FBC

ENTREPRENEURSHIP
AND Businesse Development
 Chapter One

Introductionpart
Entrepreneurship
Enterprise is the term we generally apply to a small or medium-sized
business. An enterprise can be a start-up, an early stage business or
a fully developed business.
 Con---

“enterprise” is what entrepreneurs do by creating new businesses,
jobs and wealth, all of which contribute to the economy. The academic
approach is more precise and takes the view that not all firms are
enterprising; those that are involve the use of imagination and creativity,
generating new ideas, dealing flexibly with changing situations, taking
responsibility and making decision.
 What is entrepreneurship

 The word entrepreneur first appeared in the French language as

“entreprendre”, which means, “to undertake”.
 are action-oriented, highly motivated individuals who take risks to achieve

goals.
 are people who have the ability to see and evaluate business opportunities;

 are people who have the ability to gather the necessary resources to take
advantage of them; and

 are people who have the ability to initiate appropriate action to ensure
success
 Con---
 Economists may view entrepreneurs as those who bring resources together
in unusual combinations to generate profits.

 Psychologists tend to view entrepreneurs in behavioral terms as those

achievement-oriented individuals driven to seek challenges and new
accomplishments.

 "Entrepreneur is someone who always searches for change, responds to

it, and exploits it as an opportunity”.

 The entrepreneur is a combination of the thinker and the doer.

 What is Entrepreneurship?

Enterprise
Entrepreneur Entrepreneurship

Process
Person or Object/
philosophy Outcome
 What is Entrepreneurship?

• The pursuit/search of opportunity beyond the resources one currently has under control.
• Is a process not, a person; the process of setting up a business.
• Entrepreneurship as the mindset and the process to create and develop economic activity
by blending risk-taking, creativity and/or innovation with sound management within a new
or an existing organization.
• Schumpeter one of the most highly cited and pioneered person in entrepreneurship define
it as the process of innovation or creating something new (new product or service, new
organization, new methods of production, and new market) and the ability of risk taking.
 Con------
 Entrepreneurship is the process of creating something new, with value,
by devoting the necessary time and effort, assuming the accompanying
financial, and social risks, and receiving the resulting rewards of
monetary and personal satisfaction and independence.
 Entrepreneurship is the tendency of a person to organize the business of
his own and to run it profitably, using all the qualities of leadership,
decisions making and managerial quality etc.
Who is an entrepreneur?
 Are people who start businesses, hire labor, mobilize resources and ensure
that their operational business keeps running.

 Is an individual who creates a new business, bearing most of the risks

and enjoying most of the rewards. Commonly seen as an innovator, a
source of new ideas, goods, services, and business/or procedures.

 Entrepreneurs are those persons (business owners) who seek to generate

value, through the creation or expansion of economic activity, by
identifying and exploring new products, processes or markets .
Entrepreneurship Bridges The Gap

Technology Entrepreneurship Value

 The Entrepreneurial process
 Identity (Opportunity)
 Need identification
 Solution/producing product or delivering service, etc
 “Unfair advantage”

 Acquire (Resources)
 Technology
 People
 Money
 Con----
The entrepreneurial process, which is made up of related activities,
consists of the following phases.

1. Identifying and evaluating a business opportunity

2. Developing the business plan
3. Determining the resources required for the business and
4. Managing the resulting enterprise
1. Identifying and evaluating a business opportunity

 A new business opportunity may be the result of a technological change,

market shift, government regulation, or competition.

 Good business opportunities are often the results of the entrepreneur being
alert to his environment of extra effort in establishing opportunity
identification mechanisms.
 Sources to identify new business opportunities such as consumers
(complaints and comment), members of distribution channels
(wholesaler, Retailer) & Technical people
 This identification and evaluation phase deals with –
 the assessment of the creation and length of the opportunity,

 its real and perceived value,

 its risks and returns,

 its differential advantages competitive environment, and

 its fit with the personal skills, personal interests and goals of the entrepreneur.

 Remember that a business idea is not a business opportunity until it is

assessed objectives and judged to be feasible.
 Con---

 At this particular phase, as a matter of formal procedure, the entrepreneur may

prepare an opportunity assessment plan.
 a description of the product or service;
 an assessment of the entrepreneur
 the team and the opportunity;
 specifications of all the activities and resources needed to translate the opportunity
into a viable business venture; and
 the sources of capital to finance the establishment of the venture as well as its
growth.
 2. Developing a Business Plan

 Once a business idea is selected, the concept must be sharpened by an in

depth planning process.
 The result of this step is a comprehensive business plan-the “blueprint”

for the implementation process.

 A business plan is a document the entrepreneur prepares before going to

the implementation stage.

 The business plan contains- description of the business, and the

marketing, financial, organizational and operational plans necessary for

the foundation of the venture.
3. Determining the Required Resources

 The entrepreneur starts this phase with an assessment of his/ her present
resources.
 Then, he/she carefully identifies all the resources required to get the business
on its feet and run it successfully.

 needs to classify the required resources into two: the ones that are vital and
the ones that are just helpful
 It is also important to evaluate the impact of insufficient or inappropriate
resources on the business.
 The next step will be to acquire the needed resources in the right quality and
quantity on a timely basis. The resources needed may be finance (money),
machinery, raw materials etc…
 4. Managing the Venture
 . At this stage, the entrepreneur examines the operational

problems of the growing enterprise, a task that involves the

implementation of an effective management approach and
structure.
 An effective control mechanism also needs to be set up in

order to identify and tackle emerging problems and challenges

on time.
History and theory of entrepreneurship

 The theories on the phenomenon ‘entrepreneurship’ had been a

matter for controversy among theoreticians and academicians.
After its initial appearance in economics, it disappeared for a long
time from the attention of economists since the neo-classical
economics supported the concept of perfect competition and
perfect information, where the concept of the (risk taking and
innovative) entrepreneurship did not have a role.
 Con----

 Although different economists have emphasized different facets of

entrepreneurship, all economists who have written about it agree that, at its
core, entrepreneurship involves judgment. But, if people have perfect
information, there is no need for judgment. Fortunately, economists have
increasingly dropped the assumption of perfect information in recent years.
As this trend prevails, economists have to allow the role of the innovative
entrepreneur in their models.
 con----
 Where the economists were in philosophical disarray, the baton of the
concept, entrepreneurship, was taken up by sociologists and psychologists.
The progress of sociologists and psychologists in the theorization of
entrepreneurship has not been as organized as economists due to the
differences in the methodology chosen in different sciences as well as the
different aspects of the same subject viewed by different scientists.
Behavioral and social aspects are alien to economists, and that is where
the psychologists and sociologists could make their contributions. In fact
the study of entrepreneurship will be incomplete without the contributions
of economists, sociologists, psychologists and other social scientists.
 Con---
 Where the economists were in philosophical disarray/confusion, the
baton of the concept, entrepreneurship, was taken up by sociologists and
psychologists. The progress of sociologists and psychologists in the
theorization of entrepreneurship has not been as organized as economists
due to the differences in the methodology chosen in different sciences as
well as the different aspects of the same subject viewed by different
scientists..
 Con---

 Behavioral and social aspects are alien to economists, and that is where the
psychologists and sociologists could make their contributions. In fact, the study of
entrepreneurship will be incomplete without the contributions of economists,
sociologists, psychologists and other social scientists
 Types of entrepreneurship
 1) According to the type of Business
i) Business entrepreneurs:- who start business units after developing ideas
for new product/services.
ii) Trading entrepreneurs:- who undertake buying & selling of goods, but
not engage in manufacturing.
iii) Corporate entrepreneurs:- who establish and manage corporate form of
organization which have separate legal existence.
iv) Agricultural entrepreneurs:- who undertake activities like raising and
marketing of crops, fertilizers and other allied activities
 2) On the basis of stage of development
i) First generation entrepreneurs:- who do not possess any
entrepreneurial background. They start industry by their own innovative
skills.
ii) Second generation entrepreneurs:- who inherit the family business and
pass to next generation.
iii) Classical entrepreneurs:-who aims to maximize his/her economic
returns at a level consistent with the survival of the unit with or without
an element of growth.
3) On the basis of motivation

i) Pure entrepreneurs:- who are basically motivated to

become entrepreneurs for their personal satisfaction,
ego etc…
ii) Induced entrepreneurs:- who are induced to take up
entrepreneurial role by the assistance and policy of
government including incentives, subsidies etc.
 4) On the basis of technology

i) Technical entrepreneurs:- who are task oriented and

‘craftsman type’. They prefer doing to thinking.
ii) Non-technical entrepreneurs:- who are not concerned
with technical side, but rather with marketing and
promotion.
iii) Professional entrepreneurs:- who start a business unit,
but later sell the running business and start a new unit
later.
5) On the basis of capital ownership

i) Private entrepreneurs:- individual or group set up

enterprise, arrange finance , share risk etc…
ii) State entrepreneurs:- means the trading or industrial
venture undertaken by the state or the government
itself
iii) Joint entrepreneurs:- the combination of private and
government entrepreneurs.
IMPORTANCE OF ENTREPRENEURSHIP

 Creates wealth for a nation and for individuals as

well
 Provides employment to huge mass of people
 Contributed towards research and development

system
 It is a challenging opportunity for the people
 Entrepreneurship provides self-sufficiency
 Factors Affecting Entrepreneurship

Individual
Economic
Environment
Entrepreneurship
Socio-cultural
Support factors
system
Political
Environment
Technological
Legal Environment
Environment
 Personal Entrepreneurial
Competencies (PECs)
Systemati Demand
c for Informati
Taking Goal
Opportunity on
Commitme Settin Planning quality
taking and Calculated g
nt and and seeking
initiative Risk monitorin efficiency
g

Persuasion and Networking

Independence and Self-Confidence
Persistence
Goal setting

 Sets goals and objectives which are personally meaningful and

challenging

 Articulates clear and specific long-term goals

 Sets measurable short-term objectives

  Plans by breaking large tasks down into
sub-tasks with clear time-frames

 Revises plans in light of feedback on

Systematic
performance or changing circumstances
Planning and
Monitoring  Keeps financial records and uses them to
make decisions
Opportunity Seeking And Initiatives

 Does things before being asked or forced to by events

 Takes action to extend the business into new area, product or servicies

 Seizes unusual opportunities to start a new business, obtain financing,

equipment, land, work space or assistance
Taking Calculated Risk

 Deliberately calcúlate risks and evalúate alternativas

 Takes action to reduce risk and/ or control out comes

 Places oneself in situación involving a challenge or modérate risk

 Information seeking

 Personally seeks information from customers, suppliers and competitors

 Does personal research on how to provide a product or service

 Consults experts for business or technical advice

Demand for Efficiency and Quality
 Finds ways to do things better, faster and cheaper

 Acts to do things that meet or exceed standards of excellence

 Develops and uses procedures to ensure that work is completed on time

and that work meets agreed upon standards of quality
Commitment
 Takes personal responsibility for solving problems that may hinder
accomplishing the task under the stated conditions
 Pitches in with employees, or takes their place if needed, to complete a
task
 Strives to keep customers satisfied and places long-term good will above
short-term gain
End