_ Entrepreneurship _and Ordinary Small Business Activity At the end of this lesson, the learner should be able to distinguish between entrepreneurship and ordinary small business activity, and determine the importance of knowing the distinction. NATURE AND CONCEPT Entrepreneurship is different from the activities of ordinary small businesses. This does Set mean, however, that entrepreneurship does not connote small business. It does because SStepreneurship covers small- and medium-scale businesses. The distinction lies in the Gescriptive word “ordinary.” Thislesson outlines the differences between entrepreneurship and the activities of ordinary | Sail businesses. Knowing them will help you assess yourself if you are an entrepreneur ‘= 2 mere owner of an ordinary small business. You will be able to completely avoid the ‘Pexeptions or behavior similar to the latter and focus more on the perceptions or behavior of he former. Entrepreneurship and the activities of ordinary small businesses differ in the following areas: Motive in opening a business Perception of risk in the business Reactions to changes in the environment Pee View on competition Vision for development and growth Horizon of business operation Now Sources of business funds Lesson 4 | Entrepreneurship and Ordinary Small Business Activity iMOTIVE IN OPENING A BUSINESS Anentrepreneur startsa business venture based on entrepreneurial concepts and principles, and the aspiration to become successful. He/She is constantly on the lookout for new and fresh ideas, which can be found in the business environment. The business environment is marked by creativity and innovation. It continuously changes and evolves. New and fresh ideas for the entrepreneur lead to business opportunities. Likewise, the entrepreneur makes use of entrepreneurship as a means to a happy and fruitful life. Entrepreneurship is perceived as a wealth-creating venture that will ultimately improve the life of the entrepreneur. On the other hand, the owner of an ordinary small business opens a business with the primary goal of making it his/her source of livelihood. The business becomes a major provider of the family for their financial requirements. The’ owner of an ordinary small business operates with a basic motive of earning profit. However, the level of Profitability iS sometimes neglected. The profitability aspect and the level of profitability are two distinct important issues. Now ask yourself these questions: 1. What small business would you engage in? 2. Why would you open your own small business? 3. When your next-door neighbor opens a small business and it attracts g00d customers, are you also going to open your own small business? Why do you say so? PERCEPTION OF RISK IN THE BUSINESS ‘The entrepreneur takes and faces the business risk squarely. He/She considers it inherent ih the business venture, prepares the business for it, and finds ways to minimize ite effects The owner of an ordinary small business, on the other hand, believes that the business risk ig a deterrent to the operation of the business and must be avoided. Usually the owner is not concerned with coming up with appropriate strategies to handle it. Now ask yourself these questions: 1. Would you expect risks in your business? Why? 2. How would you handle the risks in your business? 3. Would you have the necessary plan in case business risks arise? What would it be? Chapter 1 | Understanding Entrepreneurship SeamanACTIONS TO CHANGES IN THE ENVIRONMENT The entrepreneur reacts positively to the changes in the environment. Changes in the ss environment bring new ideas for entrepreneurial opportunities. The entrepreneur changes in the environment a creative mechanism for development and growth in entrepreneurial activities. They become a new source of possible entrepreneurial venture. | Entrepreneurs do not simply wait for the changes to happen in the entrepreneurial it. They outline alternative courses of action in anticipation of the changes to On the other hand, the owner of an ordinary small business remains passive and static s in the environment where his/her business operates. He/She usually believes that in the environment is not a plus factor to the daily operations but rather a source of e consequences. Now ask yourself these questions: Is What possible changes may take place in the environment where your business operates? 2. Would you consider them favorable or unfavorable to your business? Why? 3. What benefits can your business derive from the changes in the environment? ‘W ON COMPETITION For the entrepreneur the presence of competition is a sign of a healthy economic ent. The environment where the venture operates can be considered neutral or free- ‘Because of healthy competition. Competition will undoubtedly force entreprenetirs to uuously improve their present products or services. It will be one of the factors that will ke them creative in their endeavor. "The owner of an ordinary small business, however, views competition as an unhealthy it in the business environment and tries to avoid it. He/She is very uncomfortable in a competitive environment and strongly discourages competition in the business Fe Now ask yourself these questions: 1. What is your view about competition? 2. Do you consider competition in your community healthy? Why? 3. How should you treat your competitors? ‘Lesson 4 | Entrepreneurship and Ordinary Small Business Activity i | aVISION FOR DEVELOPMENT AND GROWTH The entrepreneur usually outlines the course of his/her entrepreneurial venture in terms of short-term, medium-term, and long-term plans of action. He/She makes sure that the vision and mission of his/her business is clear. The entrepreneur aligns the daily business activities toward the attainment of the plans. He/She properly manages the venture in such a way that the operations will provide development and growth to the venture. ‘The owner of an ordinary small business, on the other hand, relies upon chance or luck in maintaining the status quo of his/her business. He/She is not so much concerned about its development and growth as long as he/she is satisfied with its earnings. Now ask yourself these questions: 1. Would you have a development plan for your business? Why or why not? 2. Would you consider preparing a development plan a useless endeavor? Why or why not? 3. Would you express your development plan in concrete terms? Why or why not? 4. What would be the emphasis of your one-year development plan? How about your three-or-five year development plan? HORIZON OF BUSINESS OPERATION An entrepreneur thinks globally but acts locally. His/Her sight is always focused on the stars above, while his/her feet are firmly anchored on the ground. He/She is primarily concerned with the major economic events not only in the local environment but also in the global business market. The entrepreneur has a strong notion that the business venture will be going out of the local market and will soon face healthy competition in the international market. The entrepreneur has both local and global perspectives. The owner of an ordinary small business, meanwhile, is centered only on the local environment. He/She does not intend to participate in the global environment. The concept or view of operating outside the local market is inconceivable. In other words expansion has never been an idea worth entertaining for the owner of an ordinary small business. Now ask yourself these questions: 1. Toward what business horizon would you direct your business? 2. Why would you choose that business horizon? Chapter 1 | Understanding Entrepreneurship: SOURCES OF BUSINESS FUNDS ___ When the entrepreneur finds that the proposed business endeavor is a wealth-creating ‘venture, he/she explores ways to generate the much-needed funds from both internal and ‘Stternal resources. He/She strongly believes that the wealth that the venture may create is “more than enough to compensate for the sourced funds. ‘On the contrary, the owner of an ordinary small business tends to limit the funding of | his/her business enterprise to personal resources. Loans from external resources can be a " asky undertaking for him/her. He/She fears that financial institutions will not be willing to \d financial assistance to the business. In other words, he/she is already fully convinced he/she is pursuing, the unprogressive type of business endeavor. Now ask yourself these questions: 1. What will be the primary source of funds for your business? 2. Will financial institutions be willing to finance it? Why? 3. Do you strongly believe that your business venture is worth funding by external sources? Why or why not? 4, Would you consider the cost of borrowing before you actually borrow the funds? Why? LESSON SUMMARY . The entrepreneur and the owner of an ordinary small business are different in the following areas: a. Motive in opening a business Perception of risk in the business Reactions to changes in the environment View on competition Vision for development and growth Horizon of business operation Sources of business funds mop ans 2. Knowing the differences between an entrepreneur and an owner of an ordinary small business will help you assess yourself, if you are an entrepreneur or a mere owner of an ordinary small business. Such knowledge will enable you to avoid completely the perceptions or behavior similar to the latter and focus more on the perceptions or behavior of the Lesson 4 | Entrepreneurship and Ordinary Small Business Act former. 4 | ?