ENTREPRENEURSHIP

AND SELF
EMPLOYMENT
 Definition of self-employment

• Self employment means working for yourself . It means organising all factors of production
and taking the risk to start and run an business with an aim of making profits.
• Why Self-Employment? Deciding to start one's own business is a big decision to some
people. There are those who have the required resources, yet they cannot make a decision to
be self employed. Indeed there are many reasons which make people opt to go into self
employment. They include:
1. There are those who want to make more money than what they have: to get rich. They
believe that nobody gets to be a millionaire while working for others. To them, money is a
measure of success. Love for money becomes a motive for going into self employment.
2. Some people want to realize a dream. They want to challenge themselves to do more
because they want more.
• Some people want freedom from depending on someone else for a salary.
• There are those who simply love success. They go into business with a burning desire to succeed.
They want to prove to themselves and others that they are succeeding.
• There are those who simply love hard work. They derive fun from working long and hard, only they
do not like working for someone else. They want to do so for themselves.
• Quite a number of people have a desire to put into practice a talent that they have. They may have an
inborn talent, a natural gift.
• There are also those who are risk lovers. They understand the basic risk and reward ratio in life: the
greater the risk, the higher the reward. They therefore risk going into self employment.
• Pride and prestige may also lead some people into self employment. Such people want to be proud of
their abilities and achievements. Business success gives them the pride and prestige that they want.
• Some go into business as a need to continue with the family business.
• Lack of wage employment has forced many to go into self employment. Some people may have been
sacked, retired, or simply unable to get wage employment.
• Some people are encouraged by e.g. spouses to go into self employment
• The above list is not exhaustive. There are more reasons why people go into self
employment. Quite a number of people combine more than one of the above
reasons.
• Why would you want to go into self employment? Which of the above reasons are
close to your own?
• It is advisable that you are objective in selecting reasons why you should go into self
employment. For example: working for yourself may be a personal challenge, but you must be
prepared to work for long and hard hours. You may be avoiding to take orders from your employer,
hence opting for self employment, but remember that in self employment, you will be taking orders
from customers who are always right.
 Requirements of entry into self- employment

Skills- It is the ability to do something. There are (3) three types of skills you need in order to
succeed in business. These are:
1. Entrepreneurial
2. Management
3. Technical
1. Entrepreneurial skills are the know-how or ability to tactfully respond positively to a given
situation and enable you to start and operate an enterprise. It includes:
- Your ability to study/ scan the environment and identify opportunities.
- Your ability to identify the necessary resources and take advantage of opportunities
- Your ability to take action to utilize the opportunity
2. Managerial skills are those which enable an entrepreneur to run an enterprise. They include:
- Managing money and people
- Directing a business operation
- Direction, sales operation
- Managing and establishing a business.
Business/Managerial skills needed by an entrepreneur:
• Managing money
• Borrowing money
• Keeping records
• Analyzing money problems, planning cover payment on products, buying wisely,
• avoiding losses, handling credit, figure taxes and budgeting.
Managing people
• Hiring employees
• Supervising employees
• Training employees
• Motivating people
Directing Business Operations
• Buying supplies
• Buying equipment
• Buying stock
• Filing orders for products and services
• Managing facilities.
Marketing
• Developing new ideas for products and services
• Analyzing community needs
• Analyzing potential customers
• Deciding prices for products or services
• Designing promotional strategies
• Purchasing media space.
Directing sales promotions
• Identifying sales promotions
• Identifying different customers’ needs
• Thinking about products for various customer needs
• Planning necessary sales to cover costs
• Overcoming customer objectives and asking for the sales.
• Teaching others how to sell.
Establishing a business
• Choosing a location
• Determining initial stocks
• Obtaining financing
• Planning long term cash flow
• Choosing the type of ownership
• Working with layers and accounts.
3. Technical Skills
• These are skills that give us expertise in a technical trade area such as electrical
engineering, accounting or printing. The above skills are acquired through
interacting with entrepreneurs family, formal training in an educational institutions
by working on a volunteer, work experience by your hobbies etc.
 Acquiring Business Skills
1. Developing Entrepreneurial skills
To acquire further skills that will facilitate the start of operation or an enterprise.
Entrepreneurs have options to attend formal courses in vocational institutions or informal by
working with qualified persons, listening to friends and other qualified acquaintances.

2. Training
One way is to develop our personal interests is by training in a technical institute.

3. Work experience
Many technical skills can be learnt on the job. Example would include wiring for a mechanic
would help develop technical skills needed to repair motor vehicles. Working as an accountant
would help refine mechanical skills needed to run a business.
4. Hobbies and special interests
Our lives are as education. Examples of hobbies that teach us skills include, photography, gardening,
crafts, sports. These are all hobbies from which skills learned can be transferred as a business e.g. garden
centre as landscaping firm if one had an interest and expertise in gardening.

5. Volunteer
You can learn much from volunteer services as well. e.g. Conducting fund-raising activities, promoting
an organization through public and free advertising and managing and coordinating members of an
organization.

6. At home
Everyday home experience can teach us many business skills. e.g. budgeting income, planning finances,
organizing, buying wisely managing and dealing with people’s behavior and friends.

7. Relatives and friends

 Wage Versus Self-Employment
• The final decision as to the manner in which one makes a living is with the
individual. However before making that decision, one must consider many factors,
most of which require value judgements.
Wage Employment
• Some people are better suited to be employers, while others would rather be
employed by large, well established organizations. As employees, they will have
security, regularity of income, shorter hours, overtime pay, regular vacations,
insurance and other benefits, and will not risk their personal savings or other capital.
• However, there are also many disadvantages. For example, there is the power
syndrome in large corporations. Advancement up the ladder may not always be
based on individual effort or ability. Many large employers also want "organization"
men and women who can fit nicely into any niche and be content not to overstep its
predetermined boundaries. Too often, many corporate employees feel, the person
who gets ahead in the corporate hierarchy is the one who doesn't "rock the boat".
• A related factor is the problem of relocation. In the large organizations, there is need
to move people around geographically. More and more executives and their families
are refusing to be transferred to branch offices or plants in other areas, even if the
transfer means higher rank and salary. Changes in top management are also frequent
in many big firms, and these also cause anxieties. Such changes often initiate a chain
reaction involving the security of numerous other executives down the line. Mergers
also tend to disturb the security of many big companies.
 Self-Employment
• Business ownership gives people a chance to exercise all their abilities, skill, knowledge, energy and desire
for pioneering and adventure. Self employed people have fewer restraints on their actions, are able to
express themselves fully and can develop any creative ideas they have to the limit of their ability and
resources. They are not restrained by precedent or by job descriptions and regulations.
• The desire to start a small business is a common one, for the entrepreneur seeks to provide for certain
needs through self expression and with independence. In this way the purely economic needs of the
individual are supplied in a manner emotionally pleasing to him/her. Once established, the small business
offers the owner security. Those owning their own business cannot be fired. They have no fear of petty
jealousies, factions, internal politics or favoritism. Instead they have the forces of competition to be met
successfully. This may not always be easy.
• The small business owner is not subject to same time limitations e.g. in retirement age as applies to those
employed who must adhere to company policy. Some self employed people prefer to reap from their
profits, saving or investing as they choose and retiring when they please.
• Owning one's own business may seem attractive, however, it comes with shortcomings. Risk is probably the
greatest of the shortcomings. In the beginning, one's income may be irregular, as the business experiences
ups and downs. If one may have an accident or become ill, their income could be affected. In addition, the
entrepreneur will be expected to work long hours, in order for the venture to prosper.
 Advantages and disadvantages of self-employment
✓ Personal Satisfaction;
✓ Doing what you enjoy daily and fulfilling personal goals;
✓ Freedom;
✓ Gaining relative freedom from control of employers. Freedom to make personal decisions;
✓ Improved Personal Income;
✓ They may prefer to reap the entire profit from their efforts, saving or investing as they
choose.
✓ Being your own boss;
✓ Controlling the working conditions, surroundings. e.g. you cannot be fired, transferred etc.
have little fears of petty jealousies, internal politics or favouritism. They are also not subject
to time limitations for example retirement at certain age.
✓ Prestige For example being called Director e.t.c
Disadvantages:
Attractive as owning one's own business may seem, however, there are also some limitations
✓ Risk; Improved earnings are enjoyed only if the business is successful. If you become ill or
are involved in an accident, this could affect the business adversely.
✓ Sacrifice of guaranteed income. For those leaving wage employment, they sacrifice their
regular income for the unknown.
✓ Responsibilities: Self employed people are personally responsible for themselves and their
employees to the government in terms of taxation, health care etc.
✓ Being a "yes man" to the customer; This means adhering to the "customer is king" rule
✓ Hard/Long Work; Running a business can be hard work.
Despite the disadvantages, for many people the advantages of being self employed outweigh
the limitations. To realize the entrepreneurial dream is the inherent ambition of many people.
 Roles of an Entrepreneur in an Enterprise
Roles of an entrepreneur in an enterprise include:
• Initiator/Promoter: the entrepreneur scans the environment, identifies the opportunities,
marshalls resources and implements the business idea.
• Mobilizer/Partner: role as a mobilizer is to solicit the participation of other persons in a
business project for the following reason: your degree of success or failure; complexity of a
business idea that may require more than one person to run; making use of the influence,
experience and capacity of others; consolidating friendship or acquaintainship through joint
business association.
• Shareholder: Roles as a shareholder are to share with others in buying a business when it is
too big for one person; join with others when one don’t want to commit oneself full time in
the enterprise; join with others when you want to spread your investment portfolio to reduce
risks; to share with others when you do not have the capacity to manage such an enterprise.
• Director: to contribute ideas to advance the enterprise objectives and to convince other
directors to consider your views by using various techniques.
• Organizer of systems: to develop structures that will effectively control, monitor
operations and facilitate communication with workers.
• Designer: to design organization structure to reflect the amount of time you as the
entrepreneur can devote to the business. Know the complexity of the business
operations and understand the degree of external influence that can be managed.
• Controller: entrepreneurs are leaders rather than followers, they make final decisions
and control all aspects of business operations.
• Co-ordinator: the entrepreneur must coordinate all factors of production needed in
the business.
 Contribution of Entrepreneurship to National Development
✓ Employment creation: Entrepreneurs create employment for themselves and other people. They are employers and assist in solving the unemployment problem.
✓ Local resources: When entrepreneurs utilize local resources, the value of these resources increases.
✓ Decentralization and diversification of business: Entrepreneurs are able to identify business opportunities, and locate these businesses in suitable areas, including rural
areas.
✓ Promotion of technology: By being creative, entrepreneurs are able to contribute to the utilization and development of appropriate technology.
✓ Capital formation: Entrepreneurship increases capital formation and investment in new and expanding business.
✓ Promotion of an entrepreneurial culture: By projecting successful images, entrepreneurs become role models for other people.
✓ Product and services: Entrepreneurs make and distribute the products and services that people want.
✓ Income: through its employment creation, business provides an income base to its stakeholders in terms of salaries, wages, profits and taxes.
✓ Taxes: without taxes on the incomes of individuals and businesses, social institutions and services cannot be afforded.
✓ National well-being: most of the capital goods, commercial and social services as well as technological know-how required to satisfy our needs come from
business activity.
✓ Improving standard of living of the people: the standard of living of a people is measured by the ability of people of a nation to buy goods and services.
✓ Promotion of national productivity: when an entrepreneurs’ products or services are sold in the local economy, this means that the equivalent of the same in money
terms is not used for importing similar products. When this happens the gross domestic productivity increases.
✓ Innovation/technology: entrepreneurs are innovative and creative and usually come up with new technologies.
✓ Conservation of foreign exchange: the more able a country is able to produce goods and services which do not require any or little imported components the more
entrepreneurs can contribute to the conservation of foreign exchange.
✓ Export promotion: Entrepreneurs earn the country foreign exchange by providing goods and services for exports.
 Are entrepreneurs Born or Made?
• A persistent notion is that most entrepreneurs are born with innate characteristics that prepare them
for the life of new venture creation. Those who believe entrepreneurs are born conclude that
entrepreneurship cannot be taught. However, this would suggest that studying how new ventures are
formed, or how innovation takes place is of little value.
• Successful entrepreneurs have been found to have initiative, take charge, are determined, persevere,
are resilient and able to adapt. While there is an undeniable core of such inborn characteristics as
energy and raw intelligence, which an entrepreneur either has or does not, It has become apparent
that possession of these characteristics does not necessarily make an entrepreneur.
• There is substantial evidence that entrepreneurial characteristics may be environmentally based. And
that certain attitudes and behaviours can be acquired, developed, practiced and refined through a
combination of experience and study. If this theme has credence, then learning as much as possible
about entrepreneurial process will better prepare students to succeed in business.
• Albert Shapero made comparative studies between ethnic groups. He concluded that individuals often
become entrepreneurs by being thrown into situations that force them to fashion their own means of
economic livelihoods.
• Shapero also found a high correlation between increases in new ventures and rising unemployment.
Many individuals become economically displaced (unemployed). Also for individuals who retire early,
starting a business is an exciting opportunity.
 Entrepreneurship Culture
Concept of Entrepreneurial Culture;
• An environment that prepares the population as a whole to take advantage of the abundant business opportunities and
provide supportive measures for entrepreneurs at all levels to realize their potential.
• A set of values attitudes and beliefs supporting the exercise in the community of independent entrepreneurial
behaviour in a business context.

Habits that Promote Entrepreneurial Development:

• Increased awareness of entrepreneurial opportunities
• Intensified enterprise education and awareness campaigns i.e. entrepreneurship should be seen as a means to dynamic
economic development but not as a curse for unemployment.
• Creation of identifiable role models and champions i.e. regional success stories should be identified and promoted in
different media.
• Established mentor and patron panels i.e. the availability of a panel of retired business people to counsel new and
expanding enterprises.
• Incentives and support for business succession i.e. more incentives and support structures should be developed.
• Enhanced intrapreneurship i.e. generation of intrapreneurial attitudes amongst company managers and staff, is an
important ingredient in the process of raising SMEs innovation, potential and readiness.
 Factors Inhibiting Entrepreneurial Development
✓ Inadequate capital
✓ Poor infrastructure
✓ Poor information on availability of opportunities.
✓ Poor knowledge of existing regulations.
✓ Poor knowledge of the market.
✓ High risks involved in starting and operating an enterprise.
✓ Low status of entrepreneurs
✓ Low status of entrepreneurs in the eyes of the public
✓ Unwillingness to devote organizational abilities to business purposes.
✓ Lack of adequate response to monetary incentives
✓ Arbitrary changes in the administration of law by the government which spreads the element of
uncertainty among entrepreneurs
✓ Family issues
✓ Lack of encouragement
 Ways of Managing Factors that Inhibit Development
• Availability of finance or funds. of Entrepreneurial Culture
Capital is always the major challenge to those who wish to start businesses. Availability of finance of a starting capital will favour
entrepreneurship. Financial assistance from families, friends and relatives further ensures that the entrepreneurs are better placed
financially.
• Modern technology.
Technological advancement has made entrepreneurs get more skills in improving their businesses and helping the entrepreneurs have
more advanced business skills in starting and running the business successfully.
• Infrastructure.
Development of infrastructure favours entrepreneurship. With good and developed infrastructural facilities, operational and other costs
are reduced. Developed infrastructure also reduces efforts and improves the viability of projects through higher profit margins.
• Appropriate knowledge and skills.
Entrepreneurial practices are favoured by appropriate knowledge and skills. An individual will easily go into starting a business when he
or she has the appropriate skills and knowledge.
• Appropriate training.
Entrepreneurial practices are easily encouraged when one has gone through training and acquired the relevant and appropriate knowledge in
entrepreneurship.
• Government policies.
• The government can also come in to provide incentives to new business persons. Entrepreneurs take this opportunity to venture into
businesses with assurance that they have the government support. The government can choose to reduce taxes on new businesses, can
provide free electricity, and can provide good roads and such other incentives to attract more businesses.
• Individual strengths and talents
An individual’s strengths and/or talents can help him or her or even lead him or her into starting a business. Some entrepreneurs are motivated by what they see
from others while others are just individual who come to be entrepreneurs through their talents and strengths.
• Availability of markets
Availability of markets, in this case customers, will motivate an individual (an entrepreneur) to start or improve on his or her products, targeted at satisfying
customer’s needs. An entrepreneur is able to scan the market and come out with a general opinion or survey of what the customers need and is not produced or
available in the market so that he or she can supply that product or service.
• Availability of resources
Without resources, entrepreneurs find it a challenge to put their ideas into important investments. Resources, both physical and human among others are very
important in entrepreneurship. An entrepreneur will be motivated to go into a business when there are resources to help him or her start and run the business
easily and effectively.
• Culture
Environmental impact on the business is important for entrepreneurs. Some cultural values might make entrepreneurship to grow or rather to develop faster than
others. For instance, there are some cultures that encourage people through role models to develop well through entrepreneurship and this leads to people
following other people’s lines of success.
• Natural factors
Entrepreneurship can also be encouraged by natural factors. For instance, an entrepreneurship will be encouraged to get into a business when there are favorable
natural factors.
• Political stability

Political stability favours entrepreneurial practices to a larger extent. For instance, when there is political stability in a country, entrepreneurs seem to invest, start
and run businesses successfully while when there is political instability, the businesses are mostly affected and entrepreneurs run away and are discouraged to start
businesses.
• Competition
Fair competition in the market will encourage entrepreneurship in a country. For
instance, when businesses are almost all in one level so that there is no monopoly,
entrepreneurs will tend to get into business and work hard to succeed.
• Resource persons or entrepreneurs
Successful entrepreneurs may be resource persons who through their success,
motivates young and other aspiring entrepreneurs to go their successful ways.
• Social security
Social security guarantees basic protection in case of failure of a business. An
entrepreneur will be motivated to start a business when there is social security.