MODULE 1. What is entrepreneurship?
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- Annabel Freeman
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1 MODULE 1 What is entrepreneurship? Part 1: Key features f an entrepreneur ENTREPRENEUR - ne wh undertakes an endeavr. This is the meaning f the French wrd entrepreneur. It is really all abut starting smething and making it prsper while ffering peple the services and prducts they need. When yu decide t becme an entrepreneur yur life changes r at least it shuld. In rder t becme a successful entrepreneur it is imprtant that yu develp yur entrepreneurial skills thrugh educatin, netwrking and research. Entrepreneurialism is a career lng endeavr, but nly fr thse wh chse t stick with it and develp their skills in their respective fields. Accrding t sme theries, the entrepreneur is ne wh is willing t bear the risk f a new venture if there is a significant chance fr prfit. Other ecnmists emphasize the entrepreneur s rle as an innvatr wh markets his innvatin. Still thers say that entrepreneurs develp new gds r prcesses that the market demands and are nt currently being supplied. WHO CAN BE AN ENTREPRENEUR? There is nt ne single quality r skill t define an entrepreneur. Successful entrepreneurs cme in varius ages, gender, race and scial status. They als differ in educatin and experience. Hwever, research indicates that mst successful entrepreneurs share certain persnal attributes, including: creativity, dedicatin, determinatin, flexibility, leadership, passin, self-cnfidence, and smarts. Creativity is the spark that drives the develpment f new prducts ideas r ways t d business. It is the push fr innvatin and imprvement.
2 Dedicatin is what mtivates the persn t wrk hard t get the endeavr ff the grund. Planning and ideas must be jined by hard wrk t succeed. Dedicatin makes it happen. Determinatin is the extremely strng desire t achieve success. It includes persistence and the ability t bunce back after rugh times. It persuades the entrepreneur t make the 10th phne call, after nine have yielded nthing. Fr the true entrepreneur, mney is nt the mtivatin. Flexibility is the ability t mve quickly in respnse t changing market needs. It is being true t a dream while als being mindful f market realities. A stry is tld abut an entrepreneur wh started a fancy shp selling nly French pastries. But custmers wanted t buy muffins as well. Rather than risking the lss f these custmers, the entrepreneur mdified his visin t accmmdate these needs. Leadership is the ability t create rules and t set gals. It is the capacity t fllw thrugh t see that rules are fllwed and gals are accmplished. Passin is what gets entrepreneurs started and keeps them there. It gives entrepreneurs the ability t cnvince thers t believe in their visin. It can t substitute fr planning, but it will help them t stay fcused and t get thers t lk at their plans. Self-cnfidence cmes frm thrugh planning, which reduces uncertainty and the level f risk. It als cmes frm expertise. Self-cnfidence gives the entrepreneur the ability t listen withut being easily swayed r intimidated. Smarts cnsists f cmmn sense jined with knwledge r experience in a related business r endeavr. The frmer gives a persn gd instincts, the latter, expertise. Many peple have smarts they dn t recgnize. A persn wh successfully keeps a husehld n a budget has rganizatinal and financial skills. Emplyment, educatin, and life experiences all cntribute t smarts. Every entrepreneur has these qualities in different degrees. Hwever, many skills can be learned. Or, smene can be hired wh has strengths that the entrepreneur lacks. The mst imprtant strategy is t be aware f strengths and t build n them.
3 Part 2: Risks and benefits WHAT LEADS A PERSON TO STRIKE OUT ON HIS OWN AND START A BUSINESS? Smetimes a persn is frustrated with his r her current jb and desn t see any better career prspects n the hrizn. Smetimes a persn realises that his r her jb is in jepardy. Sme peple are actually repulsed by the idea f wrking fr smene else. They bject t a system where reward is ften based n senirity rather than accmplishment, r where they have t cnfrm t a crprate culture. Other peple decide t becme entrepreneurs because they are disillusined by the bureaucracy r plitics invlved in getting ahead in an established business r prfessin. Thse wh are attracted t entrepreneurship by the advantages f starting their wn thing. These include: Entrepreneurs are their wn bsses. They make the decisins. They chse whm t d business with and what wrk they will d. They decide what hurs t wrk, as well as what t pay and whether t take vacatins. Entrepreneurship ffers a greater pssibility f achieving significant financial rewards than wrking fr smene else. It prvides the ability t be invlved in the whle lifecycle f the business, frm cncept t design and creatin, frm sales t business peratins and custmer respnse. It ffers the prestige f being the persn in charge. It gives an individual the pprtunity t build equity, which can be kept, sld, r passed n t the next generatin. Entrepreneurship creates an pprtunity fr a persn t make a cntributin. Mst new entrepreneurs help the lcal ecnmy. A few thrugh their innvatins cntribute t sciety as a whle. One example is entrepreneur Steve Jbs, wh c-funded Apple in 1976, and the subsequent revlutin in desktp cmputers. Hwever, it is imprtant t nte that t every single advantage there is a matching disadvantage which shuld be carefully analysed. Here is an example f the mst cmmn prs and cns t entrepreneurship:
4 SALARY Often peple d nt feel fully cmpensated fr the wrk they d. Becming an entrepreneur means yu can reap the benefits f all yur hard wrk. Becming an entrepreneur means yu have t leave behind the security f being paid each mnth. FLEXIBILITY Having cntrl ver yur wrk schedule means that yu can chse when t take time ff and wrk the schedule that suits yu best. Althugh entrepreneurs benefit frm a flexible schedule they ften have t wrk very lng hurs particularly in the start-up phase. Furthermre entrepreneurs wrk schedules are never predictable and they must deal with emergencies that may ccur at any time. DECISIONS Entrepreneurs are able t make all f the decisins relating t their cmpany themselves; they have cmplete cntrl. This allws fr a huge degree f independence and a chance t shape ne s wn career. Being respnsible fr all decisins can be quite stressful and handling such respnsibility can be difficult. EXCITEMENT
5 Becming an entrepreneur is a very exciting time, frm the idea and start-up t the develpment and realisatin f the prduct r service. There is als great risk attached t entrepreneurship. The success r failure f the business rests with the entrepreneur. After cmparing the advantages and disadvantages, yu will have t decide if yu can realistically handle the respnsibility f running yur wn business. Being an entrepreneur is a huge respnsibility with many risks attached. In business decisins shuld be carefully cnsidered. Risk assessment (giving thughtful cnsideratin t ptential csts and benefits) and the cllectin f relevant infrmatin are key t successful decisin making. Nthing splendid has ever been achieved except by thse wh dared believe that smething inside them was superir t circumstance.
6 Part 3: Histric backgrund One f the first entrepreneurs was Marc Pl. He had ideas f trading with Asia in the 13th century and was sure f hw he culd get there and the materials he culd trade. His expeditins were financed by venture capitalists in Venice with an assurance that he wuld share his prfits with them. These lse assciatins cntinued t flurish in Eurpe and ther parts f the wrld where peple with mney were willing t back ideas and new schemes when they were cnvinced that there was sme pecuniary advantage in the end. Entrepreneurship first tk ff when prductin levels exceeded lcal cnsumptin and peple were left with surpluses f the things they prduced, whether in the frm f agricultural prduce, dairy prducts, livestck and quite a few manufactured items. This initially led t a barter system that allwed peple exchanged things t satisfy their wn requirements. This further led t the develpment f the market place where peple gathered t barter r sell their excess prductin in rder t prfit themselves. This came abut with the realizatin that they culd nt wait indefinitely fr a cincidence f wants befre they culd barter their wn prducts. Gvernment agencies stepped int the act in the 17th century and made capital available t peple t finance prductin ventures. The risk invlved in such ventures was the sle respnsibility f the entrepreneur and they had t make a fixed payment t the gvernment, irrespective f any prfit they made frm the venture. Gvernments cnsidered this as a surce f revenue. The cncept f entrepreneurship was first established in the 1700s. There are many cncepts and theries abut its genesis. Hwever, based n its key features, there were three basic ideas that explain the appearance f entrepreneurial activity. The first fcuses n the individual, in ther wrds, entrepreneurial actin is cnceived as a human attribute, such as the willingness t face uncertainty, accepting risks, the need fr achievement, which differentiate entrepreneurs frm the rest f sciety. The secnd fundamental idea emphasizes ecnmic and envirnmental factrs that mtivate and enable entrepreneurial activity, such as the dimensin f markets, the dynamic f technlgical changes, the structure f the market r merely the industrial dynamic. The third factr is linked t the functining f institutins, culture and scietal values. This apprach is nt exclusive given that entrepreneurial activity is als a human activity and des nt spntaneusly ccur slely due t the ecnmic envirnment r technlgical, nrmative r demgraphic changes.
7 The present develpment f entrepreneurship started after the Secnd Wrld War in the 1950 s when natins were lking t build up their ecnmies frm the ravages f the war. Peple had new ideas fr business r jbs as individuals and started in small ways with limited capital t frm businesses which went n t challenge the well established cmpanies. In the 20th century, ecnmist Jseph Schumpeter ( ) fcused n hw the entrepreneur s drive fr innvatin and imprvement creates upheaval and change. Schumpeter viewed entrepreneurship as a frce f creative destructin. The entrepreneur carries ut new cmbinatins, thereby helping render ld industries bslete. Established ways f ding business are destryed by the creatin f new and better ways t d them. Business expert Peter Drucker ( ) tk this idea further, describing the entrepreneur as smene wh actually searches fr change, respnds t it, and explits change as an pprtunity.
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