UNIT 1

Entrepreneurship
 1.1.1 THE HISTORY OF
ENTREPRENEURSHIP
The first entrepreneurs : 20,000 years ago.

Barter system: tools, skins and food.

Creation of money and later bank cards.

Entrepreneur: French word ‘entreprendre’ - "to

undertake"
 1.1.2 Definition of Business

 Organisation: profit making (business) or non-profit making entity

(government, charitable Institutions and NGOs)

 Business:
“An organisation operates with the objective of making a profit from
the sale goods or services”.

 Small and Medium Enterprise, SME (‘Petite et Moyenne Entreprise,

PME’).
1.1.3 – DEFINITION OF ENTREPRENEURSHIP

 Entrepreneurship is about creating or establishing a

business.

 Entrepreneurship is a dynamic, social process where

individuals, alone or in collaboration identify financial
opportunities and act upon them by establishing new
enterprises.
 1.2 – THE ENTREPRENEUR

 Someone who has the ability and desire to establish, administer and
succeed in a start-up venture along with risk entitled to it, to make
profits.

 “The entrepreneur is the visionary in us. The dreamer. The energy

behind every human activity. The imagination that sparks the fire of
the future. The catalyst for change. The entrepreneur lives in the
future, never in the past, rarely in the present. He (or she) is
happiest when left free to construct images of ‘what if’ and ‘if‐
when’.”
1.2.1 – CHARACTERISTICS OF AN
ENTREPRENEUR
Risk taker: risk time, effort, business reputation, invested funds of self
and stakeholders.

Innovator: attempts to introduce new products, new productive

techniques or new forms of business organisations.

Takes the initiative to combine land, capital and labour to produce

goods and services.
1.2.1 – CHARACTERISTICS OF AN
ENTREPRENEUR
Manager: plan, organise, lead and control

A clear vision of goals.

Motivated to achieve goals, high degree of self ‐confidence.

Resilience: being able to take “no” for an answer without

giving up.
1.2.1 – CHARACTERISTICS OF AN
ENTREPRENEUR
Passion: a labour of love instead their work of just "work".

Technical knowledge : important to influence and engage other

stakeholders in leading the business in its start‐up stages.

Market knowledge: about the market and the industry in which

they wish to start a company.

Resourceful : maximise the resources at hand.

 1.3 RISK TAKING AND THE
ENTREPRENEUR
1.3.1 WHY DO ENTREPRENEURS TAKE RISKS?
1. You will never know unless you try: Nobody can really be sure if risks
will pay off, no matter how calculated they may be.

2. You learn from taking risks: Failure will teach you how to think and
plan strategically.

3. Innovation and opportunity are tied to risk: Innovation involves

changing how people do things. With changing demands, you have
consistent opportunities for new business.
 1.3 RISK TAKING AND THE
ENTREPRENEUR
1.3.1 WHY DO ENTREPRENEURS TAKE RISKS?
4. Those who take risks already have a competitive advantage: Since most people
tend to avoid risk, those who are brave enough to take risks already have a
competitive advantage. If you don’t take the risk competitors may opt to do so
instead.

5. Risk-takers may be more content and satisfied with their lives: You won’t look
back and dwell on what could have been or the fear you felt when facing uncertainty.
Instead, you know what was on the other side of that “what-if” scenario and can feel
proud of the fact that you were willing to take risks to grow your business.
 1.3.2 TYPES OF RISKS

1. Economic Risk
The economy is constantly changing. Changes can be positive or negative. Monitoring is
important. To counteract economic risk, save as much money as possible to maintain a steady
cash flow.

2. Compliance Risk
Business owners face an abundance of laws and regulations with which they need to comply.
They should be aware of existing laws and regulations.

3. Security and Fraud Risk

As more customers use online and mobile channels to share personal data, there are also greater
opportunities for hacking. Focus on security solutions, fraud detection tools and employee and
customer education.
 1.3.2 TYPES OF RISKS

4. Financial Risk
Cash flow not sufficient to meet financial obligations. Credit extended to customers. company's debt
load, interest rate fluctuations. If you rely on one or two clients, risk increases.

5. Reputation Risk
If a company’s reputation gets damaged, a decline in revenue follows. The goodwill of the company
declines among customers and the company is unable to find talented employees.

6. Operational Risk
Can be internally or externally. Something could unexpectedly happen that causes you to lose business
continuity. A natural disaster or fire, a server outage caused by technical problems, people or a power
cut. People-related: mistakes that cost time and money.
 1.3.2 TYPES OF RISKS

7. Competition (or Comfort) Risk

Direct or indirect competition impacts the revenue or margins of your business. Risk is higher for
startups since they usually face competition with companies that have established their presence in
the market several years prior.

8. Strategic Risk
Even a well-thought-out business plan can sometimes lead to failure. A company that manages to
adapt to a changing environment and new challenges manages to sail through difficult times,
whereas others fail.

9. Market Risk
Risk of loss due to fluctuations in the market. To mitigate this risk, an entrepreneur should develop
and implement various strategies to be aware of potential changes or disruptions.
 1.3.2 TYPES OF RISKS

10. Credibility risk

Risk faced when putting out a new product or service in the market. The credibility of a
brand name helps greatly in establishing a business and can influence the purchasing
decisions of potential customers.

11.Technology risk

Risk of losses faced due to technology failures. Ex lost revenue due to the crash of your e-
commerce website, a security breach resulting in the theft of customer data or failing to
transition employees to working remotely due to a lack of available tools.
 1.4 CREATIVITY

Creativity refers to the essential source of inventiveness and can lead to the formation
of new firms and to make improvements in existing products of the company to
become more efficient and competitive in the marketplace.

Entrepreneurship and creativity form a perfect combination. Over time, creativity has
become an integral component of good business acumen. Lack of creativity could
easily drag a business into the stagnation mode.
1.4.1 IMPORTANCE OF CREATIVITY

High overall success: Help to find unique and useful solutions. Essential for both
leaders and employees to develop creative skills.

Exploit employee potential: can result in improved financial strategies, increased

profitability, and quick decision making.

Encourage critical thinking: Problem-solving works best when coupled with highly
disciplined and focused thinking.

Foster innovation: Manufacturers create unique products to not only meet customer
expectations but exceed them as well.
1.5 A SUCESSFUL ENTREPRENEUR

Don’t take ‘no’ for an answer: No matter how many knock-backs and refusals successful entrepreneurs
receive, they are always prepared to dust themselves down and find an alternative route to the summit. It’s
this kind of tenacity which is required to take a business idea from the realms of the mind and transform it
into a profitable business.

Learn from the best: Even the very best entrepreneurs of our time worked with other experts in their
industry before going alone. Finding a suitable mentor is a great way to learn more about your sector as a
whole and, more importantly, the various facets of running your very own business.

Stay hungry and ambitious: The moment that an entrepreneur stops wanting to learn new things is the
moment that complacency sets in, allowing others to overtake you and leave you behind.
1.5 A SUCESSFUL ENTREPRENEUR

Never stand still: evolve with the times, learn and adapt to new methods, processes
or technology that can make their business stronger and more efficient. Business and
consumer worlds are ever-changing and what worked years, even months ago might
not work tomorrow.

Nurture long-term business relationships: Businesses will prefer to work with

companies they like and trust. Your ability to nurture long-term working relationships
with like-minded entrepreneurs within your industry is a key factor to success.
1.5 A SUCESSFUL ENTREPRENEUR

Inspire those around you: Even the richest, most experienced

entrepreneurs cannot be good at everything! All entrepreneurs require a
team of people around them that complement their skills.

Trust your gut instinct, not just your spreadsheet!

Sometimes entrepreneurs can be found guilty of being wedded to their
spreadsheets and the data. However, your gut instinct and heart are still
your very best guide for decision-making.
1.6 – THE ROLE OF ENTREPRENEURSHIP IN SOCIETY

1. Employment opportunities
- Offers self‐employment opportunities and employment for others.
- Utilises the human resources of the country and helps the natural talent emerge.
- Self employment and self sufficiency for people with disabilities.
2. Income generation and fewer social problems
- Increase the income level of the average person and the standard of living in the community.
- Creation of wealth helps in the development of a nation. More people employed = more
taxes paid hence more income for the government.
- Crime rate may decrease and the country can become a safer location for tourists. Hence
more job opportunities.
- Entrepreneurship can also attract more foreign investment.
1.2 – THE ROLE OF ENTREPRENEURSHIP IN SOCIETY

3. Personal Challenge
- A challenging task
- Financial and personal rewards
- Self‐satisfaction and confidence

4. Improvements in Industry
- Development of more industries, especially in rural areas or regions
- higher quality products because of healthy competition between the different
businesses.
1.2 – THE ROLE OF ENTREPRENEURSHIP IN SOCIETY

5. Higher productivity and economic growth

- More industries create higher production at lower prices.
- Use of local raw materials is encouraged
- Enables the country to produce more goods locally, hence building its capacity and resources.

6. Increases in exports and less dependence on imports

- Leads to the development of new foreign markets.
- Export products not sold locally.
- Trade agreements with other countries: opportunities
- Earnings from exports stimulate local economy.