Notes 4

More Concepts/Information about the Entrepreneur.

Some people say that there is a specific psychological or motivational theory in
entrepreneurship, but that is not true. However, some entrepreneurs have different
opinions in achieving success in new ventures or enterprises such as talent and skills.

The Psychological Theory of Dr. McClelland and Dr. Atkinson

This theory explains entrepreneurial behavior. The theory states that people are
motivated by three principal needs:

1. Need for Power - is an urge to control others: to be able to influence them and make
them do things which perhaps they would not have done if left to themselves.

McClelland identified four stages within the power orientation:

1. Drawing inner strength from others - being a loyal follower and serving the power
of other people.

2. Strengthening oneself - trying to dominate situations.

3. Self-assertiveness - trying to manipulate situations so as to use other people to

achieve one‘s own target.

4. Acting as an instrument of higher authority - identifying with some organizations

and employing the methods learnt in stages 2 and 3 but now being able to claim formal
legitimacy.

2. Need for Affiliation - concerns the desire to be associated with specific people and
groups, to have a greater sense of belonging and place. It can play a role in variety of human
interactions and in the formation of bonds and friendships. A low need of affiliation can be
part of a more independent personality. People who do not feel a strong desire to affiliate
with others may have difficulty finding support.

3. Need for Achievement - is the urge to excel, to accomplish in relation to a set of

standards, to struggle to achieve success. The individuals with high achievement needs are
highly motivated by competing and challenging work. They look for promotional
opportunities in job. They have a strong urge for feedback on their achievement.

The Entrepreneurial Reasoning

Some people say entrepreneurs are born, not made. Others say it‘s all in the genes. The
truth probably lies somewhere in the middle. Some people say it‘s all about starting a
company, that you‘re not an entrepreneur unless you‘re your own boss or start something
from nothing.

Both have a germ of truth. But both these ideas miss an important point.
Entrepreneurial is not about whom you are - a noun - or starting a company - a verb.
Entrepreneurial is an adjective.

In this chapter, we will discuss more information about entrepreneur, innovator,

promoter, and administrator. We will discuss also the concept of apprenticeship and some
experiences of some people who become an apprentice. Lastly, the myths about
entrepreneurship.

Entrepreneur, Inventor, Promoter, and Administrator

Entrepreneur knows the management skills, business know-how, and sufficient

contacts. How is it possible? Let see the information about it.

First, Entrepreneur is a person who organizes and directs a business enterprise,

assumes all the risks for the sake of profit. The person means by representation by law or by
natural, a human. The word “organizes” means assigning all the workers to their duties. The
“directs” mean is leading a people to their task to make it right. The “business” means a
trade of products. The “enterprises” are company. The word “assumes” are to take
everything to make it real and beneficial. At last, the “risks” that you do not know what is
going to happen. These are the tidbits concept of being entrepreneur.

Now let’s talk about the skills.

1. Interpersonal skills - a successful entrepreneur will have to work closely with people. This
is where it critical to be able to build great relationships with his team, customers, suppliers,
shareholders, investors, and more. Some people are more gifted in this area than others but
fortunately, he can learn and improve these skills. The types of interpersonal skills include
leadership and motivation, communication skills, listening, personal relations, negotiation,
and ethics.

2. Creative and Critical Thinking Skills - an entrepreneur needs to come up with fresh ideas,
and make good decisions about opportunities and potential projects. Many people that a
person either born creative or not. However, creativity is a skill that can develop for an
individual to invest time and effort.

3. Management Skills - entrepreneur should know how on to manage his time, to make a
plan, evaluate the potential of the employees, finding and keeping customers, leads in sales,
review all financial statement, and last understanding all aspects of how his business
operates. Entrepreneurs must be knowledgeable about labor, and more.

Second, Innovator. Innovator is a person or an organization who is one of the first to

introduce into really something better than before. And another one is a person who creates
something from something. There are five discovery skills of innovators:

1. Associating to people to synthesize and organize novel inputs. Individuals with

strong discovery skills are able to make connections across seemingly unrelated questions,
problems, or ideas.

2. Asking provocative questions to challenge the status quo.

3. Observing the world as an anthropologist would to detect new ways of doing

things.

4. Networking with people who are in various walks of life and who come from
different viewpoints to gain radically different perspectives

5. Experimenting relentlessly to test new ideas and try out new experiences.

But some people say that innovators are also aadaptors. Check these comparisons.
1. Adaptors seek better solutions. Innovators seek different solutions.

2. Adaptors characterized by precision, reliability, discipline, and conformity. Innovators

have seen as undisciplined, thinking, imaginatively approaching tasks.

3. Adaptors are seen as sound, safe, and dependable. Innovators have seen as unsound,
impractical, often shocks the adaptor.

4. Adaptors detailed work oriented. Innovators can only handle detail work for short time.

5. Adaptors like structure. Innovators comfortable with lack of structure.

6. Adaptors rarely challenge rules. An innovator often challenges rules with little respect for
custom.

Third, promoter. Promoter is a person who makes things knows. He is a person who
introduces the particular products to the society. The skills of promoter are good in talking,
persuading, aware of other‘s reaction, active listening, critical thinking, coordination, always
motivated, and how a system should work and how changes in conditions, operation, and
the environment will affect outcomes.

Lastly, the Administrator. Administrator is an occasionally the title of the general

manager or company secretary who reports to a corporate board of directors. The
administrator has functions:

1. Planning - is deciding in advance what to do, how to do it, and who should do it.

2. Organizing - involves identifying responsibilities, grouping, them into departments or

divisions, and specifying organizational relationships

3. Coordinating - synchronizes the elements of the organization and must take into account
delegation of authority and responsibility and span of control within units.

4. Directing - is leading people in a manner that achieves the goals of the organization.

5. Review - is monitoring function that evaluates quality in all areas

6. Creating output - includes all of the processes that create the product that the business
sells.

By that information help us to understand who and what the entrepreneur is and differ
from other positions when it comes to business. Always sure that knows first the thing
before doing it.

ENTREPRENEURIAL APPRENTICESHIP

In many succession situations, founders are extremely interested in ensuring the

continuation of the firm that they have created. They do not just want a sale that only has
financial benefits, although they are very interested in receiving those benefits. They are
also concerned that a strategic sale, to a competitor for example, will result in the
destruction of the unique value that they spent their life creating, as it gets merged in
another entity.
 So when no entrepreneurs can be found that are ready, willing and able to buy the
business outright and maintain its independence and success, what is there to do?

Apprenticeship is the answer. Entrepreneurial apprenticeships can be applied in other

ways. Apprentice can be utilized by existing entrepreneurs to pursue specific untapped
opportunities in their business that neither they nor any of their people have the time or the
skill to develop. Of course, an apprenticeship situation requires the entrepreneur to take an
active role in leading the apprentice through the start-up process as well as in developing
their skill.

But some cases, young entrepreneurs at the aged of 25 are already achieving a
succession in business and sometimes are not. So there is a problem that do older
entrepreneurs or young entrepreneurs have the greater advantage?

Statistically, older entrepreneurs have the advantage. However, there are unique
advantages to starting a business at every age.

Forbes contributor Liz Kammel gives some interesting perspective in her recent article
Start A Company When You’re 25–Not When You’re 52. Liz points out that the younger
entrepreneur may have the greater advantage in many respects:

1) You’re already fairly poor,

2) Energy and motivation will never be higher and

3) You have no fear about challenging the “status quo.”

All the great points. However, Liz cautions that if a young founder’s company succeeds
in qualifying for a large Series A or B round of funding, the VC will most likely replace the
entrepreneur with a more seasoned executive.

Consider this finding as well – The Kauffman Ewing Institute posted recent data on how
5,000 start-ups launched in 2004 have fared over time. The report says “firms surviving
through 2008 were much more likely than firms that exited over the period to have primary
owners older than age 45.” Of the 5,000 start-ups in the study, 48 % were started by
founders who were 45 or older. However, a full 64% of the surviving companies were
headed by entrepreneurs in the 45-and-up group. This is a fairly surprising result. Kauffman
report: “Previous industry experience and start-up experience had less impact on firm
survival prospects than did owner age.”

In a recent interview with US News, Dennis Ceru, an Adjunct professor at Babson

College in Wellesley, Mass, also noted that older people not only have a great deal of
business experience, they also tend to have more financial resources than younger
entrepreneurs.

Ceru notes there are many tales of younger business successes in which entrepreneurs
didn’t have the experience to know where the barriers to success would be located, and
overcame obstacles they didn’t know existed when they began. In contrast, he notes that
older entrepreneurs often have extensive business connections that help them anticipate
and bypass such barriers rather than frontally assaulting them. The result in both cases is
success, but the route to achieving it is quite different.
 There is ample evidence that older entrepreneurs tend to be more successful. For
example, VivekWadhwa, a Duke University researcher worked with the Kauffman
Foundation in 2009 to explore the anatomy of a successful start-up founder. That survey of
more than 500 start-ups in high-growth industries showed that the average founder of a
successful company had launched his or her venture at the surprisingly high age of 40. The
study also found that people over 55 are almost twice as likely to launch high-growth start-
ups as those aged 20 to 34.

The term “high growth” is the key. 2010′s top two fastest-growing tech start-ups,
according to Forbes, were First Solar, founded by a 68-year old, followed by Riverbed
Technology, co-founded by entrepreneurs who were 51 and 33 at the time. So the data
seems to be showing that older entrepreneurs are starting a greater number of companies–
and in particular, are starting a greater number of high growth companies—and their
companies have a significantly higher statistical chance to survive.

However, we should also take a look at the kinds of companies young entrepreneurs
tend to launch. A recent Fast Company article by author Rob Salkowitz notes that “the kinds
of businesses founded by young entrepreneurs make a much bigger impact when they
succeed, and leave a much lighter mark when they fail.” Salkowitz appears to be referring to
the two kinds of companies we equate most fully with younger entrepreneurs: 1) smaller
firms launched with very little capital—statistically many of these fails, but when they do,
they result in only a few lost jobs and little money is lost, or 2) the no-holds-barred kind of
companies like Microsoft, Amazon, Google, Twitter or Facebook. Each of these companies
was founded by entrepreneurs younger than 35. Even with the stress of situations such as
Facebook’s rocky IPO, there is no doubt these companies are succeeding and they are
companies that are changing the world.

So when it comes to starting a new business, who has the greater advantage? Statistics
continue to favor the experienced entrepreneur—however, who says you can’t experience
the best characteristics of both? A younger entrepreneur, paired with a more experienced
co-founder or mentor, could potentially tap the advantages of both generations.

It’s also important to remember that a more seasoned executive is not the same thing
as a seasoned entrepreneur. Consider the older executives starting businesses for the first
time either out of necessity (due to layoffs or insufficient funds to move into retirement) or
out of the desire to fulfill a personal dream. They may have greater financial resources than
a younger founder, and a greater network of business resources to turn to, however, in a
very real sense these individuals are also “young entrepreneurs” as they are moving into the
challenging arena of start-up business for the very first time.

At every age, entrepreneurs need to rely on each other and on an increasingly strong
web of mentors and resources to help them succeed. Regardless of the statistics, I, for one,
am preparing my own adult children as they graduate college that regardless of their fields
of study, they should hone their entrepreneurial skills. We should do all in our power, as a
society, to help entrepreneurs at every age and stage to succeed. Our economy and its
future jobs will depend heavily on their success.

MYTHS ABOUT ENTREPRENEUR

So many myths are in about entrepreneur but the following information are most
common myths about them.

1. Challenges and Risks

Entrepreneurs are often thought of in terms of the risk they assume. Even the dictionary
describes an entrepreneur as one who assumes business risks. However, like all prudent
business people, entrepreneurs know that taking high risks is a gamble. Entrepreneurs are
neither high nor low risk takers. They prefer situations in which they can influence the
outcome, and they like challenges if they believe the odds are in their favor.

They seldom act until they have assessed all the risks associated with an endeavor, and
they have an innate ability to make sense out of complexity. These are traits that carry them
on to success where others fail.

2. Entrepreneurs Are Born

Many people believe that entrepreneurs possess innate, genetic talents. However,
experts generally agree that most entrepreneurs were not born; they learned to become
entrepreneurs. The recent proliferation of college and university courses on the subject
supports this point. Entrepreneurship is currently being successfully taught.

3. Money Motivation

Any successful entrepreneur will tell you that starting a business is not a get-rich-quick
alternative. New businesses usually take from one to three years to turn a profit. In the
meantime, you will do well to break even. During the business start-up stage, entrepreneurs
do not buy anything they do not need, such as fancy cars. Most drive junk cars and use their
surplus money to pay off debt or reinvest it in the business. Their focus is on creating a
company with a strong financial base for future expansion.

4. Personal Life

All successful entrepreneurs work long hours, which cuts into their personal life.
However, long working hours are not unique to entrepreneurs. Many corporate managers
and executives work well beyond the average forty-hour work week. The primary difference
between the entrepreneur and his or her corporate counterpart is schedule control. In the
corporate world, you may not have control over your schedule. If some higher-level
manager calls a Saturday meeting, you've got no choice but to be there. Entrepreneurs don't
mind working sixty- to seventy-hour weeks, but they will do everything they can to preserve
their private time. They schedule important meetings, during the week so that they can have
weekends off for their personal life, which is very important to them.

5. High-Tech Wizards

We are all aware of a few "high-tech" entrepreneur wizards, such as Microsoft's Bill
Gates, who have made it. Media attention overplays the success of these few high-tech
entrepreneurs. Only a small percentage of today's personal businesses are considered high
tech, and what was considered high tech just a few years ago is not considered high tech by
today's standards.

It takes high profit margins, not high tech, to make it as an entrepreneur. One has only
to look at the recent problems that have plagued the computer industry to understand this
basic principle. High-tech personal computers did very well when they made high profit
margins. The industry went into a nose dive when profits fell.

6. Loners and Introverts

Initially, entrepreneurs might work alone on a business idea by tinkering in the solitude
of their garage or den. However, the astute entrepreneur knows that he or she must draw
on the experience and ideas of others in order to succeed. Entrepreneurs will actively seek
the advice of others and will make many business contacts to validate their business ideas.
The entrepreneur who is a loner and will not talk to anybody will never start a successful
business.

7. Job Hoppers

A recent study of successful entrepreneurs showed that most of them worked for a
large corporation for a number of years before they started their own business. In every
instance, they used the corporate structure to learn everything they could about the
business they intended to establish, before they started. Entrepreneurs are not job hoppers.

8. Venture Capital Users

Entrepreneurs know that venture capital money is one of the most expensive forms of
funding they can get. Consequently, they will avoid venture capitalists, using them only as a
last resort. Most entrepreneurs fund their business from personal savings or by borrowing
from friends or lending institutions.

9. Deceptive Individuals

Some believe that to make it as an entrepreneur, you have to be deceptive and step on
anybody who gets in your way. On the contrary, this mode of operation doesn't work for the
entrepreneur. The truly deceptive entrepreneur will not be able to seek help from others or
retain suppliers or customers. He or she will ultimately fail.

10. Limited Dedication

That entrepreneurs are not dedicated to any one thing is a myth. Dedication is an
attribute that all successful entrepreneurs exhibit. They are dedicated to becoming their
own boss. To this end, they'll conduct extensive research campaigns into the advantages and
disadvantages of their business ideas in their dedicated drive to start a business.

Entrepreneur’s Creed

Entrepreneurs want success and they are responsible for that. so, they are more open-
minded to all things when it comes to management. The following are the entrepreneur's
creed.

1. I will not be ashamed of failure.

 You will remember that failure is part of the human experience and that you cannot
have great success without tasting some failure. You will choose to see failure as a step in
the refining process--an adaptation of sorts. You will not be a dinosaur and die. I will fail and
evolve.

2. I will not make excuses when I don’t deliver.

You know that you will make terrible decisions and will be inefficient. You will admit
these inadequacies and move on. You will remember that taking personal responsibility is an
indispensable part of building a business. You will not make excuses; I will make reality.

3. I will not wait to launch until I have a perfect product. That’ll be too late

Perfectionism is the kiss of death. I will launch early and launch often because a perfect
product doesn’t exist.

4. I will surround myself with people who challenge me.

If you are the smartest person in the room, you will walk out. If you are not sufficiently
challenged every day, then your not working with the right people. If you are not
experiencing intellectual, emotional, or technical gymnastics most days, then you will
reconsider your tribe.

5. I will jump now, land later.

Starting anything--including a business--involves risk. I will jump and worry about the
landing only when it’s pragmatically necessary. You will learn to be comfortable--even
thrive--without a road-map.

6. I will build a cult of believers.

Passion is my most valuable asset. You will be on fire and persuade others to get on my
rocket ship. You will not forget that convincing others to believe in your mission, follow
yourself, and work their asses off on my behalf is the most important part of my job. If you
lose your passion, you will get off the ship.

7. I will be kind to my spouse and children even when my day sucks.

Despite the slow progress or eroding team, your family will be the remaining constant
through all of the craziness. You will treat the people I love like a Stradivarius violin. You
won’t just aim for life balance; You will demand it.

8. I will see money as a result of my effort, not of my worth.

The minute you start aligning my purpose to your net income, instead of vice-versa, you
simply won’t be as effective. You will not let money be your personal metric. Your values,
impact on others, and character will be.

9. I will only say crazy things to other crazy people.

You will admit that I’m a little crazy because, unlike most people, You see a path to the
impossible. However, You will only speak these crazy thoughts to:

1) People that are energized by them, or

2)People that can help me execute them. You will not speak to people that scared easily just
for the fun of it.

10. Dare to be different.

Common people are a dime a dozen, by being different you stand out. Not being
different to a few of your friends, being different on a world scale. God made us all different,
no tumb print is the same, neither is any retina scan, we are all unique individuals with
unique giftings, but we conform, and rob the world of our deposits.

11. Reach for the Skies.

The sky is the place of freedom, it’s the place where there is sufficient space for the
actualization of the dreams of all men (and women). All of nature grows upwards, the more
we advance, the more our freedom. The more our freedom, the more our dignity. He that
pays the piper, instructs the tunes. Every human soul yearns for freedom, a place of personal
identity, and choice. A place where one’s values cannot be mortaged for “thus saith the
master”. A place of