ENTREPRENEURSHIP AND ENTERPRISE DEVELOPMENT

(Lecture in AGEC1) Why be an entrepreneur?

There is only one way I know to make a lot of money, and that is by being your own boss. You will never do it by working for somebody else. -John Paul Getty(wrote the book How to be Rich)

ENTREPRENEUR
Originates from the French word entreprendre which means to undertake. In business context, it means to start a business. A person who organizes and maintains a business undertaking assuming the risk for the sake of profit. One who looks out for new ideas, and is willing to take the risk of introducing them Someone who is in business for him or herself. Is a manager but not just a salaried manager who works for others.

ENTREPRENEUR IS SOMEONE WHO: 1. 2. 3. 4. Perceives and take advantage of business opportunities in the environment. Takes risks to take advantage of these opportunities Invests his own or borrows money to use in the business Introduces innovations or improvements to make the business better, bigger more efficient and more profitable 5. Makes plans and decisions for the business 6. Makes profit from the business

CONTRIBUTIONS OF ENTREPRENEUR
EMPLOYMENT GENERATIONS Entrepreneurs are able to employ persons who may or may not have formal trainings.

MOBILIZES CAPITAL RESOURCES Entrepreneurs are the organizers and coordinators of the major factors of production such as: land, labor & capital.

 DISCOVERS NEW SOURCES OF MATERIALS Entrepreneurs are never satisfied with the traditional or existing source of materials.

DEVELOPS NEW MARKET Entrepreneurs are resourceful and creative. They can create customers or buyers.

INTRODUCES NEW TECHNOLOGIES, NEW INDUSTRIES AND NEW PRODUCTS Entrepreneurs take advantage of business opportunities and transform these into profits.

FUNCTIONS OF AN ENTREPRENEUR
Mobilizes capital A person who starts a business must have capital to begin with-cash from his savings or borrowed money from friends, relatives or moneylenders. If he is lucky, the business makes a profit, which he may use or decide to reinvest in the business. In the latter situation, the entrepreneur produces additional capital. Capital is a critical consideration in going into or withdrawing from a potential business project. A study of business graduates who majored in entrepreneurship revealed that only 25 % actually went into business. Those who did not explained they lacked money to invest as start-up capital. Introduces innovations An entrepreneur innovates when he introduces a new product or reinvents an old product, which is another way of saying that he does it in a new way. A reinvented product is one that has been enhanced in terms of size, color, shape, design, or even use. A handicraft entrepreneur who produces embroidered angels for Christmas decorations is a case point. When buyers complained her products were too expensive, she went back to the drawings boards. She made the angels just a bit smaller, used slightly different package, and was able to lower the unit price without sacrificing quality. Plans ahead Planning implies forecasting or trying to predict events. Flower shops have to prepare for an increase in demand on Valentines Day in February and All Saints Day in November. Beach resort operators expect fewer excursionists when rains begin to come in June, signaling the end of summer. Entrepreneurs also try to prepare for the unexpected, like the sudden rise and fall of prices of world commodities, natural calamities like floods, earthquakes, volcanic eruptions, and

man-made crises like power grabs. The forward-looking entrepreneur tries to get ready for any type of emergency. Makes decisions Related to planning is decision-making. Because the entrepreneur manages under uncertain conditions, he is careful in making decisions. He considers alternatives open to him to solve a problem. A hundred and one decisions have to be made each day but the wise entrepreneur is able to delegate some of these to trusted employees, retaining the critical ones for him to personally deal with. Sells his products and services for a profit The entrepreneur sees to it that his products sell and bring him revenues. After all, he is in business to make profit-the financial reward a person gets from all the resources he puts into the venture Takes advantage of economic opportunities An opportunity in every human need!may well be the entrepreneurs battle cry. These do not only refer to basic human needs of food, clothing, and shelter but to higher needs and wants like comfort, convenience, and social approval (convenience store, courier service, holidays resorts, travel agency). He sees an opportunity in an expensive, imported product. He thinks of ways to develop and produce a substitute for this, to make it affordable for the Filipino buyer and save dollars for the country. Organizes labor and production What is a business enterprise made of? It is a combination of money, men, machines, materials, methods, and markets. Think of each one as separate items. Money has to be raised. Men have to be hired and trained. Machines have to be canvassed, bought, installed, and pilotrun. Materials have to be sourced to start production. And markets have to be identified and be convinced to try the product or service. Being separate items, money, men, machines, materials, and markets have to be obtained and put together to start the business and to run it on a sustained basis. Who does it all? Who else, but the entrepreneur!

REWARDS OF BEING AN ENTREPRENEUR

Having unlimited opportunity to make money When you have your own business, you will most certainly have unlimited potential to earn money. How much money you earn depends on the time and effort you put into your

enterprise. Successful entrepreneurs have earned their wealth and prestige through hard work and by having the right product for the right market at the right time. Being your own boss As manager of your business, you make the decisions for your enterprise and take full responsibility for these. The quality of these decisions will translate into either gain or loss for your enterprise. Being your own boss means you are in control of your future. You have a better grasp of what you want to be. Tapping your creativity A business usually starts out as an idea. You will have the opportunity to harness this creativity and turn your idea into products and processes. Overcoming challenges and finding fulfillment Starting a business is by itself an accomplishment. Running a business tests an entrepreneurs capability in securing and managing resources. How well a business turns outr depends on the owners ability to face the challenges and overcome difficulties. Helping others In the process of running a business, an entrepreneur employs workers, and pays them income which improves their lives. An entrepreneur who succeeds and grows also helps suppliers, sub-contractors, dealers, and other businesses connected to him succeed and grow too. Building an entrepreneurial legacy A business can be a lasting legacy to the family. It can ensure employment for some members of the family. It can create an enterprising culture than can be handed down through the generations.

RISK OF GOING INTO BUSINESS

Possibility of failure A single wrong business decision can bring a business bankruptcy. Unpredictable business conditions A small business is vulnerable to sudden changes in the business environment. Long hours of work A prospective entrepreneur must be ready to spend most if not all his waking hours in the business.

 Unwanted or unexpected responsibilities Other people might depend on you for their livelihood.

TRAITS OF A SUCCESSFUL ENTREPRENEUR

A. ACHIEVEMENT CLUSTER B. PLANNING CLUSTER C. POWER CLUSTER

A. ACHIEVEMENT CLUSTER
OPPORTUNITY-SEEKING Perceives and acts on new business opportunities Seizes unusual opportunities to obtain financing equipment, land, work space, or assistance. PERSISTENCE Takes repeated or different actions to overcome obstacles. Sticks to own judgment in the face of opposition or disappointment. COMMITMENT Accepts full responsibility for problems encountered Helps own employees to get the job done. Seeks to satisfy the customer. RISK-TAKER Rises to a challenge and transfers problems into opportunities. Prefers situations involving moderate risks CONCERN FOR QUALITY AND EFFICIENCY Always strives to raise standards Aims for excellence Strives to do things better, faster and cheaper.

B. PLANNING CLUSTER
Goal-setting Sets clear and specific short-term objectives Sets clear long-term goals. Information-seeking Personally seeks information on clients, suppliers and competitors. Seeks experts for business or technical advice. Uses contacts or networks to obtain information Systematic planning and monitoring Develops logical, step by step plans to reach goals. Looks into alternatives and weighs them Monitors progress and shifts to alternative strategies when necessary to achieve goals.

C. POWER CLUSTER
PERSUASION AND NETWORKING Convince someone to buy a product or service or provide financing Uses business and personal contacts to accomplish objectives. SELF-CONFIDENCE Believes in self Express confidence in own ability to complete a difficult task or meet a challenge.

SOME BEHAVIORAL PATTERNS AMONG BICOLANO ENTREPRENEURS

Live according to your means and spend wisely Be innovative, creative unique, original and open-minded to seek new knowledge, and information as well as to always keep oneself updated. Perseverance, patience, hard-worker. Self-confidence where mistakes are treated not as hindrances but as opportunities where one can learn more. Opportunity seeker and achievement oriented Risk-taker Resourceful Manage time properly Establish harmonious relationships with suppliers and buyers Never lose hope and it helps to have a positive outlook in life. Flexible

GENERAL CHARACTERISTICS OF ENTREPRENEURS

Table 1. Personal entrepreneurial competencies. Core Competencies 1. Initiative Entrepreneurial Activities Does things before being asked or forced to by events. Acts to extend the business into new areas, products or services. Sees and acts on new business opportunities. Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance. Takes repeated or different actions to overcome obstacles. Takes actions in the face of a significant obstacle. Does personal research on how to provide a product or service. Consults experts for business and technical advice. Seeks information or asks questions to clarify a clients or suppliers needs. Personally undertakes market research, analysis or investigations. Uses contact or information networks to obtain useful information.

2. Sees and acts on opportunities

3. Persistence

4. Information seeking

5. Commitment to work 6. 7.

8.

9. 10.

11.

12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Makes a personal sacrifice or expends extraordinary effort to complete a job. Concern for high quality work States desire to produce or sell a top or better quality product or service. Efficiency orientation Looks for or find ways to do things faster at less cost. Uses information or business tools to improve efficiency. Systematic planning Plans by breaking a large task down into sub-tasks. Develops plans that anticipate obstacles. Evaluates alternatives. Problem solving Switches to an alternative strategy to reach a goal. Generates new ideas or innovative solutions. Self confidence Expresses confidence in own ability to complete a task or meet a challenge. Sticks with own judgment in the face of opposition or early lack of success. Expertise Had experience in the same area of business. Possesses strong technical expertise in area of business. Recognizing own limitations Explicitly states a personal limitation. States learning from past mistakes. Persuasion Convinces someone to buy a product or service or provide financing. Use of influence strategies Acts to develop contact business. Uses influential people as agents to accomplish own objectives. Assertiveness Confronts problems with others directly. Tell others what they have to do. Credibility, integrity, sincerity Emphasizes own honesty to others. Acts to ensure honesty or fairness in dealing with others. Concern for employee Expresses concern and takes action to improve the welfare of employees. Monitoring Develops or uses procedure to ensure that work is completed or that works meet standards of quality. Recognizing importance of business Sees interpersonal relationships as a fundamental relationship business resource. Building capital Saves money in order to invest in business. Concern for the image of product/service Expresses a concern about how others see his/her product, service or company.

END OF CHAPTER 1 Prepared by: Ms. Charmyne de Vera Sanglay (CBSUA-IEM)