ENTREPRENEURSHIP

FOR
FRESHMAN STUDENTS
 OUTLINES OF THE COURSE
➢ CHAPTER 1 : THE NATURE OF
ENTREPRENEURSHIP
➢ CHAPTER 2 : BUSINESS PLANNING
➢ CHAPTER 3: BUSINESS FORMATION
➢ CHAPTER 4: PRODUCT/SERVICE
DEVELOPMENT
➢ CHAPTER 5: MARKETING

➢ CHAPTER 6: BUSINESS FINANCING

➢ CHAPTER 7 : MANAGING GROWTH AND

 CHAPTER ONE
THE NATURE OF ENTREPRENEURSHIP
Definitions of Entrepreneurship and Entrepreneur
 It is the process of identifying, evaluating and exploiting
opportunities and investing the resources for long term gains
 It is the art of turning an idea into a business
 It is the process of creating incremental wealth by bringing
together resources in new ways
 Entrepreneurship is the process of creating something different
and better by devoting the necessary time and effort by
assuming financial, psychic and social risks and receiving
monetary reward and personal satisfaction
 Entrepreneurship is the practice of starting new
organizations, particularly new businesses generally
in response to identified opportunity
 Entrepreneurship is the art of identifying viable(Practical)
business opportunities and mobilizing resources to convert
those opportunities into a successful enterprise through
creativity, innovation, risk taking and progressive imagination
 Entrepreneurship is the processes through which individuals be
aware of business ownership, develop ideas for, and initiate a
business
In general, the process of Entrepreneurship includes five critical
elements. These are:
➢ The ability to perceive (identify) an .
➢ The ability to commercialize the perceived opportunity i.e.
innovation
➢ The ability to pursue it on a sustainable basis.
➢ The ability to pursue it through systematic means.
➢ The acceptance of risk or failure.
 What is Entrepreneur
❖ An entrepreneur is a person who is action oriented, highly
motivated, takes risks to achieve goals
❖ Entrepreneur is any person who creates and develops a business
idea and takes the risk of setting up an enterprise to produce a
product or service.
❖ Entrepreneur: is an individual who undertakes the risk of creating,
organization, and ownership of a business
❖ Is a professional who discovers a business opportunity to produce
improved or new goods and services and identifies a way in which
resources required can be mobilized.
❖ Is a person who create the job not a job-seeker; has a dream, has a
vision; willing to take the risk and makes something out of nothing.
❖ To an economist an entrepreneur is one who brings resource, labor,
materials, and other assets into combination that makes their value
greater than before and also one who introduces changes &
❖ An Entrepreneur is any person who creates and develops a
business idea and takes the risk of setting up an enterprise to
produce a product or service which satisfies customer needs
Types of Entrepreneurs
1. Individual Entrepreneur: is someone who started; acquired
or franchised his/her own independent organization.
2. Intrapreneurs: Entrepreneur is a person who does
entrepreneurial work within large organization.
Intrapreneurs notice opportunities and take initiative to
mobilize resources, however they work in large
companies and contribute the innovation of them to firm.
Intrapreneurs often become entrepreneurs.
3. Entrepreneurial Organization: Entrepreneurial function
need not be embodied in a physical person. Every social
environment has its own way of filling the entrepreneurial
function.An organization that creates such an internal
Role of Entrepreneurs in Economic Development
➢ Improvement in per capita Income/Wealth Generation
➢ Generation of Employment Opportunities
➢ Inspire others Towards Entrepreneurship
➢ Balanced Regional Development
➢ Enhance the Number of Enterprise
➢ Provide Diversity in Firms
➢ Economic Independence
➢ Combine Economic factors
➢ Provide Market efficiency
➢ Accepting Risk
➢ Maximize Investor’s Return
 Entrepreneurial Competence and Environment
➢ Entrepreneurial Mindset
✓ Who Becomes an Entrepreneur? Anyone with the
following characteristics can be an entrepreneur.
❖ The Young Professional: Increasingly young highly educated
people often with entrepreneurial qualifications
❖ The Inventor: is someone who has developed an innovation and
who has decided to make a career out of presenting that
innovation to the market. It may be a new product or it may be
an idea for a new service. It may be a high-tech or it may be
based on a traditional technology.
❖ The Excluded: Displaced communities and ethnic and religious
minorities have not been invited to join the wider economic
community due to a variety of social, cultural and political and
historical reasons.
 Qualities of an Entrepreneur
In order to be successful, an entrepreneur should have the
following qualities:
 Opportunity-Seeking
 Persevering: makes intensive efforts towards the successful
completion of a goal
 Risk Taking or Willingness to take risk
 Demanding for efficiency and quality
 Information-seeking
 Goal Setting
 Planning
 Persuasion and networking
 Building self-confidence
 Listening to others
 Demonstrating leadership
1. Opportunity-seeking: An opportunity is a favorable set
of circumstances that creates a need for a new product,
service or business. It includes access to credit, working
premises, education, trainings
2. Persevering: An entrepreneur always makes
concentrated/intensive efforts towards the successful
completion of a goal. An entrepreneur perseveres and is
undiscouraged by uncertainties, risks, obstacles, or difficulties
which could challenge the achievement of the ultimate
3. Risk Taking: The best entrepreneurs tend to:-
❖ Set their own objectives where there is moderate risk of failure
and take calculated risks
❖ Gain satisfaction from completing a job well
❖ Not be afraid of public opinion, skepticism
❖ Take responsibility for their own actions
o Importance of Risk-taking are: Build self confidence, Create a
feeling of leadership, Create strong motivation to complete a job well
4. Demanding for Efficiency and Quality
❖ Efficiency: Being efficient means producing results with little wasted
effort.
❖ Quality Refers to:
o The ongoing process of education, communication, evaluation
and constant improvement of goods/services to meet the
customer’s need in a way that exceeds the customer’s
expectations;
o A characteristic of the product or service that makes it fit to use.
o The ability of a product or service to meet a customer’s
expectations for that product or service.
Quality plays an important role in this new era of globalization because it
confers (discusses) certain benefits which include:
❖Reduction of waste
❖Cost-effectiveness
❖An increase in market share
❖Better profitability.
❖Social responsibility
❖Reputation
5. Information-seeking: Successful entrepreneurs do not rely
on guesswork and do not rely on others for information. Instead,
they spend time collecting information about their customers,
competitors, suppliers, relevant technology and markets.
6. Goal Setting
❖ A Goal - is a general direction, or long-term aim that you want
to accomplish. It is not specific enough to be measured.
❖ Objectives - are specific and measurable. They are concise
and specific.
•An entrepreneur must have a goal and an objective which is
specific, measurable, attainable relevant, and time bound
(SMART).
7. Planning
Planning is making a decision about the future in terms of what
to do, when to do, where to do, how to do, by whom to do, for
whom scarce using resources
8. Persuasion and Networking
Persuasion is a way of convincing someone to get something or make a decision in
your favor.
Importance of Persuasion in Business
✓ We purchase goods from people
✓ We sell goods to people
✓ We need support from people
✓ We work with people.
Networking is an extended group of people with similar interests or concerns
who interact and remain in informal contact for mutual assistance or support.
Factors that Affect Persuasion and Networking
✓ Socio-cultural background and perceptions
✓ Communication skills (both verbal and non-verbal).
✓ Negotiation skills
9. Building Self-confidence: Self-confidence is the state of being certain
that a chosen course of action is the best or most effective given the
circumstances.
Self-confidence is having confidence in oneself when considering a capability.
Characteristics of a Self-confident Person
A person with self-confidence may exhibit some of the following characteristics:
▪ Risk-taking: willing to take risks and go the extra mile to achieve better
things.
▪ Independent: entrepreneurs want to be responsible for their own decisions.
▪ Perseverance: Ability to endure (tolerate) and survive setbacks and continue
to build confidence in whatever you do in your business.
▪ Able to learn to live with failure. Entrepreneurs are going to make mistakes.
They are human. But they learn from these mistakes and then move on.
▪ Ability to find happiness and contentment (satisfaction) in work.
▪ Doing what you believe to be right, even if others mock or criticize you for it.
▪ Admitting mistakes and learning from them
10. Demonstrating Leadership
An Ability of leadership: Successful entrepreneurs are successful leaders, they
set goals for themselves and for others, and direct and guide others to
accomplish goals.

11. Ability of decision making: Successful entrepreneurs are creative

decision makers. Looking matters from different angles, gathering relevant
information for decision making
12.. Listening to others
 Entrepreneurial Skills
Turning an idea into reality calls upon two sorts of skills, these are:
I. General management skills and
II. People management skills
1. General Management Skills: These are skills required to organize the
physical and financial resources needed to run the venture. Some of the
most important general management business skills are:
 Strategy Skills: an ability to consider the business as a whole
 Planning Skills: an ability to consider what the future might offer, how it will
impact on the business and what needs to be done to prepare for it now.
 Marketing Skills – an ability to see past the firm’s offerings and their features,
to be able to see how they satisfy the customer’s needs and why the
customer finds them attractive.
 Financial Skills: an ability to manage money; to monitor
 Project Management Skills – An ability to organize projects, to set specific
objectives, to set schedules and to ensure that the necessary resources are in
the right plat of the right time.
 Time Management Skills: An ability to use time productively to get things
done to schedule.
2. People Management Skills: A business can only be successful if
the peoples who make it up are properly directed and are
committed to make an effort on its behalf.
Some of the more important skills we might include under this
heading are:
Communication Skills – an ability to use spoken and written
language to express ideas and inform others.
Leadership Skills – An ability to inspire people to work in a
specific way and to undertake the tasks that are necessary for the
success of the venture.
Motivation Skills – An ability to enthuse people and get them to
give their full commitment to the tasks in hand.
Delegation Skills – An ability to allocate tasks to different people.
Effective delegation involves more than instructing.
Negotiation Skills – An ability to understand what is wanted
from a situations, what is motivating others in that situation and
recognize the possibilities of maximizing the outcomes for all
parties.
 The Entrepreneurial Tasks
A number of tasks have been associated with the
Entrepreneur. Some of the more important are:
❖Owning Organizations
❖Founding New Organizations
❖Bringing Innovations to Market
❖Identification of Market Opportunity
❖Application of Expertise
❖Provision of leadership
❖The entrepreneur as manager
 Who Benefits from the entrepreneur’s Wealth?
The stakeholder groups are; employees, investor, supplier, customer, the local
community and government. Let us look at the benefits of each stakeholder.
1. Employees: They contribute physical and mental labor to the business.
➢ Money – their wage or salary
➢ The possibility of owning a part of the firm through share schemes.
➢ A stage of which they can develop social relationships.
➢ The possibility of personal development.
2. Investors: These are the peoples who provide the entrepreneur with the
necessary money to start the venture and keep it running. There are two main
sorts of investors:
✓ Stockholders: Stockholders are those who buy the stock of the company and
are true owners of the firm.
✓ Lenders: are people who offer money to the venture on the basis of it being a
3. Supplier: They are the individuals and organizations who provide the
business with the materials, productive assets and information it needs to
produce its output.
4. Customers: The entrepreneur may reward customers by offering quality
products, fair prices, regular and consistency of supply, loan arrangement etc.
5. The local community: A business has a number of responsibilities, which
may be defined or not in national laws, to this local community. Such as:
 Not polluting their shared environment
 Contributing and sponsoring local development activities
 Contribution for political and cultural stabilities and economic
improvements
 Acting in an ethical way.
6. Government
 Entrepreneurship and Environment
Business environment refers to the factors external to a business enterprise
which influence its operations and determine its effectiveness. Business
environment may be healthy or unhealthy.
Phases of Business Environment: may be classified into two broad categories;
namely external; and internal environment
1. External Environment : The following are the components of external
environment:
➢ Economic Environment: It consists of the structure of the economy, the
industrial, agricultural, trade and transport policies of the country, the growth
and pattern of national income and its distribution, etc.
➢ Legal Environment: When new laws are made and controls exercised through
legal enactments, the first reaction of the business community is to oppose
them and disobey them.
Entrepreneur should:
 Read the books that enlighten on the legal side of business
 Consult government agencies concerned with the implementation of
business laws.
 Retain labor law consultants.
➢ Political Environment: In a democratic country, politics cannot be ignored.
Managers and entrepreneurs should understand the working of the
political system.
➢ Socio-Cultural Environment: It consist the social and cultural norms of a
society in a given period of time. The variables that are appraised are
values, beliefs, norms, fashions and fads of a particular society.
➢ Demographic Environment: It assesses the overall population pattern of a
given geographical region. It includes variables like age profile, distribution,
sex, education profile, income distribution etc.
2. Internal Environment: is the environment which is under the control of
a given organization. Following are the components of internal environment of
a business:
➢ Raw Material: It assesses the availability of raw material now and in the
near future
➢ Production/Operation: It assesses the availability of various machineries,
equipment, tools and techniques that would be required for
production/operation.
➢ Finance: It assesses the total requirements of finance in terms start-up
expenses, fixed expenses and running expenses. It also indicates the sources
of finance that can be approached for funding.
➢ Human Resource: It assesses the kind of human resources required and its
demand and supply in the market.
Environmental Factors Affecting Entrepreneurship
 Sudden changes in Government policy.

 Sudden political upsurge.

 Outbreak of war or regional conflicts.

 Political instability or hostile Government attitude towards industry.

 Excessive red-tapism and corruption among Government agencies.

 Ideological and social conflicts.

 Unreliable supply of power, materials, finance, labor and other inputs.

 Rise in the cost of inputs.

 Unfavorable market fluctuations.

 Non-cooperative attitude of banks and financial institutions.

Creativity, Innovation and Entrepreneurship

1. Creativity: It is the ability to come up with new idea and to identify
new and different ways of looking at a problem and opportunities.

It is a process of assembling ideas by recombining elements already

known but wrongly assumed to be unrelated to each other.
 This definition has several key elements that are worth considering:
 Process: creativity is a process (implying among other things, that it is
more like a skill than an attitude, and that you can get better at it with
practice)
 Ideas: creativity results in ideas that have potential value.
 Recombining: the creative process is one of putting things together in
unexpected ways.

Steps in the Creative Process

1: Opportunity or problem Recognition: A person discovers that a new
opportunity exists or a problem needs resolution.
2: Immersion: the individual concentrates on the problem and becomes
immersed in it. He or she will recall and collect information that seems
relevant, dreaming up alternatives without refining or evaluating them.
3: Incubation: the person keeps the assembled information in mind for a
while. He or she does not appear to be working on the problem actively;
however, the subconscious (unintentional) mind is still engaged. While the
information is simmering it is being arranged into meaningful new patterns.
4: Insight: the problem-conquering solution flashes into the person’s mind at
an unexpected time, such as on the verge of sleep, during a shower, or while
running. Insight is also called the Aha! Experience.
5: Verification and Application: the individual sets out to prove that the
creative solution has merit. Verification procedures include gathering
supporting evidence, using logical persuasion, and experimenting with new
ideas.
 2. Barriers to Creativity
Be aware that there are numerous barriers to creativity, including:
➢ searching for the one ‘right’ answer
➢ focusing on being logical
➢ blindly following the rules
➢ constantly being practical
➢ becoming overly specialized
➢ avoiding ambiguity (doubt)
➢ fearing looking foolish
➢ fearing mistakes and failure
➢ believing that ‘I’m not creative
2 Innovation: It is the implementation of new idea
There are four distinct types of innovation, these are as follows:
➢ Invention - described as the creation of a new product, service or process
➢ Extension - the expansion of a product, service or process
➢ Duplication - defined as replication of an already existing product, service
➢ Synthesis - the combination of existing concepts and factors into a new
formulation
The Innovation Process
1. Analytical planning: carefully identifying the product or service features,
design as well as the resources that will be needed.
2. Resources organization: obtaining the required resources, materials,
technology, human or capital resources
3. Implementation: applying the resources in order to accomplish the plans
4. Commercial application: the provision of values to customers, reward
employees and satisfy the stakeholders.
 Areas of Innovation
The following are some of the major areas in which valuable innovation might
be made.
➢ New product
➢ New Services
➢ New Production Techniques
➢ Ways of Managing Relationships between Organizations
➢ New Means of Managing Relationship within the Organization
➢ New Operating Practices
➢ New Means of Informing the Customer about the Product
➢ New Way of Delivering the Product or Service to the Customer
From Creativity to Entrepreneurship
Creativity is the ability to develop new ideas and to discover new ways of looking at problems and
opportunities. Innovation is the ability to apply creative solution to those problems and opportunities
in order to enhance people’s lives or to enrich society.
Entrepreneurship = creativity + innovation.

Fig 1.2: Flow of Creativity, Innovation and Entrepreneurship

THE END