Myths of Entrepreneurship

Truth #1: Entrepreneurship is not reserved for startups

 Startup – a temporary organization in search of a scalable business model

 The entrepreneur creates a business based on research to assess the validity of an idea or
business model.

 The business may be partially funded by seed money from family members or investors, but
usually the majority is funded by the entrepreneurs themselves.

 The truth is that, entrepreneurs are everywhere, from corporations to franchises, to for-profit
and non-profit organizations, to family enterprises.

Truth #2: Entrepreneurs do not have a special set of personality traits

 Early research identified four main traits of an entrepreneur

 A desire for achievement

 Innate sense of having the ability to influence events

 a tendency to take risks, and a tolerance for uncertainty

 No scientific evidence to confirm traits and patterns as nature or nurture for entrepreneurs.

 Researcher Saras Sarasvathy, through study involving serial entrepreneurs, Sarasvathy

discovered patterns of thinking, a theory she calls effectuation.

 Serial entrepreneurs – (or Habitual Entrepreneurs) the type of entrepreneurs who starts several
businesses, whether simultaneously or one after the other.

 Effectuation – the idea that the future is unpredictable yet controllable.

 Sarasvathy believes that effectual entrepreneurs focus on creating a future rather than
predicting it.

Effectual entrepreneurs…

1. create opportunities

2. make markets rather than find them

3. accept and learn from failure

4. build relationships with a variety of stakeholders

Truth #3: Entrepreneurship can be taught (it is a method that requires practice

 From the story “lone-wolf Bob shuns formal education to follow his entrepreneurial path”

 Entrepreneurship can be and is being taught in colleges and universities all over the world.
  Typically, entrepreneurship is as linear process of identifying an opportunity, understanding
resource requirements, acquiring resources, planning, implementing, and harvesting (exiting a
business)

 The entrepreneurial method or practice represents a body of skills that when developed
through practice over time constitute a toolkit for entrepreneurial action.

Truth #4: Entrepreneurs are not extreme risk-takers

 Contrary to the stereotype that entrepreneurs like to gamble when the stakes are high, there is
no evidence to suggest that entrepreneurs take more risks than anyone else.

 In fact, entrepreneurs with gambling tendencies are usually not successful, simply because they
are leaving too much to chance.

 Most entrepreneurs are very calculated risk takers and gauge what they are willing to lose with
every step taken.

Truth #5: Entrepreneurs collaborate more than they compete

 Entrepreneurs draw on shared experience and desire to learn from other facing similar
challenges.

 It becomes very important to have a support group of like-minded entrepreneurs willing to help
one another out with a “pay-it-forward” attitude-collaborating for the greater good.

 Not only do successful entrepreneurs collaborate with other entrepreneurs, but they also
collaborate with their target customers to test new ideas, potential investors to build trust, and
family and friends for support,

Truth #6: Entrepreneurs act more than they plan

 Research revealed that fewer than half of Inc. 500 founders wrote formal business plans prior to
launching their companies, and fewer than 30% had only have basic plans.

- They went out and talked to other people, connected with customers, generated buzz about
their product or service, and built a strong network.

 Today’s investors want to know what the entrepreneur has done, the customers they have
approached, and the interest they have generated.

Truth #7: Entrepreneurship is a life skill

 Life skill that helps people deal with an uncertain future by providing them with the methods to
think, act, identify opportunities, approach problems in a specific way, adapt to new conditions,
and take control of personal goals and ambitions.

 It provides people with a set of skills that can be applied to many other fields.

 Being entrepreneurial empowers us to create opportunities and reach our goals.

Evolution of Entrepreneurship

Entrepreneurship

 One who undertake a project for a manufacturer, a master builder

- Common French Usage (1600s)

 Someone who engages in exchanges for profits; someone who exercises business judgment in
the face of uncertainty
– Richard Cantillon (1755)

 The entrepreneur shifts economic resource out of an area of lower and into an area of higher
productivity and greater yield
– Jean-Baptiste Say (1800s)

 [One who identifies] new combinations including the doing of new things or the doing of things
that are already being done in a new way. New combinations include 1) introduction of a new
good, 2) new method of production, 3) opening of new market, 4) new source of supply, 5) new
organizations.
– Schumpeter (1934)

 Entrepreneur – An individual or a group who creates something new – a new idea, a new item
or product, a new institution, a new market, a new set of possibilities. (1975 to present)

Types of Entrepreneurship

1. Corporate Entrepreneurship

 (or Intrapreneurship) is the process of creating new products, ventures, processes, or renewal
within the organizations.

Typically carried out by employees working in units separate from the organization who create and test
innovations that are then assimilated back inside the broader organization.

2. Entrepreneurs Inside
- The types of entrepreneurs who think and act entrepreneurially within organizations.
- May sound similar to corporate entrepreneurs, but entrepreneurs inside can exist and function
in any type of organization, big or small, including government agencies, nonprofits, religious
entities, self-organizing entities and cooperatives.

3. Buying a Franchise
- Franchise – a type of license purchased by a franchisee from an existing business to allow them
to trade under the name of that business.
- Royalties – a share of the proceeds of a business from one party to another.

4. Buying Small Businesses

  The entrepreneur is buying out the existing owner and taking over operations.

5. Social Entrepreneurship
- The process of sourcing innovative solutions to social and environmental problems
6. Global Entrepreneurship

Global Entrepreneurship Monitor (GEM) – a global research study founded by Babson College and the
London Business School, now currently conducted by a consortium of universities around the world.

The GEM study gathers its data according to different phases of entrepreneurs

 Potential Entrepreneurs

 Nascent Entrepreneurs

 New Business Owners

 Established Business Owners

 Necessity-based Entrepreneurs

 Opportunity-based Entrepreneurs

Different Phases of Entrepreneurs

- Potential Entrepreneurs – individuals who believe they have the capacity and know-how to start
a business without being burdened by the fear of failure.
- Nascent Entrepreneurs – individuals who have set up a business they will own or co-own that is
less than three months old and has not yet generated wages or salaries for the business owners
- New Business Owners – individuals who are former nascent entrepreneurs and have been
actively involved in a business for over three and a half years.

- Established business owners – the people who are still active in business for over three and a
half years.

- Necessity-based entrepreneurs – individuals who are pushed into starting their own business
because of circumstance such as redundancy, threat of a job loss, and unemployment.

What makes a country entrepreneurial?

 Financial Resources

 Support from Government

 Entrepreneurship Education

 Research and Development (R&D)

 Commercial and Legal Infrastructure

 Entry Regulation
Assignment
(One whole Sheet of Paper)

The Current Environment for Filipino Entrepreneurs:

 RA10679 – Youth Entrepreneurship Mind

 RA10644 – GoNegosyo Act of 2014