ENTREPRENEURSHIP AND SMALL BUSINESS
CHAPTER 1. THE FOUNDATIONS OF ENTREPRENEURSHIP
Learning Objectives:
1. Define the role of the entrepreneur in business in Egypt and around the world.
2. What is an Entrepreneur?
3. Describe the entrepreneurial profile and evaluate your potential as an entrepreneur.
4. Describe the benefits of entrepreneurship.
5. Describe the drawbacks of entrepreneurship.
6. Explain the cultural diversity of entrepreneurship.
7. Put failure into the proper perspective.
8. Explain how an entrepreneur can avoid becoming another failure statistic.
The world of the Entrepreneur:
Around the world growing numbers of people are realizing their dreams of owning and
operating their own business. Entrepreneurship is thriving and is essential to a strong global
economy. Downsizing by large companies has resulted in a new population of
entrepreneurs. Today small companies have the competitive advantage as they can move
faster to exploit market opportunities and use modern technology to quickly create products
and service that once took years.
❖ Entrepreneurship is a key driver of economic growth for Egypt and around the world.
❖ Egyptian society’s perception of entrepreneurship is particularly high and continues
to grow.
❖ More than 73 percent of Egyptians think entrepreneurship is a good career choice.
❖ Over the past decade, Egypt has witnessed an entrepreneurial revolution, with a
growing number of support organizations, emerging policy focus, and numerous
government and donor support programs.
❖ The Global Entrepreneurship Monitor (GEM) report states that more than 42 percent
of early-stage entrepreneurs are "necessity entrepreneurs," meaning they started a
new venture due to a lack of other employment opportunities.
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❖ One of the report’s important findings is that only one out of every four entrepreneurs
in Egypt is a woman, which is significantly lower than the global average. Young
adults between the ages of 25-34 are also the group most likely to undertake an
entrepreneurial venture.
2. What is an Entrepreneur?
An entrepreneur is one who creates a new business in the face of risk and uncertainty for achieving profit
and growth opportunities and assembles the necessary resources to capitalize on those opportunities.
Although many people come up with great business ideas, most of them never act on their ideas.
Entrepreneurs do!
3. Characteristics of an Entrepreneur:
1. Desire for responsibility. Entrepreneurs feel a deep sense of personal responsibility for the outcome of
the ventures they start. They prefer to be in control of their resources, and they use those resources to
achieve self-determined goals.
2. Preference for moderate risk. Entrepreneurs are not wild risk takers but are instead calculated risk
takers. Entrepreneurship is not the same thing as throwing darts and hoping for the best. It is about
planning and taking calculated risks based upon knowledge of the market, the available resources or
products, and a predetermined measure of the potential for success. In other words, Successful
entrepreneurs are not as much risk takers as they are risk eliminators, removing as many obstacles to the
successful launch of their ventures as possible. One of the most successful ways of eliminating risks is to
build a solid business plan for a venture.
3. Self-reliance: Entrepreneurs must ill multiple roles to make their companies successful. Especially in
the early days of a start-up.
4. Confidence in their ability to succeed. Entrepreneurs typically have an abundance of confidence in
their ability to succeed and are confident that they chose the correct career path.
5. Determination: the ability to focus intently on achieving a singular, long-term goal. It entails a
combination of passion and perseverance. Successful entrepreneurs demonstrate high levels of
determination, especially in the face of challenging circumstances.
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6. Desire for immediate feedback. Entrepreneurs enjoy the challenge of running a business, and they like
to know how they are doing and are constantly looking for feedback.
7. High level of energy. Entrepreneurs are more energetic than the average person. That energy may be a
critical factor given the incredible effort required to launch a start-up company. Long hours and hard work
are the rule rather than the exception, and the pace can be grueling.
8. Future orientation (serial entrepreneurs.)
Entrepreneurs have a well-defined sense of searching for opportunities. They look ahead and are less
concerned with what they did yesterday than with what they might do tomorrow. Not satisfied to sit back
and revel in their success, real entrepreneurs stay focused on the future.
Entrepreneurs see potential where most people see only problems or nothing at all, a characteristic that
often makes them the objects of ridicule (at least until their ideas become huge successes). Whereas
traditional managers are concerned with managing available resources, entrepreneurs are more interested
in spotting and capitalizing on opportunities.
Opportunity entrepreneurs, those who start businesses because they spot an opportunity in the
marketplace, compared to necessity entrepreneurs, those who start businesses because they cannot find
work any other way. Serial entrepreneurs, those who repeatedly start businesses and grow them to a
sustainable size before striking out again, push this characteristic to the maximum. The majority of serial
entrepreneurs are leapfroggers, people who start a company, manage its growth until they get bored, and
then sell it to start another. A few are jugglers (or parallel entrepreneurs), people who start and manage
several companies at once.
9. Skill in organization. Building a company "from scratch" is much like piecing together a giant puzzle.
Entrepreneurs know how to put the right people together to accomplish a task. Effectively combining
people and jobs enables entrepreneurs to transform their visions into reality.
10. Value of achievement over money. One of the most common misconceptions about entrepreneurs is
that they are driven wholly by the desire to make money. To the contrary, achievement seems to be
entrepreneurs' primary motivating force; money is simply a way of "keeping score" of accomplishments-a
symbol of achievement. What drives entrepreneurs goes much deeper than just the desire for wealth.
Economist Joseph Schumpeter claimed that entrepreneurs have "the will to conquer, the impulse to fight,
to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success
itself." Entrepreneurs experience "the joy of creating, of getting things done, or simply of exercising one's
energy and ingenuity.
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Other characteristics of entrepreneurs include:
• High degree of commitment
• Tolerance for ambiguity
• Creativity
• Flexibility
• Resourceful.
• Willingness to work hard
• Tenacity
Entrepreneurs are not of one mold; no one set of characteristics can predict who will become
entrepreneurs and whether or not they will succeed. Indeed, diversity seems to be a central characteristic
of entrepreneurs. Anyone, regardless of age, race, gender, color, national origin, or any other
characteristic, can become an entrepreneur (although not everyone should). There are no limitations on
this form of economic expression. Entrepreneurship is not a mystery; it is a practical discipline.
Entrepreneurship is not a genetic trait; it is a skill that most people can learn. It has become a very
common vocation.
4. The Benefits of Entrepreneurship
The primary benefits entrepreneurs enjoy include the:
• Opportunity to Create Your Own Destiny
• Opportunity to Make a Difference. entrepreneurs are starting businesses because they see an
opportunity to make a difference in a cause that is important to them.
Known as social entrepreneurs, these business builders seek innovative solutions to some of
society's most vexing problems. They use their skill not only to create profitable business ventures
but also to achieve social and environmental goals for society as a whole. Their businesses often
have a triple bottom line that encompasses economic, social, and environmental objectives.
These entrepreneurs see their businesses as mechanisms for achieving social goals that are important
to them as individuals.
• Opportunity to Reach Your Full Potential
• Opportunity to Reap Impressive Profits
• Opportunity to Contribute to Society and Be Recognized for Your Efforts
• Opportunity to Do What You Enjoy and Have Fun at It
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5. The Potential Drawbacks of Entrepreneurship
With these potential rewards, entrepreneurship also presents risk and uncertainty.
Entrepreneurs may experience:
• Uncertainty of income: The entrepreneur is the last one to be paid, as employees must
be paid first. While it is possible for an entrepreneur to earn more working for
themselves, their may end up earning less.
• Risk of losing their entire investment
• Long hours and hard work
• Lower quality of life until the business gets established
• High levels of stress: Refer to the next Figure for Sources of Stress for Small
Business Owners
• Complete responsibility
• Discouragement
Sources of Stress for Entrepreneurs
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7. The Cultural Diversity in Entrepreneurship
You will find entrepreneurs in virtually every walk of life including:
• Young Entrepreneurs
• Women Entrepreneurs
• Immigrant Entrepreneurs
• Home-Based Businesses
• Family Businesses: one that includes two or more members of a family with financial control of the
company.
• Copreneurs: entrepreneurial couples who work together as co-owners of their businesses.
• Corporate Castoffs: Those individuals who are unemployed and are highly educated and skilled,
and had corporate executive Jobs. They have extensive on-the-job experience and are dislocated
workers due primarily to corporate downsizing.
• Corporate Dropouts: Executives who leave the corporate to pursue their own dreams and
aspirations by starting their own businesses.
• Retiring baby boomers
8. The Ten Deadly Mistakes of Entrepreneurship
1. Management mistakes
• The manager lacks the ability to operate a small business.
2. Lack of experience
• Many owners start businesses in industries in which they have no experience.
3. Poor financial control
Many owners start with too little money and with little or no understanding of financial
spreadsheet applications.
4. Weak marketing efforts
5. Failure to develop a strategic plan
• The lack of a strategic plan to guide the business in the long run.
7. Poor location
• Owners who choose a business location without proper analysis, investigation, and
planning often fail. Too often, owners seek “cheap” sites and locate themselves
straight into failure.
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8. Improper inventory control
• Although inventory is typically the largest investment for the owner, inventory control
is one of the most neglected duties.
9. Incorrect pricing
9. Putting Failure into Perspective
Entrepreneurs recognize that failure is a natural part of the creative process. Successful entrepreneurs have
the attitude that failures are simply stepping stones along the path to success, and they refuse to be
paralyzed by a fear of failure.
• Always look to turn a negative situation into a positive opportunity.
• Have no fear of failure and be sure to have a contingency plan.
• The only people who never fail are those who never do anything or never attempt anything new.
The successful entrepreneur understands the meaning of these clichés and knows how to deal
with adversity in a proactive and positive manner.
10. How to Avoid the Pitfalls
Entrepreneurs can employ several general tactics to avoid pitfalls.
1. Know your business in depth.
2. Develop a solid business plan in writing.
3. Manage financial resources.
4. Understand financial statements.
5. Learn to manage people effectively.
6. Keep in tune with who they are.
Conclusion
Entrepreneurs:
◼ Are important parts of the free enterprise system.
◼ Are a diverse and talented group of people.
◼ Are able to enhance the profitability of their businesses through acquiring additional knowledge
and experience.
