worth.
17. Screening for opportunity
18. Goal orientation: have a relentless drive to accomplish goals.
19. Optimism – seeing the positive future

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20. Courage-
21. Tolerance to Ambiguity: not bothered by ambiguity and uncertainty.
Top 10 Characteristics Today’s Entrepreneurs Share
Recognize and take advantage of opportunities
Resourceful

Creative

Visionary

Independent thinker

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Hard worker
Optimistic

Innovator

Risk taker
Leader

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Competence: is combination of knowledge, skills, and appropriate motives
or traits that an individual must possess to perform a given task.
The 3 clusters include:
1. Achievement motivation cluster (composed of 5 competencies)
2. Planning cluster (composed of 3 competencies)
3. Implementing cluster (composed of 2 competencies)

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1. Achievement motivation competencies
i. Risk taking propensity : extent of risk friendly, take action to control risk
and control outcomes.
ii. Opportunity seeking and initiatives: ability to proactively identify
opportunities and take initiatives to optimize.
iii. Persistence: the courage to face obstacles and the capacity to overcome
it.
iv. Commitment to the work and contract: extent of exerting personal
sacrifices and extraordinary efforts to keep promises, meet deadlines

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v. Demand for efficiency and quality: find ways to do things better, faster
and cheaper.
2. Planning competencies
i. Goal setting: proactive move, setting meaningful and challenging goals.
ii. Information seeking: personal seeking information from clients,
suppliers, competitors.
iii. Systematic planning and monitoring: create time bounded tasks; revise
plans in light of feedback.

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3. Implementation competencies
i. Persuasion and networking: use deliberate strategies to influence and
persuade others
ii. Independence and self confidence: seek autonomy from the rule or
control of others.

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 A person decides to do something either because something in that
activity attract him or he takes it as option.
 Motivations for venturing can be grouped in to two broad categories:
pull factors and push factors.
I. Pull Factors: when individuals are attracted towards small business
ownership by positive motive.
 Important pull factors are:
 Independence: "Being my own boss" is a powerful motivator for many
entrepreneurs.

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The need for power or control
 Need for Achievement: a desire to excel and achieve a particular goal.
 Profit: enticed by the hefty profits of a highly successful business

 Role Models: watching others' successes drive individuals to start

their own business

 People influence
II. Push Factors: forced in to founding a new business
 Entrepreneurship by making the conventional option less attractive.

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Some of the push factors include:
 Job dissatisfaction: highly dissatisfied with their current jobs.
 Job Insecurity: a view that running own business is more secure
alternative.
 Personal and professional Growth: the limited growth opportunity in
conventional jobs.
 Unemployment- joblessness
 Retirement
 Boredom

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Which factors are pull and push?

Source: Dun & Bradstreet 19th Annual Small Business

Survey, 2000
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a. Based on source of capital

1. Private entrepreneurship: is carried out by an individual on

the basis of his or her own property
2. Collective entrepreneurship: is carried out by two or more
entrepreneurs on the bases of collective property, that is,
capital contributed by the entrepreneurs.

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b. Based on reason for start up
1. Opportunity driven entrepreneurship: starts a company because he or
she sees clear market opportunities to exploit.
2. Necessity driven entrepreneurship: goes into business to create self
employment and his or her primary concern is survival.
opportunity driven entrepreneurs are more growth oriented than
necessity driven entrepreneurs.

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c. Business idea generation
1. Technological: invents a new technology to produce new products or
new processes for producing old products.
2. Geographical: moves technology, the products and processes that goes
with it from one place to another.
3. Sociological: finds a new situation in which to sell an old product.

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a. Entrepreneurial decision process
1. The decision to leave a present career or life-style
2. The decision that an entrepreneurial venture is desirable, and
3. The decision that both external and internal factors make the Venture
possible.

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 Form new Enterprise
Desirable
Change from present life Culture
 Subculture
style: Family
Work environment Teachers
Peers
 Disruption Possible
Government
Subculture
Culture of saving Background
Unity and cooperation Marketing
Ethnic solidarity Finance
 Role model

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Entrepreneurial process in general involves the following steps
1. Deciding to be an entrepreneur
 Be their Own Boss
 Pursue their Own ideas
Realize Financial Rewards
2. Developing successful business idea
 Identify opportunity:

Observing trends
Solving problems

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 Finding gaps in the market place
3. Moving from an idea to creating entrepreneurial firm
4. Managing and growing the entrepreneurial firm
b. Challenges of Entrepreneurial Process
1. Management deficiency: deficiency is one of the biggest reasons for
poor performance of small scale units.
2. Limited access to finance: financial inadequacy
 Limiting factors in accessing business finances includes:
 New is too risky: risky investment
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No preferential interest rates: unable to afford the high interest rates
charged by banks or others.
 Longer loan processing time
 Lack of collateral demanded by lenders
3. Technological forces: the most abrupt and unpredictable part of an
entrepreneurial environment.
4. Limited access to market: limitations on penetrating and servicing
their markets.
5. Political factors: changes in regulation, directives, and laws

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1. Creation of Job Opportunities
2. Better Production Methods and Products: better production methods in
terms of processing speed, quality of output, energy consumption
3. Identification of Business opportunities and Markets: keep their eyes
open to identify and exploit market opportunities.
4. Conservation of Natural Resources: invent production methods that
consumed less energy and raw materials.
5. Abolition of monopoly and Enhancement of competition: often bring an
end to monopolies that have existed for long.

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6. Development of complementary goods products that are used together.
7. Increase in per capital output and income
8. Generation of foreign currency
9. Better utilization of resources: enable to use waste or useless resources.
10. Improvement of business policies and procedures: developing new
business systems, laws, rules and policies.

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11. Positive Externalities: good (road constructed) or bad (pollution)
byproducts of a business.
12. Business Opportunity for Suppliers:

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 Myth 1: Entrepreneurs are Doers, Not Thinkers
 Myth 2: Entrepreneurs are Born, Not Made
 Myth 3: Entrepreneurs are Always Inventors
 Myth 4: Entrepreneurs are Academic and Social Misfits
 Myth 5: Entrepreneurs Must Fit the “Profile”
 Myth 6: All entrepreneurs Need is Money
 Myth 7: All Entrepreneurs Need is Luck
 Myth 8: Ignorance is Bliss for entrepreneurs
 Myth 9: Entrepreneurs Seek Success but Experience High failure

Rates
 Myth 10: Entrepreneurs are Extreme Risk Takers (Gamblers)

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