LECTURE 1

FUNDAMENTALS OF ENTREPRENEURSHIP
By
Dr. Zakayo Tallam
WHY STUDY ENTREPRENEURSHIP?
• The primary reasons why study entrepreneurship is to “build your own
dreams, or someone else will hire you to build theirs” A.P.J., Abdul
Kalam.
• 1. when you are an employee learn to think like an entrepreneur:
i. observe- seek out opportunities to learn new skills and accept new
responsibilities
ii. Listen- pay attention to what others have to say
iii. Think- don’t complain about a problem- analyze it and suggest
possible solutions
• Learning about entrepreneurship often inspires people to develop a vision
for their life.
 ENTREPRENEUR DEFINITION
• Entrepreneur definition: (The word entrepreneur is derived from the
French word “Entreprendre” which means to ‘undertake’ i.e., the person
who undertakes the risk of starting a new venture).
• An entrepreneur is one who creates a new business in the face of risk and
uncertainty for the purpose of achieving profit and growth by identifying
opportunities and assembling the necessary resources to capitalize on
them
• “Entrepreneurs are people who identify and pursue solutions among
problems, possibilities among needs, and opportunities among
challenges.”
• Recognize opportunities where others see chaos or confusion
• Are aggressive catalysts for change within the marketplace
• Challenge the unknown and continuously create the future
• Anyone – regardless of age, race, gender, color, national origin, or any
other characteristic – can become an entrepreneur (although not everyone
should)
WHAT IS ENTREPRENEURSHIP?
• Entrepreneurship is the process of creating something new with value by developing the
necessary time, effort and the accompanying financial, psychic and social risks with an
aim of receiving the resulting rewards of monetary and personal satisfaction and
independence.
• Entrepreneurship is the pursuit of opportunity beyond the resources one currently has
under control
• It is the know-how to Marshall and control resources and to make sure the
venture does not run out of money when it is needed the most.
• This may result in new organizations or may be part of revitalizing mature
organizations in response to a perceived opportunities
• The most obvious form of entrepreneurship is that of starting new business
(referred as start-up venture): however, in recent years, the term has been
extended to include social and political forms of entrepreneurial activity.
• Entrepreneurship = Entrepreneur + Enterprise

The process/the act The person/the actor The outcome

Verb Subject Object
 SCHOLARLY DEFINITION OF AN ENTREPRENEUR
• There are many definition of an entrepreneur which differ from person
to person, but there are definition of 6 persons who are experts in this
subject of entrepreneurship:
• 1. Richard Cantillon, 1755 (economist) coined the term entrepreneur to
be (“go-between” or between-taker) An entrepreneur is a person who
buys goods and services at a certain price with a view to selling at an
uncertain price, thereby making decisions about obtaining and using the
resources while consequently admitting the risk of an enterprise.
Entrepreneurs bears risks and plans, supervises, organizes and owns
factors of production.
• 2. Adam Smith (1776): define an entrepreneur as an individual, who
undertakes the formation of an organization for commercial purposes
by recognizing the potential demand for goods and services, and
thereby acts as an economic agent and transform demand into supply
 SCHOLARLY DEFINITION OF AN ENTREPRENEUR
• 3. 1803; Jean Baptiste Say (economist) proposed that the profits of
entrepreneurship were separate from profits of capital ownership. The
distinction was made between those who supplied funds and earned interest
and those who profited from entrepreneurial activities.
• 4. Joseph Schumpeter, 1934 (economist) described entrepreneur as
someone who is an innovator and someone who “creatively destructs”.
According to him, the entrepreneurs are innovators who use this process of
shattering the status quo, the existing products and services, to set new
products and new services. This process is known as “creative destruction”.
• 5. Peter Drucker, (1909-2005); (manager author) described the
entrepreneur as someone who maximizes opportunities. He defines an
entrepreneur as one who always involved in gathering and using resources
to opportunities to produce results. He also argues that Innovation is the
basic tool of entrepreneurs, the means by which they exploit change as an
opportunity for a different business or service.
• 6.David C. McLelland (1951):The entrepreneur is a person with a high
need for achievement. This need for achievement is the foundation of the
entrepreneurship process.
ENTREPRENEURSHIP Cont’d
• Entrepreneurship is being in charge of your own destiny. It is the journey and
experience of turning your dreams into reality
• Transforming “can do” into “done”
• Creating an exciting new future by taking action today
• Marshalling resources in a creative way in order to initiate change
• Entrepreneurship is the engine that turns ideas into solutions
• Entrepreneurship is more than starting a new business, it is a way of living with an
attitude, facing all situations as opportunities to learn, discover, create, explore, and
make the world a better place.
• Looking at the world with an opportunity-oriented mindset
• Brining your version of the world to life
• Thinking big and doing the unexpected
• Entrepreneurship is the difference between recognizing an opportunity and acting
on it
• Improving yourself by improving the world and its people around you.
ENTREPRENEURSHIP Cont’d

“Entrepreneurship is a mindset, an outlook that shapes the way you

see the world and the possibilities that it holds. It is born of a basic
dissatisfaction with the status quo, and it is the courage to say to
yourself, ‘This could be better’” - Jim Plummer

“Most of what you hear about entrepreneurship says American’s leading

management thinker, (Drucker 1985) was that, entrepreneurship is not
magic, it’s not mysterious, and it has nothing to do with the genes. It’s a
discipline. And, like any discipline, it can be learned”
Entrepreneur Entrepreneurship
Entrepreneur is a person Entrepreneurship is a process
Entrepreneur is an organizer Entrepreneurship is the organized form of
initiative
Entrepreneur is a risk taker Entrepreneurship is a risk-taking activity
Entrepreneur is an innovator Entrepreneurship is the process of innovation
Entrepreneur is a good planner Entrepreneurship is the planning of successful
performance
Entrepreneur is a leader Entrepreneurship is the crux of leadership
Entrepreneur is a decision Entrepreneurship is nothing but decision
maker making activity
Entrepreneur is a visualizer Entrepreneurship is the vision
Entrepreneur is an Is the administration
administrator
Entrepreneur is an initiator Entrepreneurship is taking an initiative
CHARACTERISTICS OF ENTREPRENEURS
• Desire for responsibility
• Willingness to take initiative
• Preference for moderate levels of risk: calculated risk takers
-in terms of time, equity, or career.
• Self-reliance
• Confidence in their ability to succeed
• Determination
• Desire for immediate feedback
• High level of energy
• Skilled at organizing
• Value achievement over money
CHARACTERISTICS OF ENTREPRENEURS
• Entrepreneurs tend to exhibit:
• A high degree of commitment
• Tolerance for ambiguity
• Creativity
• Flexibility
• Resourcefulness

• Bootstrapping is a strategy that involves conserving money and

cutting costs during start-up so that entrepreneurs can pour every
available shilling into their businesses
CHARACTERISTICS OF ENTREPRENEURS
• Persistent problem solver
• Ability to set goals
• A willingness to work hard
• Tenacity (firmness, persistence, stubbornness)
 TYPES OF ENTREPRENEURS
• Novice entrepreneur: Has no prior business ownership experiences as a
business founder, inheritor, or purchaser
• Habitual entrepreneur: Has prior business ownership experience
• Nascent entrepreneur:
• In the process of starting a new business
• Can be either a novice or a habitual entrepreneur
• Serial entrepreneur:
• Has sold or closed an original business and establishes another new business
• Continues the cycle of selling/closing and establishing
• Portfolio entrepreneur:
• Retains an original business and builds a portfolio of additional business
• Through inheriting, establishing, and purchasing the business
• Opportunity entrepreneurs: start businesses because they spot an
opportunity in the marketplace.
• Necessity entrepreneurs: start businesses because they cannot find work
any other way.
WHY BECOME AN ENTREPRENEUR

• The tree primary reasons that people become entrepreneurs

and start their own firms:
• 1. Desire to be their own boss
• Most common reason
• Due to frustration with traditional jobs
• When this is the only reason, firms are usually small-to-medium sized at
full growth
• 2. Desire to pursue their own ideas
• Passion to see ideas realized
• Identify a problem and a solution to that problem
• Many established firms resist change/innovation
• 3. financial rewards
BENEFITS OF ENTREPRENEURSHIP
• The opportunity to:
• Create your own destiny.
• Make a difference.
• Reach your full potential.
• Reap impressive profits.
• Contribute to society and to be recognized for your efforts.
• Do what you enjoy and to have fun at it.
DRAWBACKS OF ENTREPRENEURSHIP
• Uncertainty of income
-The entrepreneur is the last one to be paid, as employees must be
paid first, the suppliers, bills e.g rent, electricity, water etc.
• Risk of losing your entire investment
• Long hours and hard work
• Lower quality of life until the business gets established
• High levels of stress
• Complete responsibility
• Discouragement