ECU 302 LECTURE ONE

Objectives:
By the end of this lecture, learners should be able to:
i. Explain entrepreneurial terms
ii. Discuss entrepreneurial traits
iii. Discuss the various types of entrepreneurs
iv. Analyze the benefits of entrepreneurship to a nation

Definition of Terms in Entrepreneurship and Innovation

Entrepreneur
• A person who organizes, operates, and assumes the risk for a business venture.
• An entrepreneur is an individual who creates a new business, bearing most of the risks
and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a
source of new ideas, goods, services, and business/or procedures.
Entrepreneurship
• is the process of designing, launching and running a new business, which is often
initially a small business The people who create these businesses are
called entrepreneurs.
Acquisition
• Taking ownership of another business. Frequently used in conjunction with the word
merger, as in mergers and acquisitions or M&As.
Advertising
• The activity of attracting public attention to a product or business, as by paid
announcements in the print, broadcast, or electronic media. Not to be confused with
marketing or public relations. Angel Investors
• Individuals who back emerging entrepreneurial ventures, usually as a bridge to get from
the self-funded stage to the level of business that would both need and attract venture
capital. Funding level ranges anywhere from $50,000 to $2 million.
Appraisal
• A formal estimate of the value of something on the open market. It also describes how
the estimation and conclusion of value was made.

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Barter
• Direct exchange of merchandise and/or services between businesses. Business Incubator
• Provides workspace, coaching, and support services to entrepreneurs and early-stage
businesses.
Business Valuation
• An estimate of the worth of a business entity and its assets.
Consumer Direct Marketing
• A form of Network Marketing in which the distributors are all also consumers, i.e., they
must also buy the product for their personal use.
Copyright
• Copyright is a form of protection for published and unpublished literary, scientific and
artistic works that have been fixed in a tangible or material form.

Corporation
• A body that is granted a charter recognizing it as a separate legal entity having its own
rights, privileges, and liabilities distinct from those of its members. The primary
advantage of a corporation is that shield its investors from personal liability for any losses
the corporation may experience.
Downline
• In a Multi-Level Marketing business, the collection of all people signed up underneath an
individual on which the individual receives payment on their sales.
Due Diligence
• The inquiry process of obtaining sufficient and accurate disclosure of all material
documents and other information which may influence the outcome of the transaction.
General Partnership
• An organizational structure in which each general partner shares in the administration,
profits and losses of the operation.
Home Based Business
• A home based business is a business whose primary office is in the owner's home. The
business can be any size or any type as long as the office itself is located in a home.
Independent Contractor

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 • One who practices an independent trade, business, or profession in which they offer their
services to the public. The person contracting for their services must have the right to
control or direct only the result of the work and not the means and methods of
accomplishing the result.
• An intrapreneur is one who takes on entrepreneur-like ventures within a large corporate
environment.
Joint Venture
• A legal entity created by two or more businesses joining together to conduct a specific
business enterprise with both parties sharing profits and losses. It differs from a strategic
alliance in that there is a specific legal entity created.
Limited Liability Company (LLC)
• A legal entity that is not taxable itself and distributes the profits to its owners, but shields
personal assets from business debt like a corporation.
Limited Partnership
• A business arrangement in which the day-to-day operations are controlled by one or more
general partners and funded by limited or silent partners who are legally responsible for
losses based on the amount of their investment.
Line of Credit
• Similar to a business loan, except that the borrower only pays interest on the amount
actually used. Much like a credit card, the business makes periodic payments against the
outstanding balance.
Marketing
• The process of researching, promoting, selling and distributing a product or service.
Marketing covers a broad range of practices, including advertising, publicity, promotion,
pricing, and overall packaging of the goods or services.
Merger
• A joining together of two previously separate corporations. A true merger in the legal
sense occurs when both businesses dissolve and move their assets and liabilities into a
newly created entity.
Multi-level Marketing (MLM)
• Any business in which a person receives proceeds not only from their own sales, but from
the sales made by people they have signed up, and potentially people those people have
signed up, and so on.
Network Marketing

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 • A business in which a distributor network is needed to build the business. Usually, such
businesses are also MLM (see above).
Networking
• Developing business contacts to form business relationships, increase your knowledge,
expand your business base, or serve the community. Also used to describe linking
computers systems together.
Outsourcing
• Purchasing standard operational services from another business. Outsourced services
typically including accounting, payroll, IT, advertising, and more. Partnership
• A business form in which two or more individuals who carry on a continuing business for
profit. A partnership is legally regarded as a group of individuals rather than as a single
entity, and each of the partners file their share of the profits on their individual tax
returns.
Patent
• A property right granted to an inventor to exclude others from making, using, offering for
sale, or selling the invention for a limited time in exchange for public disclosure of the
invention when the patent is granted.
Planning
• A detailed method, formulated beforehand, for managing a business.
Public Relations (PR)
• The deliberate promotion of a specific image for a business. Often confused with
publicity which is simply the materials used in a specific part of a public relations effort.
Sales
• The exchange of a product or service for money. Also refers to the profession of that
activity or a department within a company that performs that activity.
SCORE
• Service Corps of Retired Executives; they provide counseling advice for small businesses.
Small Business Just what exactly constitutes "small"? There actually is an official
definition, but it varies widely from industry to industry. Small Business
Administration (SBA)
The United States Government Agency charged with "providing customer-oriented, full-
service programs and accurate, timely information to the entrepreneurial community".
DO WE HAVE ONE IN KENYA? FIND OUT
Sole Proprietorship

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 • A business owned and operated by one person.
Strategic Alliance
• An ongoing relationship between two businesses in which they combine efforts for a
specific purpose.
Trademark
• A form of legal protection for words, names, symbols, sounds, or colors that distinguish
goods and services. Trademarks, unlike patents, can be renewed forever as long as they
are being used in business.
Venture Capital (VC)
• A form of financing for a company in which the business gives up partial ownership and
control of the business in exchange for capital over a limited time frame, usually 3-5
years. Investments typically range from $500,000 to $5 million., although there are
occasionally VC investments for as low as $50,000 or as high as $20 million.

ENTREPRENEURIAL TRAITS
Entrepreneurial spirit — this is something that you might have seen in a lot of job post ads that
you come across. Your track record may not be like Richard Branson, Lori Greiner, or Mark
Zuckerberg, but this does not mean that you cannot become like them or even adopt the right
traits to emulate these successful entrepreneurs.
What does it take to be a successful entrepreneur? Other than some few traits that many
successful entrepreneurs share, being a self-starter can make you very desirable both in your
business and also in the industry. Moreover, having an abundance of optimism and self-
confidence is another key that can help you.
There isn’t any “ideal” entrepreneurial personality for an entrepreneur who is successful. You
should be thrill-seeking and sociable, as well as analytical, intuitive and taciturn. And as per
Belinda Plutz, who is a career coach at New York City–based Career Mentors Inc, “Regardless
of who writes the paycheck, we all need to work as if we work for ourselves.”
However, there are some experts in the industry that say that new entrepreneurs who have
become successful have some common traits, as shared below:
1. Passion
This is the most significant characteristic that every entrepreneur has, and for obvious reasons.
They are successful because they love what they do. These entrepreneurs put all the extra hours
they have into the business to make it successful and flourish. It is a pleasure for them to see the
results of their labor, which goes well beyond the money received.

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People like this are always researching and reading things to find strategies in how they can
make their business better.
2. Strong work ethic
Entrepreneurs who are successful make sure that they are always the one who is first to the office
and the last one to leave.
These people are those who ensure that they come to the office during their off days, if needed,
just to ensure that the outcomes meet their expectations. The successful entrepreneurs are those
who always have their mind in their work, even if they are not in their workplace.
3. Strong people skills
A successful entrepreneur is someone who has excellent communication skills for selling the
products to customers and motivating the employees. Yes, most entrepreneurs who have the
power to motivate their employees can see their business grow within no time. These
entrepreneurs are also great at instructing others to be successful and highlighting the advantages
of any situation.

4. Determination
The successful entrepreneurs are never greatly impacted by the defeats they encounter. For them,
failure is like an opening for a success story, and hence, they try again and again just till they get
the success they are expecting. Moreover, these entrepreneurs are not wired to believe that some
things are not possible and cannot be done.
5. Creativity
One of the main aspects of creativity is the ability to find a relationship between two unrelated
situations or events. They usually come up with the solutions of these problems that are a
combination of other things. These people normally re-purpose the items for marketing them to
new industries.
6. Competitiveness
The number of companies formed are increasing every month and every year, as every
entrepreneur feels that they can do a much better job than others. They run with the aim that they
need to win at the sport they play and win the business that they are creating or have created. It is
an entrepreneur that highlights the track record of success of their company.
7. Self Starter
Every successful entrepreneur knows that if something has to be done, it needs to be done by
themselves. Parameters are set by them, and they ensure that the projects are following that path.
They do not wait for someone to permit them and are highly proactive.
8. Open Minded

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For those entrepreneurs that are successful or are following others who have been successful,
understand that each situation and event is a business opportunity. There are new ideas that
continually come out regarding new potential businesses, people skills, efficiency, and
workflows. These people have the capability to see all that is around them and direct the focus
towards their objectives and goals.
9. Confidence
A successful entrepreneur never asks the question or keeps doubts in their mind about if they can
succeed or if they are even worthy of success. They are normally confident enough that their
knowledge and their know-how will help them make their business idea a success. And they
radiate this confidence in everything that they do for the business.
10. Disciplined
Successful entrepreneurs always focus their energy on making the business work, and for
eliminating the distractions or obstacles to their goals. Their overarching strategies help them to
reach the goals they have while they outline the plan to achieve the final outcome. Moreover,
entrepreneurs become successful as they are disciplined to always make new steps every day
towards the accomplishment of their goals.
Other than these traits, every successful entrepreneur just wants to see what is at the top of the
business mountain and they will pick up everything they get on the path while on their way up.
But that is not where their determination ends.
As soon as they see it, they want to move ahead and see more. One of the most important things
about successful entrepreneurs is that they know exactly how to talk to their employees. These
are all the reasons why their business soars.
So, if you are about to embark on the journey to be an entrepreneur, have just entered the journey
or have been in the journey but have not seen success, you need to adopt these traits and make
them a part of you for gaining success.

TYPES OF ENTREPRENEURS
Types of entrepreneurs, their roles, and how each type affects the success of the business:
1. Innovators
Innovators are the types of entrepreneurs who come up with completely new ideas and turn them
into viable businesses.
In most cases, these entrepreneurs change the way people think about and do things. Such
entrepreneurs tend to be extremely passionate and obsessive, deriving their motivation from the
unique nature of their business idea.

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Innovative entrepreneurs also find new ways to market their products by choosing product
differentiation strategies that make their company stand out from the crowd. And sometimes it is
not just standing out from the crowd but actually creating a new crowd.
To say that innovators like Steve Jobs, Larry Page of Google and Microsoft founder Bill Gates
were obsessed with their business would be an understatement.
Advantages of Being An Innovate Entrepreneur:
• Get all the glory for the success of the business (and take all the arrows)
• Create the rules
• Face minimal competition during the initial days
Disadvantages of Being An Innovate Entrepreneur:
• You will need a lot of capital to bring a new idea to life
• Often face resistance from shareholders
• The timeframe for success is longer
The ability of an innovative entrepreneur to envision a new way of thinking makes them stand
out from the crowd and wildly successful in many cases however it takes significant capital,
patience and commitment to bring true innovation to life.
2. The Hustler Entrepreneur
Unlike innovators whose vision is the gas in their engine, hustlers just work harder and are
willing to get their hands dirty. Hustlers often start small and think about effort – as opposed to
raising capital to grow their businesses. These types of entrepreneurs focus on starting small with
the goal of becoming bigger in the future.
Hustlers are motivated by their dreams and will work extremely hard to achieve them. They tend
to be very focused and will get rid of all forms of distractions, favoring risks over short-term
comfort.
A perfect example of a hustler is Mark Cuban. He started in business very young selling trash
bags, newspapers and even postage stamps and this hustle later created a goldmine which was
acquired by internet giant Yahoo!
Advantages of Being A Hustler
• They will outwork most
• Tend to have thick skin – they don’t give up easily
• See disappointment and rejection as just a step in the process
Disadvantages of Being A Hustler

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 • Usually prone to burn out
• Wear out their team members who don’t have the same work ethic
• Often don’t see the value of raising capital as opposed to just working harder
Even though many hustlers never give up, a lot of them are willing to try anything to succeed
which unfortunately means that they have a lot of hits and misses. Achieving their dreams takes
a lot longer than most other types of entrepreneurs.
3. Imitators
Imitators are the types of entrepreneurs who copy certain business ideas and improve upon them.
They are always looking for ways to make a particular product better so as to gain an upper hand
in the market.
Imitators are part innovators and part hustlers who don’t stick to the terms set by other people
and have a lot of self-confidence.
Advantages of Imitators
• Refining a business idea is easier and less stressful
• You can easily benchmark your performance with the original idea
• Can learn and avoid mistakes that were made by the originator
Disadvantages of Imitators
• Their ideas are always compared to the original idea
• Always have to play catch-up
Taking an existing idea and refining and improving it can be a great way to develop a business. It
certainly does not have as much risk as the innovator but it might just not be as sexy.
4. Researcher
Even after having an idea, researchers will take their time to gather all the relevant information
about it. To them, failure is not an option because they have analyzed the idea from all angles.
Researcher entrepreneurs usually believe in starting a business that has high chances of
succeeding because they have put in detailed work to understand all aspects.
As a result, these types of entrepreneurs usually take a lot of time to launch products to make
decisions because they need the foundation of deep understanding. These entrepreneurs rely
much more on data and facts than instincts and intuition.
For a researcher, there should be no room for making mistakes.
Advantages of Being a Researcher Entrepreneur
• Plan for as many contingencies as possible

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 • Write detailed, well-thought-out business and financial plans
• Focus on data and information rather than gut feeling
• Won’t start unless they feel like they know the market
• Will minimize the chances of failing in the business
Disadvantages of Being a Researcher Entrepreneur
• Typically moves slow
• Doesn’t like risk and that can hamper progress in a new venture
Even though these types of entrepreneurs spend a lot of time researching and digging into the
data to ensure the success of their business, they can fall into the habit of obsessing over the
numbers and focusing less on the running of the business.
Jeff Bezos has spoken against this in a recent letter to shareholders where he asserted that “Most
decisions should probably be made with somewhere around 70% of the information you wish
you had”.
5. Buyers
One thing that defines buyers is their wealth. These types of entrepreneurs have the money and
specialize in buying promising businesses.
Buyer entrepreneurs will identify a business and assess its viability, proceed to acquire it and
find the most suitable person to run and grow it.
Advantages of being a Buyer
• Buying an already established venture is less risky
• Doesn’t have to worry so much about innovation
• Can focus on building on something that has already gone through building a foundation
• Already has a market for your products
Disadvantages of being a Buyer
• Usually pays a high price for good businesses
• Will face the risk of buying businesses that have problems that you think you can turn
around

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WHY ENTREPRENEURSHIP IS IMPORTANT TO THE
ECONOMY
Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and
remunerated to the greatest possible extent. Great entrepreneurs have the ability to change the
way we live and work. If successful, their innovations may improve standards of living, and in
addition to creating wealth with entrepreneurial ventures, they also create jobs and contribute to
a growing economy.
Entrepreneurship is thus important for a number of reasons, from promoting social change to
driving innovation.

Entrepreneurs Spur Economic Growth

New products and services created by entrepreneurs can produce a cascading effect, where it
stimulates related businesses or sectors that need to support the new venture, furthering
economic development.
For example, a few information technology companies made up the IT industry in India during
the 1990s. The industry quickly expanded and many other sectors benefited from it. Businesses
in associated industries—such as call center operations, network maintenance companies, and
hardware providers—flourished.
Education and training institutes nurtured a new class of IT workers who were offered better,
high-paying jobs. Infrastructure development organizations and even real estate companies
capitalized on this growth as workers migrated to cities where employment was growing.
Similarly, future development efforts in underdeveloped countries require robust logistics
support, capital investments, and a qualified workforce. From the highly qualified programmer to
the construction worker, entrepreneurship benefits a large part of the economy.
Entrepreneurs Add to National Income
Entrepreneurial ventures help generate new wealth. Existing businesses may remain confined to
existing markets and may hit the glass ceiling in terms of income. New and improved products,
services or technology from entrepreneurs enable new markets to be developed and new wealth
to be created.
Additionally, increased employment and higher earnings contribute to better national income in
the form of higher tax revenue and higher government spending. This revenue can be used by the
government to invest in other, struggling sectors and human capital. Although it may make a few
existing players redundant, the government can soften the blow by redirecting surplus wealth to
retrain workers.

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Entrepreneurs Create Social Change
Through offering unique goods and services, entrepreneurs break away from tradition and reduce
dependence on obsolete systems and technologies. This results in an improved quality of life,
improved morale, and greater economic freedom.
For example, the water supply in a water-scarce region will, at times, forces people to stop
working to collect water. This will impact their business, productivity, and income. Imagine an
innovative and automatic pump that can fill people's water containers automatically. This type of
innovation ensures people are able to focus on their jobs without worrying about a basic
necessity like water. More time to devote to work translates to economic growth.
For a more contemporary example, smartphones and apps have revolutionized work and play
across the globe. Smartphones are not exclusive to wealthy countries or people. As the growth of
the smartphone market continues, technological entrepreneurship can have a profound, long-
lasting impact on the world.
Moreover, the globalization of technology means entrepreneurs in lesser-developed countries
have access to the same tools as their counterparts in richer countries. They also have the
advantage of a lower cost of living, so a young entrepreneur from an underdeveloped country can
compete with a multi-million-dollar existing product from a developed country.
Community Development
Entrepreneurs regularly nurture ventures by other like-minded individuals. They also invest in
community projects and provide financial support to local charities. This enables further
development beyond their own ventures.
Some famous entrepreneurs, such as Bill Gates, have used their money to finance good causes,
from education to public health. The qualities that make one an entrepreneur are the same
qualities that help motivate entrepreneurs to pay it forward.

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