CHAPTER 2

THE ENTREPRENEURS

Learning Outcomes:
At the end of this chapter, the student will be able to:
 Know the different traits of entrepreneurs
 Learn the Characteristics of entrepreneurs
 Identify the contributions of entrepreneurs

Activity 1.2
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Name: ___________________________________ Time and Date: ______________

1. Can you start a project and see it through to completion in spite of obstacle?
______Yes ______No
2. Can you make a decision on a matter and then stick to the decision even when
challenged?
_____Yes ______ No
3. Do you like to be in charge and be responsible?
_____Yes ______ No
4. Do other people you deal with respect and trust you?
_____Yes ______No
5. Are you willing to work long hours with little immediate compensation?
_____Yes ______No
6. Do you like meeting and dealing with people?
_____Yes ______No
7. Can you communicate effectively and persuade people?
____Yes ______No
8. Do you have skills in marketing and/or finance?
____Yes ______No
9. Do others easily understand your concepts and ideas?
____Yes ______No
10. Do you really want to start this business more than anything else?
____Yes ______No

Note: One way to determine whether you have what it takes to be an entrepreneur is to fill out the
Questionnaire.
Note: Regardless of your score, keep in mind that the Quiz is not scientifically validated indicator of an
entrepreneur.

THE ENTREPRENEURS

Entrepreneurs have many of the same character traits as leaders. Similarly, to the early great
man theorist or leadership; however, trait-based theories of entrepreneurship are increasingly
being called into question. Entrepreneurs are often contrasted with managers and administrators
who are said to be more methodical and less prone to risk-taking. Such person-centric models of
entrepreneurship have shown to be of questionable validity not least as many real-life
entrepreneurs operate in teams rather than as single individuals. Still, a

vast but now clearly dated literature studying the entrepreneurial personality

found that certain traits seem to be associated with entrepreneurs:

 David MacClelland (1961) described the entrepreneur as primarily motivated by an

overwhelming need for achievement and strong urge to build.
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 Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough,
pragmatic people driven by needs of independence and achievement. They seldom are
willing to submit to authority.
 Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms,
deceptions, ingeniousness and resourcefulness. They are cunning opportunistic, creative
and unsentimental.
 Cooper, Woo, & Dunkelberg (1989) argue that entrepreneurs exhibit extreme optimism
in their decision- making processes. In a study of 2994 entrepreneurs, they report that
81% indicate their personal odds of success as greater that 70% and a remarkable 33%
seeing odds of success of 10 out of 10.
 Busenitz and Barney (1997) Claim entrepreneurs are prone to overconfidence and over
generalizations.
 Cole (1959) Found there, are four types of entrepreneur: the innovator, the calculating
inventor, the over-optimistic promoter, and the organization builder. These types are not
related to the personality but to the type of opportunity the entrepreneur faces.

CHARACTERISTICS OF ENTREPRENEURSIP

 The entrepreneur has an enthusiastic vision, the driving force of an enterprise.

 The entrepreneur’s vision is usually supported by an interlocked collection of specific
ideas not available to the marketplace.
 The overall blueprint to realize the vision is clear, however details may be incomplete,
flexible and evolving
 The entrepreneur promotes the vision with enthusiastic passion
 With persistence and determination, the entrepreneur develops strategies to change the
vision into reality
 The entrepreneur takes the initial responsibility to cause a vision to become successful.
 Entrepreneurs take prudent risks. They assess costs, market/ customer needs and
persuade others to join and help.
 An entrepreneur is usually a positive thinker and a decision maker.

CONTRIBUTIONS OF ENTREPRENEUR

1. Develop new markets. Under the modern concept of marketing markets are people who
are willing and able to satisfy their needs. In Economics, this is called effective demand.
Entrepreneurs are resourceful and creative. They can create customers or buyers. This
makes entrepreneurs different from ordinary businessmen who only perform traditional
functions of management like planning, organization, and coordination.
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2. Discover new resources of material. Entrepreneurs are never satisfied with traditional
or existing sources of materials. Due to their innovative nature, they persist on
discovering new sources of materials to improve their enterprises. In business, those who
can develop new sources of materials enjoy a comparative advantage in terms of supply,
cost and quality.
3. Mobilize capital resources. Entrepreneurs are the organizers and coordinators of the
major factors of production, such as land labor and capital. They properly mix these
factors of production to create goods and service. Capital resources, from a layman’s
view, refer to money. However, in economics, capital resources represent machines,
buildings, and other physical productive resources. Entrepreneurs have initiative and
self-confidence in accumulating and mobilizing capital resources for new business or
business expansion.
4. Introduce new technologies, new industries and new products. Aside from being
innovators and reasonable risk-takers, entrepreneurs take advantage of business
opportunities, and transform these into profits. So, they introduce something new or
something different.
Such entrepreneurial spirit has greatly contributed to the modernization of economies.
Every year, there are new technologies and new products. All of these are intended to
satisfy human needs in more convenient and pleasant way.
5. Create employment. The biggest employer is the private business sector. Millions of
jobs are provided by factories, numerous small-scale businesses. For instance, the super
department stores like SM, Uniwide, Robinson and others like SMC, Ayala and Soriano
group of companies are great job creators. Such massive employment has multiplier and
accelerator affects in the whole economy. More jobs mean more incomes. This increases
demand for goods and services. This stimulates production. Again, more production
requires more employment.
ADVANTAGE AND CHALLENGES OF ENTREPENEURSHIP

Every successful entrepreneur brings about benefits not only for himself/herself but also for the
municipality, region or country as whole. The benefits that can be derived from entrepreneurial
activities are as follows:
1. Enormous personal financial gain.
2. Self- employment, offering more job satisfaction and flexibility of the work force.
3. Employment for others, often in better jobs.
4. Development of more industries, especially in rural areas or regions disadvantaged by
economic changes, for example due to globalization effect.
5. Encouragement of the processing of local materials into finished goods for domestic
consumption as well as for export.
6. Income generation and increased economic growth.
7. Healthy competition thus encourages higher quality products.
8. More goods and services available.
9. Development of new markets.
10. Promotion of the use of modern technology in small-scale manufacturing to enhance higher
productivity.
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11. Encouragement of more researches/ studies and development of modern machines and
equipment for domestic consumption.
12. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to
bring about significant changes in the rural areas.
13. Freedom from the dependency on the jobs offered by others.
14. The ability to have great accomplishments.
15. Reduction of the informal economy.
16. Emigration of talent may be stopped by a better domestic entrepreneurship climate.

10 Advantages of Entrepreneurship

1. Be your own boss

One of the most common reasons people start a business is because of the independence it creates. As the
founder and CEO of a business, you answer to no higher authority, except maybe the customers you
serve.

2. Choose your own team

Playing well with other team members can be difficult, especially if you have conflicting personalities or
philosophies. When you start your own business, you get the privilege of choosing the team members
that you get to work with, and that best represent the brand.

3. Creative expression

Brands are really just the personality, the creative expression of a business, and as an entrepreneur, you
get to call the shots. That doesn’t just refer to the colors and imagery, but the core values and tone of the
company’s messaging.

4. Excellent learning experience

Nothing prepares you for the business world better than real-life experience. Even if you studied business
in college, the lessons in a work setting are more memorable and better understood. For example, while
you may have learned about writing up business plans for startups, reality may be slightly messier and
less structured. Your startup will likely evolve several times and look totally different to the original
concept.

5. Flexible Schedule

As the manager of your business, you also have more control over your time. If you want to work earlier
in the morning and rest in the afternoon or work late at night, you have the power to do so.

6. Following a vision/cause

Entrepreneurs don’t just undertake the risk of starting a business for fun. Something usually inspires them
to action, whether it’s a perceived lack of options, or an unfulfilled customer need. The drive to innovate
and compete is one of the major differences between an entrepreneur and a small business.

7. Greater potential profit

Since entrepreneurs have the ability to allocate resources, they have the opportunity to save money in
certain places, such as expensive marketing initiatives or costly office maintenance.
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8. Set your own office

Forget about stuffy cubicles and small offices. Depending on the size of your business, you can choose to
work from home, or in a coworking space. Some entrepreneurs even enjoy their privilege of traveling the
world as they work.

9. No professional ceiling

Don’t wait years hoping for a promotion. As an entrepreneur, traditional hierarchies are meaningless.
You automatically become the CEO of your company, so there’s no need to worry about vertical
mobility. You just need to make sure you’re running the business smoothly.

10. Develop an inspiring work culture

Many entrepreneurs were once entry-level workers stuck in someone else’s concept of a work
environment. Dreams of more inclusive policies and team-centered values can finally be realized.
Entrepreneurs get to set the standard for how team members treat customers and one another.

10 Challenges of Entrepreneurship

1. Multiple roles and responsibilities

Even though your title may read “CEO” or “Founder,” you’ll really be using multiple titles at once.
Don’t expect to only work on sales or business development- you’ll be juggling finances, legal,
marketing, human resources, and business admin work until your team gradually expands.

2. Work-life balance

Sure, entrepreneurs can work from anywhere at any time, but the downside is that you’re pretty much
working during most of your free time. That might involve fielding sales calls in the evening, finishing
up a SOW on the weekends, or putting out fires while on vacation.

Be sure to read our previous article on improving the work-life balance of your team.

3. Self-motivation

Without a boss to keep you in line, discipline becomes a self-taught responsibility. That may involve
getting up early to work, helping team members on a certain project, or holding meetings on holidays.

4. High risk

Starting a business is no walk in the park- there’s a lot of financial and legal risk involved if you don’t do
your homework. Businesses without a plan in place to manage their finances risk ending their ventures
prematurely.

5. Few business connections

Businesses are built on networks of investors, partners, influencers, and team members. Unless you’re a
veteran in a certain industry, you’re going to have to build your business network from the ground up.
That may be challenging for those with little networking experience.
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6. Building reputation

Building up a new brand can be one of the biggest challenges for a new startup. Unless you have an
innovative breakthrough on your hands, you’ll likely have dozens of competitors that your target
audience will already be more familiar with.

7. Legal considerations

New businesses have to deal with a whole new set of laws, a challenge that can be overwhelming without
a lawyer. However, compliance is absolutely mandatory- if your business doesn’t abide by industry
codes, you may develop a negative reputation, or eventually risk the threat of litigation.

8. Leadership

Entrepreneurs may struggle in their newfound leadership role, especially if they have limited experience
managing people or prioritizing activities. However, there’s no need to panic – leadership skills can be
learned and developed over time.

Check out Michael Hyatt’s This Is Your Life Podcast for more tips on leadership.

9. Limited supplies/technology

Starting out, a new business won’t have all the amenities and supplies that larger companies already
have, including hardware such as computers, printers, scanners, cameras. There is also the challenge of
obtaining suitable and effective software for CRM, conference calls, and other industry-relevant web
apps.

10. Fewer benefits

Unfortunately, entrepreneurs will likely not be able to offer healthcare plans or discounted gym
memberships early in the business’s life. Lack of benefits may turn a few potential customers and
employees away.
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Chapter Quiz

Name: _______________________________________ Time and date: _______________

I. Multiple Choice.
1. Claim entrepreneurs are prone to overconfidence and over generalizations.
a. David MacClelland b. Cooper, Woo, & Dunkelberg
c. Busenitz and Barney
2. studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by
needs of independence and achievement.
a. David MacClelland b. Cooper, Woo, & Dunkelberg
c. Busenitz and Barney d. Collins and Moore
3. They takes the initial responsibility to cause a vision to become successful.
a. Investors b. Businessmen c. Managers d. Entrepreneurs
4. They are built on networks of investors.
a. Builders b. Investors c. Businesses d. Malls
5. Starts business from a unique and innovative idea.
a. Investors b. Businessmen c. Managers d. Entrepreneurs
II. Essay
1. Discuss the contribution of entrepreneur in creating new markets.5pts
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

2. An entrepreneur is usually a positive thinker and a decision maker.

Explain. 5pts
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________

Chapter Quiz 2

Name：_________________________________ Time and Date: ____________

I. Identification
______________1. They studied 150 entrepreneurs and concluded that they are taught,
pragmatic people driven by needs of independence and achievement.
______________2. He sees entrepreneurs as mercurial, that is prone to insights, brainstorms,
deceptions, ingeniousness and resourcefulness.
______________3. He described the entrepreneurs as primarily motivated by an overwhelming
need for achievement and strong urge to build.

______________4. They claim entrepreneurs are prone to overconfidence and over

generalizations.
______________5. They argue that entrepreneurs exhibit extreme optimism in their decision-
making processes.
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______________6. He found out that there are four types of entrepreneur.

______________7. He claims that entrepreneur are cunning opportunistic, creative and
unsentimental.
______________8. They concluded that entrepreneurs are seldom willing to submit to authority.
_____________9. They have studied 2994 entrepreneurs they reported that 81% indicate their
personal odds of success as greater than 70% and a remarkable 33% seeing odds of success of
10 out of 10.
____________10. According to him, these types of entrepreneurs are not related to the
personality but to the type of opportunity the entrepreneurs faces.

II. True/False
1. Businesses are built on networks of investors, partners, influencers, and team members. _______
2. Emigration of talent may not be stopped by a better domestic entrepreneurship climate.
_______
3. Leadership skills can be learned and developed over time. ________
4. Nothing prepares you for the business world better than real-life experience. _____
5. Entrepreneurs may struggle in their newfound leadership role, especially if they have more
experience managing people or prioritizing activities. _________
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Answer key
Quiz I.
1. c
2. d
3. d
4. c
5. d

Quiz II. Part I.

1. Collins and Moore
2. Bird
3. David MacClelland
4. Busenitz and Barney
5. Cooper, Woo, & Dunkelberg
6. Cole
7. Bird
8. Collins and Moore
9. Cooper, Woo, & Dunkelberg
10. Cole
Part II.
11. True
12. False
13. True
14. True
15. False