• Course Syllabus for The Course

Entrepreneurship And Small Business

Management
 Course description

• This interdisciplinary course is designed to

introduce students to the concept of sustainable
entrepreneurship, a manageable process that
can be applied across careers and work settings.
• It focuses on building entrepreneurial attitudes
and behaviors that will lead to creative solution
within community and organizational
environments.
• Course topics include:
 fundamentals of entrepreneurship,
the role of entrepreneurs in the 21st century global
economy, and
the identification of entrepreneurial opportunities.
The elements of creative problem solving,
the development of a business concept/model,
 the examination of feasibility studies and the social
/moral/ethical implication of entrepreneurship will be
incorporated.
 Issues related to starting and financing a new venture are
included.
 Course objective

• At the end of this course students will be able

to explain concepts; the specific management
issues involved in setting up and running a
small enterprise, entrepreneurial success
factors, the role of entrepreneurship on the
economy and recognize & overcome obstacles
to creative problem-solving.
 Contents
• Chapter 1: Fundamentals Of Entrepreneurship
• Chapter 2: Small Business: Vital Components Of
The Economy
• Chapter 3: Developing Business Plan
• Chapter 4: the Concept of Product
• Chapter 5: Marketing and New Venture
Development
• Chapter 6: Organizing and Financing a New
Venture
• chapter 7: managing business growth or growth
strategies for small business
 Chapter one

Fundamentals of Entrepreneurship
 Introduction

• The concept of entrepreneurship is a complex phenomenon. Broadly,

it relates to entrepreneur, his vision and its implementation.
• Entrepreneurship refers to a process of action an entrepreneur
undertakes to establish his or her enterprise.
• Entrepreneurship is a composite skill, the resultant of a mix of many
qualities and traits.
• These include imagination, readiness to take risks, ability to bring
together and put to use other factors of production, capital, labor, and
land as also intangible factors such as the ability to mobilize
scientific and technological advances.
• Above all, entrepreneurship today is the product of team work and
the ability to create, build and work as a team
 Definitions of Entrepreneurship and
Entrepreneur
• A.H. Cole has defined entrepreneurship as “The
purposeful activity of an individual or group of
associated individuals, undertaken to initiate,
maintain or earn profit by production and
distribution of economic goods and services”.
• According to Joseph A Schempeter
Entrepreneurship is essentially a creative activity that
consists of doing things as are not generally done in
ordinary course of business.
• Entrepreneurship can also be defined as the
attempt to create value through recognition of
business opportunity, the management of risk
taking appropriate to the opportunity and through
the communicative and management skills to
mobilize human, financial and material resources
necessary to bring a project to fruition.
• Entrepreneurship refers to a process of action an
entrepreneur undertakes to establish his or her
enterprise.
 What Is an Entrepreneur?

• An entrepreneur is a person who creates a business or

product, manages his/her resources and takes risks to gain a
profit.
• Jean Baptiste (1816) described the entrepreneur as the agent
who unites all means of production and “who finds in the
value of the products-the reestablishment of the entire capital
he employs, and the value of the wages, the interest, and rent
which he pays as well as profits belonging to himself.”
• According to Frank Knight (1921), the entrepreneur attempts
to foresee and act upon changes within markets. emphasized
the entrepreneur’s role in bearing the uncertainty of market
dynamics.
 – From this an entrepreneur is person who has:
• The ability to see and evaluate business opportunities
• The ability to gather the necessary resources, to take
advantage of opportunities and
• The ability to take risk and initiate appropriate action to
ensure success.
• Peter Drucker describes an entrepreneur as “someone who
always searches for change, responds to it, and exploits it as
an opportunity.”
• Entrepreneurs are the instrument of change in any economy
and any country.
• perceives opportunities for profitable investments
• Explores the prospects of starting such a
manufacturing entrepreneurs
• obtains necessary industrial licenses
• Arranges initial capital
• Provides personal guarantees to the financial
institutions
• Promotes to meet the short falls in the capital and
• supplies technical know-how
 Entrepreneur Entrepreneurship

 Refers to a person Refers to a process

 Able to visualize Vision
 Creator Creation
 Organizer Organization
 Innovator Innovation.
 Decision Maker Decision
 Leader Leadership
 Motivator Motivation
 Programmer Action
 Risk Taker Risk Taking
 Communicator Communication
 Administrator Administration
Manager
 Management is a profession,
which, in principle, can be learnt
by formal education and/or
practice.
 The manager is not necessarily the
full risk taker of the business;
 Managers tend to be custodial;
prefer to stick to prove ways of
doing business.
 Managers are more oriented to the
achievement of short-term goals.
 They are rewarded by minimizing
risk and avoiding failure.
 They tend to delegate tasks and
supervise those workers
performing the task.
Entrepreneur
 Entrepreneurship is not a profession;
rather, it is a style of life – a tradition.
It is not easy to learn it.
 The entrepreneur is the full risk taker.
He or she is the creator of the business.
 Entrepreneurs' activity seeks change by
exploiting opportunities.
 They look at their business growth
over a long period of time.
 Entrepreneurs put their own personal
finance at risk and they accept risk as
part of the entrepreneurial process.
 They are directly involved in their
organization's operational activities.
 
 
 Types of entrepreneurs

 Based on the type of business

a. Business entrepreneurs
These are individuals who conceive an idea for a new product or service and
then create a business to materialize their idea in to reality. They tap both
production and marketing resources in their search to develop a new
business opportunity.
b. Trade entrepreneur is one who undertakes trading activities but not
concerned with the manufacturing work.
c. Industrial entrepreneur is essentially a manufacturer who identifies the
potential needs of customers and tailors a product/service to meet the
marketing need.
d. Corporate entrepreneur is an individual who plans develop and manages
a corporate body. Corporate is a separate legal entity.
e. Agricultural entrepreneurs are those entrepreneurs who undertake
agricultural activities as raising and marketing of crops, fertilizers and other
inputs of agriculture.
  Based on motivation
Motivation is the force that influences the effort of the
entrepreneur to achieve his/her objective. Based on motivation
entrepreneur can be classified as:
• a. Pure entrepreneur: an individual who is motivated by
psychological and economic rewards.
• b. Induced entrepreneur: is one who is induced to take up
an entrepreneurial task due to the policy measures of the
government that provides assistance, incentives and
necessary overhead facilities to start a venture.
• c. Motivated entrepreneurs: they come in to being because
of the possibility of making and marketing some new
product/service for the use of the customers.
• d. Spontaneous entrepreneur: entrepreneurs start their
business out of their natural talents.
• Historical Perspective of
Entrepreneurship???? Reading assignment
 Entrepreneurial Competencies

– Initiative – taking action beyond job requirements or the demand for

the situation. Doing things before being asked or forced by the
events. Acts to extend the business in to new areas, product or
service.
– Assess and acts on opportunities – looks forward and take action on
opportunities ( business, educational or personal growth) seizes
unusual opportunities to obtain financing equipment, land,
workspace or assistance.
– Persistence- takes repeated action to overcome obstacle.
– Information seeking- take action to get information to help reach
objectives or clarify problems.
• Does personal research on how to provide a product or service.
• Consults experts for business or technical advice.
• Seeks information or asks question to clarify what is wanted or needed.
• Use information network to obtain useful information.
• Concern for high quality of work-Doing things that meet or
beat existing standards of excellence.
• Commitment to work contract- place the highest priority on
getting a job completed.
• Efficiency oriented- finds ways to do things faster with fewer
resources or at lower sources or at a lower cost.
• Systematic planning- plans by breaking a large task down in
to subtasks. Develops plans that anticipate obstacles. Evaluate
alternatives. Take a logical and systematic approach to
activities.
• Problem solving- generates new ideas or innovations
sometimes. Switches to an alternative strategy to reach a goal.
• Self-confidence- has a strong belief in self and own abilities. Does
something that he says risky. Sticks with own ability to complete a task
or meet a challenge.
• Assertiveness - confronts problems and issues with others directly tell
others what they have to do and disciplines those failing to perform as
expected.
• Persuasion – Successfully persuade others. Convince someone to buy a
product or service. Convince someone to provide financing. Convinces
someone to do something else that he would like that person to do.
• Use of influential strategies: Use of variety of strategies to affect others.
Acts to develop business contacts. Uses influential peoples as agent to
accomplish objectives. Selectively limits the information given to
others.
• Monitoring: personally supervises all aspects of a project.
• Concern for employee welfare: Take positive action in response to
employees’ personal concern and improving the welfare of the
employees.
 Types of Entrepreneurial Role
a. Founders /pure/ entrepreneurs
• These are those who initiate business on the basis of new or improved
products/services. They are individuals who bring new firms in to
existence by surveying the market, raising funds etc.
b. General Managers
• As new firms become well established, founders become less of
innovators and more administrators. General Managers involves the
operation of successful business firms. They manage the week to week
and month to month production, marketing and financial function of
enterprise. The distinction between founders and General Managers is
often hazy.
c. Franchises
• Franchises differ from General Managers in the degree of their
independence. Because of the constraints and guidance provided by
contractual relations with franchising organizations, franchisees function
as limited entrepreneurs.
 Types of Entrepreneurial Ventures
• Marginal Firms
It is a small firm which provides insignificant profit to its owners. It
provides a profit return that does little more than compensating them
for the time. Some examples are very small dry cleaners, beauty shops,
repair shops and others.
• Attractive small companies
They offer substantial reward to their owner. These are strong segment
of small business. ‘The good’ firms which can provide rewarding
carriers even to well-educated young people.
• High potential ventures
These are firms that have great prospect for growth. Frequently these
are also high-technology ventures. At the time of the firms founding
the owners often anticipate rapid growth, a possible merger or going
public with in a few year.
 Motivation for starting a business

• Some of the reasons for the difficulties in

classifying those involved in small business
management are the wide variety of motives
for their involvement in small firms.
• The reason for small business/firm formation
can be divided in to
 “pull” and
 “push” influences.
 Pull Factors

Some individuals are attracted towards small

business ownership by positive motives such as a
specific idea which they are convinced with work
“pull” motives include:
• desire for independence
• desire to extract the opportunity
• Turning a hobby by previous work experience in
to a business
• Financial incentives
 Push factors

Many people are pushed in to finding a new

enterprise by a variety factors including:
• Redundancy- when other employment
opportunities are low
• Unemployment
• Disagreement with previous employer
 Barriers to entrepreneurship

i. Environmental barriers
• This includes raw material, labor, machinery,
land and building
ii. Financial barrier
iii. Personal barrier: This includes lack of
confidence, lack of motivation, lack of patience
and sense of pride.
iv. Societal barrier
 Role of Entrepreneurship in Economic Development

• 1. Capital formation
• 2. Improvement in per capita income:
• 3. Generation of employment:
• 4. Balanced regional development:
• 5. Improving in living standards:
• 6. Economic independence:
• 7. Agents role
• 8. Role of innovation(Innovation implies the commercial
application of an invention )
• 9. Imitating role
 Innovation, creativity, and entrepreneurship.

• Innovation :Innovation implies the commercial application

of an invention.
• Innovation can be defined as the successful exploitation of
new ideas –incorporating new technology, design, and best
practice-the key business process that enables business to
compete effectively.
• Innovation is process of doing new things. It is more than
just a good idea. Ideas have little value unless they are
converted in to a useful products or services.
• Innovation is a tool which the small scale- industry can
exploit.
• it is the successor of creativity.
 Creativity

• The process of developing an original product,

service or idea that makes a socially recognized
contribution.
• Hence creativity is the ability to bring something
new into existence. Entrepreneurs bring new ideas
for setting up/running new business ventures. An
entrepreneur who is creative and brings her/his ideas
in to reality turns to be successful in business.
• Are creative persons born or made?
• Innovation is different from invention. An
invention is discovery of new methods and
new materials, where as innovation is
utilization of inventions to produce new better
quality of products that give greater
satisfaction to the consumer and higher profits
to the entrepreneur
?
End of chapter I
 Chapter 2

Micro and Small Business: Vital

Components Of The Economy
 Chapter 3
DEVELOPING BUSINESS PLAN
 WHAT IS A BUSINESS PLAN?
• One of the most important steps in setting up any new
business is to develop a business plan.
• However, business planning is not a result or an outcome but
an ongoing process.
• To be useful, the development of a business plan must
become part of the very foundation of the entrepreneur’s
business venture.
• There is no substitute for a well-prepared business plan, and
there are no shortcuts to creating one
• A business plan is a written document that sets out the
basic idea underlying a business and related start-up
considerations.
• A business plan can be viewed as an entrepreneur’s game
plan:
• The business plan is also the “blue print” for creating a
new venture for the entrepreneur activity, in essence, it is a
bridge between an idea and reality without first mentally
visualizing the desired end result, the entrepreneur is not
likely to see the venture become reality.
 Objectives of BP(why we need to develop
BP?)
• For the entrepreneur starting a new venture, a
business plan has basic objectives:
It identifies the nature and context of the business
opportunity. why does such an opportunity exist?
It presents the approach the entrepreneur plans to
take to exploit the opportunity.
It identifies the factors that will most likely
determine the success of the venture,
It also serves as tool to raise financial sources.
 SCOPE AND VALUE OF THE BUSINESS PLAN

• SCOPE depends on:

1.Types of business (manufacturing or service )
2. Size of the market
3. Level of competition
4. Potential growth
VALUE: Business plan is more valuable to the entrepreneur,
potential investors, or even for the review of new personnel.
The business plan is important to these people because:
• It helps to determine the viability of the venture in the
designated market
• It provides guidance to the entrepreneur in organizing
his/her planning activities.
 USERS OF A BUSINESS PLAN

• Who do you think are the users of a business plan?

The users of a business plan will vary based on its
function. The business plan has two major functions.
First, it provides a clearly articulated statement of
goals and strategies for the entrepreneur and called as
internal users. Second, it serves as a selling document
to be shared with outsiders such as investors,
government officials and interested parties.
• Internal Users
• External Users
 INFORMATION NEEDS OF AN ENTREPRENEUR

• Before coming time and energy to preparing a

business plan, the entrepreneur should do a
quick feasibility study of the business concepts
to see if there are any possible barriers to
success.
• The information which can be obtained from
many sources should focus on marketing,
finance, and production and operations.
 1. Market Information Needs
• One of the initial important elements of
information need by the entrepreneur is the
market potential for the product/service.
Market size, demand,
• It should also include information on
competition, margins for distribution, market
trends and grow potentials as well as the
important marketing mixes.
 2. Operation Information Needs
• Manufacturing operations: Information with regard to basic
machines and assembly operations needed to be identified, as well
as whether any of these operations would be subcontracted and how
and by whom.
• Raw material: The kind and quantity of raw materials needed and
supplier’s names, addresses, and costs should be determined.
Equipments – the equipment needed should be listed and whether it
will be purchased, rented or leased also should be clearly indicated.
• Space and Area: The total amount of space and area needed should
be determined, including whether the space and the area will be
owned, leased. Rented and so on.
• Over heads: Each items needed to support production or
manufacturing, such as tools, supplies, utilities, salaries and so on,
should be clearly determined.
 3. Financial Information Needs

• Expected sales and expense for at least the

first three years
• Cash flow figures for the first three years; and
• Current balance sheet figures and forecasted
balance sheets for the first three years.
4. Technology and Internet as Sources of Information