LEARNING OUTCOME 2: Demonstrate Knowledge of entrepreneurship

Introduction

This Topic covers on how to differentiate and understand the relationship between entrepreneurship
and self-employment, the importance, the contributions to the economy and how to explore different
entrepreneurship opportunities.

Definition of key terms

Entrepreneurial traits: These refer to characteristics of entrepreneurship and are always possessed by
the entrepreneurs. All the entrepreneurs possess these characteristics and they distinguish them from
the other persons.

Entrepreneurship culture: It is the behavior that is possessed by most of the individuals. Are also the
attributes, values, beliefs, and behavior in which an individual learns from one generation to another i.e.
behaviors of carrying out entrepreneurship activities e.g. starting up a business.

Self-employment: This is where one is his/her own boss, is in full control of the business, makes all
decisions affecting the business and enjoys all the profits of the business or incurs all the losses of the
[Link] individual can even hire employees to work for him or her.

National Development: This explains the benefits accrued from entrepreneurship to the nation. It may
include benefits like revenues, employment, cohesion, infrastructure [lights roads, electricity] increased
imports and exports among others.

Distinguish between entrepreneurship and self-employment

To distinguish means recognizing the differences between two aspects in this case entrepreneurship and
self-employment.

Entrepreneurship Self-Employment
Doesn’t have to physically be at the workplace, The individual is very hardworking and should be
they have partners and employees who run the at the workplace for them to make money hence
entire business for them hence flexible. rigid.
Emphasizes on creating opportunity even though Hopes for growth and expansion, is tolerant of
there may be no actual work or no income. great risk i.e. he is concerned about risk and
reward Emphasizes on maintaining a secure
income and remain working – not tolerant of
great financial risk
Has invested in different businesses. Normally have one business
Not everyone can be an entrepreneur, it is a title Anyone can be self-employed because anyone
bestowed upon you. To becomes an can have a business idea, register a company and
entrepreneur when people see you as creative, try to make the business work.
inspired and overcome challenges
One cannot start a business as entrepreneur i.e. I One can starts as self-employed and not as an
am self-employees, but one day I strive to be an entrepreneur.
entrepreneur.
You can have people go are working with you and You can have people working for you i.e.
not just under you i.e. partners. employees.
 The business outruns the existence of the owner If one decides to retire, the business dies as well
because, workers are working with him hence because workers are working for him, hence just
understand vision, mission and value of the run the business of the owner, they do not
business. understand the mind of the owner

The importance of self-employment

To analyze means to interpret and explain in detail the importance of self-employment based on
business procedures and strategies. The importance includes:

i. Being your own boss, one is control of all key decisions affecting his business because it is
your business you have started. You work for your clients. Clients state what results they
expect from you, but they do not direct your work. You are your own boss therefore you
decide when and where and how to work to get the job done.
ii. Flexibility To decide hours of operation, working conditions, business location. You do not
have to go where your employer forces you to do work.
iii. Harmony with your life If you are working for yourself, chances are you will be doing ok that
you enjoy hence self-fulfillment.
iv. Income generating If all goes well and you are making money, chances are you will make
more money than you did while working for someone else.
v. Profitable You get to enjoy all the business profits. If your business is doing well, you may
not have to share proceeds with anyone else. The fruits of your labor will all be yours
because you own the vineyard.

Requirements for entry into self-employment

i. Identify business structure: Determine whether your business will operate as a sole
proprietorship or partnership. You can also set your business up as a limited liability
company or as a corporation.
ii. Register your business: Apply to receive employer identification number. Also register your
business with state and local tax offices.
iii. Licenses and permits: Seek for licenses and permits required to operate a business.
iv. Record keeping: Create and maintain accurate records. Items to list in your records are
details of customers, dates sales or purchases, amount of sales, taxes collected on sold
items and unsold.
v. Taxes – be aware of the taxes that apply to the business to ensure you are fully compliant.
vi. Will you enjoy your work? – You can only run a business you are passionate about because
it brings happiness that satisfies your life goals. You will have to run a business that fill the
sense of your purpose.

The role of an Entrepreneur in business

 Initiator: One who initiates the process of creating a business by coming up with the idea for the
business and planning out how to turn that idea into a reality.

 Risk taker: He is the biggest risk taker in business because he is the one who invests capital and
accountable in the face of failure.
 Allocator: He allocates various resources in the organization. These resources include; manpower,
machines, funds, etc.

 Forecasting: He should be prepared on how to deal with various forecast changes such as strikes,
machine breakdowns, budget cuts, legal policies, political or social unrest, technological
advancement etc.

 Adhering to legal norms: To ensure the enterprise adheres to legal norms and policies. Not
pertaining to this can mean serious legal consequences.

 Reduces risk: Best achieved by bringing people that can help the organization grow. These people
can be stakeholders or investors that have stake in the company.

The contributions of entrepreneurs to national development

 Entrepreneurs spur economic growth. New products or services created by entrepreneurs can
produce a cascading effect, where it stimulates relate businesses or sectors that need support the
new venture, furthering economic development.

 Boosts national income. Entrepreneurial ventures help generate new wealth, additionally
increased employment and higher earnings contribute to better national income in the form of
higher tax, revenue and higher government spending.

 Entrepreneurs create social change. Through offering unique goods and services, entrepreneurs
break away from tradition and reduce dependence on obsolete systems and technologies.

 Community development. Entrepreneurs regularly nurture venture by other likeminded

 Conservation of foreign exchange – You are able to produce goods hence no need to import
therefore contributing to conservation of foreign exchange.

 Promotion of entrepreneurial culture – They encourage individuals to set up and manage their
business and this reduces importation of goods.

Entrepreneurship culture in Kenya

Entrepreneurship culture in Kenya is influenced by the following factors:

 Availability of funds

 Modern technology

 Availability of developed infrastructure

 Appropriate knowledge and skills

 Appropriate training

 Government policies

 Individual strength and talents

 Availability of resources

 Culture

 Natural factors

 Political stability

 Competition

 Resource persons and entrepreneurs

 Social security

Born or made Entrepreneurs traits

Born entrepreneurs dream big, take what they want and never stop trying to achieve their goals.
They have the following traits:

 Believe in themselves

 Have some security

 Takes charge

 Crafty and innovative

 Outspoken

 Observed with making money

 Fearless and thrive on challenges

 Take huge financial risks

 They can have a business idea that doesn’t have to bring income instantly when it is implemented.

Made entrepreneurs are those that are self-made successful individuals. They may have different
traits from those who were successful before.

They have the following characteristics.

 Determined.

 Enjoy what they do.

 Serious.

 Risk taker.

 Can manage money.

 High level of confidence.

 Plan everything.