ENTREPRENEURSHIP

SKILLS NOTES FOR

DIPLOMA CLASS
 DEFINITIONS
• The word entrepreneur is derived from a
French root “entreprendre” meaning to
undertake.
• According to the Webster dictionary an
entrepreneur is one who organizes,
managers and assumes the risks of a
business enterprise.
• The Oxford English Dictionary describes
an entrepreneur as ‘one who undertakes; a
manager, controller; champion’.
• Most management researchers agree that
there is no uniformly accepted definition
of the terms entrepreneur/ship.
• Ricahard Cantillon viewed
entrepreneurship as self-employment of
any sort.
• The entrepreneur, according to French
economist J. B. Say, “is a person who
shifts economic resources from an area of
a lower into an area of higher
productivity and yield.”
• (Joseph Schumpeter); (Gartner) equated
entrepreneurship with the concept of
innovation.
• Penrose viewed it as the activity that
involves identifying opportunities within
the economic system.
• Leibenstein perceived entrepreneurship
as involving the activities necessary to
create or carry on an enterprise where
not all markets are well established or
clearly defined and/or in which parts of
the production function are not
completely known.
• Okpar (2000) defines entrepreneurship as
the willingness and ability of an
individual to seek out investment
opportunities in an environment and be
able to establish and run an enterprise
successfully based on the identifiable
opportunities.
• Nwachukwu (1990) viewed
entrepreneurship as a process of
identifying opportunities, gathering the
necessary resources to take advantage of
them and initiate appropriate action to
ensure success.
• Reiss (2010) views an entrepreneur as the
person that recognizes and pursues
opportunities without regard to the
resources he/she is currently controlling,
with confidence that he/she will succeed,
with the flexibility to change course as
necessary, and to rebound from setbacks.
• Priston (2010) visualized an entrepreneur
as a person who starts a business to
follow a vision, to make money, to be the
master of his/her own soul (both
financially and spiritually) and is an
educated risk taker.
• Murphy (2010), conceives an entrepreneur
as an individual who is dynamic and
continues to seek opportunities and/or
different methods of operation and will do
whatever it takes to be successful in
business.

• Dimasi (2010) describes an entrepreneur as

a successful business person. Innovation is
considered as the strategic tool of
entrepreneurs with which they are able to
beat the competition.
• Generally speaking, the entrepreneur ca
defined as an innovative person who
takes up the initiative and looks for a
business opportunity takes risks using
his/her own capital with an aim of
maximizing profits.

• A general definition of entrepreneurship

is that it is the process of exploitation of a
business opportunity through use of own
capital, risk taking and innovativeness to
maximize profits.
 •RISK TAKERS
Entrepreneurs take calculated/educated risks.
They prefer situations in which they can influence
the outcome, and they like challenges if they
believe the odds are in their favor.

•DESIRE TO ACHIEVE
A strong enough dream and desire will always
point towards success and provide the fuel to get
there.
 
 • ABILITY TO WORK WITH OTHERS
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.
• VERSATILE KNOWLEDGE
A recent study of successful entrepreneurs
showed that most of them worked for a large
corporation to gain experience before they
started their own business.
 • DEDICATED
They are devoted to their businesses. They
conduct extensive research campaigns of
their business ideas in their bid to start a
business and succeed no matter the
challenges encountered.

• ACTION ORIENTED
This is exhibited by their motivation to take
action the achieve goals of the organization.
 • INITIATIVE
They have the ability to generate new ideas and
implement them ahead of the others to be able
to create a competitive edge. Entrepreneurs are
resourceful and creative.

• OPTIMISTIC
Entrepreneurs believe in themselves; see half a
glass as full not half way or half empty. They
are able to endure great difficulties and stay
focused for long.
• Energetic: active/hard working person
• Diligent: tries to do everything right
• Inquisitive: intellectually curious
• Tenacious: ability to hold on to something
• High degree of commitment
• Conation: this has also been referred to as
emotional intelligence, or EI. EI is a measure
of people’s ability to understand and use their
emotions to solve life’s problems
• Cognitive abilities: high Intelligence Quotient
• Desire for • Flexible
responsibility Perceptive
• Determination • Internal locus of
• Desire for control
immediate • Networker ,
feedback Social
• Future orientation • Low Need to
• Skill at organizing Conform
• Tolerance for
ambiguity
• Self Confidence
 ADVANTAGES OF
ENTREPRENEURSHIP TO THE
ENTREPRENEUR
• Gets to be his/her own boss
• Recognition by the society
• Ability to attain self-actualization
• Quick decision making
• Ability to follow own dream
• Exciting and fulfilling
• Does not share profits with anyone
• independent
DISADVANTAGES OF ENTREPRENEURSHIP
TO THE ENTREPRENEUR

• Unlimited liability
• Difficulty in raising the capital for the business
• Pressure in decision making as they do not
have anyone to consult and thus fear that
decisions reached may end in failure
• Poor quality life, they have to work for about
60 hours a week to achieve success
• A non-regular pay check
 ADVANTAGES OF
ENTREPRENEURSHIP TO THE
SOCIETY

• Job creation
• Decentralization
• Competition thus improved products services and
variety
• Raising the standard of living of the people
• Revenue to government
• Foreign exchange
• Use of local raw materials
• Improved infrastructure
 DISADVANTAGES OF
ENTREPRENEURSHIP TO THE
SOCIETY
• Moral decay
• Insecurity
• Contraband and counterfeit Products
• Overcrowding
• Air pollution
• Wastage and Plundering of (natural)
resources
 ADVANTAGES OF
ENTREPRENEURSHIP TO A
BUSINESS
• Ability to Exploit • Autonomy
opportunities • (Maximizing a
• Adapt to changes company’s
• Optimal use of potential)
resources • Motivation ()
• New discoveries • Risk taking (free
• Alliances (reach from being
goals faster) average)
• Competitiveness
TYPES OF ENTREPRENEURS:
1. Inventor – have the ability to invent new
products, process or service and then
create companies to develop, produce and
sell the items.
2. Opportunistic – A person who starts a
business acts as a coordinator with a view
to expand, create, innovate and spot
opportunities to make the business grow
in order to be able to hire other employees.
TYPES OF ENTREPRENEURS CONT’D

3. Acquirers – takes up a business started by

another and use their own means to make it
successful.
4. Craft –exploit or utilize personal skills to start
a business without thinking of growth and
5. development (skills could be technical).
6. Economy of scale exploiters - sell large
quantities of products by offering discount
prices and have low overhead expenses
TYPES OF ENTREPRENEURS CONT’D

7. By and sell artists – these are people who

buy a company for the purpose of
improving it before selling it for a profit.

8. Pattern multiplier - looks for ideas,

products others have come up with, and
then creates their own business based on
other people’s model.
TYPES OF ENTREPRENEURS: on the
basis of risks

1. INNOVATORS: they are preoccupied with

introducing something new into the market.
They invest substantially in research and
development.

2. IMMITATORS: Also referred to as copy cats.

They improve on existing products,
processes, technology and through their
vision create something similar but better.
3. FABIAN: These are entrepreneurs that
are careful and cautious, in adopting any
changes. Apart from this, they are lazy
and shy away from innovations.

4. DRONE: These are entrepreneurs that

are resistant to change. They are
considered as old school. They prefer to
stick to their orthodox or traditional
methods of production.
Types of Entrepreneurs On the Basis of
Stage of Development
1. First generation entrepreneurs: they do not
possess any entrepreneurial experience. They
start industry with their own innovative
skills
2. Second generation entrepreneurs: Inherit the
family business and pass it on to the next
generation.
3. Classical entrepreneurs: Aim to maximize
economic returns or survival with or without
growth
Types of Entrepreneurs on the Basis of the
Type of the Business
1. Business entrepreneurs: start business
units for developing products or
services.
2. Trading entrepreneurs: Involved in
buying and selling goods and services
3. Corporate entrepreneurs: manage
institutions with separate legal existence.
4. Agricultural entrepreneurs: raising and
marketing of crops, fertilizers and other
allied activities
 Types of Entrepreneurs on the Basis of
Motivation
1. Pure entrepreneurs:-who are basically
motivated to become entrepreneurs for
their personal satisfaction, ego etc..

2. Induced entrepreneurs:- who are

induced to take up entrepreneurial role
by the assistance and policy of
government including incentives,
subsidies etc.
 Types of Entrepreneurs on the Basis of
Techniques Used
1. Technical entrepreneurs:- who are task
oriented and ‘craftsman type’. They
prefer doing to thinking.
2. Non-technical entrepreneurs:- who are
not concerned with technical side, but
rather with marketing and promotion.
3. Professional entrepreneurs:- who start a
business unit, but later sell the running
business and start a new unit later.
 Types of entrepreneurs on the Basis of
Capital Ownership
1. Private entrepreneurs:- individual or
group set up enterprise, arrange finance,
share risk etc..

2. State entrepreneurs:- means the trading

or industrial venture undertaken by the
state or the government itself.

3. Joint entrepreneurs:- the combination of

private and government entrepreneurs
 TYPES OF ENTREPRENEURS
ON THE BASIS OF GENDER, AGE AND
AREA

1. Men and women entrepreneurs

2. Young, Middle-aged and Old
entrepreneurs
3. Urban entrepreneurs
4. Rural entrepreneurs
 TYPES OF ENTREPRENEURS
ON THE BASIS OF THE SIZE OF THE
BUSINESS
( Size based on the number of Employees)
1. Large scale entrepreneurs (100 and
above)
2. Medium scale entrepreneurs (50-100)
3. Small scale entrepreneurs (10-50)
4. Micro entrepreneurs (0-9)
TYPES OF ENTREPRENEURS
ON THE BASIS CAREERS:
1. Religion: Spiritual Entrepreneur:
2. Meeting the need s of the community: Social
entrepreneurs
3. Education: Edu-preneurs
4. Technology: Techno-preneurs
5. Politics: Political entrepreneurs

 Etc.
 Characteristics of Entrepreneurship

• Creative activity: innovative while

taking into consideration the market
• Dynamic process: has to keep in mind
the changing environment.
• Purposeful activity: embarked upon for a
• Involves risk: decisions made may not
always be certain.
 Functions of Entrepreneurs
1. Taking Initiative (Prime movers in the
business enterprise)
2. Mobilizing resources needed to create and run
the business
3. Organizing : (Determination of the form of
ownership/organization)
4. Identifying Opportunities and Prospects
5. Risk-Taking
Functions of Entrepreneurs Cont’d
6. Determination of business objectives
7. Product analysis and market research
8. Managing the business that is the
production, marketing, finances,
human resources, etc.
9. Decision Making
10. Technology Transfer and Adaptation
11. Innovation
Functions of Entrepreneurship Cont’d

12) Fostering Autonomy

13) Social Responsibility
14) Public Relations
15) Experience Sharing
16) Managerial Roles
17) Balanced Economic Development
 Factors that can be used to Gauge
Your Entrepreneurial (Idea) Potential
• Motivation (attitude) and Commitment
• Abilities and skills
• Experience
• Entrepreneurship traits e.g.
hardworking, etc.
• Resources
• Strategy and vision
• Planning and organization abilities
Factors that can be used to Gauge Your
Entrepreneurial (Idea) Potential Cont’d

• Information from various sources ( internet,

magazines, newspapers, exhibitions etc.)
• Idea in relation to the following :
• Market (social) needs
• Political incentives
• Economic factors
• Legal factors,
• Ecological factors
 Entrepreneurship Process
1. Opportunity Discovery: (Vision) this
begins with idea generation. inputs from
all stake holders including employees,
consumers, channel partners, technical
people, etc. are sought with an aim to
reach an optimum business opportunity.
Above all, an entrepreneur must analyze
whether his/her personal skills and
hobbies, compliment the entrepreneurial
vision.
2). Developing a Business Plan: Once the
opportunity is identified, an entrepreneur
needs to create a comprehensive business
plan. This is critical to the success of any
new venture since it acts as a benchmark on
the set organizational goals. The major
components of a business plan are mission
and vision statement, goals and objectives,
capital requirement, description of
products and services, etc.
3). Resourcing : at this stage the
entrepreneur identifies the financial
(investors) and human resources
(personnel) to carry out the business.

4.) Managing the company: Once the funds

are firmed up and employees hired, the next
step is to initiate the business operations to
achieve the set goals. The entrepreneur
must decide on the management structure
or the hierarchy that is required to handle
operational problems.
5).
Harvesting: This is wherein, an
entrepreneur decides on the future
prospects of the business, i.e. its growth
and development. The actual growth is
benchmarked against the planned growth
and then the decision regarding the
stability or the expansion of business
operations and corrective measures are
undertaken accordingly.
 Ten Myths of Entrepreneurship

1. Entrepreneurs are doers not thinkers :

Though methodical and plan their
moves carefully.
2. Entrepreneurs are born not made:
entrepreneurship can be learned
3. Entrepreneurs are academic and social
misfits: today the entrepreneur is
considered a hero socially, economically,
and academically. And are no longer is
misfits
 Myths Cont’d
4. Entrepreneurs Must fit the profile: Today we
realize that a standard entrepreneurial profile is
not clear and is thus hard to compile.
5. All you need is money to be an entrepreneur:
Failure due to a lack of proper financing often is
an indicator of other problems.
6. All you need is luck to be an entrepreneur: “Luck
happens when preparation meets opportunity”
7. Entrepreneurs are either inventors or innovators:
entrepreneurship encompasses all sorts of profit
but is mostly innovation based.
 Myths Cont’d

making activity
8. Ignorance is bliss for the entrepreneur : careful
strategy formulation is key in successful
entrepreneurship.
9. Entrepreneurs seek success but experience
high failure rates: many entrepreneurs suffer a
number of failures before they are successful.
10. Entrepreneurs are high risk takers :
entrepreneurs usually working on moderate or
“calculated” risk
INTELLECTUAL PROPERTY RIGHTS

Intellectual property rights refers to

exclusive rights conferred upon the
property holder these may constitute of :
Copyrights, Patents, Trade Secrets and
Trade marks,.
 PATENT

A patent grants exclusive rights to a patent

holder preventing others from
manufacturing, using or selling the
protected invention in a given country.
Improving on a product may be perfectly
legal (no patent infringement) and actually
good business strategy. If it is impossible to
copy and improve the product to avoid
patent infringement, the entrepreneur may
try to license the product from the patent
holder.
 Advantages of Patenting

1. Since patenting means protection and

exclusivity, it gives the entrepreneur a
window period of monopoly and hence
huge profits from the product or idea.
2. Obtaining intellectual property rights
creates valuable assets. As such the
entrepreneur can make money on them
by selling, mortgaging, assigning, or
using them as collateral.
 Advantages of Patenting Cont’d
3. Patents have been argued to provide
incentives for economically efficient research
and development.
4. Lastly, awarding patents generally makes the
details of new technology publicly available,
for exploitation by anyone after the patent
expires, or for further improvement by other
inventors. Furthermore, when a patent’s term
has expired, the public record ensures that the
patentee’s idea is not lost to humanity.
 COPYRIGHT

The term “copyright” denotes the exclusive

right given by law to the creator of a
literary, dramatic, musical or artistic work,
or to a producer of a sound recording or
cinematographic film, or to one who
develops a computer software program.
Protection is thus given to a creative person
to control and benefit from a work of
authorship, and is also known as author’s
right.
 Trade Secret
A trade secret is proprietary information not
generally known which provides a business with
an economic advantage over competitors or
customers. Examples include proprietary search
algorithms and databases customer lists, as well
as famous, but secret, recipes, like the Coca-Cola
formula
 TRADEMARKS
A trademark denotes any word, letter,
name, initial, signature, figure, numeral,
artistic, design or device or any combination
of these adopted and used to identify and
distinguish the goods of one manufacturer
or merchant from those of others.
Unlike the patent, a trademark can last
indefinitely, as long as the mark continues
to perform its indicated function.
 Benefits of a trade Mark

1. It provides notice to everyone that you

have the exclusive rights to use the
trademark.
2. It entitles you to sue for trademark
infringement which can result in
recovery of profits, damages and costs.
3. It establishes incontestable rights
regarding the commercial use of the
mark.
Benefits of a Trademark Cont’d

4. It entitles you to use the notice of

registration.

5. It provides a basis for filing trademark

application in foreign countries.

6. It establishes the right to deposit

registration with customs to prevent
importation of goods with a similar mark.
 Intrapreneurship Definitions
1. Intrapreneurs are entrepreneurs who given
situations are not able to establish their own
business and as result work in an
organization. In recent scholarly work, the
term Intrapreneurs has been applied to the
person who acts as an entrepreneur within a
corporate environment.
2. "A person within a large corporation who
takes direct responsibility for turning an idea
into a profitable finished product through
assertive risk-taking and innovation".
3).Intrapreneurship is now known as the
practice of a corporate management style
that integrates risk-taking and innovation
approaches, as well as the reward and
motivational techniques .
4)."Intrapreneurship refers to employee
initiatives in organizations to undertake
something new, without being asked to do
so." Hence, the intrapreneur focuses on
innovation and creativity, and transforms
an idea into a profitable venture, while
operating within the organizational
environment.
 Characteristics of Intrapreneurs
• Money is not their measurement: Value
for customers is what guides them
• They are green houses: Improve on ideas
• They know how to pivot: Change course
when necessary.
• They are people of integrity: they behave
authentically and with integrity: exhibit
traits of humility, respect, belief, and
courage
 Comparison of Entrepreneurship and
Intrapreneurship
1). Intrapreneurship is restorative in
nature, Intrapreneurs practice
entrepreneurial principles to counter
stagnation within the firm or transform the
slow growth of the company into a high-
growth. Whereas the entrepreneurship is
developmental in nature, i.e. an individual
creates something that has never existed
before, such as a new product, process or a
new venture itself
2). In intrapreneurship, the major challenge
that individual faces are from the
company’s culture itself. Sometimes, the
corporate relationships and the mindsets of
employees acts as a hurdle in the path of an
Intrapreneur. Whereas, in the case of
entrepreneurship, the market is the only
enemy. An entrepreneur has to scrutinize
the market conditions thoroughly to cross
the hurdles coming in his/her way.
3). An Intrapreneur has access to a firm’s
resources to give shape to his dreams. An
entrepreneur has to arrange his own
resources e.g. funds, manufacturing,
marketing facilities, etc.

4). An Intrapreneur does not have the

ownership of a new venture and is not even
independent to take decisions, whereas an
entrepreneur is the owner of the venture
established and is an independent decision
maker.
 Advantages of intrapreneurship over
Entrepreneurship
• Intrapreneurs have a management pool of
resources to work with i.e. advisors
• Intrapreneurs do not have to come up
with the capital to run the business
• Guarantee of a salary no matter what the
performance of the business is
• In case of loss to the business the
Intrapreneur does not stand to lose
his/her personal assets
 Disadvantages of Intrapreneurship over
Entrepreneurship
• Tendency of being risk averse for fear of
negative consequences.
• Lack of job security
• Lack of flexibility
• Bureaucracy: ideas have to be censored
by board of directors
• Gets only a small share of the profits
• Incase of success the society may not
recognize his/her efforts.
Means of Generating a Business Idea (Opportunity)

1. Identifying a need: An underserved need

is a sure way of generating business ideas.
2. Brainstorming
3. Building on your skills, hobbies or
interests
4. Spotting a market niche
5. Copy or improving somebody’s ideas
(skill)
 
Means of Generating a Business Idea
(Opportunity) CONT’D
6. Analyze the weaknesses of the existing
business and look for solutions.
7. Combining two existing business ideas
in a new way.
8. Spin off from employment
9. Importing an idea
10. Day dreaming
11. Spin off from employment
Means of Generating a Business Idea (Opportunity) CONT’D

12. Spotting a market niche

13. Listening to what people are saying
14. Attribute listening
15. Recycling: Gaining from waste
16. Observation
17. Research
18. Importing an idea
19. Day dreaming
Generating Business Ideas on the Basis of
Events:

1. Birthdays
2. Concerts
3. Conferemces
4. Exhibitions
5. Shows
6. Weddings
7. Valentines day
8. Games (Olympics)
9. Graduations
Etc.
Generating Business Ideas on the Basis of
Market Analysis:
1. Race
2. Tribe
3. Age
4. Gender
5. Family size
6. Religion
7. Population
8. Etc.
Generating Business Ideas on the Basis of
Articles:

1. Magazines
2. Newspapers

3. Internet

4. Books

Etc.
Generating Business Ideas on the Basis of
Career:

1. Marketing: Advertising
2. Human Resource: Recruitment , training
3. Entrepreneurship: Consulting
4. Information and Technology: Web
design, software development, Cyber
security
Etc.
 INVESTMENTS

Definition:
An investment is money that is put into use
to make more money. Thus the owner has
the initial capital plus profits upon
undertaking an investment.
 Characteristics of good investment

1. In line with ones Skill

2. Experience
3. Plan and implement immediately.
4. Funds must be firmed up
5. Competent employees
6. Economically Viable.
7. Value as a long term venture. Plough back
profits and carry out research.
 TYPES OF INVESTMENTS

1. Business whether formal or informal

(Agriculture, Manufacturing, retail, e-
commerce)
2. Savings
3. Property: land (Speculation) or real
estate
4. Stocks e.g. shares and bonds
 The Pros of Taking Over a Family Business

1. You’re not starting from scratch :The hard

work has already been done for you:
established brand, a business model, a
built-in customer-base and reliable income,
existing relationships with the community,
vendors, banks, and investors.
2. The groundwork has been laid, so you can
focus on growth, make the business even
better for your loyal customers.
3. You’re acquiring people : the most
important asset are the employees that
come along for the ride.
4. Immediate cash flow: It takes years for
entrepreneurs to start making money.
5. You’re carrying on a tradition: Family-run
businesses already have a relationship
with the community. This is because they
contribute to the local economy, provide
jobs, and in-some cases, are a local
institution.
 The Cons of Taking Over a Family Business

1. You’ll likely face tension and resistance:

Even if you keep everything the same
you’ll most likely face resistance from the
community and employees. Change is
always tough to deal with.
2. It’s a large investment upfront: You
already have a business ready-to-go. If
you’re not committed, or sure that it’s
sustainable, then you’re taking a pretty big
risk.
3. Their business might have a bad
reputation. E.g. outstanding contracts
with suppliers, distributors, and other
people in the industry? You can’t forge
your own identity.
4. Ultimately, you won’t get the respect
that you deserve This is especially true if
you’re the founder’s son or daughter. To
stake holders, You’ll always be the seen
as that kid who was born with the
proverbial spoon in your mouth.
5. You may not be capable of running the
business: Even if you have the existing
business plan and established
.
employees to make the transition a bit
easier, you may not have the skills,
experience, or desire to properly run the
business that you’ve just taken over.
These learning curves may prevent you
from successfully sustaining the
business.
 An Introduction to Business Planning

A business plan is a written description of

your business's future. That's all there is to it.
A blueprint that describes what you intend
to do and how you plan to do it.
 The Business planning
Process

1. Executive Summary
2. Name/Type of the business
3. Business/Industry Overview
4. Market Analysis and Competition
5. Sales and Marketing Plan
 Cont’d
6. Ownership and Management Plan
7. Operating Plan
8. Financial Plan
9. Appendices and Exhibits
Advantages of having a Business Plan

1. Projects the Financial Future

2. Future Vision
3. Attract Financing
4. Attract Team Members
5. Manage Company
6. Identifies and Measures Risks
7. Describes the Business Model
8. Helps Prioritize Business Objectives
9. Source for Budgeting
 To be cont’d