Definition of Key Entrepreneurial Terms
Definition of an entrepreneur
- An entrepreneur is a person who identifies a business opportunity, harnesses and obtains the resources necessary to initiate a successful business activity.
- The entrepreneur implements the idea
- Undertakes to operate the business
- An entrepreneur is therefore a central key individual in the society who makes things happens for economic development.
Entrepreneurship meaning
- In the broader sense, entrepreneurship refers to the means of stimulating innovative and creative undertakings for a better business community or world.
- The act or process of identifying business opportunities and gathering the necessary resources to initiate a successful business activity.
- Entrepreneurship is a French word meaning to undertake and focuses on a business enterprise
- Entrepreneurship can exist in any situation – therefore it is the creation of values through establishing a business enterprise.
- Entrepreneurship means having an idea of one’s own and trying to implement the idea to create values on it.
- Entrepreneurship is a term which encompasses what entrepreneurs do i.e Identifying a business opportunity of a particular demand
- Look at the opportunity as a process of creating, something that did not exist.
- Constantly searching/ harnessing ones environment and resources to implement the activities.
- Creating a totally new product and using it in as new.
- Entrepreneurship there is the practice of starting a new business or revitalizing existing businesses in response to identifying opportunities.
Self-Employment
- Working independently and earning a living from it.
- This is a concept that arises when the entrepreneur relies on revenues from his business as a source of income
- What is Unemployment? Advantages and disadvantages of Self Employment?
- What is Salaried Employment? Advantages and Disadvantages of Salaried employment?
- Enterprise
- A business undertaking by an individual for the purpose of making a profit.
Factors impeding the growth of Entrepreneurship
- High Taxation Levels
- Corruption and Official Harassment
- Unregulated competition from outside countries
- Decline in personal incomes
- The high cost of finance
- Lack of entrepreneurial culture
- Poor transport and communication networks
- Lack of skills and knowledge
- Explain the distinctions between an Entrepreneur and a Manager
- The economic growth, the improved quality of life, the equitable distribution of resources and the capacity of the economy to deal with economic, social and environmental development.
- Main objectives of national development include:
Elimination / Reduction of poverty: reduce rural-urban migration Provision of opportunities for employment and personal advancement
Trying to narrow the income differences between the rich and the poor.
- Employment Creation:
- Promotion of National Productivity: This is through production of goods and services within the country and therefore they contribute to the Gross Domestic Product (GDP)
- Raising Standards of Living: It’s measured by the capacity of people of a country to buy goods and services. Entrepreneurs contribute by employing people and giving them salaries or wages to buy their necessities.
- Conservation of foreign Exchange: Entrepreneurs produce goods and services that are needed by people and reduction in importing those goods and hence the government saves foreign exchange.
- Export Promotion: Entrepreneurs who produce goods and services for export earn vi)Conservation Agent: Entrepreneurs can contribute to conservation and utilization of resources, e.g. manufacturing a Jiko that uses sawdust instead of wood charcoal
- Rural development which in effect.
- Promotes change to the formal sector from informal sector
- Equitable development
- Reduced rural-urban migrations.
7. Development of technology through
- establishment of research institutions ii) education systems ix) Government revenue
- Through taxes. From domestic borrowing (TBs)
- Establishment of small businesses ii) Participation in community dev. Projects xi)Providing a positive role model and facilitating.
- Competition between domestic entrepreneurship and imported Stimulating dev. Of entrepreneurship. xii) Reducing dependence on imported goods and services.
- Quality production methods are adopted
- Quality products are produced
- Variety goods and services are produced.
- Capital accumulation is possible through savings
- Loaning is facilitated
- Development of the capital market.
- i) Entrepreneurship looks at particular individuals in a business set-up. It operates in large business or organization which is business minded to make profit.
- ii) Entrepreneurs operate autonomously for the welfare of the organization.
- iii) The term Intra – refers to within – therefore Entrepreneurship is a process whereby an individual or group within a large organization creates something new or different to maximize on the available opportunities to that organization.
- iv)Intra can therefore be equated to entra within the context of a large organization where the workers are a leeway to be creative or innovative on their own.
- v)They become competitive, socially and economically the idea is to allow individuals within the organization to act and think independently.
Entrepreneurial Behavior
Several theories have been developed to explain why entrepreneurs behave the way they do.
There has been debate on whether entrepreneurs are born or made
Born-hereditary, made-entrepreneurs are environmental influenced by where they are born.
These are;
i) Economic
The theory explains entrepreneurial behavior as influenced by economic factors through which.
a) It is possible to introduce new methods
b) It is possible to find new sources of materials
c) It is possible to open new markets
The economic prospective is important since they create enabling environment for the entrepreneur to combine the factors of production.
ii) Psychological factors
Several theories have been developed to explain why entrepreneurs behave the way they do.
There has been debate on whether entrepreneurs are born or made
Born-hereditary, made-entrepreneurs are environmental influenced by where they are born.
These are;
i) Economic
The theory explains entrepreneurial behavior as influenced by economic factors through which.
a) It is possible to introduce new methods
b) It is possible to find new sources of materials
c) It is possible to open new markets
The economic prospective is important since they create enabling environment for the entrepreneur to combine the factors of production.
ii) Psychological factors
- The theory states that entrepreneurs have unique values, attitudes and needs within which drive them.
- It is mostly concerned with personality traits as the main determinants of entrepreneurial behavior
- People are likely to become entrepreneurs because of high liking of say.
- a) Independence
- b) Attitude
- c) Need to satisfy certain needs.
- Maintains that environmental factors such as beliefs, culture, social structures determine entrepreneurial behavior.
- Emphasizes on the organization of resources in a specific way to attain profits
- Leadership impacts on behavior and facilitates pioneership, achieving of goals and provides vision.
- i) The bearing of uncertainty is the primary function of the entrepreneur i.e losses or profits.
- ii) The management of the business enterprise ie can delegate iii) Provision of risk capital and invention.
- iv) Identifying gaps in the market and turning such gaps to business opportunities i.e to initiate a business.
- v) Financing the businesses, through raising and mobilizing the necessary resources to exploit opportunity.
- vi) Searching for business opportunities through environmental scans.
- vii) Mobilization of resources needed to start and run a business e.g. from
- a) Personal savings
- b) Friends & relatives
- c) Financial institutions e.t.c
ix) Provide the necessary leadership for the business and those working in it.
Advantages of Entrepreneurship
- i.) Financial gains
- ii.) Self-employment which leads to job satisfaction and flexibility
- iii.) Provide job opportunities to the unemployed or those seeking better jobs.
- iv.) A means of opening up new industries especially in the rural areas - facilitating globalization
- v.) A source of generating income and increased economic growth.
- vi.) Facilitates competition encouraging high quality products
- vii.) Facilitates production of more goods and services
- viii.) Leads to the development of newer markets
Drawbacks of entrepreneurship
Challenges of a being an entrepreneur
- long working hours
- poor pay
- unclear future
- fear of losing all that has been invested
- bankruptcies and closure
- Fear of delegating
- the problem do it yourself and know it all
- competition by established business
- lack of funds especially before break even
- Mis- management by employees
- Integrating entrepreneurship into the education system
- Registration to encourage risk taking
- National companies to promote entrepreneurship
- Support of entrepreneurs through friendly loans at the appropriate time.
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