Venture Creation

Dr. Reuben M. Badubi

email:
reubenb@[Link]

Cell: 76616311
Businesss Practice

Chapter one:
Entrepreneurship
and small, medium
and micro
enterprises
 Learning Outcomes
After you have studied this chapter, you should be able to:
• explain the terms “entrepreneur”, “intrapreneur” and “small
business manager”

• explain the similarities and differences between

entrepreneurship, intrapreneurship and small business
management

• distinguish between informal and formal businesses

• explain the role of informal businesses in Botswana

• distinguish between micro, very small, small, medium and large

enterprises

• explain the difference between the franchisor and the

franchisee
 Learning Outcomes
After you have studied this chapter, you should
be able to:
• describe the key success factors that
contribute to successful entrepreneurship

• explain and give a critical evaluation of the

following concepts:
• personal skills, expertise and aptitudes
• personal characteristics of an entrepreneur
• functional management skills of an
entrepreneur
 Introduction
• Economic development can be directly attributed to the
level of entrepreneurial activity in a country.

• There is no universally agreed definition of

entrepreneurship.

• The various definitions emphasize three aspects:

• the entrepreneur as a manager undertaking particular tasks;

• the entrepreneur as an economic agent

• the entrepreneur as an individual of a particular personality.

 Introduction
• Entrepreneurship is an activity that involves
the discovery, evaluation and exploitation of
opportunities to introduce new goods and
services.

• Entrepreneurship refers to an individual’s

ability to turn ideas into action

• Entrepreneurship is concerned with:

• The discovery of profitable opportunities
• The exploitation of profitable opportunities
 Introduction: Importance of
Entrepreneurship
1. Employment Creation

2. Local Resources

3. Decentralization and Diversification Of Business

4. Promotion of Technology

5. Capital Formation

6. Promotion of an Entrepreneurial Culture

 Definition of the concept of
Entrepreneurship
• An entrepreneur starts his or her own enterprise, takes risks, is creative
and innovative and is responsible for the growth of the enterprise.
• An entrepreneur is ‘a person who undertakes a wealth-creating and
value-adding process, through developing ideas, assembling resources
and making things happen (Kao, Kao & Kao, 2002:42).
• Successful entrepreneurs play an extremely important role in a country’s
economic development, wealth and employment creation. = GDP (57%
and 60% workforce)

• The main characteristics of an entrepreneur are as follows:

• starts his or her own enterprise and manage them
• Identify new products or opportunities
• takes risks
• is creative and innovative
• is responsible for growth
A mind map for the creation of an
Enterprise
 The relationship between Entrepreneurship
and
small business management
• Starts as a small/micro enterprise and is managed by one person and they aim to grow
the business

• Once satisfied with the growth of the business, they become a small business manager

• Danger at this stage is that the entrepreneur has good ideas but insufficient expertise to
implement ideas

• Successful business manager must be able to:

• Plan,organise, lead and control business functions
• Organise efficent operation of tasks
• Ensure interpersonal and inter-group competence
• Facilitate formal communication during scheduled meetings
• Compile and implement necessary policies and procedures

• Example of a small business manager who is not an entrepreneur:

• Person who manages an existing business without ensuring growth
• inherits or takes over a business and runs it in the same way as the previous owner (no
creativity and innovation
The relationship between Entrepreneurship
and
small business management
What is meant by the concept of 'creativity and innovation'? Chapter 3
The relationship between Entrepreneurship
and
small business management
 The relationship between Entrepreneurship
and
small
What is meant by business
the conceptmanagement
of 'creativity and innovation'?
Chapter 3

• Creativity refers to the ability to come up with new ideas or to

identify new opportunities.

• Innovation refers to the ability to implement or apply these new

ideas or opportunities.

• Creativity and innovation can be accomplished by, inter alia,

introducing new products, using better methods to market
existing products or entering new markets, using better or other
resources, or applying new technology or better production
processes.
The relationship between Entrepreneurship
and
small business management
 Types of Entrepreneurial Businesses

Can be classified:
• Informal
• Micro
• Very small
• Small
• Medium
• Large
 Types of Entrepreneurial Businesses

The formal small business: Small and micro business

sector:

[Link] business has 5 or less employees and a

turnover of less than P100000

[Link] small business has between 1 and 10

employees

[Link] business has between 11 and 50

employees
Types of Entrepreneurial Businesses
 Corporate
Entrepreneurship/Intrapreneurship

Corporate entrepreneurship is when a new

business is created within an existing business but
with products or services different from the original
business.
Definition: The creation of a business within an
existing large business, by using new ideas and
opportunities, using the resources of the existing
business.
Allows large businesses to adapt to changes in the
market and diversify
 Corporate
Entrepreneurship/Intrapreneurship

• An intrapreneur does not want to take the risk of

starting his or her own enterprise, but prefers to
use his or her entrepreneurial ability in an
existing enterprise.

• An intrapreneur is an employee with

entrepreneurial abilities who identifies an
opportunity in an existing enterprise.
 Franchisors/Franchisees
• An arrangement whereby one person or
business (franchisor) grants an independent
party (franchisee) the right to sell the
business’s products or services according to
guidelines set down by the franchisor.

• The franchisor retains control over the

conduct of the business and offers the
franchisee a comprehensive business
package.
Franchisors/Franchisees
• Franchisor is an entrepreneur

• Franchisee is a corporate entrepreneur

• Franchisee’s do not have the freedom to

experiment and operate their business according
to their own vision

• Franchisors usually fall into the medium to large

business category
 Key success factors of
entrepreneurs
Entrepreneurs posses characteristics that set them apart, not
meaning each one has the same characteristics
 Key success factors of
entrepreneurs
Entrepreneurs posses characteristics that set them apart,
not meaning each one has the same characteristics

•As an Entrepreneur it is important to know your strengths and

your weaknesses

•Strengths can be positively applied

•Weaknesses can be addressed by one of the following:

- Personal development
- Attending courses
- Appointing staff and/or experts to compensate where
needed
 The skills, expertise and aptitudes of an
Entrepreneur
Successful entrepreneurs have
skills/expertise/aptitudes that can be applied
profitably in any business

Skills- refers to manual work that can be learned

Expertise- based on knowledge you acquire by studying or

experience

Aptitudes: Each person is born with certain aptitudes and

talents
 The important characteristics of
Entrepreneurs
Perseverance: entrepreneur has confidence in themselves
and their business
Commitment to the business: entrepreneurs dedicate all
their skills, expertise and resources to establishing and
building the business
Involvement in the business: Perform tasks themselves and
communicate well with staff and others involved with the
business
Willingness to take risks: entrepreneurs take calculated risks
(risk related to a business opportunity that’s not to great)
 The important characteristics of
Entrepreneurs

Sound human relations: entrepreneurs work

closely with other people and realise the
importance of good business relationships
Creativity and innovative ability: creativity
refers to a persons imagination and innovative
ability refers to the use of creative abilities
Positive attitude and approach: entrepreneurs
learn from failures and they are realistic and able
to identify opportunities in adverse situations
 The important fundamental management
skills of Entrepreneurs
The management skills of an entrepreneur are an indication of how well he or she can
perform important tasks in a business
 The important fundamental management
skills of Entrepreneurs
General management (GM) skills and the use of
advisors: GM function, once you are aware of your
strengths and weaknesses you can make use of
advisors or development programmes to strengthen
all weak areas.

Customer service: Marketing and administrative

function. Good customer relations= good customer
service

Knowledge of competitors: Part of the marketing

function. Successful entrepreneurs know who/ how
many/ size etc. of their competitor

Market orientation: Part of the marketing function.

Entrepreneurs know who their target market is, their
 The important fundamental management
skills of Entrepreneurs

The importance of quality products or services:

Part of the marketing function. Value for money is
important

Accounting for your own purposes: Administrative

and financial function. Entrepreneur must have a
simple, useful and easy to understand accounting
system

Insight to expenditure, income, profit and loss:

Part of the financial function. Entrepreneurs must
know the difference between income and profit and
how to calculate profit.

Ability to use income wisely: Part of the financial

function. Entrepreneurs exercises financial discipline
and understands what to spend money on to ensure a
 Dealing with External factors that affect
Entrepreneurship

•External factors will influence the ability of the

entrepreneur to exploit his or her potential

•External factors:
- Economic conditions: interest rate
- Technological changes: keep up with
technological development
- Social and cultural forces: identify
opportunities for growth in market share
among large sections of the population
 Dealing with External factors that affect
Entrepreneurship

•External factors will influence the ability of the

entrepreneur to exploit his or her potential. External factors:

-Economic conditions: interest rate, inflation, pandemics

(Covid-19, HIV/AIDS), literacy rate, life expectancy rate etc.

-Technological changes: keep up with technological

development, digitalization etc

-Social and cultural issues: identify opportunities for growth

in market share among large sections of the population
 Dealing with External factors that affect
Entrepreneurship

Political and legislative variables: realise

opportunities that arise after political adjustments,
political stability, industrial strikes, law and other
restrictions.
Physical variables: Keep abreast of the availability
and price of resources
International forces: By using technologically
advanced communication channels, an
entrepreneur can expand and establish a business
in another country.
Dealing with External factors that affect
Entrepreneurship
Chapter Review
[Link]

THANK YOU