Entrepreneurship

Management
BAG 09104
 EVOLUTION

• The sad fact is that until the Industrial Revolution of the late eighteenth and early
nineteenth centuries, in Europe at least, an entrepreneur’s life could lead to
decapitation, death on the battlefield or appropriation by the emperor.
• Amazing as it may sound, in ancient Rome, innovation and profit were completely
disconnected. Romans made considerable advances in technology, but this was
divorced from commerce.
• One day an inventor came before Emperor Tiberius to show him his invention of an
unbreakable glass window and to beseech him for an inventor’s fee. Tiberius asked
whether he had told anyone the formula. The man assured him that the invention
was absolutely secret, whereupon the emperor immediately cut his head off ‘
• Turning to medieval China, how could an entrepreneur begin a
venture when the monarch owned all the property? When the
emperor needed cash, he simply seized it from his wealthy
noblemen. This meant that no one would invest in a productive
enterprise for fear of losing it so easily.
• Meanwhile in Europe in the Middle Ages, great wealth and power
came not from business acumen, but from military conquest.
Innovations such as armour, the crossbow and gunpowder were
needed for military campaigns, not retail shops.
• We recognize that the agent of change in human history has been and most likely
will continue to be the entrepreneur. Rough individualists, those who cherish
individual liberty and self-reliance, frequently found themselves opposed to
authority and to controls over the individual.
• Entrepreneurship is a dynamic process of vision, change and creation. It requires an
application of energy and passion towards the creation and implementation of new
value-adding ideas and creative solutions. Essential ingredients include the
willingness to take calculated risks in terms of time, equity or career; the ability to
formulate an effective venture team; the creative skill to marshal needed resources;
and, finally, the vision to recognize opportunity where others see chaos,
contradiction and confusion
 DEFINITIONS

• The definition is broadened so that today an entrepreneur is considered to

be a social or business innovator or developer who recognizes and seizes
opportunities; converts those opportunities into workable/marketable ideas;
adds value through time, effort, money or skills; assumes the risks of the
competitive marketplace to implement these ideas; and realizes the rewards
from those efforts.
• Enterprise : is the process of identifying, developing and bringing a vision
to life, be it an innovative evolution and revolution an idea or simply a better
way of doing something. Enterprise applies not only to business ventures,
but also to political and social decisions
 Types of Entrepreneurs

• Business entrepreneurs are driven by the profit motive. They seek

growth and profits within the business world. They are constant
innovators and always trying to capture larger market shares from a
competitive marketplace. They are pioneering individualists who create
one venture after another and one innovation after another
• Social entrepreneurs have many of the same personality
characteristics as business entrepreneurs, but they are driven by a
mission and seek to find innovative ways to solve problems that are not
being or cannot be addressed by either the market or the public sector.
 Differentiating Business Owners from
Entrepreneurs
• Small-business owners may once have captured an opportunity
like an entrepreneur but then they rest on their achievements
because either they or the opportunity – or both – do not continue to
have the attributes that make it entrepreneurial.
• The business may never grow large and the business owner may
prefer a more stable and less aggressive approach to running their
business. Many small business owners often like stable sales, profits
and modest growth and want to keep the business at a size they can
personally manage and control
• The difference is that small-business owners would
rather exploit existing equilibrium opportunities
and optimize supply and demand in established
markets. Entrepreneurs, on the other hand, aim to
exploit innovative venture opportunities and
create new markets at home and abroad.
 Myths of Entrepreneurship


NO MORE BOSSES / DON’T HAVE A BOSS/ MY OWN BOSS

No, entrepreneurs don’t always work independently. Contrary to
the popular belief that entrepreneurship equates to having no
boss, the reality is often quite different. Entrepreneurs answer to
various stakeholders, including customers, investors, and partners,
who all influence business decisions. While myths about
entrepreneurship often portray complete freedom from authority,
specific entities, though not traditional bosses, can impose
demands and expectations surpassing typical employers.
• ENTREPRENEURS DON’T NEED A FORMAL EDUCATION
• Entrepreneurs don’t require formal education, which stems from a few high-
profile success stories where business magnates dropped out of school and still
made a fortune. Education is pivotal in dispelling myths about entrepreneurship
by offering a robust foundation in business, finance, and critical thinking. It
equips aspiring entrepreneurs with essential skills and knowledge to navigate
complex challenges and succeed beyond common misconceptions in the
entrepreneurial world.
• AN ENTREPRENEUR IS A LONE WOLF: Another myth is that entrepreneurs
work alone. Most successful ventures involve teamwork and collaboration.
• GREAT ENTREPRENEURS ARE JUST THE LUCKY ONES. Real entrepreneurs
make their own luck by working smart and hard, never giving up, and learning
from their own failures. They also seek out mentors, and study the tactics of
successful business leaders before them. They are always able to balance
their passion for a new solution against real market forces.
• SUCCESSFUL ENTREPRENEURS MUST COME UP WITH A NOVEL
IDEA. An innovative idea is necessary to catalyze a team into action, but
more important is executing effectively on a viable idea and evolving it over
time with real customers. Ideas that are extremely novel carry the highest risk
of failure due to long and expensive customer learning curves.
• YOU NEED TO BE YOUNG TO BE AN ENTREPRENEUR. Research indicates
that the average age of founders for their first startup is now 45 and continues
to increase as the business world becomes more complex. Entrepreneurship
does appeal to young professionals because of its low cost of entry, their
passion for technology, and a desire to manage their own destiny.
• YOU HAVE TO LOVE TAKING RISK TO BE AN ENTREPRENEUR. What great
entrepreneurs learn is how to detect intelligent and informed risk. This is
where they have some knowledge and some advantage, where the risk-
reward ratio indicates it is rational to pursue a given opportunity. They
understand there is no place in business today where there is no risk.
• ENTREPRENEURS DON’T HAVE A PERSONAL LIFE :
• We have been told over and over again that business people have to
make sacrifices to follow their entrepreneurial dream. Often, this has
been interpreted as a suggestion that entrepreneurs should renounce
their personal life. However, work-life balance is as important for this
category as it is for other professionals. It reduces the risk of burn-
out, increases productivity and it is good for our health. The most
successful entrepreneurs know how to take breaks and master their
prioritizing, delegating, and scheduling skills.
• THERE IS A SECRET TO SUCCESS:
Truth to be told, there are no secrets, just the same old thing. Work hard on your idea, do not be
afraid of failure, and remind that the most successful entrepreneurs have failed at the beginning.
As an entrepreneur, you have to learn from your mistakes and find a way to overcome them.
• ENTREPRENEURS ARE BORN NOT MADE:
This common myth overlooks the vast potential for personal development and the impact of
experiential learning in entrepreneurship. Entrepreneurship involves a mix of inherent traits and
learned skills, debunking myths about entrepreneurship that suggest success is solely innate. By
embracing personal finance investing ideas, entrepreneurs can enhance their capabilities,
blending natural abilities with acquired expertise for sustainable growth and innovation.
 ENTREPRENEURIAL COGNITION

• cognition refers to mental processes, including attention, remembering,

producing and understanding language, solving problems and making
decisions. It means the ability to process information, apply knowledge
and change preferences.
• Social cognition theory looks at situation-based mental models
(cognitions) that optimize personal effectiveness.
• Mitchell et al. define entrepreneurial cognition as the knowledge
structures that people use to make assessments, judgements, or
decisions involving opportunity evaluation, venture creation, and growth
 Characteristics of Entrepreneurs

• DETERMINATION AND PERSEVERANCE: More than any other

factor, total dedication to success and focus on advantage can
overcome obstacles and setbacks. Sheer determination and a
stubborn, unwavering commitment to succeed often wins out against
odds that many people would consider insurmountable.
• DRIVE TO ACHIEVE: Entrepreneurs are self-starters who appear to
others to be internally driven by a strong desire to compete, to excel
against self-imposed standards and to pursue and attain challenging
goals. High achievers take calculated risks.
• OPPORTUNITY ORIENTATION One clear pattern among successful, growth-
minded entrepreneurs is their focus on opportunity rather than on resources,
structure or strategy.
• Opportunity orientation is the constant awareness of the opportunities that
exist in everyday life. Successful entrepreneurs start with the opportunity and
let their understanding of it guide other important issues. Setting high but
attainable goals enables them to focus their energies selectively to sort out
opportunities and to know when to say ‘no’.
• Their goal orientation also helps them to define priorities and provides them
with measures of how well they are performing
• PERSISTENT PROBLEM SOLVING: Entrepreneurs are not intimidated by difficult
situations. In fact, their self-confidence and general optimism seem to translate
into a view that the impossible just takes a little longer. Yet they are neither
aimless nor foolhardy in their relentless attack on a problem or an obstacle that is
impeding business operations.
• SEEKING FEEDBACK: Effective entrepreneurs are often described as quick
learners. Unlike many people, however, they also have a strong desire to know
how well they are doing and how they might improve their performance. In
attempting to make these determinations, they actively seek out mentors and use
their feedback. Feedback is also central to their learning from their mistakes and
setbacks.
• INTERNAL LOCUS OF CONTROL :Successful entrepreneurs believe in themselves.
They do not believe the success or failure of their venture will be governed by fate,
luck or similar forces. They believe their accomplishments and setbacks are within
their own control and influence and that they can affect the outcome of their actions.
This attribute is consistent with a high-achievement motivational drive, the desire to
take personal responsibility and self-confidence.
• TOLERANCE FOR AMBIGUITY: Start-up entrepreneurs face uncertainty multiplied
by constant change. This introduces ambiguity and stress into every aspect of the
enterprise. Yet successful entrepreneurs thrive on the fluidity and excitement of such
an ambiguous existence and generally have a high tolerance for ambiguity. Job
security and retirement generally are of no concern to them
• CALCULATED RISK TAKING: Successful entrepreneurs are not gamblers –
if they decide to participate in a venture, they do so in a very calculated,
carefully thought-out manner. These strategies include getting others to
share inherent financial and business risks with them – for example, by
persuading partners and investors to put up money, creditors to offer
special terms and suppliers to advance merchandise.
• TOLERANCE FOR FAILURE: Entrepreneurs use failure as a learning
experience and generally have a high tolerance for failure. The iterative,
trial-and-error nature of becoming a successful entrepreneur makes serious
setbacks and disappointments an integral part of the learning process.
• HIGH ENERGY LEVEL: The extraordinary workloads and the stressful
demands faced by entrepreneurs place a premium on energy. Many
entrepreneurs fine-tune their energy levels by carefully monitoring what
they eat and drink, establishing exercise routines and knowing when to get
away for relaxation.
• CREATIVITY AND INNOVATIVENESS: Creativity was once regarded as an
exclusively inherited trait. Looking around the world we see that cultures
differ very much in terms of creativity and innovation. It appears likely that
creativity is less a genetic trait than a cultural characteristic – one that can
be learned.
• VISION: Entrepreneurs know where they want to go. They have a vision or concept of what
their business can be. For example, Steve Jobs, one of the founders of Apple Computer Inc.,
wanted his business to provide microcomputers that could be used by everyone from
schoolchildren to businesspeople. The computer would be more than a machine. It would be
an integral part of the person’s life in terms of learning and communicating. In many cases,
this vision develops over time as the individual begins to realize what the business is and
what it can become.
• PASSION :Entrepreneurial passion is a fundamental emotional experience for entrepreneurs.
Moreover, entrepreneurial passion is characterized by a discrete emotion that is quite
intense, having been described as an underlying force that fuels our strongest emotions, or
the intensity felt when engaging in activities that are of deep interest, or the energy that
enables entrepreneurs to achieve peak performance.
• TEAM-BUILDING :The desire for recognition and autonomy
does not exclude the entrepreneur’s desire to build a strong
entrepreneurial team. Successful entrepreneurs need to have
highly qualified, well-motivated teams that help handle the
venture’s growth and development. Teams with past
experience together can have an even stronger effect on the
new venture’s survival and successful growth
 Nature and Scope of
Entrepreneurship

Dynamic Process: Entrepreneurship is a
dynamic process of vision, change, and creation.
It requires passion, energy, and persistence.

Interdisciplinary: It involves various aspects of
business including marketing, finance,
operations, and strategy.

Global Impact: Entrepreneurship drives global
economic growth, innovation, and cultural shifts.
Risk and Uncertainty:
Entrepreneurs often operate in environments filled with uncertainty, requiring them to take
calculated risks. The ability to assess and manage risk is crucial in navigating challenges and
seizing opportunities.
Innovation:
A cornerstone of entrepreneurship is innovation, which can manifest as new products, services,
processes, or business models. Entrepreneurs drive technological advancements and creative
solutions to meet market demands.
Resource Mobilization:
Entrepreneurs are adept at gathering and utilizing resources—financial, human, and material—
to launch and grow their businesses. This includes finding funding sources, hiring talent, and
leveraging networks.
Value Creation:
At its core, entrepreneurship focuses on creating value, whether
for customers, employees, or the community. This value can come
in the form of new products, improved services, or social impacts.
Social and Economic Contribution:
Entrepreneurship contributes to economic growth, job creation,
and innovation. It plays a significant role in addressing social
issues and fostering community development.
 Benefits of Entrepreneurship

Creativity and Innovation: Entrepreneurship encourages
creativity and the opportunity to bring unique ideas and solutions
to market.

Personal Growth: Starting a business challenges individuals,
fostering skills, resilience, and personal development.

Job Creation: Entrepreneurs contribute to the economy by
creating jobs, which can have a positive impact on their
communities.

Networking Opportunities: Entrepreneurs often connect with
other business owners, mentors, and professionals, building
valuable networks that can provide support and collaboration.
• Independence: Being your own boss allows for
greater control over decisions, work hours, and
business direction.
• Flexibility: Entrepreneurs often have the ability to
design their work schedule, providing opportunities
for a better work-life balance.
• Financial Potential: While there are risks,
successful entrepreneurs can achieve significant
financial rewards and wealth creation compared to
traditional employment.
• Satisfaction and Fulfillment: Building a business from the
ground up can provide a sense of accomplishment and
fulfillment, especially when it aligns with personal passions.
• Impact: Entrepreneurs can implement positive changes
within their communities or industries, driving social and
economic progress.
• Learning Experiences: The journey of entrepreneurship
involves continuous learning, from problem-solving to
customer relations, enhancing one’s skills and knowledge.
 Drawbacks of Entrepreneurship
Financial Risk: Entrepreneurs often invest their own money
and may take on debt. There’s a risk of financial loss,
particularly in the early stages.
Uncertain Income: Unlike a regular paycheck, income from a
business can be unpredictable. Entrepreneurs may face
fluctuating revenues and might struggle to pay themselves
initially.
Work-Life Balance: Starting and running a business can be
time-consuming, leading to long hours and difficulty in
maintaining personal and family time.
High Stress: The pressure to succeed, manage
operations, and ensure profitability can lead to stress and
burnout.
Responsibility: Entrepreneurs bear the responsibility for
all aspects of the business, including hiring, finances, and
compliance. This can be overwhelming.
Lack of Benefits: Many entrepreneurs do not receive
health insurance, retirement plans, or other benefits
typically provided by employers, which can add to
personal expenses.
Market Competition: Standing out in a crowded market
can be challenging, and entrepreneurs must continually
innovate and adapt to changing consumer preferences.
Isolation: Entrepreneurs may feel isolated, especially if they
work alone or without a strong support network. This can
affect motivation and mental health.
Regulatory Challenges: Navigating laws, regulations, and
licensing can be complex and time-consuming, especially for
new businesses.
Skill Gaps: Entrepreneurs may need to wear many hats, but
lacking skills in areas like marketing, finance, or operations
can hinder business growth
 Role of Entrepreneurship


Economic Development: Entrepreneurs contribute to national income
through taxation and increased consumption.

Social Change: They address social issues through innovative solutions
that lead to social progress.

Innovation: They continually bring new ideas to market, which drives
technological advancement and societal shifts.

Job Creation: Startups and small businesses are significant sources of employment. As they
grow, they create new jobs, reducing unemployment rates and supporting local economies
• Wealth Creation: Successful entrepreneurship can generate wealth for
individuals, investors, and communities. This wealth can then be
reinvested in the economy, further driving growth.
• Diversity in Market Offerings: Entrepreneurs introduce diverse
products and services, catering to various consumer needs and
preferences, which enhances market dynamism
• Competition: Entrepreneurship encourages competition, which drives
efficiency and innovation. This competition can lead to better prices,
improved products, and enhanced customer service
• Cultural Impact: Entrepreneurs can influence culture and societal norms
through their businesses, promoting values such as sustainability, social
responsibility, and community engagement.
• Inspiration and Motivation: Successful entrepreneurs serve as role
models, inspiring others to pursue their own business ventures, fostering
a culture of innovation and ambition.
• Resource Utilization: Entrepreneurship efficiently utilizes resources by
identifying gaps in the market and leveraging existing assets, leading to
better allocation of resources
 Motives for engaging in entrepreneurial
activities
• 1. Financial Gain

Profit Motive: The desire to achieve financial independence and generate wealth is
a primary motivation for many entrepreneurs. Capital Growth: Entrepreneurs seek
to increase their capital and reinvest profits to further expand their ventures.
• 2. Independence and Autonomy

Self-Determination: Many individuals are motivated by the desire to be their own
boss. Entrepreneurship allows for personal freedom in decision-making and direction.

Flexibility: Entrepreneurs often seek flexible schedules, enabling them to balance
work with personal commitments.
• 3. Passion and Fulfillment

Pursuing Interests: Many entrepreneurs are driven by a passion for their field or industry.
This intrinsic motivation fuels their commitment to their ventures.

Personal Satisfaction: The joy of building something from the ground up and creating
value can be highly fulfilling.
• 4. Innovation and Creativity
 Desire to Innovate: Entrepreneurs are often motivated by the desire to bring new ideas,
products, or services to market. They thrive on creativity and innovation.

Problem Solving: The motivation to solve specific problems or address unmet needs in
the market can inspire entrepreneurial ventures.
• 5. Social Impact

Addressing Social Issues: Many entrepreneurs are driven by a desire to make a positive impact on
society or the environment. Social entrepreneurship focuses on creating social value alongside
financial returns.

Community Improvement: Entrepreneurs may also be motivated to contribute to their local
community by creating jobs or addressing local needs.
• 6. Recognition and Status

Achievement Recognition: The pursuit of success and recognition within an industry can motivate
individuals to start their ventures. Building a brand and gaining respect can be powerful incentives.

Legacy Building: Some entrepreneurs are motivated by the desire to leave a legacy or a lasting
impact through their business endeavors.
• 7. Challenge and Personal Growth

Desire for Challenge: Entrepreneurship presents unique challenges and risks. Many
individuals are motivated by the thrill of overcoming obstacles and achieving challenging goals.

Skill Development: Engaging in entrepreneurial activities offers opportunities for personal
and professional growth, enabling individuals to develop new skills and competencies.
• 8. External Factors

Economic Conditions: Economic opportunities, such as a favorable market environment or a
gap in the market, can motivate individuals to engage in entrepreneurial activities.

Support Systems: Support from family, friends, mentors, and institutions can encourage
individuals to pursue entrepreneurship.
• Entrepreneurial motivations can be complex and
multifaceted. Understanding these motives not only
helps to identify potential entrepreneurs but also
informs strategies for supporting and nurturing
entrepreneurial endeavors. Each entrepreneur may
prioritize different motives based on their unique
circumstances and aspirations.
 Types of Entrepreneurship
(Corporate, Social and Public)
 Social Entrepreneurship

 Characteristics:
o Focuses on creating social value and addressing societal challenges.
o Combines social mission with business principles.
o Success is measured not only by profit but also by social impact.
 Examples: Non-profits that operate sustainably, social enterprises and
businesses that address environmental issues.
 Evaluation: Social entrepreneurship contributes to positive change in
communities and promotes sustainable business practices, though it may struggle
with funding compared to profit-driven models.
 Corporate Entrepreneurship
(Intrapreneurship)


Characteristics:
o
Involves behaving like an entrepreneur while working within an established
organization.
o
Focuses on innovation, product development, and improving processes.
o
Encourages employees to take risks and pursue new ideas.

Examples: Google’s 20% time policy for employee projects, and companies
creating new divisions or products.

Evaluation: Corporate entrepreneurship fosters innovation within established firms,
helping them remain competitive and responsive to market trends.
 Public Entrepreneurship

Public entrepreneurship involves government entities or public

sector organizations that innovate and create solutions to
improve public services and initiatives.
•Key Characteristics: Focused on delivering value to the
public and community. May involve collaboration between
government and private sectors. Uses innovative practices to
enhance efficiency and effectiveness.
• Objectives: Improve public services and infrastructure. Address social
issues through policy innovation. Engage citizens and enhance
participation in governance.
• Advantages: Can lead to significant improvements in public welfare and
services. Utilizes public resources for the greater good. Encourages
transparency and accountability in government processes.
• Challenges: Bureaucratic red tape can stifle innovation. Changes in
political leadership can disrupt continuity and support. Measuring success
in public impacts can be complex.
 Key Qualities of Successful
Entrepreneurs
• 1. Visionary Thinking

Entrepreneurs often possess a clear vision for their business and the
ability to see opportunities where others may not. A strong vision guides
decision-making and motivates the team, providing a sense of purpose
and direction.
• 2. Risk-Tolerance

Entrepreneurs are willing to take calculated risks to pursue their goals,
understanding that such risks can lead to potential rewards. Risk-taking is
essential in entrepreneurship, as ventures often require stepping outside
comfort zones and making difficult decisions.
• 3. Resilience

The ability to bounce back from setbacks and maintain persistence in the
face of challenges and failures. Resilience helps entrepreneurs remain
focused and committed to their goals, allowing them to overcome
obstacles and learn from mistakes.
• 4. Creativity and Innovation

Entrepreneurs often think outside the box, coming up with innovative
ideas and solutions to problems. Creativity fosters the development of
unique products or services that can differentiate a business in the
marketplace.
• 5. Passion and Drive

A strong personal interest and motivation for their business and its success.
Passion fuels dedication and hard work, helping entrepreneurs stay
committed even during tough times.

• 6. Adaptability

The ability to adjust strategies and approaches in response to changing
market conditions and unexpected challenges. Adaptability is crucial for
navigating the dynamic nature of business environments and staying
relevant.
• 7. Strong Communication Skills

The ability to effectively convey ideas, build relationships, and
collaborate with others. Communication is vital for leadership,
negotiation, marketing, and engaging with customers and
stakeholders.
• 8. Leadership Ability

The capacity to inspire and lead a team toward achieving common
goals. Good leadership fosters a positive work environment,
encourages team collaboration, and motivates employees.
• 9. Financial Literacy

Understanding financial principles, including budgeting, cash flow
management, and profit margins. Financial literacy enables
entrepreneurs to make informed decisions and manage resources
effectively.
• 10. Networking Skills

The ability to build and maintain professional relationships that can
support business growth. A strong network provides access to
resources, advice, partnerships, and potential customers.
• 11. Self-Discipline and Time Management

The ability to manage one’s time effectively, prioritize tasks, and remain
focused on goals. Entrepreneurs often face numerous responsibilities;
effective time management enables them to balance various demands and
stay productive.

• 12. Customer-Oriented Mindset


A focus on understanding and meeting the needs of customers. A strong
customer orientation leads to better products and services and fosters
loyalty, essential for long-term success.
These qualities play a critical role in determining an
entrepreneur's success and ability to navigate the challenges of
starting and running a business. While some traits may be
inherent, many can be developed and strengthened over time
through experience and education. Recognizing and cultivating
these qualities can enhance the effectiveness of aspiring
entrepreneurs, enabling them to achieve their business goals