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 Introduction
• The word ‘entrepreneur’ is originated from a French word,
entreprender, where an entrepreneur was an individual
commissioned to undertake a particular commercial
project.
• A number of concepts have been derived from the idea of
the entrepreneur such as entrepreneurial,
entrepreneurship and entrepreneurial process.
• Entrepreneur is someone who undertakes certain
projects offers an opening to developing an
understanding of the nature of entrepreneurship.
• Entrepreneurship is then what the entrepreneur does.
• Entrepreneurial is an adjective describing how the
entrepreneur undertakes? what he does?.
• The entrepreneurial process in which the entrepreneur
engages in creating of new value as a result of the
project: the entrepreneurial venture formation.
 Historical Origin of Entrepreneurship

 During the ancient period: the word entrepreneur was

used to refer to a person managing large commercial projects
through the resources provided to him.
 In the 17th Century: an entrepreneur is a person who signed
a contractual agreement with the government to provide
stipulated products or to perform service was considered as
entrepreneur.
 In the 18th Century: an entrepreneur is a risk taker.
consider the merchant, farmers and /or the professionals they
all operate at risk.
 During the 18th Century: the differentiation/separation/ of
the entrepreneurial role from capital providing role.
 In the late 19th and early 20th Century: an entrepreneur
was viewed from economic perspectives. The entrepreneur
organizes and operates an enterprise for personal gain.
 In the middle of the 20th Century: the notion of an
entrepreneur as an inventor as established.
 Definitions of Entrepreneurship and
Entrepreneur
• Entrepreneurship is the process of
identifying opportunities in the market place,
arranging the resources required to pursue
these opportunities and investing the
resources to exploit the opportunities for long
term gains.
• It involves creating incremental wealth by
bringing together resources in new ways
to start and operate an enterprise.
• Entrepreneurship is the processes through
which individuals become aware of
business ownership then develop ideas
for, and initiate a business.
 CON’T…
• Entrepreneurship is the process of
creating something different and better
with value by devoting the necessary time
and effort by assuming the accompanying
financial, psychic and social risks and
receiving the resulting monetary reward
and personal satisfaction.
• In this case an individual should come up
with something different and better in
order to the named as entrepreneur.
 CON’T…

• Entrepreneurship is the art of identifying

viable business opportunities and
mobilizing resources to convert those
opportunities into a successful enterprise
through creativity, innovation, risk taking
and progressive imagination.
• Entrepreneurship is the process of
creating something new with value by
devoting the necessary time and effort,
assuming the accompanying financial,
psychic and social risks and receiving the
resulting rewards of monetary and
personal satisfaction and independence.
• Entrepreneurship is a practice and a
 CON’T…

Based on the above concepts :

• An entrepreneur is any person: who
creates and develops a business idea and
takes the risk of setting up an enterprise
to produce a product or service which
satisfies customer needs.
• An entrepreneur is a professional who
discovers a business opportunity to
produce improved or new goods and
services and identifies a way in which
resources required can be mobilized.
 CON’T…

• An entrepreneur: is an individual who

has the ability to identify and pursue a
business opportunity; undertakes a
business venture; raises the capital to
finance it; gathers necessary physical,
financial and human resources needed to
operate the business venture; sets goals for
him/herself and others; initiates appropriate
action to ensure success; and assumes all or a
major portion of the risk!
• An entrepreneur is a person who: create
the job not a job-seeker; has a dream, has a
vision; willing to take the risk and makes
something out of nothing
 Other definitions
• To an economist an entrepreneur is one who
brings resource, labor, materials, and other
assets into combination that makes their
value greater than before and also one who
introduces changes innovations.
• To a psychologist an entrepreneur is a
person typically driven by certain forces need
to obtain or attain something, to experiment,
to accomplish or perhaps to escape the
authority of others.
 CON’T…
• For the capitalist philosopher an
entrepreneur is one who creates wealth for
others as well, who finds better way to utilize
resources and reduce waste and who produce
job others are glad to get.
• A sociologist defines entrepreneur as a person
whose actions would determine his social status
and who contributes to the development of the
society.
• Management experts define entrepreneur as a
person who has a vision and generates an action
plan to achieve it.
• An entrepreneur is a person who creates a
business or products, manage his/her resources
and takes risks to gain profit
 Types of Entrepreneurs
• 1. The individual entrepreneur: An individual entrepreneur is
someone who started; acquired or franchised his own
independent organization.
• 2. Intrapreneur: An Intrapreneur is a person who does
entrepreneurial work within large organization.
The process by which an Intrapreneur affects change is called
Intrapreneurship.
• a)The Intrapreneur’s context is often large and bureaucratic organization
whereas the individual entrepreneur operates in the broader, more
flexible economic market place.
• b) Intrapreneurs are individuals who often engage in the entrepreneurial
actions in large organizations without the blessing of their organizations.
• 3. The Entrepreneurial Organization: Every social environment
has its own way of filling the entrepreneurial function.
• Individuals working in organizations have the potential for being, as
do those working independently to start their own business.
• An organization can create an environment in which all of its members
can contribute in some function to the entrepreneurial function.
 The Role of Entrepreneurs in Economic Development

• Improvement in per capita Income/Wealth

Generation: Entrepreneurs play a vital in the
economic development of a region.
• Generation of Employment
Opportunities: By creating a new business
enterprise, entrepreneurs generate employment
opportunities for others.
• Unemployment is a major issue, especially
in the context of developing economies like
Ethiopia.
• Thus, entrepreneurs not only self-employ
themselves, but also create jobs for others.
 CON’T…
• Inspire others Towards Entrepreneurship:
The team created by an entrepreneur for his
new undertaking often provides the opportunity
for the employees to have a first-hand
experience of getting involved in an
entrepreneurial Venture.
• Balanced Regional Development:
Entrepreneurs help to remove regional
disparities in economic development.
• They set up the industries in the backward
areas to avail various subsidies and
incentives offered by the Central and State
Governments, thereby balancing the economic
growth in different regions in the country.
 CON’T…
• Enhance the Number of Enterprise: When new
firms are created by entrepreneurs, the number of
enterprises based upon new ideas/ concepts/
products in a region increases.
• Not only does an increase in the number of firms
enhance the competition for new ideas, but greater
competition across firms also facilitates the entry of
new firms specializing in a particular new product or
service.
• Provide Diversity in Firms: Entrepreneurial
activity often results into creation of a variety of
firms in a region.
• These firms operate into diverse activities and it
has been found that it is this diversity in firms
which fosters economic development and growth
rather than homogeneity.
 CON’T…

• Economic Independence: Entrepreneurship

is essential for self-reliance for a country.
• Entrepreneurs create industries that
manufacture indigenous substitutes,
thereby reducing the dependence on
imports.
• Also, the goods are exported to other countries
to earn foreign exchange.
• This import substitution and export
promotion results in more economic
independence to the country
 CON’T…
• Combine Economic factors: All the products bought
and sold in an economy are a mix of three primary
economic factors (the raw materials, nature
offers up, the physical and mental labor people
provide and capital (money).
• Now value is created by combing economic factors
together in a way which satisfies human needs.
• Provide Market efficiency: Efficient means
resources are distributed in an optimal way that is
the satisfaction that people can gain from them is
maximized.
• An economic system can only reach this state if there is
competition between different suppliers.
• If a supplier is not using competition then they will tend
to demand profit in excess of what the market would
allow and reduce the overall efficiency of the system
 CON’T…

• Accepting Risk: Risk is the potential variation

in terms of future outcomes. We do not know
exactly what the future will bring. This
lack of knowledge creates uncertainty.
• No matter how we plan there is always a
possibility of adverse deviation from what we
expect or hoped for.
• The primary function of the entrepreneur is to
accept risk on behalf of other people.
• Maximize Investor’s Return: Entrepreneurs
create and run organizations which maximize
long-term profit on behalf of the investors
which in turn generates overall economic
efficiency.
 Entrepreneurial Mindset

• Who Becomes an Entrepreneur?

• The Young Professional: Increasingly young highly
educated people often with entrepreneurial qualifications
are skipping the experience of working for an established
organization and moving directly to work on establishing
their own ventures.
• The Inventor: The inventor is someone who has
developed an innovation and who has decided to make a
career out of presenting that innovation to the market.
• The Excluded: Some people turn to an entrepreneurial
career because nothing is open to them.
• Displaced communities and ethnic and religious minorities
have not been invited to join the wider economic
community due to a variety of social, cultural and political
and historical reasons.
• As a result they may form their own internal networks,
trading among themselves and, perhaps, with their
ancestral countries.
 Qualities of an Entrepreneur

• Opportunity-seeking:An opportunity is a favorable

set of circumstances that creates a need for a new
product, service or business.
• It includes access to credit, working premises,
education, trainings etc.
• An entrepreneur always seeks out and identifies
opportunities. He/she seizes an opportunity and
converts it into a realistic and achievable goal or
plan.
• Persevering: An entrepreneur always makes
concerted efforts towards the successful completion
of a goal.
• An entrepreneur perseveres and is undeterred by
uncertainties, risks, obstacles, or difficulties which
could challenge the achievement of the ultimate
goal.
 CON’T…
• Risk Taking: The best entrepreneurs tend
to:-
• Set their own objectives where there is
moderate risk of failure and take
calculated risks
• Gain satisfaction from completing a job
well
• Not be afraid of public opinion,
skepticism
• Take responsibility for their own actions
Importance of Risk-taking
• Build self confidence
• Create a feeling of leadership
 CON’T…
• Demanding for Efficiency and Quality
• Efficiency: Being efficient means producing
results with little wasted effort.
• Quality refers to:
• The ongoing process of education,
communication, evaluation and constant
improvement of goods/services to meet the
customer’s need in a way that exceeds the
customer’s expectations;
• A characteristic of the product or service that
makes it fit to use. It makes a product, process,
or service desirable.
• The ability of a product or service to meet a
customer’s expectations for that product or
 CON’T…
• Reduction of waste: Striving to maintain quality means
examining all processes that contribute to the creation of a
product, to remove non-productive processes and waste.
• Cost-effectiveness: Striving to ensure quality helps
businesses to minimize the chances that they will make
mistakes.
• As a result, the costs of re-doing work or changing the
product after it has been sold are greatly reduced.
• An increase in market share: Customers prefer to buy
the same product again and again if they are satisfied
with the quality.
• If they are satisfied with the quality of a product, then
they will not only purchase the product/services more
than once, but they will also recommend it to their
friends.
• As a result, this contributes to an increase in the
company’s market share.
 CON’T…

• Better profitability: Better quality of product

satisfies customers. Increased customers
means increase sales, increased shares in
market and consequently increased
profits.
• Social responsibility: By providing quality
products and services, a company is more likely
to be able to fulfill its responsibility to the
community and meet standards set by
government.
• Reputation: Quality of goods and services
improves the reputation of the business for
competition in the market and growth.
 CON’T…
• Information-seeking: Successful
entrepreneurs do not rely on guesswork and
do not rely on others for information.
• Instead, they spend time collecting
information about their customers,
competitors, suppliers, relevant
technology and markets.
• Gathering relevant information is important
to ensure that the entrepreneur makes
well informed decisions.
• Information on the area of market, supply,
operations, finance, legislation, and
infrastructure are important for
entrepreneurs.
 CON’T…
• Goal Setting
• A Goal - is a general direction, or long-term aim
that you want to accomplish.
• Goal is something that people strive for
meeting certain objectives.
• Where as objectives are specific ,concise and
measurable.
• An entrepreneur must have a goal and an
objective which is specific, measurable,
attainable relevant, and time bound
(SMART).
 CON’T…
• Specific: Great goals are well-defined and
focused.
• Measurable: A goal without a measurable
outcome is like a sports competition without a
scoreboard or scorekeeper. Numbers are an
essential part of business.
• Attainable: Far too often, entrepreneurs can
set goals which are beyond their reach.
• Dream big and aim for the stars but keep
one foot firmly based in reality.
• Relevant: Achievable business goals are
based on the current conditions and
realities of the business climate.
 CON’T…
• Planning: Planning is making a decision about the
future in terms of what to do, when to do, where to do,
how to do, by whom to do and using what resources.
• Persuasion and Networking:
• Persuasion is a way of convincing someone to get
something or make a decision in your favor.
• It is inducing or taking a course of action or embracing
a point of view by means of argument, reasoning, or
entreaty; to convince.
• Networking is an extended group of people with
similar interests or concerns who interact.
• In a business environment we network with
customers, suppliers, competitors, various
firms, different organizations, government
offices and family, etc.
 CON’T…
• Building Self-confidence: Self-confidence is
the state of being certain that a chosen course of
action is the best or most effective given the
circumstances.
• Listening to Others: An entrepreneur does not
simply impose his/her idea on others.
• Rather, he listens to other people in their sphere
of influence, analyses their input in line with
his/her own thinking and makes an informed
decision.
• Demonstrating Leadership: An entrepreneur
does not only do things by him/herself, but also
gets things done through others.
• Entrepreneurs inspire, encourage and lead
others to undertake the given duties in time.
 Entrepreneurial Skills
General management skills and People
management skills
• A. General Management Skills: These are skills
required to organize the physical and financial resources
needed to run the venture.
• Some of the most important general management
business skills are:
• Strategy Skills – An ability to consider the business as a
whole, to understand how it fits within its market place, how
it can organize itself to deliver value to its customers, and the
ways in which it does this better than its competitors.
• Planning Skills – An ability to consider what the future
might offer, how it will impact on the business and what
needs to be done to prepare for it now.
• Marketing Skills – An ability to see past the firm’s offerings
and their features, to be able to see how they satisfy the
customer’s needs and why the customer finds them
attractive.
 CON’T…
• Financial Skills – An ability to manage money; to be able to
keep track of expenditure and to monitor cash-flow, but also an
ability to assess investments in terms of their potential and
their risks.
• Project Management Skills – An ability to organize projects,
to set specific objectives, to set schedules and to ensure that
the necessary resources are in the right plat of the right time.
• Time Management Skills – An ability to use time
productively, to be able to priorities important jobs and to get
things done to schedule.
• B. People Management Skills: Businesses are made
by people.
• A business can only be successful if the peoples who
make it up are properly directed and are committed to
make an effort on its behalf.
• To be effective, an entrepreneur needs to demonstrative
a wide variety of skills in the way he/she deals with other
peoples.
 CON’T…
• Communication Skills – An ability to use spoken
and written language to express ideas and inform
others.
• Leadership Skills – An ability to inspire people to
work in a specific way and to undertake the tasks that
are necessary for the success of the venture.
• Motivation Skills – An ability to enthuse people and
get them to give their full commitment to the tasks in
hand. Being able to motivate demands an
understanding of what drives people and what they
expect from their jobs.
• Delegation Skills – An ability to allocate tasks to
different people/employee. Effective delegation
involves more than instructing.
• Negotiation Skills – An ability to understand what is
wanted from a situations, what is motivating others in
that situation and recognize the possibilities of
maximizing the outcomes for all parties.
 The Entrepreneurial Tasks
• Owning Organizations: Ownership lies with those
who invest in the business and own its stock – the
principals, while the actual running is delegated to
professional agents or managers.
• Founding New Organizations: The entrepreneur is
recognized as the person who undertakes the task of
bringing together the different elements of the
organization (people, property, productive resource, etc.)
and giving them a separate legal entity.
• Bringing Innovations to Market: The idea of innovation
encompasses any new way of doing something so that
value is created.
• Identification of Market Opportunity: An opportunity
is the gap in a market where the potential exists to do
something better and create value.
• New opportunities exist all the time but they do not
necessarily present themselves.
 CON’T…

• Application of Expertise: A slight more

technical notion is that they have a special ability
in deciding how to allocate scarce resources in
situations where information is limited.
• Provision of leadership: Entrepreneurs can
rarely drive their innovation to market on their
own.
• They need the support of other people both from
their organizations and from people outside such
as investor customer and supplier.
• The entrepreneur as manager: At the end of
the day the entrepreneur is a manager.
 Wealth of the Entrepreneur

• Wealth is money and anything which includes

money, knowledge and assets of the
entrepreneur.
• Who Benefits from the entrepreneur’s
Wealth?
• Employees: They contribute physical and mental
labor to the business.
• Success of the entrepreneurial venture depends
on their effort and motivation. Therefore, they are
rewarded with:
• Money – their wage or salary
• The possibility of owning a part of the firm through
share schemes.
• A stage of which they can develop social relationships.
• The possibility of personal development.
 CON’T…

• Investors: These are the peoples who provide

the entrepreneur with the necessary money to
start the venture and keep it running.
• Supplier: They are the individuals and
organizations who provide the business with the
materials, productive assets and information it
needs to produce its output. They are paid for
providing these inputs.
• Customers: The entrepreneur may reward
customers by offering quality products, fair
prices, regular and consistency of supply, loan
arrangement etc.
 CON’T…
• The local community: Business has physical locations.
The way they operate may affect the people who live and
other businesses which operate nearby.
• A business has a number of responsibilities for local
community.
• Not polluting their shared environment
• Contributing and sponsoring local development activities
• Contribution for political and cultural stabilities and
economic improvements
• Acting in an ethical way.
• Government: The responsibility of government is to
ensure that businesses can operate in an environment
which has political and economic stability.
• In addition, it provides central services such as education
and health-care.
 Entrepreneurship and Environment

• Business environment refers to the factors

external to a business enterprise which
influence its operations and determine its
effectiveness.
• Business environ­ment may be healthy or
unhealthy.
• Healthy business environment means the
conditions are favorable to the growth of
business
• whereas unhealthy environ­ment implies
conditions hostile or unfavorable to
business operations.
 CON’T…
• A study of business environment offers the following benefits:
• It provides information about environment
which is essential for successful
operation of business firms.
• It opens up fresh avenues for the expansion of
new entrepreneurial operations ,new ideas .
• Knowledge about changing environment
enables businessmen to adopt a dynamic
approach and maintain harmony of
business operations with the envi­
ronment.
• By studying the environment
entrepreneurs can make it hospitable to
the growth of business and thereby earn
popular support.
 Phases of Business Environment

• Business environment may be classified into two

broad categories; namely External; and
internal environment
External Environment :It is the environment
which is external to the business and hardly to
influence independently.
• Economic Environment: consists of the
structure of the economy, the industrial,
agricultural, trade and transport policies of the
country, the growth and pattern of national
income and its distribution, the conditions
prevailing in industrial, agricultural and other
sectors, balance of trade and balance of
payments, and other miscellaneous conditions of
the economy
 CON’T…
• Legal Environment: Business must function
within the framework of legal structure.
• Therefore, adequate knowledge of laws and rules
is necessary for efficient managerial performance.
• Political Environment: In a democratic country,
politics cannot be ignored.
• Managers and entrepreneurs should understand
the working of the political system.
• Socio-Cultural Environment: It consist the
social and cultural norms of a society in a given
period of time.
• The variables that are appraised are values,
beliefs, norms, fashions and fads of a
particular society.
 CON’T…
• Demographic Environment: It assesses the
overall population pattern of a given geographical
region. It includes variables like age profile,
distribution, sex, education profile, income
distribution etc. The demographic appraisal can
help in identifying the size of target customers.
 Internal Environment: it is the environment
which is under the control of a given organization.
Following are the components of internal
environment of a business:
• Raw Material: It assesses the availability of raw
material now and in the near future.
• If the availability of raw material is less now or would
be less in future then the entrepreneur should give a
serious thought to establishing due to shortage of
raw material.
 CON’T…
• Production/Operation: It assesses the
availability of various machineries, equipment,
tools and techniques that would be required
for production/operation.
• Finance: It assesses the total requirements of
finance in terms start-up expenses, fixed
expenses and running expenses.
• It also indicates the sources of finance that can be
approached for funding.
• Human Resource: It assesses the kind of
human resources required and its demand and
supply in the market.
• This further helps in estimating the cost and level
of competition in hiring and retaining the human
resources.
 Environmental Factors Affecting
Entrepreneurship
• Environmental factors which hinder
entrepreneurial growth :
• Sudden changes in Government policy.
• Sudden political upsurge.
• Outbreak of war or regional conflicts.
• Political instability or hostile Government attitude
towards industry.
• Excessive red-tapism and corruption among
Government agencies.
• Ideological and social conflicts.
• Unreliable supply of power, materials, finance, labor
and other inputs.
• Rise in the cost of inputs.
• Unfavorable market fluctuations.
• Non-cooperative attitude of banks and financial
institutions.
Creativity, Innovation and Entrepreneurship

• Creativity
• Creativity is defined as the tendency to generate or
recognize ideas, alternatives, or possibilities that may
be useful in solving problems, communicating with
others, and entertaining ourselves and others.
• Creativity is the ability to come up with new idea and
to identify new and different ways of looking at a
problem and opportunities.
 Process: creativity is a process (implying among
other things, that it is more like a skill than an
attitude, and that you can get better at it with
practice)
 Ideas: creativity results in ideas that have
potential value.
 Recombining: the creative process is one of
putting things together in unexpected ways.
 Steps in the Creative Process

• Step1: Opportunity or problem Recognition: A person

discovers that a new opportunity exists or a problem needs
resolution.
• Step2: Immersion: the individual concentrates on the problem
and becomes immersed in it. He or she will recall and collect
information that seems relevant, dreaming up alternatives
without refining or evaluating them.
• Step 3: Incubation: the person keeps the assembled
information in mind While the information is simmering it is
being arranged into meaningful new patterns.
• Step 4: Insight: the problem-conquering solution flashes into
the person’s mind at an unexpected time, such as on the verge
of sleep, during a shower, or while running. Insight is also called
the Aha! Experience.
• Step 5: Verification and Application: the individual sets out
to prove that the creative solution has merit.
• Verification procedures include gathering supporting
evidence, using logical persuasion, and experimenting
with new ideas.
 CON’T…

• Innovation
• Innovation lies at the heart of the entrepreneurial process
and is a means to the exploitation of opportunity.
• It is the implementation of new idea at the individual,
group or organizational level.
• Innovation is a process of intentional change made to rate
value by meeting opportunity and seeking advantage.
• There are four distinct types of innovation, these are as
follows:
• Invention - described as the creation of a new product,
service or process
• Extension - the expansion of a product, service or
process
• Duplication - defined as replication of an already existing
product, service or process
• Synthesis - the combination of existing concepts and
factors into a new formulation
 The Innovation Process

• Analytical planning: carefully identifying the

product or service features, design as well as
the resources that will be needed.
• Resources organization: obtaining the
required resources, materials, technology,
human or capital resources
• Implementation: applying the resources in
order to accomplish the plans
• Commercial application: the provision of
values to customers, reward employees and
satisfy the stakeholders.
 Areas of Innovation
• New product: A new product can be
developed through new or existing technology.
The new product may offer a radically new
way of doing something or it may simply be
an improvement on an existing item.
• New Services: A service is an act which is
offered to undertake a particular task or solve
a particular problem.
• New Production Techniques: Innovation
can be made in the way in which a product is
to be manufactured.
• A new production technique should allow the
end user to obtain the product at a lower cost,
or a product of higher quality or better service
 CON’T…
• New Way of Delivering the Product or
Service to the Customer: Customer can
only use product/service they can access. A
common innovation is to take a more direct
routine by cutting out distributors or
middlemen.
• New Operating Practices: As with
innovations in the production of physical
products, innovation in service delivery must
address customers need and offer them
improved benefits,
• For example easier access to the service, a
higher quality service, a more consistent
service, a faster or less time consuming
 CON’T…

• New Means of Informing the Customer

about the Product: People will only use a
product or service if they know about it.
• New Means of Managing Relationship within the
Organization: Any organization has a wide
variety of communication channels running
through it.
• The performance of the organization will depend
to a great extent on the effectiveness of its
internal communication channels.
• New Ways of Managing Relationships between
Organizations: Organizations sit in a complex
web of relationships to each other.
 From creativity to entrepreneurship

• Creativity is the ability to develop new ideas

and to discover new ways of looking at
problems and opportunities.
• Innovation is the ability to apply creative
solution to those problems and opportunities
in order to enhance people’s lives or to enrich
society.
• Entrepreneurship = creativity + innovati
on.
The end