Unit 1: Entrepreneurship

Learning Outcome 1:
Understanding the nature of entrepreneurship
“Entrepreneurial actions begin at the nexus of a
lucrative opportunity and an enterprising
individual”
 Defining entrepreneurship
Additional:
“A way of thinking and acting that is
opportunity-obsessed, holistic in approach and
leadership-balanced”. - J Timmons
 Nature of the entrepreneurship
• Recognising the opportunity.
• Creating something new (action).
*New product or process; New market entry
• Offered to the market through a new organisation or
an existing organisation.
• Risk of failure vs possibility of a reward
*Profit driven or social in nature
 Learning Outcome 2:
Describe the key ideas an entrepreneur should
consider when starting an entrepreneurial venture.
The Spinach King
 Key ideas to consider when starting
an entrepreneurial venture
• Believe in yourself
• Planning + Action = Success
• Help helps
• Do well, do good

Additional: The entrepreneurial process

Key ideas to consider when starting
an entrepreneurial venture
 Entrepreneurial process - Timmons
Communication
Opportunity Resources

Business Plan

Creativity Leadership

Entrepreneur/
Team

Risk vs. Capital Market Contest

 Entrepreneurial process - Timmons
Communication
Opportunity Resources

Business Plan

Creativity Leadership

Entrepreneur/
Team

Risk vs. Capital Market Contest

Entrepreneurial process: Opportunity
• Creation and recognition of opportunities is at
the heart of the process.
• Idea vs opportunity
• Considerations: Market readiness and
consumer trends and behaviours that seek
new products or services.
 Entrepreneurial process: Resources
• Fundamental principle of the model – let the
opportunity guide you toward the level and
the extent of resources needed (move away
from bootstrapping).
• Minimize and control rather than maximise
and own (cash flow problems).
• Build a good resource base to facilitate the
start-up process.
 Entrepreneurial process:
Entrepreneur/Team
• Once the entrepreneur identifies an opportunity,
he/she works to start a business by putting
together the team and gathering the required
resources.
• The nature of the opportunity determines the
size and shape of the team.
• A good team as indispensable for success. “A bad
team can waste a great idea”.
• Among all resources, only a good team can
unlock a higher potential with any opportunity
and manage the pressures related to growth.
 Entrepreneurial process: Creativity,
communication & leadership
• The success of the prospective business
depends on the ability of the entrepreneur to
ensure balance by applying creativity,
leadership, and maintaining effective
communications.
• Evident throughout the value chain.
 Entrepreneurial process - Timmons
Communication
Opportunity Resources

Business Plan

Creativity Leadership

Entrepreneur/
Team

Risk vs. Capital Market Contest

 Entrepreneurial process:
Business Plan
• At the center of the framework is a business
plan, in which the three basic components are
integrated into a complete strategic plan for
business.
• Not only be for financing purposes.
• The business plan provides the language to
communicate the quality of the three driving
forces of the model (opportunity, resources
and the team)
 Entrepreneurial process - Timmons
Communication
Opportunity Resources

Business Plan

Creativity Leadership

Entrepreneur/
Team

Risk vs. Capital Market Contest

 Entrepreneurial process:
Risk vs. Capital Market Capture
• Balancing act between managing risks and
capturing market share.
• There is always a risk of failure but it can be
minimized with a sound opportunity, enough
resources and a great team.
 Learning Outcome 3:
Identify actions key to becoming a small business
owner
Elements to get started in business
 Learning Outcome 4:
Recognise why small businesses are important to our
economy and your community
Small businesses and the economy
• New jobs
• Innovation
• Creation of new opportunities
 Different perspectives that drive
entrepreneurship (economic)
Factor-driven economies:
• Pakistan, Jamaica and Venezuela.
• Entrepreneurship is essential to build personal
wealth and to break the cycle of low-wage
jobs.
• Entrepreneurial activity is normally very high
 Different perspectives that drive
entrepreneurship (economic)
Efficiency-driven economies:
• Russia, Brazil and China.
• Entrepreneurship is key to building a wealthy
middle-class.
• Retail, wholesale and large industries.
• Entrepreneurial activity is normally in the
middle range.
 Different perspectives that drive
entrepreneurship (economic)
Innovation-driven economies:
• Germany, Korea and the USA.
• Focus on high-value-added manufacturing, a
large service sector and the provision of high
end products and services to the local and
export markets.
• Entrepreneurial activity is normally average to
low.
 Different perspectives that drive
entrepreneurship (entrepreneurial)
Opportunity-driven entrepreneurship:
• Entrepreneurs who are entering business to
improve themselves financially.
Necessity-driven entrepreneurship:
• A person who become an entrepreneur
because there is no prospect to get
employment.
Learning Outcome 5: Recognise the key aspects of
the entrepreneurial personality and their
operational competencies.
 Five Ps of entrepreneurial behaviour
• Passion
• Perseverance
• Promotion-prevention focus
• Planning Style
• Professionalisation
 Five Ps of entrepreneurial behavior -
Passion
• Positive feeling towards the
opportunity/business.
• Increase your commitment towards the
business and inspire stakeholders.
 Five Ps of entrepreneurial behavior -
Passion
• Passion is displayed by:
– Looking at challenges in a creative way.
– Being focused on the business.
– Being absorbed by the tasks and activities of the
business.
 Five Ps of entrepreneurial behavior -
Perseverance
• A type of learned optimism, it is the ability to
stick with the activity even if takes long or the
outcome is unsure.
• “If you don’t succeed the first time, try again”
Five Ps of entrepreneurial behavior –
Promotion-prevention focus
• Internal focus human beings have.
• Promotion focus – intention to maximise
gains, which lead us towards pursuing
opportunities.
• Prevention focus – intention to minimize
losses which lead towards inaction or
protective action.
 Five Ps of entrepreneurial behavior –
Planning style
• Comprehensive planners
• Critical-point planners
• Opportunistic planners
• Reactive planners
• Habit-based planners
Five Ps of entrepreneurial behavior –
Professionalisation
• Standard business practice – Doing at least one
thing better than the average.
• Expert business professionalism – When most
aspects of the business meet or succeed the
industry standards.
• Specialised business professionalism – When one
or two aspects of the business are at the level.
• Minimalized business professionalism – When
none of the aspects of the business meets the
industry standards.
 Learning Outcome 6:
Recognise the stages of entrepreneurial development
Entrepreneurial life-cycle
 Emergence
• The stage where the entrepreneur thinks
about and take actions towards starting the
venture.
• Entrepreneurial thinking to entrepreneurial
action
 Existence
• The stage where the business is operating but
not stable in terms of markets, processes and
finance.
• SA – cashflow problems; takes 2 years on
average to reach break-even point etc.
 Success
• Venture is established in the market.
• Consistency in terms of financial performance
and an increase in sales.
 Resource Maturity
• Characterised by stable sales and stable profit
levels.
• Associated with overall efficiency and
consistency.
 Takeoff
• Alternative to resource maturity.
• Period of exceptional growth.
• Risk – balance resources
 Learning Outcome 7:
Identify the sources of opportunities entrepreneurs
draw on to get business ideas.
Sources of ideas and opportunities
Opportunity recognition – Searching and
capturing entrepreneurial ideas that lead to
business opportunities. It is a process that
involves creative thinking.
Sources of ideas and opportunities
Entrepreneurial alertness – Observational and
thinking skills that assist entrepreneurs in
identifying opportunities.
Opportunity Recognition
 Learning Outcome 8:
Describe how to construct a business model canvas
to assess the feasibility of your business
 The business model canvas
• Business models are ways to identify and
organize key information on an organization
and how they achieve their goals.
How do they make profit?
Business Model Canvas
 Value Proposition
Additional
Three questions to ask yourself when you
develop a business model:
• What do you sell?
• What problem do you solve?
• What value do you create?
 …because…
A great value proposition is essential for any
business hoping to clearly communicate to its
customers why they are different, better

and worth buying from…

Look at the following statement…
We offer an easy fix to leaking pipes.

What is the message here?

Look at the following statement…

What is an easy fix?

Is there any
meaning in the
statement from the
customer’s point of
view?
Look at the following statement…
We offer an easy fix to leaking pipes in less than
a day.

What is the message here?

Look at the following statement…

The second statement

tell you exactly how
quickly the service
provider will solve your
problem = VALUE
 Value proposition
It describes a bundle of products and services that
create value for a specific customer segment
• Newness
• Performance
• Customization
• "Getting the job done”
• Design
• Brand/status
• Price
• Cost reduction
• Risk reduction
• Accessibility
• Convenience/usability