ENTREPRENEURSHIP

Introduction

Definition

The process of identifying a business opportunity

and getting the necessary resources to start and

run the business.

Entrepreneur

This is the person who creates new businesses or

transforms the existing ones in the face of risks

and uncertainties in order to make profit.

Importance of entrepreneurship to an economy

a.) Creation of employment

Through entrepreneurship jobs are created for

people who would otherwise be jobless by

absorbing them.

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 b.) Formation of capital

Entrepreneurs are able to create capital in many

ways such as using the profit earned to expand the

business.

c.) Reduced rural urban migration

Entrepreneurs are able to set up businesses in the

rural areas and employ local people who would have

otherwise gone to urban areas to look for

employment.

d.) Raising standards of living

Entrepreneurs are able to create goods and

services which improve the standard of living of

the people and also the salries they get from the

employments.

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 e.) Savings on imports

Local entrepreneurs are able to create goods and

services which would have been imported

therefore saving the money used on imports.

f.) Improving infrastructure

Areas where many business are set up the

government may improve infrastructure such as

roads, security or communications to help business.

g.) Making use of local resource

Entrepreneurs makes use of local resources which

may have been idle to create goods and services.

h.) Promotion of technology

Entrepreneurs are very creative such that they

contribute to development of technology.

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Characteristics of an entrepreneur

 Desire to achieve.

 Ability to solve problems.

 Readiness to take risks.

 Initiative.

 Time consciousness.

 Creativity and innovation.

 Independence.

 Self-confidence.

 Desire for feedback.

Business ideas

These are the basic points of the prospective

business that an entrepreneur may [Link] may

indicate the following:

a.) The products the business will sell.

b.) Who the business will sell to.( market)

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 c.) Where the business will be located.

d.) How the business will run (management).

e.) Why the business is needed (objectives).

Sources of business ideas

I.) Newspapers.

II.) Shows and exhibitions.

III.) Magazine articles.

IV.) Hobbies.

V.) Vocational training and experience.

VI.) Surveys.

VII.) Waste products

VIII.) Spotting a market gap (niche).

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Business opportunity

This is an attractive project idea that an

entrepreneur accepts for investments.

Identifying business opportunity

Business opportunity exist where there is a gap in

the market that needs to be filled. Examples of

such gaps are:

Unavailability of products

This is where the goods and services needed by the

consumers are not available in the market.

Poor quality products

A business opportunity may exist where one offers

quality goods and services.

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Insufficient quantities

This is where the demand for goods and services

is higher than quantity demanded

Unaffordable prices

A business opportunity may exist if one

would charge lower prices. Poor services

A business opportunity exists where customers

are not well served.

Evaluating a business opportunity

This means assessing whether the identified

opportunity is viable or not.

Factors to consider when carrying out business

opportunity evaluation a.) Personal consideration

These are the abilities and expectations of an

entrepreneur and they include:

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  Objectives

 Skills

 Commitments

 Interest

b.) Business consideration

These are external factors that are likely to

affect business operations and they include:

 Availability of market

 Technology

 Raw materials

 Government policy

 Level of competition

 Security

Business plan

This is a written document that highlights the

objects of the business and steps to be followed.

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Need for a business plan

a.) Avoid mistakes

Mistakes are identified early and corrected early

in the [Link] helps in avoiding occurrence of

such mistakes in the business.

b.) Identifying strengths and weaknesses

A business plan helps in revealing the strengths

and weaknesses in the business.

c.) Requirement by financiers

Financial institutions such as banks may require

the business plan before they can accept to

finance the business activities.

d.) Determination of the amount of finances required

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A business plan enables in working out the amount

of finance that is required to fund the various

activities in the business.

e.) Allocation of resources

It helps entreprenuers to allocate the available

resources in the most appropriate way.

f.) A motivating factor

A business plan is communicated to all employees

in the business making them to work towards the

goals hence its motivating factor.

g.) Adaptability

A business plan should give room for adoption of

any changes that might occur in future.

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Factors that influence entrepreneurial practices

a.) Government policy

Favorable government policies may encourage

business activities while unfavorable government

policies such high taxation will tend to discourage

them.

b.) Infrastructure

Availability of good infrastructure in an area tends

to encourage people to set up business while poor

infrastructure tends to discourage them.

c.) Levels of education and skills

An entrepreneur who has appropriate knowledge

and skills stands a better chance of succending in

a businesss than the one who does not.

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 d.) Availability of markets

Adequate market will encourage production of

goods and services and also encourage more

investors compared to inadequate market which

will discourage entrepreneurs.

e.) Availability of resources

A business that uses modern technology is able to

produce quality goods and services. Such services

will attract more customers leading to an

increased market for their goods.

f.) Culture

Culture determines the kind of goods and services

that the people consume. The culture may favored

the business or not.

g.) Competition

A business will thrive if it is able to compete

favourably with others.

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 h.) Political stability

Political stability will encourage formation and

growth of business due to favourable environment

compared to political instability which will

discourage formation of new business and affect

the existing ones due to insecurity.

i.) Natural factors

Natural factors such as rainfall, temperatures,

earthquakes, pest may influence the type of

business that is carried out in a particular area.

Causes of business success

a.) Ability to manage people

Activities involved in the management of people

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  Hiring

 Assigning duties

 Supervision

 Training

 Motivation

b.) Proper location/availability of customer

A business where customers are easily available

has high chances of being succesfull.

c.) Availability of raw materials or stock of goods

A business requires continues supply of raw

materials or stock of goods this would enable it to

continue operating to meet customer‟ s needs.

d.) Adequate finance

A business with adequate money is able to do well

because it has money to finance its operations.

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 e.) Lack of Competition

A business operating in an area of little or no

competition is likely to succeed than where there

is high competition.

f.) Commitment to the business

The entrepreneur should be committed only to his

or her business and this will give him or her time

to manage the business well than when he/she is

committed elsewhere.

g.) Good public relations

Good public relation is necessary for attracting

and retaining customers.

h.) Being creative and innovative

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Creativity and invitation enables the entrepreneur

to stay ahead of competition as he finds new users

of a product and even new pricing methods.

Ethical issues in Business

Business ethics helps businesses in deciding what

actions are right and wrong depending on

circumstances.

Need for ethical issues in business

 Ensures no discrimination in business

 Creates fairness in competition

 Ensures protection of the environment

 Ensures fair play in competition

 Helps in avoiding environmental degradation

 Helps in avoiding environmental pollution

 Avoids consumer exploitation

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