The Concept of Entrepreneurship

The nature of entrepreneurship implies several images and meanings

1. An entrepreneur is a person who has possession of an enterprise, or venture, and assumes
significant accountability for the inherent risks and the outcome of the enterprise.
2. Entrepreneurs are individuals who notice opportunities and take responsibility for mobilizing
the resources necessary to produce new and improved goods and services. In other words,
entrepreneurs start new business venture and do all of the planning, organizing, leading and
controlling necessary to meet organizational goals.
3. Entrepreneurs are the owners of the business who contribute the capital and bear the risk of
uncertainties in business life. He organizes, manages, assumes the risks and takes the
decisions about the enterprise.
4. 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 significant opportunities and
assembling the necessary resources to capitalize on them.
5. Entrepreneurs are individuals who recognize opportunities where others see chaos,
contradiction, and confusion. They are aggressive catalysts for change within the
marketplace.

The process of performing the roles of an entrepreneur is called entrepreneurship. Thus,

entrepreneurship is the process by which individuals pursue opportunities without regard to
resources they currently control. OR
Entrepreneurship as the art of turning an idea into a business
The Role of Entrepreneurship in a Developing Society

Entrepreneurship has been recognized all over the world as a catalyst for development in any
economy. Entrepreneurship in developing countries in particular is being seriously advocated
because of the following importance:
1. Employment Generation: It helps to provide jobs through the establishment of new
businesses, especially small and medium scale enterprises.
2. Productivity: One of the factors for the greater interest in entrepreneurship has been the
increasing recognition of its role in raising productivity through various forms of
innovation. Entrepreneurs, through their innovation and creativity are capable of
transforming existing business sectors, and creating new sectors. They are helping to
bring about new goods and services (expanding productivity) and supplying the needs of
large enterprises, which have to rely on their operations for business success.
3. Facilitate the transfer/adaptation of technology: It enables entrepreneurs to have the
opportunities of developing and adapting appropriate technological methods and provide
a veritable avenue for skilled, unskilled and semi-skilled workers.
4. Ensures increased resource utilization: It helps entrepreneurs to put limited resources
that might otherwise remain idle into good use. They contribute to the mobilization of
domestic savings and utilization of local resources, including human resources.
5. Stimulates growth in those sectors which supplies it with inputs: Entrepreneurship
stimulates growth in its supply market. The greater the number of entrepreneurship that
exist in the ‗downstream‘ of a particular sector, the greater the market, hence, the greater
the potential for increased capacity utilization.
6. Strengthens large-scale enterprises and public enterprises: Most large scale enterprises
and public sector enterprises depend on the activities of small and medium scale
enterprises (SMEs) to supply them with various raw materials and other component parts
and also to assist them in the distribution of the finished goods to the final consumers.
Entrepreneurship has made it possible to be able to transform the public sector into a
viable, market oriented and profitable organization.
7. Encourages and sustains economic dynamism that enables an economy to adjust

Successfully in a rapidly changing global economy: As a result of the dynamic nature of

the environment, small and medium scale enterprises have no choice than to respond and
adapt to environmental changes from time to time.
8. Enables individuals to use their potential and energies to create wealth, independence and
status for themselves in society.
The above eight points are not in any way exhaustive.

Functions of an Entrepreneur

To list the functions of entrepreneurs, give the impression that there are clearly defined activities
which the entrepreneur is expected to perform. On the basis of this understanding, the
entrepreneur is expected to perform the following functions:
1. Perception and identification of business opportunities: This is the first function of the
entrepreneur. It has to do with the recognition and definition of an unsatisfied need of
individuals, firms or households which can be satisfied with a product or service at the
right price that will guarantee satisfactory profit to the entrepreneur. In other words,
business opportunity occurs whenever there is a vacuum in the market place which is not
being satisfied by existing organizations or is being inadequately satisfied.
2. Selection of the legal form, location and site of the business: The form of business
ownership that the entrepreneur may decide to go into depends entirely on the amount of
capital available to the individual. To this end, the business enterprise may be operated
either as sole proprietorship, partnership or a limited liability. The selection of the initial
legal form of the enterprise as well as the location and site of the enterprise is the second
function performed by the entrepreneur.
3. Identification, selection and acquisition of key resources: This is yet another function
unique to entrepreneurs. For any start up firm to survive and grow depends heavily on the
availability of competent manpower who will be able to translate the entrepreneur‘s ideas
into concrete forms. Thus, key personnel must be sourced and encouraged to contribute
their talents and energy during and after the turbulent period of formation and take-off. In
addition, the technology that is suitable for the needs of the firm must be identified,
evaluated and acquired. Sourcing of funds is one of the major constraints in starting
businesses by entrepreneurs, since the organization has no track record to boost of with
investors and bankers, a lot depends on the talents and trust of the entrepreneur to
develop an attractive project idea, form a credible and resourceful team in order to
encourage others to believe in the business.
4. Innovation: This is usually regarded as the height of entrepreneurship. Innovation may
be defined as the translation of a new idea into a new company. In other words,
innovation simply refers to striving to satisfy your customers better than what
competitors are doing/offering. This may take the form of a new product in an old
 market; old product in a new market; or entirely a new product in a new market. It is
important to emphasize that sustaining the patronage of customers depend largely on the
ability of the entrepreneur to respond to their needs with new or modified products, new
and better techniques of production which reduce cost of production, better methods of
distribution, pricing and promotion.
5. Risk bearing: This has been traditionally associated with the entrepreneur. There are
various types of risks in business. The risk of fire, accidents, bad debts, theft etc can be
minimized by taking preventive action and by insuring against them. Other risks arise
because business decisions are future oriented. Risk of business failure may arise from
adverse fluctuation in demand, unfavorable government policies, strong competitive
advantage of other firms, obsolete technology and hence high cost of operation etc.
6. Management of the ongoing enterprises: The job of an entrepreneur is not hit and run or
one off activity. But rather, it is on a continuous basis. The entrepreneur monitors and
evaluates changes that are continuously taking place in the political, economic, socio-
cultural, technological, legal and ecological environment so as to respond appropriately
to ensure the survival of the business.

Who is an Intrapreneur?

An intrapreneur is a manager, scientist, or researcher who works inside an existing organization

and notices opportunities for product improvements and is responsible for managing the product
development process. OR
An innovative individual (employee) in an existing business organization, who perceives new
market opportunities, secures resources and initiates the realization of the opportunity. Rather
than perform the roles of an entrepreneur as an independent unit and for private economic gains,
the intrapreneur performs the same roles within an existing large organization to enhance the
competitiveness and profitability of the organization.

The Meaning of Intrapreneurship

Stoner et al., (2009) opined that in today‘s faced-paced economy, companies that do not keep up
may go the way of the dinosaur. According to them, a large number of companies have lost their
entrepreneurial spirit that they started with. As they have grown larger, their ability to be
innovative and flexible may have been stifled by the very size and success of the organization.
Intrapreneurship or corporate entrepreneurship is the process whereby an organization seeks
to expand by exploring new opportunities through new combinations of its existing resources.
Intrapreneurship requires special attention from managers, because by design it cuts against the
grain of established organizational activities. Thus, we might expect that the following are
important to support intrapreneurship:
1. Explicit goals for entrepreneurial processes

2. A system of information exchange between managers and intrapreneurs

3. An emphasis on individual responsibility and accountability

4. Rewards for creative effort

Characteristics of an Entrepreneur

1. Drive and Energy: Entrepreneurs are more energetic than the average person. They
possess the capacity to work for long hours and in spurts of several days with less than a
normal amount of sleep. Long hours and hard work are the rule rather than the exception,
and the pace can be grueling.
2. Self-confidence: Entrepreneurs typically have an abundance of confidence in their
abilities to achieve the goals they set and confident that they chose the correct career
path. They also believe that events in their lives are mainly self-determined, that they
have a major influence on their personal destinies, and have little belief based in fate.
3. Long term involvement: Entrepreneurship is hard work, and launching a company
successfully requires total commitment from an entrepreneur. They make a commitment
to a long term project and they work towards goals that may be quite distant in the future.
Business founders often immerse themselves completely in their companies. Entrepreneurs
who create high potential ventures are driven to build a business, rather than simply get
in and out in a hurry with someone else‘s money.
4. Money as a measure: One of the most common misconceptions about entrepreneurs is
that they are driven wholly by the desire to make money. To the contrary, achievement
seems to be entrepreneur primary motivating force: money is simply a way of ―keeping
score‖ of accomplishment – a symbol of achievement. What drives entrepreneur goes
much deeper than just the desire for wealth.
5. Persistent problem solving: Entrepreneurs possess an intense level of determination and
desire to overcome hurdles, solve a problem and complete the job in the course of
successfully building new enterprises. They are not intimidated by difficult situations.
6. Goal setting: Entrepreneurs have the ability and commitment to set goals that are both
measurable and attainable for them. These goals tend to be high and challenging, but they
are realistic and attainable. Entrepreneurs are doers, they are goal and action oriented
individuals. Entrepreneurs are motivated by a high need for achievement.
7. Preference for moderate risk: Entrepreneurs are not wild risk takers but instead take
calculated and moderate risk.
8. Dealing with failure: Entrepreneurs do not fear failure. Anybody who is afraid of falling
will cancel whatever achievement motivation he or she possesses. From the point of view
of entrepreneur, failing is an opportunity to learn from.
9. Desire for immediate feedback: Entrepreneurs like the challenge of doing a business and
they want to know how far they are doing in terms of performance. The use of feedback
enables entrepreneurs to assess/take stock of their performance with the aim of
improving on it.
10. Taking initiative and seeking personal responsibility: Entrepreneurs feel a deep sense of
personal responsibility for the outcome of businesses they start. They willingly put
themselves in situations where they personally take responsibility for the success or
failure of the business. They prefer to use available resources to achieve self-determined
goals and also want to be in charge of their resources.
11. Use of resources: Entrepreneurs have been known to use resources efficiently and
effectively in order to achieve organizational goals.
 12. Competing against self-imposed and objective standards: High performing entrepreneurs
possess this internalized kind of competitive spirit in which he or she continuously
engages in competition with himself/herself to beat his or her last best performance.
13. Internal locus of control belief: The success or failure of a new business enterprise from
the point of view of an entrepreneur does not depend on luck or chance, or other external,
personally uncontrollable factors. But rather, the entrepreneur believes that one‘s
personal accomplishments as well as setbacks lie within one‘s personal control and
influence.
14. Tolerance of ambiguity and uncertainty: Entrepreneurs tend to have a high tolerance for
ambiguous ever-changing situations, the environment in which they most often operate.
This ability to handle uncertainty is critical because these business builders constantly
make decisions using new, sometimes conflicting information gleaned from a variety of
unfamiliar sources.

Differences between the Entrepreneur and the Owner Manager of a Business

Enterprise
The owner manager of a business does what everybody else does the way everybody else does it
while the entrepreneur does it in a significant new and better way. It has been said that all
entrepreneurs are self-employed but not all self-employed are entrepreneurs.
The table below shows the major differences between the entrepreneur and the career
manager/owner-manager of a business.
S/N Dimension Entrepreneur Owner-Manager
1. Time orientation Medium to long (5-10 years) Short to medium (monthly,
quarterly, annual budgets and
quotas; next promotion

2. Risk taking Moderate, calculated risks, will Lower risk taken, averse to
risk job security and net worth making mistake because of
large company reward and
penalty system; what to take the
final plunge.

3. Tolerance of uncertainty High tolerance of ambiguity and Lower tolerance of

uncertainty uncertainty.

4. Personal standards High; more oriented to High; but more oriented to

internalized, self-imposed externalized standards of the
standards organization; more
responsive to organization‘s
reward system, and trapping
 such as status, job titles etc.
5. Management skills None or limited formal More likely to have formal
management education, may have management education, broad
technical or scientific training if knowledge and experience in
in a technical ventures; knows a managing
business well, may be former people and resources
general manager.

6. Motivation Highly goal-oriented and More motivated by goal and

achievement motivated, rewards established by the
selfreliant and self-motivated organization, power
motivated

Identifying and Recognising Opportunities

Most importantly, entrepreneurs recognize an opportunity and turn it into a successful business.
an opportunity is a favourable set of circumstances that creates a need for a new product, service,
or business.
Opportunities are hard to spot. Identifying a product, service, or business opportunity that is not
merely a different version of something already available is difficult. Entrepreneurs make a
common mistake in the opportunity recognition process by taking a currently available product
or service that they like or are passionate about and then trying to build a business around a
slightly better version of it. The best approach to opportunity recognition is to identify a product
or service that people need and are willing to buy, not one that an entrepreneur wants to make
and sell.
an opportunity has four important qualities. It is (1) attractive (2) durable (3) timely and (4)
anchored in a product, service, or business that creates or adds value for its buyer or end user. In
order for an entrepreneur to take advantage of an opportunity, its window of opportunity must be
available. The window of opportunity describes the time period in which a firm can realistically
enter a new market. Once the market for a new product is established, its window of opportunity
opens.

Distinction between a Business Idea and a Business Opportunity

The starting point of a new business creation process is an idea of a product or service which
can be used to satisfied an identified need of individuals, families or organizations. An aspiring
entrepreneur can have an idea which he/she believes is a great idea that would be an instant
success in the market. Not all such ideas can translate into viable business opportunities. For a
business idea to transform into a business opportunity, such idea must offer a viable solution to a
problem experienced by potential consumers and for which they are willing to pay. A business
idea, no matter how novel, cannot be a business opportunity if customers cannot see its added
value and therefore unwillingly to pay for it (Inegbenebor, 2006:18).
A business idea and business opportunity can be likened to a production process which is inputs
transformation output process. A business idea represents the input stage while a business
opportunity represents the output stage. An entrepreneur may have a business idea that he or she
believes would be an instant success in the market. Not all such business ideas (input stage) can
be transformed into viable business opportunity (output stage). The question we may want to ask
is, ‗what makes the transformation possible?‘ Such a business idea must offer a viable solution
to a problem experienced by potential consumers and for which they are willing to pay. The idea
is the conception stage of a product or service while the opportunity is the stage at which the
product or service gives satisfaction to consumers and the entrepreneur makes profit from such a
venture. Barringer and Ireland (2012) define an idea as a thought, an impression, or a notion. An
idea may or may not meet the criteria of an opportunity. This is very important because many
entrepreneurial ventures fail not because the entrepreneurs that launched them didn‘t work hard,
but rather because there was no real opportunity to begin with. For a business idea to be good, it
is necessary to understand whether the idea fills a gap and meets the criteria for an opportunity.
SOURCES OF BUSINESS OPPORTUNITY
(i) Copy of existing successful business forms: This is the commonest source from which
useful business ideas can be generated. It is a good source if and only if there are no entry
barriers.
The business that is already in existence is a model that can be copied or modified significantly
by ensuring that the product or service is more convenient, less expensive, faster and easier to
handle.
(ii) Personal or other people’s human experience: One‘s human experience whether
pleasant or unpleasant may be used to stimulate a creative response or solution to a
problem. For example, many people who buy street food may not be aware of the health
hazards of their actions. But the fact that there is such a risk can enable an entrepreneur
to come up with the idea of producing a product that does not entail such health risk and
promoting it in such a way that consumers will perceive the merit of the new product
over the existing ones.
(iii) Work Experience: As a result of work experience, aspiring entrepreneurs may become
conversant with problems associated with existing products, target market not yet
attacked, difficulties experienced by customers, limitations of suppliers, etc. Through
work experience, creative solutions to problems may emerge for which potential
customers are willing to pay for and in turn yield profit to the entrepreneur.
(iv) A Hobby: An activity done regularly in one‘s leisure time for pleasure, for example,
singing, playing football, etc can be converted into a profit yielding venture.
(v) Franchise: This is when a license is granted by a government or company to a person or
group, allowing him/them to use or sell certain products. This may create opportunity for
the individual or group to attack a market that is currently not being served.
(vi) Vocation: Possession of vocational skills or professional skills, for example,
hairdressing, catering, etc suggests ideas of services that can be rendered.
(vii) Consultants: The vast experience and knowledge gained by consultants in the course of
seeking solutions to the problems encountered by organizations is a major source of
business idea.
(viii) Joint Effort: As the saying goes, two good brains work better than one. Two individuals
may come together in an attempt to spot business opportunities in the environment. This
move may then lead them to forming a partnership.

Consideration for Choosing a Business Opportunity

(i) Skills Required for the Successful Operation of the Business: Every business requires
certain skills for successfully running it. Different businesses require different
constellation of skills or group of skills. But for each group of skills, there will be one
skill which is core and critical for success. The entrepreneur must therefore choose a
business for which he/she
has the relevant core skill. Though it may be possible to acquire such skills by
employing experienced workers, the risk of being cheated and exploited is high if the
entrepreneur does not have the relevant skills required.
(ii) Financial Capability: Just as it is with every form of business, the financial
implications is very important. Funds will be needed to provide the relevant raw
materials to be used for production. Furthermore, there will be need to acquire the
relevant technology and skills which also borders on finance. Without adequate finance,
the entrepreneur is unlikely to succeed in the chosen business.
(iii) Risk Profile of the Entrepreneur: The entrepreneurs’ tolerance for adventure in a new
livelihood is an important component in choosing a business. We all have different risk
levels or tolerance levels. Therefore, the entrepreneur must ensure that he/she selects a
business within his/her acceptable risk class.
(iv) Support from Friends and Family Members: Usually many businesses fail because of
the inability of the entrepreneur to gain the support and encouragement of their families
and friends. The support of family members is particularly crucial in the early stage of
the business.
(v) The Owners Personal Interest: If the entrepreneur loves the kind of activities that the
business will entail, the easier it is for the business to succeed. At all times, the
entrepreneur must ensure that there is no conflict between the chosen business venture
and his/her preferred life-style.
(vi) The Desired Level of Income: The income expected from the business venture must be
adequate to meet the entrepreneurs need for housing, clothing, food, recreation,
entertainment etc. While the business owner may accept a reduced standard of living at
the
initial stage, in the long run, the business must have the potential of providing the desired
level of income for the owners.
(vii) Legal or Regulatory Constraints: In some cases, the law specifies the minimum
professional training and/or experience that is required to operate certain types of
businesses. Persons desiring to operate such businesses are required to obtain a license
from the appropriate authorities. Examples are pharmacy shops, hospitals and clinics.
 FEASIBILITY STUDY

Feasibility study is the process by which an entrepreneur investigates the potential outcome of a
project. It may also be seen as the process of checking out the workability and profitability of the
proposed business. Rather than depend on trial and error, the entrepreneur painstaking collects,
summarizes and analyses data on the different aspects the business in order to decide objectively
whether or not to commit funds to the project. The pains and agony of failure of any business
may be avoided by subjecting the business idea to systematic analysis. The usefulness of
feasibility study can only be appreciated if the techniques of data collection and analysis are
objective, valid and reliable.
A feasibility report is a document that outlines the various aspects of the study and the
conclusions arrived at. For a feasibility report to be useful, it must be properly organized to
convey the needed information in a lucid, but simple manner.
The Purpose of a Feasibility Study

A feasibility study may be used to achieve the following objectives/purposes:

1. It helps to determine the profitability level of the project. Most entrepreneurs want to
find out if the project will be worth the effort so as to avoid waste of time and resources.
2. It demonstrates to potential lenders and investors of the existence and size of the market,
the liquidity or otherwise of the project. By liquidity, we mean the tendency of the
project to generate enough cash to repay the loan and interest. Feasibility study is
principally carried out for this purpose.
3. A feasibility study enables the entrepreneur to subject his/her ideas to critical
investigation in order to identify flaws in the product or service which may jeopardize the
success of the project.
4. A feasibility study also point to the financial and human resources that will be required to
operate the business successfully. Inadequate capital or inadequate skills may be
responsible for most start up businesses failure especially in developing societies.
Problems of Writing a Feasibility Report

1. Paucity of statistical data: Data is either out-of-date or not available.

2. Pressure from clients: Clients may become sentimentally involved in a project to the
point that they may want the report to reflect certain of their expectations.
3. Unethical behavior of consultants: There are ―wait-and-take‖ consultants who simply
adapt

existing reports by substituting the names of new clients.

4. Unwillingness of sponsor to be guided by the feasibility report: Having used the report to
secure a loan, the sponsor may neglect or fails to use the report as a guide in his/her
future decisions.
The Meaning of a Business Plan

a business plan is a written summary of an entrepreneur‘s proposed business venture, its

operational and financial details, its marketing opportunities and strategy, and its managers‘skills
and abilities. There is no substitute for a well prepared business plan, and there are no shortcuts
to creating one. The business plan becomes a road map that the entrepreneur will follow in
building a successful business.
Benefits of a Business Plan

1. It forces the entrepreneur to analyse all aspects of the venture and to prepare an effective
strategy to deal with the uncertainties that may arise.
2. The time, effort, research, and discipline needed to put together a formal business plan
force the entrepreneur to view the business critically and objectively.
3. The business plan quantifies objectives, providing measurable benchmarks for comparing
forecasts with actual results.
4. The completed business plan provides the entrepreneur with a communication tool for
outside financial institutions as well as an operational tool for guiding the business
toward success.
5. The business plan provides the details of the market potential and plans for securing a
share of that market.
6. Through prospective financial statements, the business plan illustrates the venture‘s
ability to service debt or provide an adequate return on equity.
7. The plan identifies critical risks and crucial events with a discussion of contingency plans
that provide opportunity for the venture‘s success.
8. By providing a comprehensive overview of the entire operation, the business plan gives
financial sources a clear, concise document that contains the necessary information for a
thorough business and financial evaluation.
Contents of a Typical Business Plan

1. Executive Summary: This is the opening chapter of the plan. It usually contains one to
three pages in length and highlights all the key points of the plan in a way that captivates
the reader‘s interest. It is the unique value proposition and business model that really
matters.
2. Company description: This short section describes the company‘s business, location and
site, strategy, structure and form of organization. It provides a summary of its goals and
plans for the next five years as well as the company‘s capabilities.
3. Products and services: This explains what products or services the company will sell; it
also discusses why customers will want the products or services, what problems the
product or service will solve and what benefits they will deliver, and how much
customers are likely to pay for them.
4. Market analysis: This section discusses the need or demand for the product, who the
target customers will be, and why the customers will buy the product. This section also
includes a discussion of the company‘s competitors or potential competitors, and why the
product or service will have a competitive advantage over similar offerings from
competitors. It also addresses the barriers to entry in this market that may prevent the
 entry of new competitors, such as high capital costs, difficulty in reaching customers or
persuading them to switch loyalties, hard-to-get employee skills etc.
5. Proprietary position: This section discusses whether the business enterprise will rely on
patents or licenses to patents, this section tells us how these patents will contribute to the
company‘s competitive position and assesses whether other patents (i.e. competitors or
otherwise) might limit the company‘s ability to market its products. If similar products
don‘t already exist, it discusses the alternative means by which customers are likely to
meet the needs the product addresses.
6. Marketing and sales plan: This section discusses product, pricing, promotion and
positioning strategy as well as how the company plans to attract, retain and maintain
customers’ loyalty.
7. Management team: Investors consider the management team as the most crucial asset
that will determine the company‘s growth and help respond to the dynamic nature of the
environment. It is on this premise that this section describes the members of the
management team in terms of their names, qualifications, age, experience and position of
members of the management team including the entrepreneur. The purpose of this is to
highlight the competencies and skills available to the company to execute its
programmes.
8. Operations plan: This section describes the day-to-day operation of the business,
highlighting how the key assets (tools, processes and labour) will be utilize to produce
and deliver the products and services. This section includes the location and site of the
business.
9. Finance: This section identifies the capital that will be required to build the business and
how it will be used. It includes forecasting of revenues and expenditure that show
investors how they will get their money back and what return they can expect on their
investment. A business plan is useful only if the different components of it are integrated
into a single piece of work. The components are interrelated and the impression must not
be created that one component can be written without reference to the others. The success
or failure of a business plan is tied to three major elements with which you started the
process
(a) A good opportunity (including the right timing),
(b) The right entrepreneurial team,
(c) The necessary resources and capabilities.
.

Differences between a Feasibility study and a Business Plan

S/N Feasibility Study Business Plan
1. The key objective is to ascertain the workability and The key objective is to determine the
profitability of a business enterprise sustainability and growth of the business
enterprise

2. It is carried out before a final decision is made to It is developed only after it has been
committing resources to the project. ascertained that a business opportunity
 Exists.
3. It suggests the broad strategies that may be adopted It is more specific in terms of goals,
to achieve profitability strategies and tactics to be adopted.

COMMON MYTHS ABOUT ENTREPRENEURS

Myth 1:

Entrepreneurs are born, not made. This myth is based on the wrong notion that some people
are genetically predisposed to be entrepreneurs. Similar studies carried out on the psychological
and sociological make up of entrepreneurs confirmed that entrepreneurs are not genetically
different from other people. This means that entrepreneurs are not born and that many
individuals have latent potential to fit into the role of entrepreneurs. Such potentials can be
actualized through training programmes.
Myth 2:

Entrepreneurs are gamblers. Another wrong notion about entrepreneurs is that they take big
risks and are gamblers. The fact is, entrepreneurs usually take moderate and calculated risks.
Entrepreneurs are often referred to as gamblers because of two main reasons. First, many
entrepreneurs have a strong need to achieve and often set challenging goals, a behaviour that is
occasionally equated with risk taking. Second, most entrepreneurs jobs are less structured, and so
they face a more uncertain set of possibilities than managers or non-managerial personnel. In a
nutshell, entrepreneurs are not gamblers but rather take calculated and moderate risks.
Myth 3:

Entrepreneurs are motivated primary by money. Entrepreneurs go into business as a result

of freedom to work for one self and to pursue personal innovation. It makes sense to say that
entrepreneurs go into business in order to seek financial and social rewards of entrepreneurship.
It must be emphasized that entrepreneurs have reason for the existence of their businesses
(mission statement) which in turn translate into the primary objective of any business
(profitability). In a nutshell, money is not often the primary reason entrepreneurs start new
businesses and persevere.
Some entrepreneurs warn that the pursuit of money can be distracting.

Myth 4:

Entrepreneurs should be young and energetic. Entrepreneurial activity is fairly evenly spread
out over age ranges. It is believed that, the increasing number of older aged entrepreneurs is a
big change in the entrepreneurial landscape in developed societies like the United States. Most
venture capitalists are ready to fund a strong entrepreneur with a mediocre business idea than
fund a strong business idea and a mediocre entrepreneur. The word ―strong‖ in the eyes of an
investor is based on a number of factors such as experience in the proposed business, a track
record of success, and passion about the business idea. The above four qualities favour aged
rather than younger entrepreneurs.
Myth 5:

Entrepreneurs love the spotlight. Majority of entrepreneurs do not like to attract public
attention except some that are flamboyant. Many entrepreneurs who are working on proprietary
products or services avoid public notice. This goes against the myth that entrepreneurs more so
than other groups in our society, love the spotlight.
To corroborate the above myths, Nwoye (2011) examines the concept of entrepreneurship myths
as follows:

1. Entrepreneurs are made not born

2. All Entrepreneurs are workaholic
3. Entrepreneurship is all about invention
4. Entrepreneur are risk takers
5. All an Entrepreneur is looking for is profit
6. Entrepreneurs are loners and introverts
7. Entrepreneurs are adventurists
8. Entrepreneurs are deceptive individuals
9. Entrepreneurs are academic misfits
10. Entrepreneurship is unstructured and chaotic high-tech wizards.

The Entrepreneurial Process

The entrepreneurial process indicates that the decision to become an entrepreneur and the
development of successful business ideas indicates that sometimes the opportunity to develop an
idea may prompt a person to become an entrepreneur.
STEPS INVOLVED IN THE ENTREPRENEURIAL PROCESS.
Step 1: Decision to become an Entrepreneur:

To pursue one‘s own idea and to realize financial rewards may prompt people to become
entrepreneurs in order to be their own bosses. For example, as a result of loss of job or
unemployment, one may decide that the time is ripe to start one‘s own business. Or one may
have the money to start one‘s own business as a result of an inheritance. Lifestyle issues may
also trigger entrepreneurial careers. For example, a woman may wait until her youngest child is
in school before she decides to launch her own business venture.
Step 2: Developing Successful Business Ideas:

The failure of many new businesses is not due to the fact that the entrepreneur is not
hardworking but that there was no real opportunity to begin with. Developing a successful
business idea includes opportunity recognition, feasibility analysis, writing a business plan,
industry analysis, and the development of an effective business model.
 Step 3: Moving from an idea to an Entrepreneurial Firm

The first thing an entrepreneur does in order to turn an idea into reality is to prepare a proper
ethical and legal framework for the firm, including selecting an appropriate form of business
ownership.
Step 4: Managing and Growing an Entrepreneurial Firm

All firms must be managed and grown properly to guarantee their continuous success in today‘s
competitive and dynamic environment. This is the last step of the entrepreneurial process.

SIMILARITIES BETWEEN CORPORATE AND START UP ENTREPRENEURSHIP

1. They both involve opportunity recognition and definition

2. They both require a unique business concept that takes the form of a product, service or
process
3. They are both driven by an individual champion who works with a team to bring the
concept

to fruition.

4. They both require that the entrepreneur be able to balance vision with managerial skill,
passion with pragmatism, and proactiveness with patience.
5. They both involve concepts that are most vulnerable in the formative stage, and that
require adaptation overtime.
6. They both entail a window of opportunity within which the concept can be successful
capitalized upon.
7. They are both predicated on value creation and accountability to a customer.

8. They both find the entrepreneur encountering resistance and obstacles, necessitating both
perseverance and an ability to formulate innovative solutions.
9. They both entail risk and require risk management strategies.
10. They both find the entrepreneur needing to develop creative strategies for leveraging
resources.
11. They both involve significant ambiguity.

12. They both require harvesting strategies.

Corporate and Start-Up Entrepreneurship Major Differences

S/N Start-Up Entrepreneurship Corporate Entrepreneurship
1. Entrepreneur takes the risk Company assumes the risks, other than career-
related risk.

2. Entrepreneur ―owns‖ the concept or Company owns the concept, and typically the
intellectual rights surrounding the concept.
innovative idea
3. Entrepreneur owns all or much of the business. Entrepreneur may have no equity in the company,
or a very small percentage.

4. Potential rewards for the entrepreneur are Clear limits are placed on the financial rewards
theoretically unlimited entrepreneurs can received.

5. One misstep ca n mean failure More room for errors; company can absorb
failure.

6. Vulnerable to outside influence More insulated from outside influence

7. Independence of the entrepreneur, although the Interdependence of the champion with many
successful entrepreneur is typically backed by others; may have to share credit with any number
a strong team. of people.

8. Flexibility in changing course, Rules, procedures and bureaucracy hinder the

entrepreneur‘s ability to maneuver.
experimenting, or trying new directions

9. Speed of decision making Longer approval cycles

10. Little security Job security
11. No safety net Dependable benefit package
12. Few people to talk to Extensive network for bouncing around ideas
13. Limited scale and scope initially Potential for sizeable scale and scope fairly
quickly.

Benefits of Entrepreneurship
The following are the benefits of entrepreneurship

(i) Opportunity to Create Your Own Destiny

Entrepreneurship provides the business owners the independence and the
opportunity to achieve what is of immense benefit to them. They want to ―call
the shots‖ in their lives, and they use their business to make this a reality come
true.

(ii) Opportunity to Make a Difference

Entrepreneurs start businesses due to the fact that they want to make a difference
in a cause that is important to them. Social entrepreneurs, for example, are
business builders who seek innovative solutions to some of society‘s most vexing
problems. They use their skills not only to create profitable business enterprises
but also to achieve social and environmental goals for society as a whole. Their
 businesses are often characterized to have a triple bottom line which includes
economic, social, and environmental objectives.

(iii) Opportunity to Reach Your Full Potential

Entrepreneurs do not find their work boring, unchallenging and unexciting. This
is because there is no much difference between work and play; to them the two
are the same. Their businesses become their weapons for self-expression and self
actualization. To them, the only boundaries on their path to success are those
imposed by their own enthusiasm, vision and creativity. They are empowered as a
result of their own businesses.

(iv) Opportunity to Reap Impressive Profits

Entrepreneurs are not driven primarily by money, the profits their businesses can
make are an important motivating factor in their decisions to launch and build
their businesses.
(v) Opportunity to Do What You Enjoy and Have Fun at it
Many entrepreneurs decide to enter their particular business lines because they
have an interest in them and enjoy those lines of work. They have made their
hobbies (avocations) their work (vocations) and are happy they did!

The Potential Drawbacks of Entrepreneurship

The following are the disadvantages of entrepreneurship:
(i) Uncertainty of Income
Entrepreneurship does not guarantee that the business owners will earn enough
money to survive when he or she opens and runs the business..
(ii) Risk of Losing Your Entire Investment
Financial ruin can be the outcome of a business failure for an entrepreneur, and the
rate of failure for the small business is relatively high.
(iii) Long Hours and Hard Work
Business start-ups often demand long hours from their owners. Entrepreneurs do not
go for holiday because they are Too busy‖. The demands of owning a business make
achieving a balance between work and life hard for entrepreneurs.
(iv) High Levels of Stress
Business failure implies that the business is ruin financially and this creates intense
levels of stress and anxiety.
(v) Complete Responsibility
It‘s good to be in charge of the business, but many entrepreneurs find that they must
make decisions on issues about which they are not really knowledgeable. Many business
owners have difficulty looking for advisers as well as consultants. When none is
available, the pressure can build quickly. They take absolute responsibility for the
success or failure of their decisions.
Management: Leading and collaborating in a competitive world (8th edition). Boston:
McGraw-Hill.

ENTREPRENEURIAL FINANCING

Sources of Entrepreneurial Financing

There are several sources from which the entrepreneur can raise funds.
(i) Personal Resources:

This is divided into two parts namely savings or inherited wealth. There is significant evidence
in Uganda and the rest of the world that most entrepreneurs depend on personal savings to start
their businesses. The research also showed that as the size of business increases, the proportion
of capital accounted for by personal savings declined. Personal resources can be augmented by
sale of personal assets. The willingness of an entrepreneur to sell off his or her personal assets in
order to raise funds is considered by financial institutions and other stakeholders as the strongest
indicator of the entrepreneur‘s belief and commitment to the success of the business venture.
Personal assets such as buildings, cars, plant and machinery, estate etc can be sold in order to
raise funds to starting a business.
(ii) Entrepreneurial Teams:

Two or more persons may start a business venture as partners and all the partners constitute an
entrepreneurial/partnership team. More capital can be raised when a partnership team is formed
as a result of the financial contributions of the partners. However, caution must be exercised in
selecting co-partners as emphasis must be laid on skills and experience they can contribute to the
business.
(iii) Sales of Shares by Private Placement:

Incorporated companies can raise fund through the sale of stock or equity to interested
stakeholders who are willing to invest on long term basis and become part owners of the
business.
The sale of shares in private limited liability company can be arranged by finance houses for a
free to their clients.
(iv) Business Angels:

These are wealthy individuals who have money and are willing to provide equity fund to an
entrepreneur for business start-ups in exchange for equity stakes in the business. They are not
partners and as such do not take part directly in the management of the business. They may offer
advice from time to time but in most cases, they prefer to remain anonymous.
(v) Rotating Credit Scheme/Osusu/Money Lenders:

These are informal institutions that provide small loans to owners of small and medium scale
enterprises (SMEs). They are commonly found in Nigeria and other developing countries. The
entrepreneur can be a member of this group popularly called Osusu/Esusu to raise funds.
Rotating credit scheme can be a popular and convenient source as they do not demand collateral
other than personal guarantors (in case of huge amount of money). However, to benefit from
such a scheme, you must be a member of the saving scheme.
(vi) Cooperative Societies:

This is another way of raising relatively large amount of money to starting a business. Many
people are able to save gradually and to obtain loans to starting their own businesses, by
becoming a member of the savings and loans cooperative societies.
(vii) Loans from Family, Friends and Relations:

Entrepreneurs in Nigeria and other developing countries usually depend on family members,
friends and relations to provide them with the needed funds in order to start their businesses.
Osaze (1981) however believes that the use of family members, friends and relations as a source
of startup capital creates obligations on the part of the entrepreneur to also assist family members
when his/her business succeeds. One of the conditions for the would-be entrepreneur to access
the fund is, if he or she has the pre-requisite skills and experience to manage the new business
successfully.
(viii) Trade Credit and Accruals:

Trade credits are created when the new business enterprise buys raw materials, supplies and
other component parts meant for production or resale on credit terms with or without signing any
formal agreement for the debt. Trade credit is an interest free source of funds for the length of
the credit period.
Accruals refer to trade credit on an intangible goods or services. The ability of an entrepreneur
to secure credits from suppliers or down payment by customers depends largely on the creditor’s
perception of the credit rating of the entrepreneur.

Reasons why Loans may not be granted to an Entrepreneur

With respect to the nature and behaviour of entrepreneurs, it is often suggested that their
inability to source funds from financial institutions is due to:
(i) Lack of knowledge of the roles of the different financial institutions and the scope of
services they provide.
(ii) Lack of skill in presenting their proposals and business plans to the financial institution.

(iii) Inadequate financial commitment on the part of the entrepreneur to the project.

(iv) Lack of adequate collateral securities that will guarantee the repayment of the loan.

(v) Poor accounting records which make it difficult to ascertain the true financial position of
the

firm.

(vi) Inadequate lead time between when the entrepreneurs need the money when the
requisition is made to the financial institution and the time required by the financial
institutions to process the request.
(vii) Poor quality of business plans and feasibility study on the part of entrepreneurs are the
factor inhibiting their access to loans.