Course Title: Entrepreneurship and Small

Business Management

Academic Year: 2012/2013 (2005 E.C)

Semester: II

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Chapter 1: An overview
Chapter 2: Small Business Ownership
Opportunities
Chapter 3: Finding Sources of Financing
Chapter 4: Preparing a business Plan
Chapter 5: Legal issues of Small business
management

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 1.1. Introduction
* Hasbecome a popular subject universities because many young
graduates has found self employment a good opportunity
* Therefore, this course presents both the content and the process
of entrepreneurship and the skills required to become an
entrepreneur.

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* What is entrepreneurship?
* What is an entrepreneur?
* Why study entrepreneurship?
* What are the benefits of entrepreneurship?
* What are the limitations of entrepreneurship?

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* Anyone who want to lead companies need to
know how to back up ideas with numbers
* You need to learn the complex business
processes involved in commercialization
* You need to learn how to make trade-offs
among costs, benefits, price, markets, and
operations
* You learn how to adapt to uncertainty and
change
* You learn techniques for managing people
 1.2. Historical perspective of
Entrepreneurship
* Itis not a new phenomena , it has existed throughout
history.
* Thestart of exchanging goods and services was the root of
entrepreneurship.
* However, the rule of the game has been changed now
1.In the Middle Ages
* the
term entrepreneur was used to describe a person
managing large production projects
* the
person would not take any risks, but would merely
manage the project using the resources provided

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2. In the 17th century
*A person who entered into a contractual arrangement
with the government to perform a service or supply
stipulated products.
*Since the price is fixed, any resulting profits or losses
reflected the efforts of the entrepreneurs. He/she assumes
risk (the notion of risk was developed)

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3. Late 19th & early 20th centuries
*An entrepreneur is viewed from an economic perspective
*entrepreneurs were frequently not distinguished from
managers
*The entrepreneur organizes and operates an enterprise for
personal gain pays for material, land, professional services etc,
contribute his own initiative, skill etc in planning, organizing,
directing and controlling and assumes loss/gain. The net
residue goes to the owner.

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4. Middle of the 20th century
*The notion of an entrepreneur as an innovator
was established
*Revolutionize the pattern of production
exploiting an invention or more generally, an
untried technological possibility for producing a
new commodity or producing an old one in a new
way, opening a new source of supply of materials
or a new outlet for products, by reorganizing a
new industry.

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Entrepreneurship is….?

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*  To an economist, an entrepreneur is one
who brings resources, labor, materials, and
other assets in to combinations that make
their value greater than before, and also one
who introduces changes, innovations and a
new order.
*To a psychologist, such a person is typically
driven by certain forces- need to obtain or
attain something, to experiment, to
accomplish, or perhaps to escape authority of
others.

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*To one businessman, an entrepreneur
appears so a threat, an aggressive
competitor, where as to another
businessman the same entrepreneur may be
any ally, a source of supply, a customer, or
some one good to invest in.
*Capitalist philosophers see entrepreneurs as
one who creates wealth for others as well,
who produces jobs others are glad to get.
* Engineers?
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1. Entrepreneurship is the process of creating
something different with value by devoting
the necessary time and effort, assuming the
accompanying financial, psychological and
social risks and receiving the resulting
rewards of monetary and personal
satisfaction. (Hirsch, Robert)

1.3. Definitions

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2. Entrepreneurship is the dynamic process of creating
incremental wealth.
3. Dr. C.B. Gupta defines entrepreneurship
that it is the process of identifying
opportunities in the market place,
marshalling the resources required to pursue
these opportunities and investing the
resources to exploit the opportunities for
long term gains. It involves creating wealth
by bringing together resources in new ways to
start and operate an enterprise.
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In all most all the definitions of
entrepreneurship, there is agreement that
basic elements such as :
i) risk taking,
ii) initiative taking,
iii) organizing and reorganizing,
iv) vision,
v) wealth creation are involved.

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* Theterm entrepreneur comes form the French word
“entereprenede” and literally translated it means
“between taker” or “go- between”- “to undertake.”

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* Schumpeter viewed entrepreneurship as a force of
"creative destruction." and the entrepreneur as someone
who carries out "new combinations," thereby helping
render old industries obsolete.

* Established
ways of doing business/existing systems are
destroyed by the creation of new and better ways to do
them.

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* Businessexpert Peter Drucker (1909-2005) describe the
entrepreneur as someone who actually searches for
change, responds to it, and exploits change as an
opportunity.

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The following are few of the definitions:
1. Entrepreneurs are action-oriented, highly motivated
individuals who take risks to achieve goals.
2. Entrepreneurs are people who have the ability to see and
evaluate business opportunities, the ability to gather the
necessary resources to take advantage of them; and the ability
to initiate appropriate action to ensure success.

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3. Entrepreneur is “someone who perceives an opportunity
and creates an organization to peruse it with the
intention of being profitable.”
4. An entrepreneur is an “energetic, single minded” person
having mission and a clear vision he/she intends to create
out this vision a product or service that improves the lives
of million. (David Silver)

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The definition entrepreneur includes:
a) Decision making;
b) Using available resources in novel ways;
c) Action orientedness;
d) The ability to see business opportunities, the
ability to gather resources to take advantage of
them and the ability to take action; and
e) The ability to search for change, respond to it,
and exploit it.

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The entrepreneurial process consists of the following
phases:
1. Identifying and evaluating a business opportunity.
2. Developing the business plan.
3. Determining the resources required for the business and
4. Managing the resulting enterprise.
 

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What do you think are the potential benefits
and limitations of Entrepreneurship?

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1. Opportunity of gain control over your own destiny
2. Opportunity to reach your full potential
3. Opportunity to reap unlimited profits
4. Opportunity to contribute to society & be recognized for
your effort
5. Opportunity to do what you enjoy

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The opportunity to:
1.Create your own destiny
2.Make a difference
3.Reach your full potential
4.Reap impressive and unlimited profits
5.Contribute to society and to be
recognized for your efforts
6.Do what you enjoy and to have fun at it
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Anyone planning to enter the world of
entrepreneurship should be aware of its
potential drawbacks.
1. Uncertainty of income
2. Risk: Entrepreneurs face a number of
different types of risk. These can be grouped
into:
Financial risk
Career risk
Family and social risk
Psychic Risk
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3. Long hours & hard work
4. Lower quality of life until the business gets
established
5. High level of stress
6. Complete responsibility
7. Discouragement

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*.
These are factors necessary
Form new enterprise
 Desirable
to start a business.  Culture
 Subculture
 Family
 Teachers
 Peers
Change from present life –style  Possible
 Work environment
 Disruption
 Government
 Background
 Marketing
 Finance
 Role models

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*Discuss those factors that push or
pull individuals toward
entrepreneurial career.
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* Knowledge consists of a set or body of information
stored, which may be recalled at an appropriate time. It
includes:
•a business opportunity
• the market
• customers
• competitors
• production processes
• technical matters
• business management
• sources of assistance

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 * Skill is the ability to apply knowledge.

Technical Managerial

• Engineering • Marketing (including selling)

• Computing
• Carpentry
• Mechanics
• Catering
• Financial management
• Organization
• Planning
• Leadership
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 Traitis the total of peculiar qualities or characteristics
that constitutes personal individuality.

 Discussed below …

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1. Hard Working
2. Self-Confident
3. Builds for the Future
4. Profit-Oriented
5. Goal-Oriented
6. Persistent

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7. Copes with Failure
8. Responds to Feedback
9. Demonstrates Initiative
10. Willing to Listen
11. Sets own Standards
12. Copes with Uncertainty

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13. Committed

14. Builds on Strengths

15. Reliable and Has Integrity

16. Risk-Taker

17. locus of control

18. Self- Esteem

19. Information seeker

20. Need for achievement

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36
1. Childhood family Environment
*Specific topics in the family environment of the
entrepreneurs researched include birth order,
parents’ occupation and social status, and
relationship with parents.
2. Education
*Although a formal education is not necessary for
starting a new business, it does provide a good
background, particularly when it is related to the
field of the venture.
* 
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3. Personal value
4. Age
most entrepreneurs initiate their entrepreneurial careers
between the ages of 22 and 55.
5. Work experience
6. Sex structure (see table below)

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Factors. Men Women
1. Motivation  Derive to control their own  Job frustration and
destinies enthusiasm for new
venture
2. Source of  Investors, banks, personal  Rely on personal
finance saving savings
3. Background  Similar, except men are Little  Arts education
older than females , have
technical education
4. Support  Use outside advisors, spouse  Spouse first, friend
second second
5. Experience  Mfg, finance, construction,  Administrative
technical areas (service sector)
6. Personality  Similar, but male are more 
confident, less flexible, more
tolerant
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Creating jobs
Promoting free enterprise culture
Promoting healthy competition
Generating wealth to himself and others
Question: (who benefits from the wealth and how?
explain)
Spreading prosperity

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Ensuring innovation and creativity

Encouraging grassroots development

Improving social and community conditions

Promoting Growth

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Better Production Methods and Products
Identification of Business opportunities and
Markets
 Conservation of Natural Resources.
 Abolition of monopoly and Enhancement of competition
 Development of Complementary Goods Producers.
Complementary goods are products that are used together.
Example: Tea and sugar, car manufacturing company and car
repair shops.

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Increase in per Capita output and income
Generation of Foreign Currency
Better Utilization of Resources
Improvement of Business policies and Procedures
Example: Unity University vs education
policy
Positive Externalities
entrepreneur may develop infrastructure such as
streets, electricity and water – wells that will be
shared by the community as well.
Business Opportunity for Suppliers.
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* WHY WE ARE POOR? Is it because we do not
have the resources? Or is there anything else?
What shall we do?

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 END of chapter 1

Thank you for listening

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What is creativity?
* Creativity is a prerequisite for innovation
* Is a generation of ideas that result in improved efficiency or
effectiveness of a system

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What is Innovation?

• Producing something new

• Commercializing or extracting value from ideas
• Innovation is a transformation of creative ideas in to useful
application
• Innovation implies action, is a process of doing new things
• Schumpeter’s five types of innovation
– New product or substantial change in existing product
– New process
– New market
– New sources of supply
– Changes in industrial organization
• Incremental innovation = improvements on existing products
• Disruptive innovation = game changers

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