BBM210/05 – Entrepreneurship Development – REVISION

Sources of research on entrepreneurial success

Research and Popular Publications

 Technical and professional journals
 Textbooks on entrepreneurship
 Books about entrepreneurship
 Biographies or autobiographies of entrepreneurs
 Compendiums about entrepreneurs
 News periodicals
 Venture periodicals
 Newsletters
 Proceedings of conferences
 The Internet
Direct Observation of Practicing Entrepreneurs
 Interviews
 Surveys
 Case studies
Speeches, Seminars, and Presentations by Practicing Entrepreneurs

Entrepreneurial motivation
a. To make money
b. To gain social recognition
c. To secure self-employment
d. Dissatisfaction with existing jobs
e. To use technical /professional knowledge
f. Previous knowledge and experience
g. Encouragement by family member and friend
h. Imitation of success entrepreneur

Entrepreneurial leadership
Entrepreneurial leaders have some specific leadership attributes.
Entrepreneurial leadership is leadership that is based on the attitude that the
leader is self-employed. Leaders of this type:
a. take initiative and act as if they are playing a critical role in the
organization rather than a mostly important one and energize their people,

b. demonstrate entrepreneurial creativity, search continuously for new

opportunities and pursue them,

c. take risk, venture into new areas and provide strategic direction and
inspiration to their people,

d. take responsibility for the failures of their team, learn from these failures
and use them as a step to ultimate success and strategic achievement.
 Entrepreneurial leadership involves instilling the confidence to think, behave
and act with entrepreneurship in the interests of fully realizing the intended
purpose of the organization to the beneficial growth of all stakeholders
involved.

Innovation Process
Innovation:
I. Is the process by which entrepreneurs convert opportunities into
marketable ideas.
II. Is a combination of the vision to create a good idea and the
perseverance and dedication to remain with the concept through
implementation.
III. Is a key function in the entrepreneurial process.
IV. Is the specific function of entrepreneurship.

Types of Innovation
 Invention
 Extension
 Duplication
 Synthesis

Sources of Innovation
 Unexpected occurrences
 Incongruities
 Process needs
 Industry and market changes
 Demographic changes
 Perceptual changes
 Knowledge-based concepts

Principle of innovation
 Be action oriented.
 Make the product, process, or service simple and understandable.
 Make the product, process, or service customer-based.
 Start small.
 Aim high.
 Try/test/revise.
 Learn from failures
 Follow a milestone schedule.
 Reward heroic activity.
 Work, work, work.

Type of debt financing

Debt finance means borrowing money from an investor or a lender with the
clear understanding that the money will be repaid, usually with interest, at an
agreed time in the future. Debt financing does not normally include any
 provision for ownership of the company, rather debt financing places an
obligation on the borrower to repay the money within a time frame. The
amount of interest charged on the borrowed money is a direct reflection of the
perceived risk; for instance, a start-up business may be subject to a higher
interest rate than an established company

Business owners can also take loans from friends or relatives with a formal
agreement to repay such money on or before a certain date. The terms for
this type of debt financing are flexible as determined by both parties. Another
advantage to personal loans is that friends and relatives are much more likely
than a financial institution to invest in a new business venture based on their
existing relationship with the business owner.

a. Self, family and friends

b. Shareholders and directors
c. Internal company sources
d. Banks
e. Second-tier finance
f. Special financial institutions
g. Venture capitalists
h. Mergers and acquisitions
i. Grants

Therefore, this section will include funding requirements, future funding

requirements (e.g., over the next five years), details of how the company will
use the funds received and any long-term financial strategies the company is
planning that would have an impact on its financial status.

Strategies that entrepreneurs should take in starting new business/ venture

Before starting a business, entrepreneurs should make orderly preparations

so that they are able to select an appropriate entrepreneurship activity based
on their strengths. The preparations should include the following:

1. Entrepreneurship activity planning

Entrepreneurs must make plans before venturing into the field of
entrepreneurship. They must know the proper time to venture into a particular
business. They should plan to start a business when they can gain profits
from day one. They should also attempt to find out whether it is possible for
them to survive in the field. To do this, they must gather facts relating to their
target markets, such as market size, competitors’ strengths and the
restrictions that they might face. They should also assess whether incoming
competitors may offer something new and interesting that will disrupt their
plans.

2. Identifying the market

Entrepreneurs must research their target market’s size and determine the
percentage of the market that they want to capture. They should be able to
identify the target market in terms of the age, gender, location, education level
and the buying power of their future customers. Successful entrepreneurs
have said that the only way to see opportunities is to really know customers
and their problems. This knowledge provides entrepreneurs with opportunities
to create new products. The assessment of the market should help
entrepreneurs identify where potential business lies.

3. Price setting strategy

The price of a product will influence customers’ acceptance of the product.
Price will also determine the amount of profit that entrepreneurs gain.
Entrepreneurs can set prices based on those of their competitors, or act
bravely and implement a price differentiation strategy. When setting prices,
entrepreneurs should also take into consideration that customers also
consider other factors when making a purchase. These factors include:
a. The time involved in selecting a product to purchase.
b. The physical effort involved in selecting a product to purchase.
c. Sensory and psychological costs.

4. Marketing strategy
After deciding the price of the product or service and considering all the costs
involved, an entrepreneur must create a strategy to ensure that the product or
service is known to everyone, especially to the target groups. The strategy
must first create an interest among potential customers to purchase the
product, assure them that the product is the best that they can find and inspire
in them the confidence to continuously buy the product. A marketing strategy
includes specifications of how the product is to be presented through
packaging, usage and storage. The second part of the strategy concerns the
identification of suitable marketing locations (urban or rural) and the place of
manufacture. The third part of the strategy focuses on the selection of
distribution channels; that is, whether the product will be distributed through
sales agents or by the company itself.

5. Developing skilled manpower

Possessing skilled manpower that has enthusiasm and commitment is an
essential factor for the success of a company. Therefore, it is the responsibility
of an entrepreneur to select suitable employees, provide a competitive salary,
upgrade workers’ skills by providing them with training and prepare an
effective performance evaluation system. Efforts must be made to avoid a
high absenteeism rate, retrenchment, creating conflicts with employees and
taking measures that might cause dissatisfaction and depression among
employees.

6. Total project cost

 Entrepreneurs must look at the assets that they own, which can be used to
fund the business that they are about to venture into. They must consider total
fixed property in hand that can be mortgaged and cash that can be used as
capital. They must look into their financial resources, whether from their own
savings or loans from their family and financial institutions. If entrepreneurs
obtain a loan from a financial institution, they must look at the terms and
conditions of the loan, the payment methods and the payment period.

Reasons of new venture fail

• No Business Plan
• Under Funded
• Lack of Operating Goals and Objectives
• Failure to Understand the Industry and the Target Customer
• No Means of Differentiation – Just Another “Me Too” Business
• Poor or No Marketing Programs in Which to Attract New Customers
• Not Cost Competitive

Entrepreneurial communication styles

Entrepreneurs spend most of their time talking and listening to other people.
To be able to communicate well, entrepreneurs should know about the
barriers to communication and how to overcome them. The main
communication barriers are conflicting information, being distracted by the
personality of people, the influence of a group of people, non-verbal
communication, emotions, noise and distance. Effective ways to overcome
these barriers are to use feedback, face-to- face communication, the
appropriate channel, reinforcement, direct and simple language, and by
reducing noise. It is also vital to adjust to the perception of the receiver.
Entrepreneurs should apply good listening skills to receive information and to
get on better with other people.

What is communication?
Communication is a process that involves the exchange of information,
thoughts, ideas and emotions. Communication happens everywhere and it is
very important in entrepreneurship because an entrepreneur needs to
communicate with various stakeholders for various reasons. Communication
is a process that involves a sender who encodes and sends a message,
which is then carried via the communication channel to the receiver, who
decodes the message, processes the information and sends an appropriate
reply via the same communication channel. Most definitions say that
communication is the process of using symbols to transfer the meaning of
information. It is also said that communication is the understanding not of the
visible but of the invisible and hidden. These hidden and symbolic elements
set in culture give meaning to the visible communication process.

Styles of communication
There are four basic communication styles:

1. The dominant communicator

Entrepreneurs who are dominant communicators tend to “run people over” in
interpersonal conversations. Dominant communicators often believe they
are never wrong, their opinions are more important than those of others,
and people who disagree with them are either disloyal or misinformed. These
misguided beliefs often lead to maladaptive behaviours such as public
criticism of others, blaming others when problems arise, acting bossy and
negative, using verbally aggressive and threatening language, showing a lack
of appreciation for the accomplishments of others, interrupting others and
even finishing their sentences or dismissing new ideas without listening to
their rationale.

2. The passive communicator

Passive communicators tend to turn people off by being indirect and meek in
their interpersonal communication. Entrepreneurs who are passive
communicators often believe that they should not express their true
feelings, create controversy or disagree with others.
They often think that other people’s opinions are more important than their
own. These beliefs often lead to maladaptive behaviours such as remaining
quiet even when being treated unfairly, asking for permission unnecessarily,
frequently complaining rather than acting and delegating personal choice to
others. Passive communicators retreat from interpersonal conflict and accept
directions without question. Passive communicators create frustration and
mistrust because they do not know where they stand. They create the
presumption that they lack the courage to be a leader. They also hinder open
communication.

3. The passive-aggressive communicator

The entrepreneurs who are passive-aggressive communicators tend to
believe that they should “go behind people’s backs” instead of dealing
with people directly. They appear to agree with others when they really do
not agree. They make sarcastic remarks and take subtle digs at others. They
send critical messages via e-mail and copy others. They hold grudges, value
“getting even” and sabotage others behind their backs (i.e., spreading
negative gossip). Passive-aggressive communicators refuse to help others
and often give others “the silent treatment.”

Passive-aggressive communicators cause increased factionalism and

favouritism in an organisation. They increase negative gossip or “back
stabbing”, creating an environment of low interpersonal trust. Their actions
often lead to diminished job performance, increased uncertainty, job
dissatisfaction and increased staff turnover.
 4. The empathic communicator
Unlike the previous three styles, the empathic communicator interacts
effectively with others to maintain healthy, long-term relationships.
Companies with numerous empathic communicators are likely to have
more healthy organisational cultures. Empathic communicators generally
believe that personal opinions and the opinions of others are important, and
that the process of coming to a decision  not just the outcome  is
important. They think acquiring input from others boosts morale and generally
leads to better decision-making.

These beliefs often lead to desirable behaviours, such as communicating

expectations instead of demands. The focus tends to be on proactive and
action-oriented conversation, with stated and realistic expectations. Empathic
communicators increase the perception of autonomy or personal control in a
company, and motivate people to achieve and “go beyond the call of duty” for
the company. They foster an improved sense of appreciation and respect,
which in turn leads to increased levels of interpersonal trust, respect, honesty
and openness. The end result is enhanced organisational communication,
higher morale and better performance.

Intrapreneur development process

Generally, intrapreneurs are individuals with entrepreneurial characteristics

who practise their ideas on their company’s products. Intrapreneurs are
usually individuals who strongly believe in their own talent and ability, and
have a strong desire to create something using their own initiative and
creativity.

There are five levels in the intrapreneur development process model:

1. Problem definition
Business opportunities can exist within the company or within the industry. In
order to identify these opportunities, intrapreneurs must be sensitive to
changes and open to anything that is out of the ordinary. One source of ideas
for intrapreneurs is an unexpected failure. This failure will lead them to
question or challenge norms by asking: “Was it caused by the way things are
currently done?”

2. Building partnerships
Intrapreneurs have to develop relationships within the company’s bureaucracy
in order to gain support when implementing new projects or products,
especially during the initial stage. Therefore, intrapreneurs will usually try to
find partners and suppliers who are willing to help them. They will use their
creative ideas to get these people involved in their projects. They will also use
a good business plan to obtain resources.
 There are several differences in the business plan prepared by intrapreneurs
and entrepreneurs. Firstly, in the business plan prepared by intrapreneurs
there is no ownership section that discusses share distribution and other
matters related to ownership. This is because the company owns everything.

Secondly, intrapreneurs do not have to find external financial resources.

Thirdly, there is a section in the intrapreneurial business plan that discusses
the relationship between operational, financial and marketing strategy, and the
investment required to carry out intrapreneurial activities.

3. Resource distribution
Like entrepreneurs, intrapreneurs must work hard to get the resources that
they need, such as physical, technological, financial and human resources.
They also need to obtain a good reputation. In the early stages of an internal
business project, resources can be borrowed from other departments.
However, once the internal business starts to grow, it has to get its own
distribution of resources to ensure smooth operations can be carried out.

4. Project implementation
Intrapreneurs implement projects in almost the same way as entrepreneurs
do. The only difference is that there is a possibility that like-minded individuals
or fellow intrapreneurs from different departments will work together with them
to ensure the success of a project. These people will cooperatively develop a
strategy and evaluate the industry environment.

5. Project completion
In case the project should fail, all its resources will be reabsorbed by the
company for future use. In fact, the resources can also be sold to other
companies or individuals who are interested. On the other hand, if the project
succeeds, the company needs to be prepared to provide the project team with
proper compensation for their efforts.

Strategies to develop intrapreneurs

Intrapreneurship is one solution to the problems and needs of companies that
operate in today’s highly competitive business world. In order for companies
to survive, they have to implement the following strategies to develop
intrapreneurs:

1. Develop an environment that encourages intrapreneurial activities

Factors such as support from top management, availability of incentives,
flexible organisational structure, availability of resources and tolerance
towards risk taking are important in encouraging intrapreneurial activities.

2. Avoid extreme bureaucracy

Extreme bureaucracy, in addition to lack of support from top management, is
a major obstacle to the development of innovation. Hence, the company
 should be prepared to restructure the firm in order to create an environment
that encourages innovative and creative activities. In other words, the
company should be prepared to practise decentralisation and willing to
empower its employees in order to encourage the development of
intrapreneurs.

3. Develop an efficient control system for the company

The existing control system needs to be improved in order to create a
balanced and effective reporting system. A high level of trust can lead to
better two-way communication among members of the firm. This type of
control system will enhance the feeling of trust among those who are involved
in the intrapreneurship programme.

4. Provide a training programme to develop intrapreneurs

Remember, people are developed into intrapreneurs; they are not born with
the skills. Therefore, companies should provide training programmes to
develop intrapreneurs. The programmes should introduce the concept of
entrepreneurship and define the importance of intrapreneurship. Emphasis
should be given to explaining the benefits that can be gained by the company
and the people involved. The main purpose of these programmes should be
to educate employees and entrepreneurs regarding the processes of
intrapreneurship so that it can be accepted without prejudice.

The training programmes can be conducted using methods such as lectures,

discussions, case studies, video presentations, group development projects,
individual assessments and trainee presentations. Usually, in these training
programmes, trainees will learn about the opportunities and constraints in
intrapreneurship. In addition, they should be encouraged to voice out their
opinions. They should also be given the chance to evaluate their own
creativity and develop a long-term programme to increase their ability to solve
problems.

5. Organisational culture
Those who are interested in developing an intrapreneurship programme
should first understand the organisational culture of the company, such as its
risk-taking propensity and the level of error tolerance. The cultural orientation
of a firm plays two contrasting roles. It can either encourage the development
of new ideas, which is a very important aspect in intrapreneurial development,
or hinder it.

Trends and technologies to be observed by technopreneurs

A technopreneur is an entrepreneur who is technologically savvy, creative,
innovative and dynamic, who dares to take the unexplored path, and who is
very passionate about his or her work. Technopreneurs lead the process of
 continual improvement and always try to redefine the dynamic digital
economy.

Technopreneurs are people such as Steve Jobs and Steve Wozniak (Apple
Inc.); Bill Gates (Microsoft); Jerry Yang and David Filo (Yahoo! Inc.); Larry
Page and Sergey Brin (Google); and Jack Ma (Alibaba.com). Malaysian
technopreneurs are not as well known, but this country does have a number
of them; for example, Mark Chang (Jobstreet.com) and Tengku Farith
Rithauddeen (Skali.com). What all these people have in common is the ability
and passion to turn leading-edge technology into a profitable business.

Technopreneurship has been called the technological/scientific combination of

the academic world and entrepreneurship (Kariv 2011). It is the merging of
technological skills and knowledge with entrepreneurial skills. It is important
because, like other forms of entrepreneurship, it creates jobs, especially for
the better-educated people of the world. It is especially vital today, because
rapidly advancing technology is the driving force behind the growth of the
world economy.

Technopreneurs need to be able to break free of traditional thinking in order to

explore the many business opportunities that technological advances offer. To
do this, they need to be able to identify and closely observe trends and
technological changes that occur in the world.

Observing trends and technological changes

In this subsection, we will touch upon the trends and technological changes
that are happening in the world today. We will focus on information and
communications technologies (ICT), but you should be aware that advances
in other technologies and sciences, such as biotechnology and materials
technology and the pure sciences, will also have a huge impact on the
development of the world economy.

Innovations in information and communications technologies have created a

digital revolution that is changing the way the world works, learns,
communicates and transacts business. E-commerce continues to show strong
growth and has been influencing the social and economic growth of many
countries. E-commerce technologies have helped countries to accelerate their
economic growth and to provide more opportunities for businesses to grow,
but they have also created challenges and effects across numerous areas of
society and for policy makers. These issues involve economic productivity,
intellectual property rights and privacy protection, and the affordability of and
access to information, among other concerns.
 The decade of the 2010s will witness the convergence of three critical trends
that each exert a powerful pull on the economic trajectory of the world: the
aging of the developed economies, the spread of data networks across the
planet and the rise of indigenous entrepreneurism as an alternative path to
economic development instead of the top-down economic assistance model
that prevailed in the post-colonial period. These trends on their own are
relatively well-known and planned-for; however, their interactions give rise to
uncertainties.

Demographers, sociologists, technologists, economists and political scientists

tend to study each of these trends in isolation. Consequently, forecasts about
the future of the workforce, the future of technology and the future of the
developing world tend to reflect the individual or selected expertise of people
and institutions conducting the analysis.

In the real world, these trends are unfolding in tandem. They touch and
reinforce one another at various points. These areas of overlap and
interrelationship suggest strategies for businesses, governments, non-
governmental organisations (NGOs) and individuals seeking to address the
significant challenges of the next two decades, and they provide one set of
answers to questions about the size, shape and nature of the next generation
of innovation.

Emergence of mobile commerce

One of the most important developments of the past decade has been the
emergence of mobile commerce. The number of mobile phone users
worldwide has increased rapidly over the last five years; from an estimated
2.5 billion in September 2006 to about 5 billion in 2010. In Japan, seven out of
ten people have mobile phone accounts, and in countries such as Italy,
Norway, Sweden and the United Kingdom, the market penetration of mobile
phones has reached 100%.

The growth of Internet-enabled mobile devices has created an extraordinary

opportunity for e-commerce to leverage the benefits of mobility. The channel
for this opportunity is mobile e-commerce, commonly known as m-commerce,
which refers to the ability to conduct financial transactions (including the ability
to purchase goods or services) through a wireless Internet-enabled device.

M-commerce allows e-commerce businesses to expand beyond the traditional

limitations of the fixed-line personal computer, thus increasing the overall
market for e-commerce. Traditional e-commerce models are generally poor at
representing m-commerce features. M-commerce has a unique value
proposition in that it provides easily personalised access to goods and
services anytime and anywhere.
 There are still technical limitations that hamper the growth of m-commerce,
such as the lack of a single standard platform, compatibility issues and
Internet connection quality. However, with mobile phones and other mobile
devices being in the hands of the majority of the people in the world today,
you can be sure that these limitations will eventually be overcome. To a
technopreneur, technical limitations are opportunities for innovation.

Type of franchising
 Product and Trade Name Franchise
Grants the right to use a widely recognized product or name (i.e. gas
stations)
 Business-Format Franchise
Provides an entire marketing system and ongoing guidance from the
franchisor (i.e. fast-food)
 Piggyback Franchising
The operation of a retail franchise within the physical facilities of a host
store (i.e. complementary food service in a fast food store)
 Master Licensee
An independent firm or individual acting as a sales agent with the
responsibility for finding new franchises within a specified territory
 Multiple-Unit Ownership
Holding by a single franchisee of more than one franchise from the
same company
 Area Developers
Individuals or firms that obtain the legal right to open several franchised
outlets in a given area

Evaluation of franchising venture

 Locating a Franchise Opportunity
 Investigating the Potential Franchise
 Information sources
 Independent, third-party sources
 Franchisors themselves
 Existing and previous franchisees
 Business operations matters
 Franchise fee
 First and Last Month’s Rent
 Leasehold Improvements
 Equipment
 Furniture and Fixtures
 Signage
 Insurance, Licences and Permits
 Training
 Initial Inventory
 Working Capital
 Royalty
Importance of business plan to an entrepreneur

a. It increases the chances of success

b. It describe the mission and vision of the business
c. It helps to determine the main competitor/s
d. It helps to determine the right way of managing the business
e. Increases stakeholder confidence
f. It helps to determine the barriers to the business
g. It serves as a performance tool

Format of Business Plan

o Title Page
o Table of Contents
o Executive Summary
o Synopsis
o Narrative
o Mission Statement and Goals
o Company Overview
o Products and/or Services Plan
o Marketing Plan
o Operating Plan
o Financial Plan
o Appendix of Supporting Documents

Financial questions that venture capitalists ask or ought to know.

I. Methods to Interpret Financial Statements

II. Liquidity - does the firm have the capacity to meet its short-term
(one year or less) financial commitments?

III. Profitability - is the firm producing adequate operating profits on

its assets?

IV. Stability - how is the firm financing its assets?

V. Return - are the owners (shareholders) receiving an acceptable

return on their equity?

VI. Financial Ratios - Restatements of selected income statement

and balance sheet date in relative terms

Six key elements of entrepreneurship

a. Motivation & Commitment:

It’s important to get the basic ingredients of start-up right. People who are lending
money look at the person first and foremost, so motivation is the most critical. You
need to convince your bank manger you can make your business work because
you’ve researched your market, you’ve costed out the business and you know where
you want the business to be in 5 or 10 years time. A means of showing your
commitment to the business would be to save and invest money.

b. Abilities & skill:

The second element is one of ability and skills. The individual has to have skills
appropriate to the kind of business they’re proposing to run. And if they don’t have
them, they should have a reliable person who can.

It could be that one person knows how to run a business from an operational and
management perspective, whereas another person has the technical skills to
develop the product or service.

c. Resources:

The third element is resources. That’s not purely about money and equipment; it’s
also about intellectual capability. (The ability to persuade others is important. Many
entrepreneurs have been able to negotiate very favourable deals against the odds,
when establishing their business).

d. Strategy & vision:

The fourth element is strategy and vision in terms of thinking four or five years ahead
and having some idea of where that business might be in the future and putting in
place a plan to achieve that goal.

e. Planning & organisation:

The fifth element is planning and organisation. Without planning, organisation,

coordination and administration, the product won’t get to market nor will it
satisfactorily meet demand. You need to think about systems, job roles, and quality
issues, which if handed effectively, will ensure you, can satisfy the market by
delivering on time and to the right place.

f. The idea in relation to the market:

The sixth element is the idea and more specifically, the idea in relation to the market
place. What we are trying to do is to make certain that we are customer focussed,
ensuring that the individual is satisfied in their requirements.

When we look at the six elements it becomes evident that you can have a bad
product with a highly motivated individual, which will produce an acceptable
business. But what you cannot have is a really good product with a de-motivated
individual. The business will not succeed because the product will not reach the
market at the right time, at the right place, or at the right price.

Benefits of e-commerce

a. It is another way of conducting business transactions that was traditionally

carried out using telephone, mail or face-to-face.
b. It gives smaller companies opportunities to compete with bigger companies.

c. Small companies serve small geographic area and Internet blurs geographic
boundaries.

d. E-commerce allows any business to access customers no matter where they

live.

e. Helps small firms with cash flow problems by reducing their sales cycle.

f. It helps small companies to build stronger customer relationships

g. Gain New Customers With Search Engine Visibility

h. Lower Costs

i. Create Markets for Niche Products

Nature and characteristics of entrepreneurship

a. It is a function of innovation.
b. It is a function of leadership.

c. It is an organisation building function.

d. It is a function of high achievement.

e. It involves creation and operation of an enterprise.

f. It is concerned with unique combinations of resources that make existing

methods or products obsolete.
 g. It is concerned with employing, managing, and developing the factors of
production.

h. It is a process of creating value for customers by exploiting untapped

opportunities.

i. It is a strong and positive orientation towards growth in sales, income, assets,

and employment.

Definition of agropreneurship

Agropreneur is defined as an entrepreneur who uses agriculture to build a business.

The term resonanted with this blogger after the realization that two Whitley County
Farmer's Market vendors had used the market as a doorway into the free enterprise
system.

Three Aspects of Entrepreneurship

o The identification/recognition of market opportunity and the generation

of a business idea (product or service) to address the opportunity
o The marshalling and commitment of resources in the face of risk to
pursue the opportunity

o The creation of an operating business organization to implement the

opportunity- motivated business idea

Agri entrepreneurs in india • Gala from bhuj an agri entrepreneur with technology •
30-year-old Gala, who's director of Jalbindu. Agri Tech. grows export-quality dates
and mangoes by installing a first-of-its-kind computer aided technology in India. •
After returning from Australia to his native village Ratual (near Bhuj), Gala aimed to
become an agri- entrepreneur. What helped in installing this technology was his
degree in horticulture from Queensland University in Australia.

Successful Entrepreneurs

According to the Small Business Administration, successful entrepreneurs have five

characteristics: –

1. Drive, which is defined as the most important attribute. Entrepreneurs

can expect long hours, high stress and endless problems, as they
launch a new business.
 2. Thinking Ability, or the characteristic that encompasses creativity,
critical thinking, analytical abilities and originality.

3. Aptitude for Human Relations. This characteristic recognizes the

importance of the ability to motivate employees, sell customers,
negotiate with suppliers and convince lenders. Personality plays a big
part in success in this area..

4. Communication Skills, or the ability to make yourself understood.

5. Technical Ability speaks to the need of the entrepreneur to know their

product and their market. They must consider the long- and short-term
implications of their decisions, their strengths and weaknesses, and
their competition. In short, they need strategic management skills.

Ethical consideration for entrepreneurs

 Ethics refer to moral principles or a set of values held by an individual or

group.
 Ethical business practices include assuring that the highest legal and moral
standards are observed in a company’s relationships with the people in your
business community.

 This includes the most important people in your business; your customer and
your employees.

 A business should make a list of values that will guide the ethical operation of
the company. In some organisations, the business leaders may even decide
to provide a list of ethical practices that the company will embrace and
demonstrate

Code of conduct describes

• Compliance with laws, rules and regulations.

• Conflicts of interest.

• Dealings with the public.

• Health and safety within the workplace.

• Competition and fair dealings.

• Discrimination and harassment.

• Environmental management.

• Proper use of company assets.

 • Payments to external providers or politicians.

• Confidentiality.

• Financial management and reporting.

• Trustworthiness.

Developing code of ethics/code of conduct

The principle of this code is based on principles in relation to sincerity, integrity,

responsibility and corporate social responsibility.

The Code of Ethics is formulated to enhance the standard of corporate governance

and corporate behaviour with the intention of achieving the following aims:

1. To establish a standard of ethical behaviour for directors based on

trustworthiness and values that can be accepted, are held or upheld by any
one person.
2. To uphold the spirit of responsibility and social responsibility in line with the
legislation, regulations and guidelines for administrating a company.

Apply your code of ethics to a written policy and procedure manual identifying the
major rules for operating your business.

1. Train your employees (and family members) to make ethical decisions about
the business.
2. Your code of ethics will apply to all types of business operations including the
following.

a. Handling cash and checks from customers.

b. “Negotiating” special prices for a friend without permission.

c. Accepting gifts from suppliers and business associates.

d. Selling damaged merchandise.

e. Warranties on products.

f. Merchandise returns policies for customers.

g. Returning merchandise to suppliers.

h. Handling shoplifters.

i. Accounting procedures for cash sales.

j. Employee theft.
 k. Insurance coverage adequate to protect the business and employees.

l. Supporting your advertising promises.

m. Checking in merchandise when received from suppliers.

n. Keeping the premises clean and free from harmful substances or germs.

o. Handling employee performance problems.

p. Telling customers the truth.

Way to identify business opportunities

a. Observing the trends - According to www.thefreedictionary.com, a

trend is defined as:

 The general direction in which something tends to move.

 The general tendency or inclination.

 Current style or vogue.

 The popular taste at a given time

b. Problem solving - A simple illustration of problem would simply be “the

difference between what you want and what you have”. It further
suggests an old saying “there are no problems - only opportunities.”
For many entrepreneurs, opportunities come in the form of a problem
looking for a solution. Once you are able to come up with a solution to
a recurring problem in your society, you are well on your way to
creating a product, service or business.

c. Finding gaps in the marketplace - Every now and then, demands in

the marketplace go unfulfilled for a considerable length of time. Gaps
occur when products or services needed by a specific group go largely
ignored by the mainstream providers because of their small numbers.
This is sometimes called a niche market. In such circumstances, an
entrepreneur sees such a problem or gap in the marketplace as a
potential opportunity waiting to become a business. In some other
cases, gaps in the marketplace are found in existing products and
 services. Consumers normally voice their opinion about the products
and services they currently consume through complaints and other
forms of feedback. This information provides adequate data to examine
the issues or problems involved with a view turning them into an
opportunity for a solution.

Factors influencing competition

1. Competition among existing companies

2. Entrance of new companies into the industry

3. Bargaining power of customers

4. Bargaining power of suppliers

5. Competition from substitute goods

Strategy to compete: The culture of competition

a. Determine business focus

b. Care for customers

c. Appreciate employees

d. Reduce waste

e. Emphasis on quality

f. Show personal commitment

g. Quick to take action

h. Reduce bureaucracy

i. Do not depend too much on technology

j. Always measure performance

Management in the context of entrepreneurship

According to Follet, management is ‘the art of getting things done through people’.
George R. Terry who defines management as “a process consisting of planning,
organising, actuating and controlling performed to determine and accomplish the
objectives by the use of people and resources”.

 Planning - looking ahead and preparing for the future.

 Organizing -established objectives and developed plans to achieve them

 Staffing - selecting and placing the right person at the right position.

 Directing – communicating, leading and motivating

 Controlling – Establishes standard, measuring and taking actions

 Innovation - creating new ideas which may result in the development of new
products or finding new uses

 Representation - A manager representing his/her organization, dealings with

customers, suppliers, government officials, banks, trade unions and etc.

Home based business

A home-based business is any business where the primary office is located in the
owner's home. They don't have to own the property, but they do need to be running a
business out of the same premises they live in for the business to be considered a
home business.

While we think of home-based business owners as working at home, that's not

necessarily the case. Software trainers, truckers, and interior decorators are just
three examples of people who may run home-based businesses but have to travel to
provide their services.

More people are choosing to run a home-based business than ever before.

Many online businesses are ideally suited to be home-based businesses, but it's also
increasingly common to see professionals from travel agents through Notary Publics
operating home-based businesses.

The Advantages of Home Businesses

1) A Super Short Commute - The most obvious home business advantage is the
lack of commuting necessary. No more minutes or hours spent each working day
sitting in a car, on a bus or subway fighting your way to work. For many home-based
business owners, their commute consists of just walking down a flight of stairs. (Of
course, this advantage is wiped off the board if you don't actually work at home but
have to travel to customers and clients.)

2) Lower Overhead - All home businesses, however, share the advantage of not
having the expense of buying or renting business premises elsewhere which cuts
down their overhead considerably. Because there is no separate office to rent or
maintain, they may also save money on expenses such as utilities, and, depending
upon local regulations, the cost of business licenses and taxes.

3) Income Tax Advantages - Running a home-based business can be a great way

to recoup your business expenses and in some cases, reduce the amount of income
tax you have to pay.

4) Family Time - If you have children, operating a home business can give you more
flexibility with child care and more time to spend with your family. Once they're old
enough, you might even employ your children in your business. It's perfectly legal as
long as you follow the rules.

The Disadvantages of Home Businesses

A home-based business is not for everyone, however. Here are some

disadvantages:

1) You Can't Have One Just Anywhere - Most municipalities regulate home-based
businesses, and particular neighborhoods may have covenants against them.
Landlords tend not to be home-based business-friendly if you're renting.

2) It Might Not Work for Your Particular Business - Even if running a home-based
business is allowable where you live, you may not want to. Issues such as signage,
parking and the need for home-based insurance may not make running a home-
based business your best choice.

3) Isolation - Many people who run home-based businesses suffer from feelings of
isolation and feel "out-of-the-loop". Others find that running a home-based business
means that their business interferes too much with their family life.

Steps for Growing a Successful Business

1. Get Organized

To be successful in business you need to be organized. Organization will help you

complete tasks and stay on top of things to be done. A good way to do this is to
create a to-do list each day. As you complete each item, check it off your list. This will
ensure that you're not forgetting anything and you're completing all the tasks that are
essential to the survival of your business.

2. Keep Detailed Records

All successful businesses keep detailed records. By keeping detailed records, you'll
know where the business stands financially and what potential challenges you could
be facing. Just knowing this gives you time to create strategies to overcome those
challenges.

3. Analyze Your Competition

Competition breeds the best results. To be successful, you can't be afraid to study
and learn from your competitors. After all, they may be doing something right that
you can implement in your business to make more money. (For related reading, see:
How do I determine my company's competitive advantage?)

4. Understand the Risks and Rewards

The key to being successful is taking calculated risks to help your business grow. A
good question to ask is "What's the downside?" If you can answer this question, then
you know what the worst-case scenario is. This knowledge will allow you to take the
kinds of calculated risks that can generate tremendous rewards.

5. Be Creative

Always be looking for ways to improve your business and to make it stand out from
the competition. Recognize that you don't know everything and be open to new ideas
and new approaches to your business.

6. Stay Focused

The old saying, "Rome was not built in a day," applies here. Just because you open
a business doesn't mean you're going to immediately start making money. It takes
time to let people know who you are, so stay focused on achieving your short-term
goals.

7. Prepare to Make Sacrifices

The lead-up to starting a business is hard work, but after you open your doors, your
work has just begun. In many cases, you have to put in more time than you would if
you were working for someone else, which may mean spending less time with family
and friends to be successful.

8. Provide Great Service

There are many successful businesses that forget that providing great customer
service is important. If you provide better service for your customers, they'll be more
inclined to come to you the next time they need something instead of going to your
competition.

9. Be Consistent

Consistency is a key component to making money in business. You have to

consistently keep doing what is necessary to be successful day in and day out. This
will create long-term positive habits that will help you make money in the long run.

Characteristics of entrepreneurs / Personality of entrepreneur

 Self-confidence
 Willingness to take risk

 Type ‘A’ and ‘B’ personalities : Aggressive Vs Easy Going

 Proactive personality

 Locus of control – Internal and external control

 Machiavellianism – Ignoring moral and ethical behaviour

Qualities of a successful entrepreneur

 Willingness to make sacrifices and assume risks

 Hard work

 Optimism - confidence and drives them towards success

 Self-confidence

 Leadership - strong leadership qualities

The concept of creativity

 To be creative is to do something different from the ordinary so as to produce

better results or solve problems.
  Dollinger (1995) believes that creativity has close connections with revolution,
evolution and dynamism. Therefore, creativity is an advantage in product
development, customer service and a company’s expansion.

 Creativity is like a map that shows us where we are and the destination we
are heading for, allowing us the freedom to choose the road to our destiny.

 Heuristics is an approach to problem solving that does not rely on a

mechanistic procedure. The algorithmic approach is more mechanistic, and
has prepared solutions to problems, decision making and conflict resolution.

Entrepreneurs and Creativity

 Creativity happens through the dynamic interaction of three forces, namely:

individual intellect, experience and devotion.
 Creativity will help entrepreneurs find solutions to problems, grab
opportunities and develop new ideas.

 Creativity is a competitive advantage that an entrepreneur should have.

 Creativity allows the entrepreneur to produce products that will generate

loyalty among existing customers and potential customers; this will lead to
increased profitability and greater flexibility in adapting to changing market
conditions.

 Creativity allows a product to stay in the market because of innovative

changes to the product’s characteristics

Three types of creative behaviour

 Creation involves designing something original and making something out of

nothing. Entrepreneurs may see certain problems faced by society that
encourage them to create new tools or new processes in order to solve the
problems.
 Synthesis involves actions taken by someone to unite or combine two or
more things that are not related into a new product. For example, the merger
of computer and telecommunications technology has created a new product "
the Internet.

 Adaptations happen when certain processes or products are enhanced in

terms of quality, usage, useful life, easy storage, handling or new functions.
 For example, mobile phones have gone through several adaptations in terms
of their size and functions.

How to develop creativity

 Always ask “is there a better way?” when looking at present methods. Are
there ways to improve or to enhance the current methods?
 Challenge the ordinary, tradition and routine by evoking dissatisfaction with
your present achievement. Entrepreneurs should get themselves out of their
comfort zone.

 See a product or a process from different perspectives, e.g., from the aspect
of usage, storage, distribution or taste.

 Realise that there is more than one precise and best answer.

Innovation and Entrepreneurship

 Innovation is a key function in the entrepreneurial process.

 Entrepreneur must find, evaluate, and develop an opportunity by overcoming
the forces that resist the creation of something new.

 Without innovation, an entrepreneur cannot survive in the modern competitive

business world.

 As per the Schumpeter’s view, a person becomes an entrepreneur only when

he or she is engaged in innovation to gain competitive advantage.

Ways to screening entrepreneurship opportunity

Whether you're starting a small business from scratch or purchasing an existing

company or franchise, you need to take steps to evaluate the business’s potential
and your abilities to make it work. Your investigation must be thorough, analyzing the
risks and benefits of the opportunity. The evaluation of business requires financial,
product and human resource analysis. Review the potential and the pitfalls inherent
in the business to make an informed decision and increase your chances of success.

 Self-Analysis
 Financial Components

 Market Research
  Risk Assessment

Incubating Your Technology Enterprise

 Most technology-based inventions never go beyond the conceptual stage.

 The light bulb in the mind gets lit up often, but only occasionally does it leave
a significant trace.

 Patents get applied for and granted, but many remain only as trophies of the
inventor or as records of technical achievement.

 Even more wasteful are the numerous inventions that do get developed into
products but which then fail commercially.

 Therefore, there is a need for technopreneurs to be carefully nurtured when

they start their ventures.

Universities as incubators

 Universities have become nurturing grounds not only for would-be

entrepreneurs but also for enterprises.
 Universities’ promotion of academic social enterprise is in line with
government support for the social enterprise sector, therefore, there is an
increased funding potential for universities that support social enterprises in
terms of incubation or technology transfer assistance

 In the US, universities such as Carnegie Mellon, MIT and Stanford have been
active in helping to create new technology companies.

 The Malaysian equivalent is the Multimedia University (MMU), which is based

in Cyberjaya

Advantages of incubating within a university or with the help of a university:

o Cheap or almost free business support.

o Affordable intellectual property protection.

o Ability to commercialise university inventions and research.

o Prestige.

Disadvantages of incubating within a university or with the help of a

university:
o University bureaucracy.
o Academicians’ inclination to publish research or inventions may conflict
with entrepreneurs’ intention of keeping products secret until they are
commercially launched.