Life Skills Development/Module Four/entrepreneurship
- 1 UNIT 4: Entrepreneurship
- 2 Introduction.
- 3 Reflection
- 3.1 What is an Entrepreneur?
- 3.2 What is meant by Entrepreneurship?
- 3.3 You may want to be an Entrepreneur or you may just want to try on the idea. Let's proceed.
- 4 Self Assessment
- 5 Web Resources
- 6 Reflection
UNIT 4: Entrepreneurship
In everyone is the potential to be an entrepreneur. The question is, are you ready to become an entrepreneur or do you wish to work for someone, for the rest of your life? In this unit, we will open the world of your own business to you.
What is an Entrepreneur?
What is meant by Entrepreneurship?
Economic analysts have realized that small firms contribute considerably to economic growth and vitality.
Entrepreneurship, can be defined as, the practice of starting new organizations, particularly new businesses generally in response to identified opportunities.
Generally, the new organizations started by entrepreneurs are small businesses.
B. How do we define Small Business?
A small business is "one that is independently owned and operated and which is not dominant in its field of operation."
Small Businesses are defined using size standards. Different countries have different standards which are used to determine the size of a business. These standards include:
- Number of Employees
- Amount of money used to start – Start up investment
- Rate of turnover - average annual receipts of the business
- St. Vincent & the Grenadines: A small business is one that employs ten persons or less and has an initial investment of Twenty five ($EC25,000.00)or less.
- Belize: A small retail business is one which has annual sales receipts under $ 2 million.
- European Union: A Small Business has less than 50 employees and a turnover of less than 10 million Euros. The EU also defines a medium sized enterprise as one which employs less than 250 people and has a turnover of of less than 50 million Euros and a micro enterprise as one with less than 10 employees and a turnover of less than 2 million Euro
Typical examples of small businesses include: small shops, hairdressers, tradesmen, solicitors, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc.
Have you been thinking of your business idea? Focus on your talents, skills, your hobbies, your passion and also on the needs of your community.
You may want to be an Entrepreneur or you may just want to try on the idea. Let's proceed.
Running a business in not easy. In order to succeed, you need to do these four things:
|#||RUDRIC of performance criteria||YES||NO|
|1||I have identify my strong point|
|2||I have identify my weak point|
|3||I have find ways of improving my weak points|
|4||Can I use my strong point to succeed in business|
4.1 Seeing me as an Entrepreneur?
An Entrepreneur is a person who owns and operates a business enterprise. He/she takes all the risks involved in the operation of this enterprise.
Entrepreneurs are innovative; and as a result, are always able to see possibilities which would not be normally seen by ordinary persons. They have a strong desire to succeed; and so, it is often quite common for entrepreneurs to fail at several initial enterprises before finally making it big. Also, entrepreneurs have the capacity to work long hours, ensuring that their business ideas are fully developed rather than, take holidays and time off from their businesses.
The table below gives some qualities that help people to better understand themselves. Try the activity.
Characteristics of an Entrepreneur
- The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
- The entreprenur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
- The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
- The entrepreneur promotes the vision with enthusiastic passion.
- With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
- The entrepreneur takes the initial responsibility to cause a vision to become a success.
- Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
- An entrepreneur is usually a positive thinker and a decision maker.
4.2 What is an Enterprise?
Almost any business or organization can be called an enterprise, possibly led by an entrepreneur
An enterprise is any activity which provides customers with a product (goods/services) with a view to making a profit.
6. How is a business idea developed?
Think about your talents, and your passion, your hobbies: which can be developed into a micro business? New opportunities occur from changes in industry, social, or economic environments. New ventures arise in the following ways:
A. External Causes
- Changes in industry stimulated by advancing technology and new knowledge spur new products and services ;a good example of this are the changes in the ICT - tele-communication etc, and the IT - the computer, internet and the e-learning technologies.
- Accidental discovery ;sometimes a person stumbles upon an idea instead of deliberately trying to invent a new product, as was the case of the Post-It product of the 3M company.
- Changing perceptions ;there are times when the social environment is an element of new venture creation. For example, the emphasis on health activities in the 1980's created full-service health clubs.
- Economic changes ;often involve opportunities that arise out of the necessity such as the energy crises leading to new ideas
B. Voluntary Self-Employment
1. Prior work experience is the most common origin of new ventures:
a) Frequently a person, perceiving ways to modify a product or improve a service will start a new venture from the knowledge acquired from a former workplace;
b) A person can also obtain the right to manufacture a product based on a patent;
c) An individual observing scant competition afforded to a particular business can go out and duplicate that same business, as long as there is a market.
2. Follow family traditions especially if they have been serving the needs of that community for so long.
3. Being your own boss can give self satisfaction and can also achieve leadership and recognition.
1. A love of horses or animals can lead someone to an opportunity of running a riding school or an animal farm.
D. Advantages of starting your own business
1. The entrepreneur can select his/her own location, employees, and avoid any undesirable precedents set by a previous owner.
2. A start up business can start fresh without having to follow old practices.
5. Competition (SWOT Analysis)
Can you manage competition?
Competition may be defined as a business relation in whom two or more parties compete to gain customers.
Goods and services will be bought from those who, in the view of buyers, provide ‘the most for the money' and/or from those who offer greater buying convenience. Hence, competition tends to drive the entrepreneurs to find ways and means of ensuring that the customers make their goods and services their first choice.
Therefore, all business persons must consider competition when deciding to start a business regardless of the size of business. Special efforts must be made in assessing existing competition; as well as, planning to deal with competition which may come after the business has started.
As an entrepreneur, you must define competition correctly; select the appropriate competitors to analyze; plan how you will deal with new competitors and explain your competitive advantages. This information will be important when developing the competition section of your business plan.
In identifying competitors, entrepreneurs often find themselves in a difficult position. On one hand, they want to show that they are unique (even under the investors' broad definition) and list no or few competitors. However, this has a negative connotation. If no or few businesses are in a market space, it implies that there may not be a large enough customers need to support the new business' products and/or services.
After identifying your competitors, your business plan must describe them. In doing so, the plan must also objectively analyze each competitor's strengths and weaknesses and the key drivers of competitive differentiation in the marketplace.
In analyzing your competitors' strengths and weaknesses you will begin to use a rather common tool used by many business persons. It is called a SWOT Analysis.
What is SWOT Analysis?
SWOT analysis is a tool for auditing a business and its environment. It is the first stage of planning and you as a new entrepreneur must focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats.
- S - Strengths
- W - Weaknesses
- O - Opportunities
- T - Threats
Strengths and weaknesses are internal factors. Opportunities and threats are external factors. For example:
A strength could be:
- Specialist marketing expertise
- New, innovative products or services
- Location of business
- Any other aspect of their businesses that add value to their products or services
A weakness could be:
- Lack of marketing expertise
- Undifferentiated products or services (i.e. in relation to your business)
- Location of their businesses
- Poor quality goods or services
- Damaged reputations
In SWOT, opportunities and threats are external factors. For example:
An opportunity could be:
- A developing market such as the Internet
- Mergers, joint ventures or strategic alliances
- Moving into new market segments that offer improved profits
- A new international market
- A market vacated by an ineffective competitor
A threat could be:
- A new competitor in your home market
- Price wars among competitors
- A competitor has a new, innovative product or service
- Competitors have superior access to channels of distribution
- Taxation (such as VAT)is introduced on your product or service