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ENTERPRENEURSHIP
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Session objectives
Define entrepreneurship andintrapreneurship
Explain the entrepreneurship process
Validate business ideas to ensure thatthey are opportunities
Identify different ways of financing
business Identify the requirements for starting new
business ideas for the cooperatives
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DEFINING ENTREPRNEUSHIP
Entrepreneurship is creating and building
something of value from practically nothing.
It is the process of creating or seizing an
opportunity and pursuing it regardless of theresources currently controlled.
It involves the definition, creation, and
distribution of value and benefits to individuals,
groups, organization, and society.
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A dynamic process of creating incremental
wealth
Creation of wealth by individuals whoassume major risks in terms of equity
and/or career, commitment of providing
value for some products
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DEFINING ENTREPRNEUSHIP (cont..)
The process of taking or bearing
uninsurable risks in buying and selling
good and servicesProcess ofcombining factors of production
or resources such that wealth is created
Creating and building something of value
from practically nothing
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DEFINING ENTREPRNEUSHIP (cont..)
Pursuing new opportunities without regard
to resources currently controlled
The process of creating new organisation
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DEFINING ENTREPRNEUSHIP (cont..)
An innovative process that involves bringing
new combinations into the production
process such that:New products or services are offered
New methods or technology is applied
New markets are targeted or opened
New sources ofsupply and raw materials areused
New forms oforganisations are formed
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DEFINING ENTREPRNEUSHIP (cont..)
The process ofcreating something new
with value by devoting the necessary time
and effort, assuming the accompanying
financial, psychological and social risk,
and receiving the necessary reward of
monetary and personal satisfaction
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EntrepreneurshipEntrepreneurship
It also requires a willingness to takecalculated risks both personal and
financial and then doing everything
possible to influence the odds.
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Teams and ResourcesTeams and Resources
Entrepreneurship involves building ateam of people with complementary skills
and talents.
Sensing an opportunity where others see
chaos, contradiction, and confusion.
Finding and controlling resources (often
owned by others) to pursue the
opportunity.Entrepreneurship involves making sure
the venture does not run out of money
when it needs money most.
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Basic aspects of being an entrepreneur
Entrepreneurship involves the creation
process
creating somethingnew of value
Entrepreneurship requires devotion of the
necessary time and effortIn order to create something new and
make it operational
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Is it a GetIs it a Get--Rich QuickRich QuickPlan?Plan?
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EntrepreneurshipEntrepreneurship
Entrepreneurship is very rarely a get-rich-
quick proposition.
Rather, it is one of building long term
value.
This leads to long term cash flow
streams.
Entrepreneurship is a human creative act. It involves using personal energy to
initiate and build an enterprise.
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EntrepreneurshipEntrepreneurship
Entrepreneurship usually requires a visionand the passion, commitment, and
motivation to transmit this vision to other
stakeholders.
These are:
Partners
Customers
Suppliers
Employees
Financial backers
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EntrepreneurshipEntrepreneurship
It also requires a willingness to takecalculated risks both personal and
financial and then doing everything
possible to influence the odds.
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Basic aspects of being an entrepreneur
(cont..)
Entrepreneurship means assuming the
necessary risks:
Financial psychological
social etc
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Basic aspects of being an entrepreneur
(cont..)
Reward for being an entrepreneur:
Independence
Personal satisfactionFinancial
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Myths about Entrepreneurs
Myth1- Entrepreneurs are born, not made
Myth2- Anyone can start a business
Myth3- Entrepreneurs are gamblers
Myth4- Entrepreneurs want the whole
show to themselves
Myth5- Entrepreneurs are their own
bosses and completelyindependent
Myth6- Entrepreneurs work longer and
harder than managers in big
com anies
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Myths about Entrepreneurs
Myth7- Entrepreneurs experience a great
deal of stress and pay a high price
Myth8- Starting a business is risky and
often ends in failure
Myth9- Money is the most important start-
up ingredient
Myth10- Entrepreneurs should be youngand energetic
Myth11- Entrepreneurs are motivated
solely by the quest for the almighty
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Myths about Entrepreneurs
Myth12- Entrepreneurs seek power and
control over others
Myth13- If an entrepreneur is talented,
success will happen in a year or
two
Myth14-Any entrepreneur with a good idea
can raise venture capitalMyth15- If an entrepreneur has enough
start- up capital, he or she cant
miss
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INTRAPREPNEURSHIP
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DEFINING INTRAPREPNEURSHIP
The practice of entrepreneurship within theconfines of the organisation
Creating something new and of valuewithin the confines of the organisation
Thrives in organisations with anentrepreneurial culture
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Intrapreneurial culture
Intrapreneurial culture:
Employees with talents to act with
freedom to take initiatives or try outnew ideas as if they were running
their own business
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Differences between entrepreneurship
and entrepreneurship
Intrapreneurship
Acts within the confines
of existing organization
Challenges the statusquo and fights to change
the system from within
Has free resources
found in the organisation
Entrepreneurship
Acts outside the
organisation
Challenges the statusquo outside the
organisation
Has to look for his
resources
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Factors retarding intraprenuership
The cost of failure too high, the reward ofsuccess too low
No space is provided for failure
No reward for innovative ideas
Inertia caused by established systems thatno one is willing to changed
we have always done it like this If itaint broken, dont fix it changing nowwould be too much effort
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Factors retarding intraprenuership
(cont)
Hierarchy the deeper the hierarchy, the more
difficult it is to get permission for anything new.
Support from top management
Recognition that entrepreneurship culture needsto be compatible with the overall organizational
culture
Communication system within the organization is
strong so that entrepreneurs within the company
can be heard
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Characteristics of successful
entrepreneurs
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Research has shown thatcertain traits seem to be
associated with entrepreneurs
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Who are entrepreneurs?
Are opportunity driven, not resource driven
Managers ask:
given the resources under my control,what can Iachieve?
Entrepreneurs ask:
Given whatIwant to achieve, what
resources do Ineed to acquire?Good as seeing pattern changes within the
environment
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Who are entrepreneurs? (cont)
The reasonable man adopts him/herselfto the world: the unreasonable one persistin trying to adapt the world to him/herself
The entrepreneur is the unreasonableman/woman who is motivated by thedream of things that conventional wisdomsays cant, wont or shouldnt be
Entrepreneurs have therefore stubbornperseverance
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Who are entrepreneurs? (cont)
Stand up to ridicule
Stand up to failure, good at failure but
See failure as a temporary setback and anopportunity to learn and do better next time
success is the ability to go from failure to
failure with no less of enthusiasm
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Who are entrepreneurs? (cont)
The two magic words of an entrepreneur
what if ?
What if telephone didnt have to be connected
to each other with wires
Constantly scanning the environment foropportunities
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Who are entrepreneurs? (cont)
Entrepreneurs create their own future
get up , look up for circumstances they
want, if they find them, make them
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Characteristics ( cont)
A desire to achieve: The push to conquer problems,and give birth to a successful venture. A strong urge tobuild
Hard work: It is often suggested that many
entrepreneurs are workaholics. Desire to work for themselves/need forindependence Entrepreneurs like to work forthemselves rather than working for an organization orany other individual. They may work for someone to gainthe knowledge of the product orservice that they may
want to produce. They seldom are willing to submit toauthority
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Nurturing quality: Willing to take charge of, and watchover a venture until it can stand alone.
Acceptance of responsibility: Are morally, legally, andmentally accountable for their ventures. Some
entrepreneurs may be driven more by altruism than byself-interest.
Reward orientation: Desire to achieve, work hard, andtake responsibility, but also with a commensurate desireto be rewarded handsomely for their efforts; rewards canbe in forms other than money, such as recognition and
respect. Optimism: Live by the philosophy that this is the best of
times, and that anything is possible.
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Orientation to excellence: Often desire to
achieve something outstanding that they can be
proud of.
Organization: Are good at bringing together thecomponents (including people) of a venture.
Profit orientation: Want to make a profit; but
the profit serves primarily as a meter to gauge
their success and achievement.
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Ingenious and resourceful, they arecunning, opportunistic, creative and nonsentimental
Innovative, calculating inventor, over-optimistic promoter, organizationalbuilder. These four terms are used todescribe the characteristics which is notbased on personality but on the type ofopportunity the entrepreneur faces
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Visionary the entrepreneur ha an
enthusiastic vision which is the driving
force of the enterprise. This vision is
supported by an interlocked collection of
specific ideas not available to the market
Persistence and determination - this
helps the entrepreneur to developstrategies to make the vision into a reality
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Risk taker calculated risks which
includes assessment of costs,
market/customer needs and persuading
others to join and help
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Characteristic of successful
entrepreneurs
Competitive
Hardworking
Forceful
Knowledgeable
Networking
Persuasive
Good communicator
Takes initiative
Independent
Problem solver
Time conscious
Leadership traits
Adaptive to change
Likes people
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Skills and competencies
required for entrepreneurship
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What skills are required of in
entrepreneurship
Technical skills Someone in the business must possess the professional
skill and knowledge to generate the companys product orservice.
The concept for what product or service the company willoffer must become clear before the venture can succeed.
Business management skills
Personal entrepreneurial skills disciplined, risk taker,innovative, change oriented, persistent, visionary etc
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ENTERPRISE CULTURE
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Enterprise culture
Culture is a pattern of share beliefs and values
that provide the members of an organization
with rules of behaviour or accepted norms for
conducting their operations It is the philosophies, ideologies, values,
assumptions, beliefs, expectations, attitudes and
norms that knit an organization or a community
together and are shared by members
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Enterprise culture (cont..)
Enterprise culture, therefore can be
defined as a set of altitudes, values, and
beliefs operating within a community or
environment that lead both to the entering
behaviour and aspiration towards self
employment or venture creation
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Research on enterprise culture
Research findings indicate that:
Those who have parents or relative who
own small businesses are likely to becomeentrepreneurs than those without similar
acquaintances
Those who have worked in small
enterprises are more likely to establish
such enterprises later
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Research on enterprise culture
Those who work in organizations which allowhem greater deal of independence and freedomof operations under conditions of uncertainty aremore likely to establish businesses than others
Those coming from a culture which supportsindividual small business ownership whether for
religious purposes, ethical or moral reasons aremore likely to establish businesses than othersoutside the culture
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Components of an enterprise culture
1. Abundant positive role models of successful independentbusinesses
2. Ample opportunity for familiarization with small business tasksespecially during youth
3. Network of independent businesses family contacts andacquaintances reinforcing familiarity and providing market entryopportunities
4. Provision of formal/informal knowledge and insight into the
process of independent business management
5. Opportunity to practice entrepreneurial attributes reinforced bysociety culture during formative years
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ENTREPRENEURIAL
BEHAVIOUR THEORIES
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Entrepreneurial behaviour theories
Entrepreneurial behaviour looks at activities,interactions, competences and feeling ofentrepreneurs
There exist a number of schools of thoughtwhich view entrepreneurship from afundamentally different perspective.
Such perspectives are:
EconomicPsychological
Social
Managerial
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Economic theories perspective
Economic theories of entrepreneurship focus on theeffects that economic environment has onentrepreneurial activities and what impact entrepreneurshave upon the economy
From the economic perspective, an entrepreneur is aperson who brings together the resources or factors ofproduction into combinations that make their valuegreater than before
Economic theories help in providing missing links in theeconomic environment that are necessary for businessstartup and survival
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Economic perspective (cont)
Proponents of economic theory believe that
entrepreneurship and small business
development is influenced by factors such as:
Market structures and opportunitiesInvestment climate
Government restrictions or encouragement
An entrepreneur is seen as a person who
specializes in taking judgmental decisions aboutthe coordination of scarce resources (Casson,
1982)
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Economic perspective (Cont..)
Classical economist like Keynes emphasis
optimization of existing resources in order
to reach equilibrium.
Here the entrepreneur is defined as:
The stabilizing force that brings market forces
closer to an equilibrium
He/she shifts economic resources out of anarea of lower risk/productivity to areas of higher
productivity/greater yield
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Here the entrepreneur is defined as:
An entrepreneur is the person involved in allocatingscarce resources in order to produce goods/serviceswith utility, hence a forth factor of production he/shedistributes and organizes resources
An entrepreneur is the stabilizing force which bringsmarkets closer to equilibrium and which makes marketforces work more smoothly
The entrepreneur is the person driven by profit motive(profit maximization and cost minimization) and gainssocially and financially from economic activities.
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Here the entrepreneur is defined as:
Entrepreneurs create a dynamic disequilibrium in the economy asopposed to static equilibrium
This he does by creating innovations which introduce newcombinations and production
Entrepreneurial activity is a destabilizing force that starts theprocess of creative destruction, the essence of economicdevelopment
Entrepreneurs are not manage who undertake routine activities on
the basis of past experience without idea of change, rather they arerisk takers in the area of uncertainty and engage in activities thathave not been undertaken before
I th i t
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In summary, the economists see
entrepreneurs as:
Risk takers or the bearer of uninsurable risks
(Cantillon, 1755)
A combiner of resources or factors of production
such that wealth is created (Say, 1832) Innovators who bring new combinations into
production process (Schumpeter, 1942)
Schumpeter saw entrepreneurship as the engine
of economic development which resulted in new
combinations (called an enterprise)
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The new combinations may include:
Introductions of new products or services
Introduction of new method s of production
Opening on new markets
Finding new sources of supply of rawmaterials or components
Providing induction reorganizationNeoclassical economist view
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Implications/comments on this theory
You can train entrepreneurs by enhancing
their creativity and supporting innovating
ideas
People can be trained to sharpen their
decision making abilities to see and
analyse opportunities creatively
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SOCIOLOGICAL THEORIST
PERSPECTIVE
According the this perspective environmental factorssuch as belief systems, cultural values, socialstructure for the basis of entrepreneurial behaviour
Studies by some sociologist indicate that the decision to
become self employed is related to having associationwith another person who is a close relative
Social interactions provide potential entrepreneurs with:
Market/market information
Credit Social support
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SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
The sociological theories have been based
on the premise that members of a given
society generally adhere to system of
structured roles which can encourage or
discourage entrepreneurships.
Entrepreneurship activities will be high in
those cultures where entrepreneurships isheld in high esteem.
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SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
The social influence of entrepreneurshipbehaviour can be explained in terms of:
Family background - the general hypothesis is
that those whose parents are self employed orbusiness owners are significantly more like tobecome business owners themselves
Religion research findings indicate that someparticular religious persuasions tend to haveentrepreneurial spirit. For example, Jews arecommonly perceived as having an enterprisingnature
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SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Ethnicity research indicates that some ethnicgroups are more inclines to entrepreneurialactivities than others
Education and training research studiesindicate that entrepreneurial activities can beenhances through educational and trainingprogrammes .Relevant training providesprerequisites for business ownership and helps
in reducing business failure ratesCultural values some cultural values
discourage/encourage entrepreneurship
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Comments of this perspective:
It perpetrates the myth and stereotypes
in society related to superiority and class
system and are not healthiest for
development
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE
The psychological theories of entrepreneurshipare based on traits and personalitycharacteristics that are exhibited by successfulentrepreneurs
The central focus of this perspective is that theentrepreneurs have unique values, attitudesand needs which drive them to businesscreation
People behave according to their values, andattitudes irrespective of the different situationsthey might be
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
The psychological school focuses on personalityfactors
Believe that entrepreneurs have unique valuesand attitudes towards work and life
This propel the individual to behave in a certainway
According to this theory, some people are morelikely to become entrepreneurs because of their
mental attitude for independence or withdissatisfaction with operating under the directionof others
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Entrepreneurs, as other people acquirethese values attitudes and needs as theygrow up from:
FamiliesSchools
Churches
Communities
These values are learned in the process ofsocialization into a culture.
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Since values are leaned early in life ad are well
established prior to adulthood, characteristics
can only be reinforced in those who portray
them or have them in latent (dormant,concealed) form
It would not be cost effective to try to develop
them in people who do not possess them but toreinforce them in those who already have them
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
The major distinguishing features, or quality ofcharacters that have been widely explored within thepsychological perspectives that make entrepreneursdifferent from others are: Need for achievement
Locus of control Risk taking propensity
Positive self image
Initiative
Independence
Future orientation
Goal setting
Time bound planning
Environmental searching
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PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Extreme psychologist further suggests
that:
The entrepreneur has an ability, sixth sense
and instinct which is inborn
The entrepreneur portrays intuition, energy,
persistence and self-esteem
Entrepreneurs according to this version areborn as they have natural abilities, training
cannot influence in any way
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Comments of this perspective:
It perpetrates the myth and stereotypes in
society related to superiority and class system
and are not healthiest for development
It simply says people are not equal and itwould be difficult to organize
training programmes suitable for all
It can give negative attitude towards young
people who might not be lucky to possess theunique abilities and traits
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MANAGEMENT PERSPECTIVE
This school emphasize organisation of resources in asystematic way to attain maximum profit
Entrepreneurs are therefore organizers of an economic
resource venture They organise, own, manage and assume risks
Entrepreneurships is therefore a series of activists whichfocus on the central function of managing a businesssuch as production, planning, marketing,coordinating, controlling, evaluating and financing
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Management perspective (cont..)
The managerial school therefore emphasizes onimproving a persons capacity throughdeveloping his/her
Analytical
Rational
Cause-effect relationship
Another stand of management view
entrepreneurs as leaders on people They have the capacity to adapt their styles in
order to get maximum out of people
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Management perspective (cont..)
They view people as their greatest resource andrealize that they cannot accomplish goals alonebut must depend on other people and their skills
Training is therefore possible by knowing how to
motivate, lead and direct people Basic questions that people who follow this
school of thought would be asking themselvesare:What are my plans?
What are my capabilities?
What are my credentials?
How do I get most from the people around me?
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CONCLUSION
1. All these theories provide a useful insight inunderstanding and explaining entrepreneurship
2. It is possible that they can complement each
other in developing a rich entrepreneurialprogramme
3. Pre- starters can benefit a lot formpsychological, social and economic schools ofthought
4. Start ups and on going entrepreneurs canbenefit more from management school
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Entrepreneurship Process
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Is everybody who starts a
business an entrepreneur?
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Appreciating entrepreneurship
Right attitude:
Positive entrepreneurship can be a
way of life
Not a get rich quick business
Be motivated to an entrepreneur
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Entrepreneurship Process
Steps:
Appreciating entrepreneurship
Idea generation
Opportunity assessment
Business planning
Registration
Financing
Start up
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ENTREPRENEURIAL
MOTIVATION
ENTREPRENERIAL MOTIVATION
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ENTREPRENERIAL MOTIVATION
.
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ENTREPRENEURAIL MOTIVATION
Entrepreneurial motivation is affected by
two main factors
internal motivating factors
External motivating factors
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Internal motivation
Internal motivation is the inner drive you
get as a result of desire to achieve a
certain goal or fulfill some needs
The goals are the aspirations that define
the base of inner drive of an entrepreneur
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Internal factors affecting motivation
Self actualization
One of the powerful motivators that form the base forinner drive on an entrepreneur is self actualization.Usually a successful venture offers various form ofreward in terms of benefits identity and prestige. Having
achieved the basic human needs, entrepreneurs becomemore confident in their abilities to realize their capabilityof achieving more
Profit maximization
The drive to maximize profits will make potentialentrepreneurs work harder, be more innovative and evenventure into other enterprises
I t l f t ff ti ti ti
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Internal factors affecting motivation
(cont)
Desire to succeed
This is an aspiration to achieve success toward oneswelfare to maximize pleasure and happiness. This willgive an entrepreneur public appreciation and recognition,especially if they have accomplished difficult tasks where
others have failed
Survival
An entrepreneur has to face many challenges,completion, internal and external forces. To succeed,
entrepreneurs have to strive to overcome theseobstacles. This sprit of survive sustains them through achallenging environment
I t l f t ff ti ti ti
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Internal factors affecting motivation
(cont)
Adventure
This is a way of taking risks or challenges without knowing the endresult. This gives a potential entrepreneur an opportunity to exploreand this helps and enhances his knowledge and innovativeness
Independence/self reliance An entrepreneur does not like being controlled by others. They havetheir own original thoughts and ideas and generally do not conformto routine jobs and practices. To satisfy their needs they seekopportunities that provide independent hence become masters oftheir own activist and taking full responsibilities for their outcome
Power The desire to feel in total control of all situations
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External motivation
What external factors would motivate me
to start a business?
External motivation factors are those
factors that expose you to the available
public resources and facilities which
would encourage you to start a business
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External motivation factors
Credit facilities
These are the facilities which would help you to acquirethe necessary capital outlay to be able to set up anenterprise
This capital outlay will assist you to purchase rawmaterials, machinery, equipment and other inputs
Infrastructure
Includes building, communication, informationtechnology, transport and other auxiliary services andutilities
Lack of adequate infrastructure creates physicalconstraint to you when implementing your ideas.
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Access to business information
This includes investment information, smallbusiness development assistance andconsultancy services, fairs and exhibitions
Training In entrepreneurship, small business
management, business planning, services,Access to technology
Technology linkages through research institutionBusiness incubation services to guide
growth
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Access to markets
Access to local markets though subcontracting,international or regional markets through tradeagreements e.g. AGOA, COMESA
Export and import incentive schemes:
These are government schemes used to provideconcessions to you, when you are involved in the exportor import activities. Concessions on taxes, customs andexcise duties, speedy licensing with regard to export andimportation of machinery equipment and raw materials
by the government will reduce your operating costs ifyour are involved in import and export activities. This willreduce your costs of imports and encourage you to setup an enterprise or expand the existing one
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Pricing policy
This is part of government policy which assistsor encourages you to produce and sell goodsand services
It is important that a pricing system must takeinto account the total cost require to produce agood or services whereby you are able torecover production cost and be left withreasonable profit margins which could de usedto improve your business
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Export processing zones (EPZ)
This is a government scheme to assist investorsmanufacture internally competitive goods aimedentirely for export markets
You as a local invest will benefit from not payingheavy freight costs, additional fees on insurancein transit, no delays form lengthy shippingdurations when you purchase from EPZ
If you invest in the EPZ you will benefit formexemption form export earning, raw materials,capital transactions, inputs relating tomanufacturing activities
Idea generation sources of business
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Idea generation sources of business
ideas
Vocational training and experience
Hobbies
Through networking, talking to bankers,sales people, peers
Observing the environment the
unexpected, process needs, change in
technology, demographic changes, law
changes
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Shows, exhibitions, fairs
Brainstorming in groups or community
Newspapers and magazine from special features ( e.g.on value addition), to tenders, adverts, etc
Survey Talking to successful business people - they can advise
you on certain businesses that are profitable
Talking to potential customers - one can get to know
their preferences for certain products or services
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Business opportunity
Not all ideas are opportunities
An opportnity is an attractive project idea
which an entrepreneur accepts for
investment on the basis of what he knows
about the possible success of the project.
Characteristics of a good business
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Characteristics of a good business
opportunity
A business idea will be a businessopportunity if it has the followingcharacteristics:
DemandThere is a good market scope for the
product the available products are notenough to everybody or its not what thecustomers want there is a gap in themarket
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Good return on investment what is the
expected return on investment, when are
you likely to break even
Availability of inputs raw materials,
technology, labour
Skill required available especially
specialized skills
Political and legal framework
Opportunity assessment/validating an
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idea
Purpose:
To assess whether an idea is feasible(workable) and viable (give the owner
good returns)
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Validation process
This requires some sort of feasibility studes
which will look at four things:
Market
Your strengths
Profitability
Environment
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The market
Is there a market
Is there a need that needs to be fulfilled
Do you understand the customers
What is the industry trends
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Your strengths
Do you have:
The required skills and appropriate
technology
An entry strategy
Organizational plan (Technical and
management)
Enough capital to finance the business
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Profitability
How profitable is the business
How long will it take to break even, can
you wait that long
What are the expected risks
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The environment
Evaluate the environment in terms of:
Technology
Resource available
Government policy and laws
Infrastructure
Market conditions
Culture
competition
Economic assessment
Business trends
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Business Planning
Failing to plan is planning to
fail
B i l h i i ?
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Business plan what is it?
A written document with specificprocedures for achieving results within aspecified period of time
It determines what a a business will is, willbe and should be
It is a document which summarizes abusiness opportunity ( why the opportunityexists and why the management team haswhat it takes to achieve it)
B i l i ( t )
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Business planning (cont)
It defines and articulates how the
management team will seize and execute
the opportunity identified
It specifies procedures for achieving
objectives/results within a specified period
of time
It t t
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It states:
What will be done, how it will be done, by
who the work will be performed, under
what time constraints
It is a document which defines the most
desirable, most timely, least hazardous
route to a given destination
Wh l
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Why plan
To raise capital to convince investors
that the new venture:
Has an opportunity
Has an entrepreneurial talent
Has management talent to exploit the
opportunity
Has rational and coherent and believableprogramme for achieving revenue and
expenses targets on time
Wh l
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Why plan
As a means for guiding business growth
to understand growth
to guide growth
it is a flight stimulator
gives confidence in decision making
helps in redefining strategy and in making
difficult decisionsClaries the venture financial requirements
Wh l
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Why plan
Save management time
Ensures management and marketopportunities are not missed
Provide for effective utilization of firmsresources
Encompasses strategies for carrying out
decisionsProvides systematic feedback as a means
of measuring results
Wh l ( t
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Why plan (cont
Analyse the impact of competition
Track changes in customers lifestyles,
wants and needs
Aid in decision making
B i l tli
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Business plan outline
Phase 1: the industry the company,products or services
Phase 2: marketing research, analysis and
marketing planMarketing research and analysis customers,
market size, trends, competition, estimatedmarket share
Marketing plan overall marketing strategy,pricing strategies, sales tactics, advertising andpromotion programs, distribution plan
B i l tli ( t )
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Business plan outline ( cont)
Phase 3: operational analysis and
organizational plan
Designer and development plans
Manufacturing and operational plans (geographical location, facilities and capacity
improvement, strategy and plans
The management team ( organizational
structure, key personnel, compensation,
incentives, support advisors
B i l tli ( t )
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Business plan outline ( cont)
Phase 4: financial analysis and plan
The economics of the business gross and
operating margins, profit potential, fixed and
variable costsFinancial plan pro forma income statements
balance sheet and cash flow, breakeven
analysis
Proposed company financing desired,sources and uses
Business plan outline ( cont )
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Business plan outline ( cont)
Phase 5: Executive summary
Summary description of the business
The opportunity and entry strategy
Target market and sales projection
Competitive advantage
Economics and profit potential
The teamFinancial plan
Overall schedule, critical risks and assumptions
Entrepreneurship financing
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Entrepreneurship financing
Purpose of financing
Types of finance
Sources of funds
Accessing funds
Utilization of funds
Purpose of financing
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Purpose of financing
To start a new business
To expand a existing business
To meet an emergency situation
To meet normal operating costs
Types of finances required
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Types of finances required
Long term finances usually for buying fixed
assets
Short time finances for buying stocks,
meeting operational expenses, repairs etc
Sources of financing
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Sources of financing
Sale of personal assets
Savings
Profits that is put back into the business
Donation from friends and relatives
Trade credit
Mortgage
Hire purchase
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Bank loans:
Overdraft
Loans secured or unsecured
Specialized loans ( for specific
sector)
Government and donor funding
What determines which source to go for?
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g
Purpose
Amount
Repayment
Terms and conditions
Security
Availability
costs
Getting started
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Getting started
Meeting all legal requirements
Registration
Identification and recruitment of staff
Creating commitment and buy ins
Opening bank account