Family & Small

Entrepreneurs
Chapter 3
Dr Nur Kamarul Hafiz bin Jamil
Faculty of Business and Accountancy
Lincoln University College
 Topic: The Entrepreneurial
Mindset
▪ What do you need to be an entrepreneur?
▪ Motivation
▪ Start-up capital
▪ Triggers for entrepreneurs
▪ Character traits of entrepreneurs
▪ Cognitive development theory
▪ Evaluating the trait approach
▪ The influence of national culture
▪ Social and demographic influences
▪ Intrapreneurs
▪ Social and civic entrepreneurs
 What it takes to be an
Characteristics
Vision and creativity
Risk-taking and resilience
Adaptability and flexibility
Entrepreneur?
Explanation
Entrepreneurs need to have a clear vision of what they want to
achieve and the creativity to develop innovative solutions to
problems or opportunities
Successful entrepreneurs are comfortable with taking risks and
can bounce back from failures. They see setbacks as learning
opportunities rather than obstacles.
The business landscape is constantly changing, so entrepreneurs
must be able to adapt their strategies and pivot when necessary to
stay relevant and competitive
 What it takes to be an
Entrepreneur?
Characteristic Explanation
Passion and persistence Passion fuels the drive to succeed despite challenges
and setbacks. Entrepreneurs need to be persistent in
pursuing their goals, even when faced with obstacles.
Leadership and communication skills Effective leadership and communication skills are
essential for building and motivating teams, attracting
investors and fostering relationships with customers
and stakeholders.
Resourcefulness and problem-solving abilities Entrepreneurs often have limited resources, so they
need to be resourceful in finding creative solutions to
problems and making the most of what they have.
Financial literacy Understanding financial concepts such as budgeting,
cash flow management, and financial forecasting is
crucial for running a successful business.
 Motivations for Becoming
Successful Entrepreneurs

Passion for Desire for

Autonomy and Impact and
their idea or financial
independence contribution
industry success

Freedom to
Challenge and Legacy and
pursue
growth recognition
personal values
Start-up in
Entrepreneur
ship
Start-up capital refers to the initial funds
required to launch a new business
venture. It encompasses the financial
resources needed to cover various
expenses during the early stages of the
business, such as equipment purchases,
marketing costs, lease payments, and
initial operating expenses.
Types of Start-up Capital
• Equity Capital: Equity capital is raised by selling ownership stakes in the business to investors.
This can include personal investments from founders, funding from friends and family, angel
investors, venture capitalists, or equity crowdfunding.
• Debt Capital: Debt capital involves borrowing funds that must be repaid over time with
interest. Sources of debt capital may include bank loans, lines of credit, small business
administration (SBA) loans, or alternative lending platforms.
• Grants and Subsidies: Some entrepreneurs may qualify for grants, subsidies, or government-
sponsored programs that provide funding for specific types of businesses or projects. These
funds typically do not need to be repaid but may come with certain eligibility criteria and
reporting requirements.
• Bootstrapping: Bootstrapping involves funding the business using personal savings, credit
cards, or revenue generated from early sales. While bootstrapping may involve minimal
external financing, it requires careful financial management and may limit the scale and pace
of growth.
 Determining Start-up
Capital Needs
• Estimating start-up capital requirements involves identifying and quantifying the various costs
associated with launching the business. This includes one-time expenses (e.g., equipment
purchases, initial inventory) and ongoing operating costs (e.g., rent, utilities, payroll).
• Entrepreneurs should conduct thorough market research and financial analysis to develop
realistic projections of start-up expenses and revenue potential. This helps in determining the
amount of capital needed to fund operations until the business becomes self-sustaining or
generates sufficient cash flow.
 Challenges and Strategies
for Obtaining Start-up Capital
I. Access to Funding: Access to start-up capital can be challenging, particularly for new
entrepreneurs without a track record of success or collateral to secure financing.
Developing a compelling business plan and presenting a convincing case to potential
investors or lenders can help overcome these barriers.
II. Risk Management: Entrepreneurs should carefully consider the trade-offs between equity
and debt financing, as well as the implications of taking on external funding in terms of
ownership dilution, repayment obligations, and risk-sharing.
III. Alternative Funding Sources: In addition to traditional sources of start-up capital, such as
banks and investors, entrepreneurs may explore alternative funding options such as
crowdfunding platforms, peer-to-peer lending networks, or strategic partnerships with
suppliers or customers.
Triggers for Entrepreneurship
1. Identification of Opportunity:
▪ Many entrepreneurs are driven to start their own businesses by
identifying a gap or opportunity in the market. This could be an
unmet need, an emerging trend, or a problem that hasn't been
adequately addressed.
2. Desire for Independence:
▪ The desire to be one's own boss and have control over one's work
and lifestyle is a common trigger for entrepreneurship. Some
individuals are motivated by the autonomy and flexibility that
entrepreneurship offers.
3. Passion and Expertise:
▪ Entrepreneurs often start businesses based on their passion for a
particular industry, product, or area of expertise. Their deep
knowledge and enthusiasm drive them to pursue entrepreneurial
ventures in that field.
4. Frustration with Current Employment:
▪ Dissatisfaction with traditional employment, such as limited career
advancement opportunities, lack of recognition, or feeling
undervalued, can prompt individuals to pursue entrepreneurship as
an alternative path.
5. Financial Incentives:
▪ The potential for financial rewards, including wealth creation,
higher earning potential, and financial independence, can serve as
a powerful trigger for entrepreneurship.
1. Personal Circumstances:
▪ Life events such as job loss, relocation, or significant changes in
personal circumstances can prompt individuals to consider
entrepreneurship as a means of creating stability and security.
2. Inspiration from Role Models:
▪ Exposure to successful entrepreneurs or inspiring role models can
spark an interest in entrepreneurship and serve as a motivating
factor for individuals to pursue their own ventures.
3. Social and Environmental Impact:
▪ Some entrepreneurs are driven by a desire to make a positive
impact on society or the environment. They may be motivated to
address social or environmental challenges through innovative
business solutions.
4. Cultural and Familial Influences:
▪ Cultural norms and family background can influence individuals'
attitudes toward entrepreneurship. In cultures or families where
entrepreneurship is valued and encouraged, individuals may be
more likely to pursue entrepreneurial paths.
5. Technological Advancements:
▪ Advances in technology and the digital economy have created new
opportunities for entrepreneurship, such as e-commerce, app
development, and online services, which can serve as triggers for
entrepreneurial activity.
 Myths About
Entrepreneurship
Myth 3:
Myth 1: Myth 2:
Entrepreneurs are Entrepreneurship is
Success happens
born, not made only for young, tech-
overnight
savvy individuals

Myth 5: Myth 4:
You need a Entrepreneurs must
groundbreaking idea take huge risks to
to start a business succeed
 Cognitive Development
Theory in Entrepreneurship
▪ Cognitive development theory, rooted in the work of psychologists like Jean Piaget and Lev
Vygotsky, focuses on how individuals acquire knowledge, process information, and develop
problem-solving skills as they grow and mature.
▪ In the context of entrepreneurship, cognitive development theory explores how individuals'
cognitive abilities and thought processes influence their entrepreneurial behavior, decision-
making, and problem-solving skills.
▪ Stages of Cognitive Development
1. Sensorimotor
2. Preoperational
3. Concrete operational
4. Formal operational
 Four Stages of
Cognitive Development
Stage Explanation
Sensorimotor Stage In the sensorimotor stage (birth to 2 years), infants develop basic sensory and motor skills and
begin to understand the world through their senses and actions. While not directly applicable
to entrepreneurship, this stage lays the foundation for future cognitive development.
Preoperational The preoperational stage (2 to 7 years) is characterized by the development of language,
Stage imagination, and symbolic thinking. Children in this stage may engage in pretend play and begin
to use symbols to represent objects and ideas, laying the groundwork for creativity and
problem-solving in entrepreneurship.
Concrete In the concrete operational stage (7 to 11 years), children become more adept at logical
Operational Stage reasoning and understanding cause-and-effect relationships. They develop the ability to solve
concrete problems using tangible objects and observable phenomena, which can inform
entrepreneurial decision-making and problem-solving.
Formal Operational The formal operational stage (11 years and older) marks the attainment of abstract thinking
Stage and hypothetical reasoning. Individuals in this stage can analyze complex problems, consider
multiple perspectives, and engage in systematic planning and decision-making—all essential
skills for successful entrepreneurship.
 The Influence of National
Culture in Entrepreneurship
1. Cultural Values and Norms:
➢ National culture shapes individuals' attitudes, beliefs, and behaviors regarding entrepreneurship. Cultural values such
as individualism-collectivism, risk aversion, and tolerance for uncertainty influence entrepreneurial aspirations, risk-
taking propensity, and innovation orientation.
2. Entrepreneurial Mindset:
➢ Cultural factors impact the entrepreneurial mindset and perception of success. In individualistic cultures like the
United States, entrepreneurship is often celebrated, and success is equated with personal achievement and wealth
accumulation. In collectivist cultures, entrepreneurship may be viewed differently, with emphasis placed on
community contributions and social responsibility.
3. Risk Perception and Tolerance:
➢ Cultural attitudes toward risk-taking vary across societies. In some cultures, such as the United States, risk-taking is
valorized, and failure is seen as a natural part of the entrepreneurial journey. In contrast, cultures with high
uncertainty avoidance may exhibit greater aversion to risk and failure, which can impact entrepreneurial activity and
innovation.
4. Social Capital and Networks:
➢ National culture influences the formation and utilization of social capital and networks, which are vital for
entrepreneurial success. In cultures with strong social ties and collectivist values, entrepreneurs may rely heavily on
family, friends, and community networks for support, funding, and business connections.
 The Influence of National
Culture in Entrepreneurship
1. Regulatory Environment:
➢ Cultural norms and values shape the regulatory environment for entrepreneurship, including government policies,
legal frameworks, and bureaucratic processes. Cultures that prioritize individual freedom and autonomy may have
more favorable regulatory environments for starting and scaling businesses, while others may face barriers and
constraints.
2. Innovation and Creativity:
➢ Cultural attitudes toward innovation and creativity impact entrepreneurial endeavors. Cultures that value
experimentation, diversity of thought, and openness to new ideas may foster a conducive environment for innovation-
driven entrepreneurship, whereas cultures with rigid conformity and resistance to change may stifle innovation.
3. Entrepreneurial Role Models and Mentors:
➢ Cultural context influences the availability and visibility of entrepreneurial role models and mentors. In cultures that
celebrate entrepreneurial success and provide support networks, aspiring entrepreneurs may have greater access to
role models, mentors, and resources for learning and development.
4. Globalization and Cultural Adaptation:
➢ In an increasingly interconnected world, entrepreneurs must navigate cultural diversity and adapt their strategies to
global markets. Cultural intelligence and cross-cultural competence are essential for building relationships,
understanding consumer preferences, and effectively operating in diverse cultural contexts.
 Social and Demographic
Influences
Social Influences
1. Cultural Norms and Values:
▪ Cultural attitudes toward entrepreneurship can impact individuals'
perceptions of risk, success, and social acceptance.
▪ Cultures that celebrate entrepreneurship may foster a more
supportive environment for aspiring entrepreneurs.
2. Family Background and Support:
▪ Family dynamics and support networks play a significant role in
shaping entrepreneurial aspirations.
▪ Entrepreneurial families may provide mentorship, financial
resources, and encouragement, positively influencing
entrepreneurial behavior.
3. Social Networks and Relationships:
▪ Access to social networks and relationships with mentors, peers,
and industry professionals can provide valuable resources,
opportunities, and support for entrepreneurs.
▪ Networking and relationship-building skills are essential for
leveraging social capital in entrepreneurship.
Demographic Influences
1. Gender:
▪ Gender norms and biases can influence entrepreneurial opportunities and
challenges.
▪ Women entrepreneurs may face barriers such as access to capital,
networks, and opportunities for advancement, but initiatives promoting
gender equality in entrepreneurship are gaining momentum.
2. Age:
▪ Age can affect entrepreneurial motivations, risk tolerance, and access to
resources.
▪ Younger entrepreneurs may have greater comfort with technology and
innovation, while older entrepreneurs may bring valuable experience and
industry knowledge.
3. Education and Socioeconomic Background:
▪ Educational attainment and socioeconomic status can impact access to
entrepreneurial opportunities and resources.
▪ Entrepreneurship education and support programs aim to democratize
access to entrepreneurship and empower individuals from diverse
backgrounds.
4. Geographic Location:
▪ Local economic conditions, infrastructure, and regulatory environments
influence entrepreneurial activity.
▪ Urban areas often offer greater access to resources, markets, and support
networks, but rural entrepreneurship is vital for economic development
and community resilience.
Intrapreneurs
▪ Definition:
• Intrapreneurs are individuals within an existing organization who exhibit entrepreneurial
behavior and mindset. They innovate, take risks, and drive change within the confines of
their organization.
▪ Characteristics of Intrapreneurs:
• Proactive and innovative: Intrapreneurs identify opportunities for improvement and
innovation within their organization.
• Risk-taking: They are willing to take calculated risks to pursue new ideas and initiatives.
• Resourcefulness: Intrapreneurs leverage resources within the organization to implement
their projects or initiatives.
• Ambitious and driven: They are motivated to make a significant impact and drive growth
within the organization.
Roles of Intrapreneurs
• Driving innovation: Intrapreneurs introduce new products,
services, or processes to enhance the organization's
competitiveness.
• Problem-solving: They identify and address challenges or
inefficiencies within the organization, leading to improved
performance and effectiveness.
• Cultural change: Intrapreneurs may challenge the status quo and
promote a culture of creativity, risk-taking, and continuous
improvement within the organization.
Social Entrepreneurs
▪ Definition:
• Social entrepreneurs are individuals who establish ventures with the primary goal of addressing
social or environmental issues. They apply entrepreneurial principles and innovative approaches to
create positive social impact.
▪ Characteristics of Social Entrepreneurs:
• Mission-driven: Social entrepreneurs are deeply committed to addressing specific social or
environmental challenges.
• Innovative solutions: They develop creative and sustainable solutions to address social problems,
often leveraging business models for impact.
• Collaboration: Social entrepreneurs collaborate with various stakeholders, including communities,
governments, NGOs, and businesses, to maximize their impact.
• Outcome-oriented: They prioritize measurable social or environmental outcomes alongside financial
sustainability.
Civic Entrepreneurship
▪ Definition:
• Civic entrepreneurs are individuals who initiate or lead projects and initiatives to address public
issues and improve the well-being of communities. They mobilize resources and stakeholders to drive
social change at the local, regional, or national level.
▪ Characteristics of Civic Entrepreneurs:
• Community-focused: Civic entrepreneurs are deeply rooted in their communities and seek to address
local needs and challenges.
• Grassroots mobilization: They engage community members, organizations, and policymakers to
advocate for change and implement solutions.
• Adaptive and resilient: Civic entrepreneurs navigate complex socio-political environments and adapt
their strategies to achieve their goals.
• Long-term vision: They pursue sustainable solutions and long-term impact, often working towards
systemic change.
Discussion
Question