KADUNA STATE UNIVERSITY, KADUNA

ENTREPRENEURSHIP RESEARCH & DEVELOPMENT CENTRE

COURSE TITIE: ENTREPRENEURSHIP & INNOVATION
COURSE CODE: ENT 301

Course Description:
This course is aimed at providing the trainee with the basic skills and mindset for successful
entrepreneurship. In order to successfully achieve that, the following topics among others are expected to
be covered: Introductory overview of an enterprise; basis of entrepreneurship, identification and
recognition of opportunities.

OVERVIEW OF AN ENTERPRISE

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1.1The meaning and scope of enterprise

3.2 Required skill for enterprising

3.3 Forms of Enterprise

3. Setting up an enterprise

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 Reference/Further Reading

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1.0 Introduction:
This unit will introduce students to the concept ad scope of an enterprise. It will also make them to
appraise some of the basic skills that are required for enterprising as well as forms of the enterprise
to be considered and finally, they will be taught on how to set a new enterprise.

2.0 Objective
At the end of this unit, students should be able to:
1. understand the meaning and scope of enterprise
2. appraise some of the basis skill for enterprising
3. discuss Forms of Enterprise
4. understand modalities for setting up an enterprise

3.0 Main Content

3.1 MEANING AND SCOPE OF ENTERPRISE

In its wider sense, an enterprise is any identified idea that is translated into a planned and
satisfactorily implemented activity. In its narrower sense, it refers to a business venture or
undertaking. Practically all projects and undertakings can be referred to as enterprises if the five
steps mentioned in the above definition are followed, i.e. idea identification, planning,
implementation, successful completion of an activity and accepting the reward. You become an
enterprising man or woman if you are consistent in systematically following the above process
whenever you are involved in dealing with issues in your life. By understanding the enterprise
concept in the above context, you appreciate that most people have the potential to be enterprising,
and that even you can realize your own business enterprise. The difference between enterprising
men and women who are able to deal positively with the challenges and problems they face in their
daily lives and those who are unable to do so is to be found in the approaches and attitudes they
have when addressing issues and solving problems. Being enterprising can bring benefits to you as
an individual, and also help you to become a valued member of your family, community, place of
work and society in general. Being enterprising will specifically enable you to achieve a great deal,
and you will stand out in the crowd due to your attitude and systematic approach to issues. By
adopting an enterprising approach you will know what to do in whatever circumstances you find
yourself in. This kind of approach will enable you to appreciate the challenges of life because you
will generally be able to translate them into positive results. To help you become enterprising, you
will need the following tools:

E- Energy
Working hard, but also in a smart way, is key in entrepreneurship. Lots of both mental and physical
energy is needed to be able to face all the challenges involved in providing solutions to issues and
for the successful completion of projects. To sustain this energy, you need to stimulate your brains
and all your senses – sight, hearing, touch, smell and taste – so that they all stay alert in identifying

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 what needs to be done in different situations. You also need to be healthy and physically fit, and this
can be achieved through appropriate diet and exercise.

N- Need to achieve
You have the motivation to achieve success and accomplish all the activities you engage in. Your
attitude and perceptiveness enable you to work towards acceptable results whenever you set out to
do something. This approach enables you to work harder than the ordinary man or woman.
T -Task oriented
You are convinced that to gain satisfying rewards tasks have to be well executed and completed on
time. Efficiency, effectiveness and time management are important aspects that enable you to
complete tasks. Being able to focus on results helps you to concentrate on whatever you set out to
do.

E- Empathy
You are able to mentally put yourself in the position of the person or persons you intend to influence.
You want to feel what they are feeling. You are able to put yourself in their shoes. In the case of a
business enterprise you are able to imagine how a potential customer would feel.

R- Resourcefulness
You are able to provide the leadership and guidance needed to realize the enterprise. Identification,
mobilization and effective utilization of both the physical and the nonphysical resources needed in
undertaking a venture are very important in the enterprise process.

P- Planning
To be able to see the total picture of the enterprise in terms of why it should be set up, what needs
to be done, how it will be done, who will do it and when it will be done, it is necessary to establish
a written plan. This will help to clarify the situation and permit decisions to be made as to whether
to engage in activities that will result in an enterprise being set up or not. In the case of business
ventures, it is through planning that indications on whether there will be profits or losses will be
made available.

R- Risk-taking
The decision to go ahead and start the enterprise or undertake the activity must be made. All
enterprising men and women make this decision only after they have done a certain amount of
research, so that in the end they are usually able to achieve the results, succeed and receive the
rewards. You will always have to take this first step, as it marks the difference between enterprising
and non-enterprising men and women. Success begins with the decision to start moving in the right
and desired direction.

I- Innovation
The ability to apply new ideas that will enable you to undertake activities differently is another
hallmark of enterprising men and women. Through individual initiative, imagination, intuition and
insight you will be able to change things around or devise ways of doing things to accommodate
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 whatever new situation you may find yourself in. Information on different issues and fields is an
important input for being innovative. Enterprising men and women therefore place great value on
information and are always alert and constantly engaging in research.

S- Skills
Enterprising men and women have the ability or know-how that enables them to undertake and
complete activities. Most men and women have a certain amount of knowledge, attitudes and
practical skills that can be useful when realizing an enterprise. You should therefore evaluate the
talents and level of skills you have and how they can be harnessed to realize an enterprise. Talents
and acquired skills have to be constantly utilized and applied, otherwise they can also be forgotten
and wasted.

E- Endurance
There are many challenges to be faced when trying to set up an enterprise. Women face specific
challenges, some of which are negative and discouraging. To ultimately realize the enterprise that
will provide you with the rewards you desire, the ability to keep on track despite the many challenges
along the way is critical. Patience, persistence and confidence are some of the attitudes you will
need to adopt to enable you to endure the physical and mental challenges you may encounter.

What is enterprise?
Enterprise is a willingness by an individual or a business to take risks, show initiative and undertake
new ventures.

What do enterprises provide?

Enterprises provide goods and/or services. A good is a physical item (it is tangible) e.g. a car
or a computer, whilst a service is a non- physical item (it is intangible) e.g. a haircut, a taxi
ride.

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 Being Enterprising

Risk - Being enterprising has some risk.

So many things could go wrong: you
could: lose money, fail, go bankrupt
and/or face competition

Initiative - Initiative means making the

first move and making things happen

Undertaking New Ventures - This is about

looking for new ideas and gaps in the
market.

3.3 TO BE ENTERPRISING YOU NEED THE FOLLOWING SKILLS

Skill Example
Persuasion Talking to a supplier round to give you a 2% discount your order
Initiative Having been turned down by two banks for a loan to expand your enterprise
not giving up and applying to another bank with a detailed business plan.
Luck Employing a worker who turns out to be much better and more skilled than
you expected
Risk taking Ordering 20% extra stock in the hope that sales will increase
Planning Preparing a production schedule to make a new product for your enterprise
Determination Following the loss of a big customer deciding to make finding
Leadership Having a vision as to where you want your enterprise to be in 2 years’ time
Decision making Reorganizing the layout of your factory to make it run better
METHOD OF DEVELOPING ENTERPRISE SKILLS
To help develop your enterprise skills you could use one of the following methods:

1) Lateral Thinking: his involves thinking differently to try and find new and unexpected ideas.
‘Thinking outside the box’ and thinking of ideas you wouldn’t normally.

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 2) Blue Sky Thinking: This is when you start with a question or an object. Then you think of as
many answers to the question or as many things related to the object or question as possible.
You only stop when you run out of ideas.

3) Six Thinking Hats: This is an idea used to help organize and focus ideas generated from blue
sky thinking. The idea being there are many different ways to look at an idea or problem.
Each ‘hat’ means different things:
i. Blue Hat – involves ‘thinking about thinking’ and is usually done by the group
leader/manager.
ii. White Hat – involves thinking about the facts about the problem/issue
iii. Red Hat – involves thinking about emotions and gut feelings
iv. Black Hat – involves thinking about the problems and difficulties
v. Yellow Hat – involves thinking about the positive aspects
vi. Green Hat – involves being creative

3.4 DIFFERENT FORMS OF ENTERPRISE

People in a community have many interests and different needs and wants in their lives. It is the
role of enterprising men and women to identify these interests, needs and wants and establish
specific enterprises through which these interests, needs and wants can be satisfied. All enterprises
provide satisfying rewards for those who successfully establish them.

Terms used to classify enterprises include private, public, formal, informal, individual, community,
local, foreign, small, large, business, social, manufacturing, and service, casual or industrial.
Enterprises that succeed, irrespective of their nature, come up with irresistible and valued
approaches that contribute to providing solutions to problems, as well as satisfying the desired needs
and wants. The key difference between all types of enterprise lies in the rewards they provide.
Business ventures provide profits as rewards, while non-business ventures provide other types of
rewards which could be either physical or psychological. Enterprising men and women will
therefore engage in enterprises depending on what kind of rewards they expect from them. Specific
enterprises in a community have the potential to benefit from the existence of all the others. Output
from one enterprise normally becomes input for other enterprises, and this helps in money
circulation among the enterprises and within the community. The more money that circulates in the
community, the more prosperous the community becomes. The synergistic nature of all enterprises
in a community creates an environment where there are lots of opportunities to be exploited by
enterprising men and women. It is therefore up to these men and women to identify the opportunities
available and exploit them. Almost all communities have lots of unexploited opportunities that can
increase this synergy if properly harnessed, to create even more opportunities for everyone.
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 Identify and explain some of the facilities and opportunities available for self-employment in
your area

In the course of training and education, men and women acquire different skills that lead to different
careers. They are applied in trade, services, manufacturing, food processing, recreation, information
and communication, and other forms of enterprises. Acquired skills are great assets that men and
women should be proud of. The existence of many types of enterprise in your community affords
you opportunities to apply the skills you have acquired in the course of your training. All types of
skill learnt have a chance to be applied if opportunities are sought in all types of enterprise. It is
normal for men and women to consider the compatibility of personal values, interests and
expectations with the type of enterprise they would wish to associate with. This, however, if taken
too far, could limit the opportunities for individual men and women.

The essence or key message is to appreciate that you have started in the right way by acquiring the
skills. The next step is to be alert and evaluate the many enterprises in your community and note
their potential synergistic nature. The final step is to identify how the skills you have acquired can
be applied or utilized in the various possible enterprises. You can therefore do what you can, with
what you have, where you are, and still succeed.

3.6 SETTING UP A NEW ENTERPRISE

When setting up as an enterprise there are different structures you can take.

Type of
enterprise
Advantages Disadvantages
Unlimited Liability
Sole You have
Trader unlimited
Easy to start. liability. Unlimited
This is an enterprise Get to keep all Lack of liability
the profit. specialisation.
owned by 1 person. Get to make all The hours will be
the decisions. long.

Partnership May be
Spreads the disagreements a
risk. nd Unlimited
This is an enterprise More people conflict. liability
with different

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 owned by 2 to
20 specializations.
people.
Limited Limited Not as easy to set
Companies liability. up as a Limited
This is an enterprise Easier to raise sole trader – there Liability
finance. are more
owned by shareholders. Tend to be regulations.
large well
There are 2 types of recognized You have to pay 2
enterprises. types of
limited company private tax.
(LTD) and public (PLC)

Franchi 88% of You have to pay a

se franchises are % of your Limited
This is an enterprise in profitable. profit each year to Liability
the
which a sole trader can You get franchisor.
support from
the
pay an existing business franchisor You cannot
when you start choose what you
to use their name and the enterprise. sell.
sell their product for a The enterprise The more well
may already known the
fee. be well known. enterprise is the
more expensive
the start-up fee
will be.
Co People
operatives working/using Decision making
the can be slow. Limited
These are enterprises business will The owners may Liability
also be the lack the
that are either workers owners as well skills needed to
and run an
by the workers or the therefore they enterprise.
may work
customers harder to make
. the enterprise a
success.
Social They make use Owners might not
Enterprises of local have Limited
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 Social enterprises are skills. suitable skills, Liability
knowledge and
businesses that focus They help ability to run an
good causes enterprise.
and
reinvesting their profits support the
local
in their business to help a community.
social cause. They can
also include charities
and not-for profit
organisations.

Sole trader (Key Words)

Specialization – the skills that the sole trader has.

Partnership (Key Words)

Deed of partnership – the document that the partners complete so they know how much control and
what % of the profit each partner is entitled too.

Limited Companies (Key Words)

Private limited company – a company whose shares are not sold on the stock market.
Public limited company – a company whose shares are sold on the stock market and anyone can buy
them.
Memorandum and Articles of Association – the two documents that must be completed before the
limited company can start trading.
Shareholders – these are the owners of the business. They own a ‘share’ of the company. The bigger
their share the more control that they have.
Dividends – this is the reward given to shareholders if the business makes a profit.

Franchises (Key Words)

Franchise – a type of enterprise in which a sole trader can pay an existing business to use their name
and sell their product for a fee.
Franchisee – the sole trader who runs the franchise.
Franchisor – the business who allows the sole trader to use their name and sell their products/services.

Exercise:
i) Describe the different stages involved I setting up a small-scale enterprise ii)
List the advantages that a small business has over a large business

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Unit 2: The Basics of Entrepreneurship

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1.1 The concept of Entrepreneurship

3.2 The Role of Entrepreneurship in a Developing Society

3.2.1 Functions of an Entrepreneur

3.4 Who is an Intrapreneur

3.4.1 The Meaning of Intrapreneurship

3.5 Characteristics of an Entrepreneur

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 Reference/Further Reading

1.0 Introduction

This unit is designed to provide an insight into the definitions, nature and concept of entrepreneurship.
By the end of the unit, students are expected to have an overview of what entrepreneurship entails,
functions and the difference(s) if any between entrepreneurship and intrapreneurship.

2.0 Objectives

At the end of this unit, you should be able to:

i.define what entrepreneurship is

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 ii.explain who is an entrepreneur

iii.list and explain the different types of entrepreneurs

iv.state the importance of entrepreneurship in any economy

v.explain the functions of an entrepreneur

vi.differentiate between an intrapreneur and an entrepreneur

3.0 Main Content

3.1.1 The Concept of Entrepreneurship

The nature of entrepreneurship implies several images and meanings. We can understand the
definitions of an entrepreneur. The word entrepreneur originates from the French word,
“entreprendre,” which means "to undertake" and was first used by the Irish‐French economist
Richard Cantillon who used the term entrepreneur to business. Since that time the word entrepreneur
means one who takes the risk of starting a new organization or introducing a new idea, product or
service to society. Jean‐ Baptiste Say, a French economist, is believed to have coined the word
"entrepreneur" in the 19th century. He defined an entrepreneur as "one who undertakes an enterprise,
especially a contractor, acting as intermediary between capital and labour" (Wikipedia).

For the purpose of this course, we shall be focusing our focus as conceptualizing entrepreneurs
as from tripartite dimensions as: a risk bearer, organizer and innovator.

Entrepreneur as risk bearer: Richard Cantilon defined entrepreneur as an agent who buys factors
as production at certain prices in order to combine them into a product with a view to selling it at
uncertain prices in future. He illustrated a former who pays contractual incomes, which are certain
to land owners and laborers, and sells at prices that are .‘uncertain’. He includes merchants also
who make certain payments in expectation of uncertain receipts. Hence both of them are
riskbearing agents of production.

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 Entrepreneur as an organizer: According to J Baptist Say “an entrepreneur is one who combines
the land of one, the labor of another and capital of yet another, and thus produces a product. By
selling the product in the market, he pays interest on capital, rent on land and wages to laborers
and what remains is his/her profit”. Say made distinction between the role of capitalist as a
financer and the entrepreneur as an organizer. This concept of entrepreneur is associated with the
functions of co-ordination, organization and supervision.

Entrepreneur as an innovator: Joseph A SchumPeter in 1934 assigned a crucial role of

‘innovation’ to the entrepreneur. He considered economic development as a dynamic change
brought by entrepreneur by instituting new combinations of factors of production, i.e. an
entrepreneur in an advanced economy is an individual who introduces something new in the
economy, a method of production not yet tested by experience in the branch of manufacture
concerned, a product with which consumers are not yet familiar, a new source of raw material or
of new market and the like. SchumPeter also made distinction between inventor and innovator.
An inventor is one who discovers new methods and new materials. An innovator utilizes
inventions and discovers in order to make new combinations.

TYPES OF ENTREPRENEURS

Today various types of Entrepreneurs are found engaged in different types of activities, not only
in industrial activities but also in agriculture and commercial activities. Today we can recognize
Entrepreneur in industry, service and business sectors which are technically called as ISB sectors.
Entrepreneurs are classified in a number of ways as discussed below.

1. Innovative entrepreneur: This category of Entrepreneur is characterized by smell of

innovativeness. This type of Entrepreneur, sense the opportunities for introduction of new ideas,
new technology, discovering of new markets and creating new organizations. Such Entrepreneur
can work only when certain level of development is already achieved and people look forward to
change and improve. Such Entrepreneur are very much helpful for their country because they
bring about a transformation in life style.

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2. Adoptive or imitative entrepreneur: Such entrepreneurs imitate the existing entrepreneur and
set their enterprise in the same manner. Instead of innovation, may just adopt the technology
and methods innovated by others. Such types of entrepreneur are particularly suitable for
underdeveloped countries for imitating the new combination of production already available in
developed countries.

3. Fabian entrepreneurs: Fabian entrepreneurs are characterized by great caution and skepticism,
in experimenting any change in their enterprises. They imitate only when it becomes perfectly
clear that failure to do so would result in a loss of the relative position in the enterprises.

4. Drone entrepreneurs: Such entrepreneurs are conservative or orthodox in outlook. They

always feel comfortable with their old-fashioned technology of production even though
technologies have changed. They never like to get rid of their traditional business, traditional
machineries and traditional system of business even at the cost of reduced returns.

5. Craftsmen: This category comprises of entrepreneurs that have skills, techniques and
experiences required to provide new products or services to the market. The skills are usually
acquired through training in vocational and technical schools. Craftsmen entrepreneurs are
usually small business owners and self-employed. They are mostly found in small scale
businesses like joinery, welding, tailoring etc.

6. Promoters: This category comprises of entrepreneurs that initiate business ideas. They
establish enterprises to actualize business ideas. Promoter entrepreneurs usually relinquish
established and fully developed business outfits in pursuit of more rewarding business ideas
and ventures.

7. Opportunists: This category of entrepreneurs exploit available business opportunities. In doing

so, they establish small scale business enterprises and develop them to large scale out fits.
Unlike promoter entrepreneurs, opportunists entrepreneurs do not usually relinquish developed
business outfits in pursuit of higher rewarding business ideas and ventures. Instead,
opportunists entrepreneurs use their technical knowhow, expertise and experience in the
continuous expansion and transformation of the established business enterprise. In Nigeria a
good example of a promoter entrepreneur is Alhaji Aliko Dangote. Dangote started with small

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 scale enterprises on sugar, salt etc. He later transformed them into large scale operations like
the sugar refinery in Lagos. Based on the strategies adopted in establishing business
enterprises, Dennis (2007) further categorized entrepreneurs into seven types, they are:

8. Soloists: These are entrepreneurs that solely establish and run their business enterprises. Such
enterprises are financed and managed mainly by an individual. If the individual requires
assistance, he usually obtains it from close associates such as members of his family, like his
wife, children or friends, relatives etc. Examples of soloist entrepreneurs are mechanics,
cobblers, and other professionals like accountants, lawyers, medical doctors etc.

9. Team builders: This category comprises of entrepreneurs that single handedly establish
business enterprises and later on, due to expansion, recruit other people (associates or non
associates) to assist in managing the business. As the name implies, team builder entrepreneurs
form a team of people that assist them in the day to day running of the business enterprise. The
relationship between the owner and the people in the team is usually more formal than the
soloist type of arrangement. Also, there may be more delegation of responsibilities by team
builder entrepreneurs than soloist entrepreneurs provides more room for expansion than the
soloist type.

10. Independent innovators: These are entrepreneurs that come up with new ideas, or products or
services and establish enterprises that actualize such ideas or produce the innovated products
or services. To prevent copying or imitation of the new idea or products, innovators
entrepreneurs usually obtain patent right from authorities for a given period of time. Examples
of innovators entrepreneurs are people like Bill Gates and authors of many books or ideas.

11. Capital aggregators: This category comprises of entrepreneurs that mobilize capital required
to establish intensive business outfits. These outfits are usually in areas of banking, insurance,
oil and gas. Examples of capital aggregator entrepreneurs in Nigeria are people like Jimoh
Ibrahim of N.I.C.O.N insurance, Pat Utomi of the former platinum bank and many more others.

12. Acquirers: These are entrepreneurs that commence business operations through the acquisition
of existing ventures mainly by means of inheritances or buying. The members of Alhassan
Dantata family in Kano an example of acquirer entrepreneurs in Nigeria. Most members of the

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 family are successful businessmen through inheritance and the buying of existing business
ventures.

13. Buy self-entrepreneurs: This category comprises of entrepreneurs that buy dying or living
business ventures for the purpose of reselling such ventures after adding value to them. Buy
self entrepreneurs are mostly found in developed economics of the world like U.S.A,, U.K.
India, etc.

14. Conglomerators: These are entrepreneurs that do business by means of buying shares of a
company that gives them control of the other related companies. The purpose of this kind of
buying may be to diversify or improve the parent company. A good example of conglomerate
entrepreneurships in Nigeria, was the buying of Sunglass Limited Company by the Seven-Up
Bottling Company. The reason for the buying was to use sunglass in producing bottles for use
by the seven up company.

3.2 The Role of Entrepreneurship in a Developing Society

Entrepreneurship has been recognized all over the world as a catalyst for development in any
economy. Entrepreneurship in developing countries in particular is being seriously advocated because
of the following importance:

1. Employment Generation: It helps to provide jobs through the establishment of new

businesses, especially small and medium scale enterprises.

2. Productivity: One of the factors for the greater interest in entrepreneurship has been the
increasing recognition of its role in raising productivity through various forms of innovation.
Entrepreneurs, through their innovation and creativity are capable of transforming existing
business sectors, and creating new sectors. They are helping to bring about new goods and
services (expanding productivity) and supplying the needs of large enterprises, which have to
rely on their operations for business success.

3. Facilitate the transfer/adaptation of technology: It enables entrepreneurs to have the

opportunities of developing and adapting appropriate technological methods and provide a
veritable avenue for skilled, unskilled and semi-skilled workers.

4. Ensures increased resource utilization: It helps entrepreneurs to put limited resources that
might otherwise remain idle into good use. They contribute to the mobilization of domestic
savings and utilization of local resources, including human resources.

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5. Stimulates growth in those sectors which supplies it with inputs: Entrepreneurship stimulates
growth in its supply market. The greater the number of entrepreneurship that exist in the
downstream‘of a particular sector, the greater the market, hence, the greater the potential for
increased capacity utilization.

6. Reinvigorates large-scale enterprises and public enterprises: Most large-scale enterprises

and public sector enterprises depend on the activities of small and medium scale enterprises
(SMEs) to supply them with various raw materials and other component parts and also to
assist them in the distribution of the finished goods to the final consumers. Entrepreneurship
has made it possible to be able to transform the public sector into a viable, market oriented
and profitable organization.

7. Generation of employment opportunities: By creating a new business enterprise,

entrepreneurs generate employment opportunities for others. Unemployment is a major issue,
especially in the context of developing economies like Nigeria. Educated youth often are
unable to get a suitable employment themselves. Thus, entrepreneurs not only self- employ
themselves, but also create jobs for others.
8. Inspire others towards entrepreneurship: The team created by an entrepreneur for his/her
new undertaking often provides the opportunity for the employees to have a first-hand
experience of getting involved in an entrepreneurial Venture. An existing venture provides a
number of entrepreneurial opportunities through forward and backward linkages, to these
employees even to become entrepreneurs themselves. Thus, this process helps in forming a
chain reaction of entrepreneurial activity which directly contributes to the health of the
economy.
9. Balanced Regional Development: Entrepreneurs help to remove regional disparities in
economic development. They set up the industries in the backward areas to avail various
subsidies and incentives offered by the Central and State Governments, thereby balancing the
economic growth in different regions in the country.
10. Enhance the number of enterprise: When new firms are created by entrepreneurs, the
number of enterprises based upon new ideas/ concepts/ products in a region increases. Not
only does an increase in the number of firms enhance the competition for new ideas, but
greater competition across firms also facilitates the entry of new firms specializing in a
particular new product or service. This is because the necessary complementary inputs are
more likely available from small specialist niche firms than from large vertically integrated
products (Jacobs, 1969).
11. Provide diversity in firms: Entrepreneurial activity often results into creation of a variety of
firms in a region. These firms operate into diverse activities and it has been found that it is
this diversity in firms which fosters economic development and growth rather than
homogeneity. According to Jacobs (1969), it is the exchange of complementary knowledge
across diverse firms and economic agents that yield an important return on new economic
knowledge.

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12. Economic Independence: Entrepreneurship is essential for self-reliance for a country.
Entrepreneurs create industries that manufacture indigenous substitutes, thereby reducing the
dependence on imports. Also, the goods are exported to other countries to earn foreign
exchange. This import substitution and export promotion results in more economic
independence to the country.

13. Enables individuals to use their potential and energies to create wealth, independence and
status for themselves in society.

The above thirteen points are not in any way exhaustive.

3.2.1 Functions of an Entrepreneur

To list the functions of entrepreneurs, give the impression that there are clearly defined activities
which the entrepreneur is expected to perform. On the basis of this understanding, the entrepreneur
is expected to perform the following functions:

1. Perception and identification of business opportunities: This is the first function of the
entrepreneur. It has to do with the recognition and definition of an unsatisfied need of
individuals, firms or households which can be satisfied with a product or service at the right
price that will guarantee satisfactory profit to the entrepreneur. In other words, business
opportunity occurs whenever there is a vacuum in the market place which is not being satisfied
by existing organizations or is being inadequately satisfied.

2. Selection of the legal form, location and site of the business: The form of business ownership
that the entrepreneur may decide to go into depends entirely on the amount of capital available
to the individual. To this end, the business enterprise may be operated either as sole
proprietorship, partnership or a limited liability. The selection of the initial legal form of the
enterprise as well as the location and site of the enterprise is the second function performed
by the entrepreneur.

3. Identification, selection and acquisition of key resources: The identification, selection and
acquisition of key resources is yet another function unique to entrepreneurs. For any start up
firm to survive and grow depends heavily on the availability of competent manpower who
will be able to translate the entrepreneur ‘s ideas into concrete forms. Thus, key personnel
must be sourced and encouraged to contribute their talents and energy during and after the
turbulent period of formation and take-off. In addition, the technology that is suitable for the
needs of the firm must be identified, evaluated and acquired. Sourcing of funds is one of the
major constraints in starting businesses by entrepreneurs, since the organization has no track
record to boost of with investors and bankers, a lot depends on the talents and trust of the

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 entrepreneur to develop an attractive project idea, form a credible and resourceful team in
order to encourage others to believe in the business.

4. Innovation: This is usually regarded as the height of entrepreneurship. Innovation may be

defined as the translation of a new idea into a new company. In other words, innovation simply
refers to striving to satisfy your customers better than what competitors are doing/offering.
This may take the form of a new product in an old market; old product in a new market; or
entirely a new product in a new market. It is important to emphasize that sustaining the
patronage of customers depend largely on the ability of the entrepreneur to respond to their
needs with new or modified products, new and better techniques of production which reduce
cost of production, better methods of distribution, pricing and promotion.

5. Risk bearing: This has been traditionally associated with the entrepreneur. There are various
types of risks in business. The risk of fire, accidents, bad debts, theft etc can be minimized by
taking preventive action and by insuring against them. Other risks arise because business
decisions are future oriented. Risk of business failure may arise from adverse fluctuation in
demand, unfavourable government policies, strong competitive advantage of other firms,
obsolete technology and hence high cost of operation etc. These risks cannot usually be
insured against and must be borne by the entrepreneur. One way of managing risk is for the
entrepreneur to be engage actively in monitoring the environment in order to be able to
respond and adapt to the dynamic nature of the environment from time to time. By so doing,
the entrepreneur proactively assesses the conditions facing him/her, and on the basis of the
evaluation of his/her strengths and weaknesses, he or she makes a choice of a strategy
considered suitable. Having made a choice, the entrepreneur accepts personal responsibility
for the outcome of his/her decision.

6. Management of the ongoing enterprises: The job of an entrepreneur is not hit and run or one
off activity. But rather, it is on a continuous basis (on going activity). To be able to sustain the
ongoing nature of the business, the entrepreneur must put in place these activities namely:
establishment of goals and targets for the enterprise; determination of the tasks to be
undertaken to achieve the goals/targets; efficient and effective allocation of the necessary
resources and controlling of the activities involved. This simply implies that the entrepreneur
is a planner, organizer, communicator, coordinator, leader, motivation and controller, and
most of all, a facilitator. Management of the on-going enterprise also involves the process
whereby the entrepreneur monitors and evaluates changes that are continuously taking place
in the political, economic, socio-cultural, technological, legal and ecological environment so
as to respond appropriately to ensure the survival of the business.

HOW TO BECOME AN ENTREPRENEUR

From the definitions of who an entrepreneur is, his qualities and contributions to societal
development, every right-thinking individual will certainly want to become an entrepreneur. Though
many individuals may wish to become entrepreneurs, not everybody will become one. This may be
18
due to the absence of what some people term as “Natural entrepreneurial traits” or lack of
environmental conduciveness or support. These and similar other obstacles notwithstanding, cannot
stop individuals from aspiring to become entrepreneurs. Such aspirations can be a reality by imbibing
the following qualities among others:

Vision and focus: A vision is an idea or a description of what one wants to achieve or to become in
the long-term future, whereas a focus means a concentration and a commitment to a determined
course of action. For one to become an entrepreneur, one must have a vision and a focus.

Goal setting: The attainment of a vision will require setting of goals on short- and medium-term
bases. The goals (unlike vision) should be specific, measurable and time bound. Potential
entrepreneurs need to imbibe the habit of setting goals in every activity they perform at every point
in time.

Self-motivation: This is an internal drive that spurs an individual into action so as to achieve the set
goals or objectives. Self-motivation simply means an interest that pushes an individual into action.
An individual cannot become an entrepreneur without having the interest of doing so. An interest
makes an entrepreneur to love what he is doing and that in turn will make him to do it well.

Sacrifice: This entails given up something in anticipation of getting another thing in future. The
establishment and the successful management of business enterprises involve sacrifice of time and
resources in anticipation of getting profits. Therefore, for one to become an entrepreneur, one must
imbibe the habit of making sacrifices.

Time management: All human activities are tied down to time. Time management means a judicious
use of time in the accomplishment of tasks. The aim of time management is to accomplish many tasks
within the shortest possible time. Many tasks are involved in the establishment and the management
of business enterprises. These tasks can only be accomplished with effective time management.

Hard work and perseverance: Hard work means continuity and consistency in putting the required
efforts for the achievement of set goals. Perseverance, on the other hand, means remaining resolute
and determined, in spite of perceived or real hurdles on the way to the achievement of the set targets.
The tasks involved in the establishment and the management of business enterprises are not only man
y, but are also difficult and complex. Hard work and perseverance are required from potential
entrepreneurs for the successful accomplishment of such tasks.

Decisiveness: It is an ability to react quickly and rightly on matters of concern (Usman et al, 2006).
A business involves making and taking decisions on many issues such as where to locate the business,
amount of capital required, type of people to employ etc. Fear of failure should not prevent one from
taking decisions. It is always better to take decisions and fail than failing to take decisions at all.
Therefore, an individual aspiring to become an entrepreneur, needs to be decisive on all matters of
concern.

19
Firmness and steadfastness: firmness means sticking to decisions taken in spite of perceived or real
difficulties on ground. Steadfastness entails consistency in firmness. There can be firmness without
consistency in firmness. There can be firmness without steadfastness, but there cannot be
steadfastness without firmness. For one to become an entrepreneur, one needs to imbibe the habit of
steadfastness and firmness on decisions taken.

Human relation: It may not be possible for an individual to single handedly establish and run a
business enterprise successfully. He may need the services of others as partners, workers, or even
customers. Potential entrepreneurs need to know how to relate with all categories of stakeholders in
the business. This can be achieved by studying people and understanding them so as to accommodate
their weaknesses and appreciate their strengths.

Freedom and independence: Though entrepreneurs require services of other people, they should not
in any way totally rely on others on key issues affecting the business. Freedom and independence are
essential attributes of potential entrepreneurs. Freedom helps entrepreneurs to think widely and
wisely so as to come up with new ideas or products. Independence on the other hand, improves the
entrepreneur’s ability to control the situation he finds himself and solves his problem without recourse
to somebody else.

Emotional stability: The business world is highly unstable and full of ups and downs. For an
individual to fit in the business world, he needs to be emotionally stable. Emotional stability means
control of sentiments (I,e, inner feelings) for the attainment of pre-determined goals or objectives.
With emotional stability, the unhappiness of incurring losses should not deter the entrepreneur from
continuing with the business. The joy of making profits should also not make entrepreneurs to relax
and lose sight of future problems.

3.4 Who is an Intrapreneur?

According to Jones, George and Hill (2000), an intrapreneur is a manager, scientist, or researcher
who works inside an existing organization and notices opportunities for product improvements and
is responsible for managing the product development process. The above definition was corroborated
by Pinchot (1985),when he coined the term intrapreneur to represent an innovative individual
(employee) in an existing business organization who perceives new market opportunities, secures
resources and initiates the realization of the opportunity. Rather than perform the roles of an
entrepreneur as an independent unit and for private economic gains, the intrapreneur performs the
same roles within an existing large organization to enhance the competitiveness and profitability of
the organization.

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3.4.1. The Meaning of Intrapreneurship

Stoner et al., (2009) opined that in today‘s faced-paced economy, companies that do not keep up may
go the way of the dinosaur. According to them, a large number of companies have lost their
entrepreneurial spirit that they started with. As they have grown larger, their ability to be innovative
and flexible may have been stifled by the very size and success of the organization. Many concepts
have been used to describe how managers can keep organizations from stagnating, make
organizations adaptive, and promote organizational climates that support creative learning. Perhaps,
the most widely used term for this process is intrapreneurship. Intrapreneurship or corporate
entrepreneurship is the process whereby an organization seeks to expand by exploring new
opportunities through new combinations of its existing resources.

3.5 Characteristics of an Entrepreneur

Timmons (1989) identified fourteen dominant characteristics of successful entrepreneurs.

They are:

1. Drive and Energy: Entrepreneurs are more energetic than the average person. They possess
the capacity to work for long hours and in spurts of several days with less than a normal
amount of sleep. Long hours and hard work are the rule rather than the exception, and the pace
can be grueling.

2. Self-confidence: Entrepreneurs typically have an abundance of confidence in their abilities to

achieve the goals they set and confident that they chose the correct career path. They also
believe that events in their lives are mainly self-determined, that they have a major influence
on their personal destinies, and have little belief based in fate.

3. Long term involvement: Entrepreneurship is hard work, and launching a company

successfully requires total commitment from an entrepreneur. They make a commitment to a
long term project and they work towards goals that may be quite distant in the future.

4. Money as a measure: One of the most common misconceptions about entrepreneurs is that
they are driven wholly by the desire to make money. To the contrary, achievement seems to
be entrepreneur primary motivating force: money is simply a way of ―keeping score‖ of
accomplishment – a symbol of achievement. What drives entrepreneur goes much deeper than
just the desire for wealth, (Scarborough, 2014).

5. Persistent problem solving: Entrepreneurs possess an intense level of determination and

desire to overcome hurdles, solve a problem and complete the job in the course of successfully
building new enterprises. They are not intimidated by difficult situations.

21
6. Goal setting: Entrepreneurs have the ability and commitment to set goals that are both
measurable and attainable for themselves. These goals tend to be high and challenging, but
they are realistic and attainable. Entrepreneurs are doers, they are goal and action oriented
individuals. Entrepreneurs are motivated by a high need for achievement.

7. Preference for moderate risk: Entrepreneurs are not wild risk takers but instead take
calculated and moderate risk.

8. Dealing with failure: Entrepreneurs do not fear failure. Anybody who is afraid of falling will
cancel whatever achievement motivation he or she possesses. From the point of view of
entrepreneur, failing is an opportunity to learn from.

9. Desire for immediate feedback: Entrepreneurs like the challenge of doing a business and they
want to know how far they are doing in terms of performance. The use of feedback enables
entrepreneurs to assess/take stock of their performance with the aim of improving on it.

10. Taking initiative and seeking personal responsibility: Entrepreneurs feel a deep sense of
personal responsibility for the outcome of businesses they start. They willingly put themselves
in situations where they personally take responsibility for the success or failure of the
business. They prefer to use available resources to achieve self-determined goals and also
want to be in charge of their resources.

11. Use of resources: Entrepreneurs have been known to use resources efficiently and effectively
in order to achieve organizational goals.

12. Competing against self-imposed and objective standards: High performing entrepreneurs
possess this internalized kind of competitive spirit in which he or she continuously engages
in competition with himself/herself to beat his or her last best performance.

13. Internal locus of control belief: The success or failure of a new business enterprise from the
point of view of an entrepreneur does not depend on luck or chance, or other external,
personally uncontrollable factors. But rather, the entrepreneur believes that one‘s personal
accomplishments as well as setbacks lie within one‘s personal control and influence.

14. Tolerance of ambiguity and uncertainty: Entrepreneurs tend to have a high tolerance for
ambiguous ever-changing situations, the environment in which they most often operate. This
ability to handle uncertainty is critical because these business builders constantly make
decisions using new, sometimes conflicting information gleaned from a variety of unfamiliar
sources.

The above characteristics are not by any means exhaustive.

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4.0 Conclusion

We have seen in this unit that entrepreneurship lies at the centre of any nation‘s free enterprise system;
small and medium scale enterprises (SMEs) are truly the backbone of any economy be it developed
or developing economy. This agent of catalyst for development has contributed immensely to the
businesses themselves in particular and the economy in general.

5.0 Summary

The highlights of this unit are hereby summarized below:

The concept of entrepreneurship has been seen to be a sine qua non for the development of any
economy. The unit also looks at the role of entrepreneurship in a developing society; functions of an
entrepreneur; characteristics of an entrepreneur as well as how to be an entrepreneur .

6.0 Tutor-Marked Assignment

(i) Distinguish between an entrepreneur and entrepreneurship

(ii) State and briefly explain five characteristics of an entrepreneur

7.0 References/Further Reading

Barringer, B.R. & Ireland, R.D. (2012). Entrepreneurship successfully launching new ventures
(4th edition). New York: Pearson.

Bateman, T.S. & Snell, S.A. (2011). Management: Leading and collaborating in a competitive world
(8th edition). Boston: McGraw-Hill.

Drucker, P.F. (1986). Innovation and entrepreneurship:practice and principles: New York: Harper &
Row

Herbert, R.F & Link,A.N. (1989). ―In search of the meaning of entrepreneurship‖ Small Business
Economics: 39-49.

Inegbenebor, A.U. (1997). Selected readings on entrepreneurial development for MBA programme,
Department of Business Administration, University of Benin, Benin City.

Inegbenebor, A.U. (2003). Unpublished lecture notes on entrepreneurship.

23
Inegbenebor, A.U. (2006). Fundamentals of entrepreneurship. Lagos: Malhouse Press.

Inegbenebor, A.U & Igbinomwanhia, O.R. (2011). Entrepreneurship in a developing society. In

F.C. Okafor. P.A. Isenmila & A.U. Inegbenebor(2nd ed.), 3 - 11. Entrepreneurshipt: A
practical approach. Benin City: Published by the Centre for Entrepreneurship Development,
Uniben, B/C.

Jones, G.R., George, J.M. & Hill, C.W.L. (2000). Contemporary management. (2nd edition). Boston:
McGraw-Hill.

Kilby, P. (1971). Entrepreneurship and economic development. New York.

Kuratko, D.F. (2014). Entrepreneurship: Theory, process, practice (9th edition). United States:
Cengage Learning.

Morris, M.H., Kuratko, D.F. & Covin, J.G. (2011). Corporate entrepreneurship and innovation (3rd
edition). United States: South-Western.

Okafor, F.C., Isenmila, P.A. and Inegbenebor, A.U. (2011). Entrepreneurship: A practical approach
(2nd. Ed). Benin City: Published by the Centre for Entrepreneurship Development,
University of Benin, Benin City.

Pinchot, G. (1985). Intrapreneurship: Why you don‘t have to leave the corporation to become an
entrepreneur. New York: Harper & Row.

Scarborough, N.M. (2013). Essentials of entrepreneurship and small business management. (6 th

edition). Boston: Pearson

Scarborough, N.M. (2014). Essentials of entrepreneurship and small business management. (7 th

edition). Boston: Pearson.

Sharma, S.C. (1999). Production management. Delhi: Khana Publishers.

Stoner, J.A.F., Freeman, R.E. & Gilbert, D.R. (JR). (2009). Management. (6 th edition). Delhi:
Pearson.

Timmons, J.A. (1989). The entrepreneurial mind. Boston: Brick House Publishing Company.

Timmons, J.A, Smaller & Dangee (1977). Entrepreneurial behaviour: Transforming an innovative
idea into an entrepreneurial product.

24
Tafamel, A.E. & J.E. Idolor (2011). ‗Discovering business opportunities‖ in Entrepreneurship: A
practical approach. Edited by Okafor, F.C., P.A. Isenmila and A.U. Inegbenebor (2nd ed.)
Benin City: published by the Centre for Entrepreneurship Development, University of Benin,
Benin City, 52-64.

Wilken, P. (1982). Entrepreneurship: A comparative and historical study: New York: The University
of Chicago Press.

Wilson, K. (2004), ―Entrepreneurship Education at European Universities and Business Schools:

Results of a Joint Pilot Survey‖, presented at EISB/EFMD Conference in Turku Finland,
September.

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Unit 3: Identification/ discovering Business Opportunities

Table of Contents

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Identifying and recognizing opportunities

3.1.1 Distinction between a business idea and a business opportunity

3.2 Sources of business opportunity

3.2.1 Some possible Business Ideas

3.3 Considerations for choosing a business opportunity

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

8.0 Reference/Further Reading

1.0 Introduction

This unit is designed to provide an insight on how an entrepreneur can identify and transform business
ideas into successful business opportunities. At the end of the unit, you are expected to be able to
distinguish between business idea from business opportunity as well as identifying and recognizing
business opportunities.

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2.0 Objectives
At the end of this unit, you should be able to:

1) define a business opportunity

2) differentiate between a business idea and a business opportunity
3) identify sources of business opportunities
4) identify the factors involved in choosing a business opportunity

3.0 Main Content

3.1 Identifying and recognizing opportunities

3.1.1 Distinction between a business idea and a business opportunity

3.2 Sources of business opportunity

3.3 Considerations for choosing a business opportunity

3.1 Identifying and Recognizing Opportunities

Most importantly, entrepreneurs recognize an opportunity and turn it into a successful business.
Barringer and Ireland (2012) defined an opportunity as a favorable set of circumstances that creates
a need for a new product, service, or business. Most business ventures are started in one of two ways.
Some ventures are either internally stimulated or externally stimulated. In the latter, an entrepreneur
decides to launch a firm, look for and recognizes an opportunity, and then starts a business. In the
former, an entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.

Irrespective of which of these two ways an entrepreneur goes into a new business, opportunities are
hard to spot. Identifying a product, service, or business opportunity that is not merely a different
version of something already available is difficult. Entrepreneurs make a common mistake in the
opportunity recognition process by taking a currently available product or service that they like or are
passionate about and then trying to build a business around a slightly better version of it. The best
approach to opportunity recognition is to identify a product or service that people need and are willing
to buy, not one that an entrepreneur wants to make and sell.

Barringer and Ireland (2012) opine that opportunity has four important qualities. It is (1) attractive
(2) durable (3) timely and (4) anchored in a product, service, or business that creates or adds value
for its buyer or end user. In order for an entrepreneur to take advantage of an opportunity, its window
of opportunity must be available. The window of opportunity describes the time period in which a

27
firm can realistically enter a new market. Once the market for a new product is established, its window
of opportunity opens.

3.1.1 Distinction between a Business Idea and a Business Opportunity

The starting point of a new business creation process is an idea of a product or service which can be
used to satisfied an identified need of individuals, families or organizations. An aspiring entrepreneur
can have an idea which he/she believes is a great idea that would be an instant success in the market.
Not all such ideas can translate into viable business opportunities. For a business idea to transform
into a business opportunity, such idea must offer a viable solution to a problem experienced by
potential consumers and for which they are willing to pay. A business idea, no matter how novel,
cannot be a business opportunity if customers cannot see its added value and therefore unwillingly to
pay for it (Inegbenebor, 2006:18).

A business idea and business opportunity can be likened to a production process which is inputs
transformation output process. A business idea represents the input stage while a business opportunity
represents the output stage. An entrepreneur may have a business idea that he or she believes would
be an instant success in the market. Not all such business ideas (input stage) can be transformed into
viable business opportunity (output stage). The question we may want to ask is, ‗what makes the
transformation possible?‘ Such a business idea must offer a viable solution to a problem experienced
by potential consumers and for which they are willing to pay. The idea is the conception stage of a
product or service while the opportunity is the stage at which the product or service gives satisfaction
to consumers and the entrepreneur makes profit from such a venture.

Barringer and Ireland (2012) define an idea as a thought, an impression, or a notion. An idea may or
may not meet the criteria of an opportunity. This is very important because many entrepreneurial
ventures fail not because the entrepreneurs that launched them didn‘t work hard, but rather because
there was no real opportunity to begin with. For a business idea to be good, it is necessary to
understand whether the idea fills a gap and meets the criteria for an opportunity. On the other hand,
Kirzner (1979) believes opportunity comes from a dysfunction in a market: ―An opportunity is a
market imperfection or an economical imbalance which can be exploited by an individual who
restores market equilibrium. Here the opportunity is considered as a profit which comes from an
existing demand and available resources‖.

3.2 Sources of Business Opportunity

Business opportunities have to be sought out as they do not present themselves for anyone to pick.
Ability to spot these business opportunities is what distinguishes an entrepreneur from all others.

There are all sorts of business opportunities to explore and which are already present in the market,
but not all of them will make a perfect match for such an individual.

28
There are various sources from where the would-be entrepreneur could get ideas; from which he will
then choose and develop into viable business opportunities. Inegbenebor (2006) identified several
ways by which an entrepreneur can spot business opportunities by examining various sources from
which useful ideas can be generated.

(i) Copy of existing successful business forms: This is the commonest source from which useful
business ideas can be generated. It is a good source if and only if there are no entry barriers.
The business that is already in existence is a model that can be copied or modified
significantly by ensuring that the product or service is more convenient, less expensive,
faster and easier to handle.

(ii) Personal or other people’s human experience: One‘s human experience whether pleasant
or unpleasant may be use to stimulate a creative response or solution to a problem. For
example, many people who buy street food may not be aware of the health hazards of their
actions. But the fact that there is such a risk can enable an entrepreneur to come up with the
idea of producing a product that does not entail such health risk and promoting it in such a
way that consumers will perceive the merit of the new product over the existing ones.

(iii)Work Experience: As a result of work experience, aspiring entrepreneurs may become

conversant with problems associated with existing products, target market not yet attacked,
difficulties experienced by customers, limitations of suppliers, etc. Through work experience,
creative solutions to problems may emerge for which potential customers are willing to pay
for and in turn yield profit to the entrepreneur.

(iv) A Hobby: An activity done regularly in one‘s leisure time for pleasure, for example,
singing, playing football, etc can be converted into a profit yielding venture.

(v) Franchise: This is when a license is granted by a government or company to a person or

group, allowing him/them to use or sell certain products. This may create opportunity for
the individual or group to attack a market that is currently not being served.

(vi) Vocation: Possession of vocational skills or professional skills, for example, hairdressing,
catering, etc suggests ideas of services that can be rendered.

(vii) Consultants: The vast experience and knowledge gained by consultants in the course of
seeking solutions to the problems encountered by organizations is a major source of
business idea.

(viii) Joint Effort: As the saying goes, two good brains work better than one. Two individuals
may come together in an attempt to spot business opportunities in the environment. This
move may then lead them to forming a partnership.

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3.2.1 Some Possible Business Ideas
(i) Baby-sitting service (ii) Baking
(iii) Art and Craft (iv) Bicycle/Auto/Appliance Repair
(v) Catering (vi) Distributing fliers
(vii) Entertaining (viii) Gardening/Lawn cutting
(ix) Handicraft (x) Holiday selling
(xi) House/Office Cleaning (xii) Laundry service

(xiii) Messenger service/Delivery service

(xiv) Music lessons (xv) Painting/Furniture refurbishing

(xvi) Pet care (xvii) Photography
(xviii) Tutoring (xix) Typing services
(xx) T-Shirts (xxi) Thrift and Credit (xxii) POS

3.3 Consideration for Choosing a Business Opportunity

An entrepreneur that wants to start a business must consider one of these three critical decisions
namely: the first is whether to take the plunge at all. The second dwells on the type of business to
start and the last is to decide on how to proceed on the new venture in terms of basics such as
financing, organization and lifestyle adjustment. However, the second decision which required a
choice of the opportunity to exploit to set up is usually by far the most difficult and tasking decisions
that an entrepreneur will ever make. A potential business owner can usually identify several business
opportunities, each of which is attractive for one reason or the other.

Some of the factors to be considered in choosing a business opportunity are:

(i) Business Experience: this is a fundamental ingredient for the success of any business venture.
To succeed in the undertaking, the entrepreneur must possess the relevant and appropriate
experience required to excel in his/her chosen niche. There exists a wide array of differences
in the practices and mode of operation in the different industries in the economy. For instance,
there are differences in the purchasing practices, production processes, customer relations
practices, ethics and modes of relating with the relevant government agencies. Also the
technicalities and concepts used vary from industry to industry. Overcoming these problems
will usually be easy for an entrepreneur who has had some years of working experience in the
chosen industry.
30
(ii) Skills Required for the Successful Operation of the Business: Every business requires
certain skills for successfully running it. Different businesses require different constellation
of skills or group of skills. But for each group of skills, there will be one skill which is core
and critical for success. The entrepreneur must therefore choose a business for which he/she
has the relevant core skills. Though it may be possible to acquire such skills by employing
experienced workers, the risk of being cheated and exploited is high if the entrepreneur does
not have the relevant skills required.

(iii) Financial Capability: Just as it is with every form of business, the financial implications is
very important. Funds will be needed to provide the relevant raw materials to be used for
production. Furthermore, there will be need to acquire the relevant technology and skills
which also borders on finance. Without adequate finance, the entrepreneur is unlikely to
succeed in the chosen business.

(iv) Risk Profile of the Entrepreneur: The entrepreneurs ‘tolerance for adventure in a new
livelihood is an important component in choosing a business. We all have different risk levels
or tolerance levels. Therefore, the entrepreneur must ensure that he/she selects a business
within his/her acceptable risk class.

(v) Support from Friends and Family Members: Usually many businesses fail because of the
inability of the entrepreneur to gain the support and encouragement of their families and
friends. The support of family members is particularly crucial in the early stage of the
business.

(vi) The Owners Personal Interest: If the entrepreneur loves the kind of activities that the
business will entail, the easier it is for the business to succeed. At all times, the entrepreneur
must ensure that there is no conflict between the chosen business venture and his/her preferred
life-style.

(vii) The Desired Level of Income: The income expected from the business venture must be
adequate to meet the entrepreneurs need for housing, clothing, food, recreation, entertainment
etc. While the business owner may accept a reduced standard of living at the initial stage, in
the long run, the business must have the potential of providing the desired level of income for
the owners.

(viii) Legal or Regulatory Constraints: In some cases, the law specifies the minimum professional
training and/or experience that is required to operate certain types of businesses. Persons
desiring to operate such businesses are required to obtain a license from the appropriate
authorities. Examples are pharmacy shops, hospitals and clinics and stock-broking firms
(Inegbenebor, 2006:22).

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4.0 Conclusion

This unit has attempted to show how opportunity recognition is also a key part of the entrepreneurial
process. There is insight on the distinction between that business idea and business opportunity. The
factors entrepreneurs should considered when choosing business opportunity were also highlighted.

32
5.0 Summary
In summary, the unit highlighted the identification and recognition of business opportunities, clear
distinction between business idea and business opportunity as well as factors to be considered in
choosing a business opportunity.

6.0 Tutor Marked Assignment

1. Mention and explain the factors you would take into account in choosing a business
opportunity to invest in

2. Write short notes on the following:

(a) An opportunity

(b) A window of opportunity

(c) A business idea

7.0 References/Further Reading

Barringer, B.R. & Ireland, R.D. (2012). Entrepreneurship successfully launching new ventures (4 th
edition). New York: Pearson.

Inegbenebor, A.U. (2006). Fundamentals of entrepreneurship. Lagos: Malhouse Press.

Kirzner, I.M. (1979). Perception, Opportunity and Profit Studies in the Theory of
Entrepreneurship, Chicago II: University of Chicago Press.

Morris, M.H., Kuratko, D.F. & Covin, J.G. (2011). Corporate entrepreneurship and innovation (3 rd
edition). United States: South-Western.

Nwoye, M.I (1994). Small Business Enterprise. Benin City: The Benin Social Science Series for
Africa.

Okafor, F.C., Isenmila, P.A. and Inegbenebor, A.U. (2011). Entrepreneurship: A practical
approach (2nd. Ed). Benin City: Published by the Centre for Entrepreneurship
Development,University of Benin, Benin City.
Tafamel, A.E. & J.E. Idolor (2011). ‗Discovering business opportunities‖ in Entrepreneurship: A
practical approach. Edited by Okafor, F.C., P.A. Isenmila and A.U. Inegbenebor (2 nd ed.)
Benin City: published by the Centre for Entrepreneurship Development, University of
Benin, Benin City, 52-64.

30