Enterepreneurship course

Entrepreneurship
Development and Training
Author
Dr. Marus Eton
Department of Business, Faculty of Arts and Social Science, Kabale
University, Kabale, Uganda
Publication Month and Year: November 2019
Pages: 121
E-BOOK ISBN: 978-81-943354-1-2
Academic Publications
C-11, 169, Sector-3, Rohini, Delhi
Website: www.publishbookonline.com
Email: publishbookonline@gmail.com
Phone: +91-9999744933

Entrepreneurship Development and Training
Author
Dr. Marus Eton (PhD)
Dr. Eton Marus (PhD) comes with vast working experience
in academia. He is a dynamic, self-motivated professional with
multi-disciplinary academic background with professional
proficiency in the areas of Finance and Accounts, Business,
Monitoring and Evaluation. He is a Lecturer at Kabale
University in the department of Business. He has Doctorate in
Business Administration with specialty in (Finance). He has
additional qualifications in areas of Financial Management,
Monitoring and Evaluation, Accounting, and marketing. He is
an accomplished scholar and researcher. He has made a number
of publications in peer reviewed journals. He has presented
papers in international Conferences and renowned consultant in
business and research. He has wide experience in lecturing at
higher institution of learning. The Author lives in Uganda.
eton.marus@gmail.com. emarus@kab.ac.ug
256772880149/256701304416

Course Description
The Entrepreneurship course is a dynamic course designed to inspire
and engage learners in the fundamental aspects of an entrepreneurial mindset
and the unlimited opportunities it can provide. This course will empower
learners through entrepreneurial thinking and immerse them in
entrepreneurial experiences that will enable them to be creative and
innovative. Furthermore, the course will expose learners on the application
of entrepreneurship skills. Thus, creating and managing viable enterprises.
Course objective
To equip students with innovative and creative skills in the business
environment.
Learning outcomes
By the end of this course, a student should be able to
i) Develop critical thinking skills that will enable them to identify and
evaluate entrepreneurial opportunities, manage risks and learn from
the results.
ii) Analyze the process that enables entrepreneurs with limited
resources to transform a simple idea into a sustainable success.
iii) Establish goals, identify resources and determine the steps required
to start and manage a business.
iv) Demonstrate and interact with local entrepreneurs and business
owners within their own communities.
v) Develop a business plan for starting up a business
Detailed Course outline
1. Introduction 10hours
 Introduction to entrepreneurship
 The concept of entrepreneurship
 The entrepreneur and entrepreneurial characteristics
 Entrepreneurial success

2. Environmental analysis 15hours
 Introduction to environmental analysis
 Internal environmental analysis
 External environmental analysis
 Challenges in industrial analysis
3. Creativity and innovation 10hours
 Purposeful innovation
 Sources of innovative opportunity
 The bright idea
 Principles of innovation
4. Starting a business 10hours
 Feasibility study
 Business plan
 Implementation follow up
 Control of the business project

Contents
S. No. Chapters Page No.
1. Entrepreneurship Development and Training 01-25
2. Types/Classification of Entrepreneurs 26-39
3. The Entrepreneurial Process 40-51
4. Small Business in Uganda 52-60
5. Creativity and Innovation 61-74
6. Environmental Analysis 75-85
7. Feasibility Study 86-95
8. Introduction to A Business Plan 96-115
9. Entrepreneurship Development 116-121

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Chapter - 1
Introduction
An entrepreneur refers to the person or persons who undertake the task
and risk of organizing other factors of production (land labor and capital).
He is the coordinator or mobilizer, a risk taker, innovator and decision
maker.
The entrepreneur therefore organizes natural resources and capital goods
for production to take place. This is done in anticipation of demand and
supply.
Entrepreneurship is a process of creating something different with value
by devoting the necessary time and effort or entrepreneurship is the process
of creating incremental wealth.
Characteristics of Entrepreneurs
i) They are risk bearers that are; they risk their capital against
uncertainties in business.
ii) They are enterprising that is; have the courage and willingness to do
new things.
iii) They are creative and innovative that is; they bring about new ideas
and things.
iv) They are decision makers i.e. they are good and quick at deciding.
v) They are mobilizes that is are able to bring together the resources
(land, labor and capital) for production.
vi) Good planning i.e. should be good at determining in advance what,
when, where, and how to produce something.
vii) Patient, this is the ability to persevere and be diligent i.e. to endure
all kinds of business problem.
viii)Restless. they don’t rest unless their dreams come true
ix) Independence that is they are free from control, support or influence
of others.

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x) Have the need for achievement
xi) They are ambitious.
xii) They always want to win.
Problems Faced by Entrepreneurs
 Taxation by the government.
 Government intervention by nationalizing and fixing prices.
 There is political pressure.
 Competition for the market.
 Lack of infrastructure for easy distribution of goods and services.
 Fluctuating demand and supply situations which in turn affect
planning of what, when, where and how to produce.
 Insufficient profits.
 High inflationary tendencies.
 Insufficient financial services and loan funds are low.
Importance of Entrepreneurship
i) It leads to employment opportunities both for the entrepreneur and
those who help him
ii) It contributes a lot to government revenue in form of taxes.
iii) Entrepreneurship utilizes those resources that would otherwise be
redundant.
iv) It helps to maintain constant flow of goods and services.
v) Provision of a variety of commodities to consumers raises their
standards of living
vi) The excess profits generated by entrepreneurs is used to finance
social services e.g. sport
vii) It helps in the development of infrastructure e.g. Bridges, roads.
viii)It may lead to the inflow of skills and the development oflocal skills
ix) It also helps to increases the export potential of a country.
x) It increases domestic investments through competition and inflow
of foreign capital

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The Process of Entrepreneurship
There are four Stages in the Entrepreneurship Process. They Include
i) Some Changes in The Real World
A change in the real world may bring a lead to produce something new,
this change is spotted through conscious acting of scanning the environment
for example change in weather conditions from humid to dry weather may
lead to the production of drought resistant crops in the areas where
Agriculture is rain fed.
ii) Idea Generation
At this stage a new idea over something comes from what is happening
in the real world, from the above for example the idea of producing drought
resistant crops may have come from understanding of a real change in the
weather conditions.
iii) Opportunity Identification
This involves conscious knowledge of the gap within the environment
that really needs to be filled. It starts with an assessment of new ideas with
possible opportunities associated to it.
iv) Viability and Feasibility
Opportunity identification also goes hand in hand with viability and
feasibility tests. At this stage an identified opportunity is to be tested on the
grounds whether it can be profitably exploited using the available resources
during a particular time period
Actual Operation of the Identified Opportunity

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Entrepreneurship Development
Introduction
Entrepreneur refers to someone who undertakes to organize, control,
manage and take risks/ profits of the organization.
Entrepreneurship refers to the process of creating and building a vision
of creating and building a vision from practically nothing, fundamentally it is
a human art.
1. Psychological Profile
Is the way an entrepreneur thinks, perceives or visualizes himself and
his environment and how this influences his behaviors? Behavior here entails
feelings, attitudes and opinions.
Many writers have tried to explain entrepreneurship in different but
mutually connected way. So different theories of entrepreneurship exist and
there have been different definitions of entrepreneurship but most of them
add something to other definitions.
Hisrich and Peters (1995) defined entrepreneurship as a process of
creating something different with value by devoting necessary time and
effort, assuming the accompanying financial, psychological and social risk,
and receiving the resulting rewards of monetary and personal satisfaction.
Another writer RonStandt (1984, 28) improved the above definition by
defining the entrepreneurship as a process of creating incremental wealth. He
said that the wealth is created by an individual (entrepreneur) who assumes
the major risk in terms of equity, time and career commitment or provides
value for some products or service may not be new or infused b the
entrepreneur by receiving and allocating the necessary skills and resources
A consistent universal theory of entrepreneurship does not exist but in
general the theory consists of several different approaches including
sociological, psychological, anthropological and economical approaches.
Timmons (1999) defines entrepreneurship as a way of thinking,
reasoning and acting that is opportunity obsessed, holistic in approach and
leadership balanced
Gupter and Sprihivan(1995) defines entrepreneurship to involve
combining factors of production to initiate changes and to that it is a
discontinuous phenomenon.
Donald and Richard (1989) defines entrepreneur as a process of

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innovation and new venture creation through four major dimension-
individuals, organization, environment and process and aided by
collaborativenetworks in the government, education and entrepreneurship.
The essence of entrepreneurship is the urge to match the continuous
changes in the environment with regard to the way an organization operates
and to the product innovation and improvement.Thus, the central
entrepreneurship role is constant desire to create something new such as;
new insights into the market, new corporate value, new manufacturing
processes, new product and service or new ways of managing all
entrepreneurial activity revolves around the birth and operation of new ideas.
The primary concern of entrepreneurship is desire to constantly adjust
with in the volatile business environment. As the economy undergoes
changes, newer and better methods of dealing with such changes are sought
and researched: a new organization, new insight into the market, new
corporate values, new manufacturing processes, new product or services,
new ways of managing.
Entrepreneurship process therefore through information synthesis,
observes such changes especially those signaling opportunities and makes
considerable judgment of the likely gains out of it. The entrepreneur thus
becomes innovative only if he discovers the ways which improves the
efficiency in the use of resources thereby improving production, productivity
and quality of a product or service required by the community.
Entrepreneurship is not a natural gift or talent peculiar only to some few
individuals. Under normal circumstances, it is believed that everybody can
upgrade his / her entrepreneurial skills through spontaneous and conscious
activity of training, experience, education and social structures such as
family; peers and religion. These factors interact with desire to create
something new and different from the common and general understanding of
a particular phenomenon.
Psychological Perspective of Entrepreneurship
In this study, several psychological theories have been analyzed above;
these theories bring out personality characteristics that are closely related to
those of entrepreneurs. These include: -
1. The Needs and Achievement Theory: Development by
McClelland emphasizes three for Achievement, need for utilizations
and Need for power. It pays attention to personal traits, motive and
incentives of on individual and concludes that entrepreneurs have a
strong head for achievement (McClelland writer 1971).

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2. From Douglas McGregor’s theory x and theory y, we can learn that
people who believe in theory y have strong self-drive and can work
comfortably alone. This is common characteristics of entrepreneurs.
3. From within the hierarchy of needs of has lows theory that within
them there is that level where the individual seeks esteem and self-
actualization. This can be likened to the entrepreneurs need for
recognition and applause.
4. The Hygiene theory developed by Hertzberg, indicate that the
motivating factors of an individual involve achievement,
recognition and advancement.
5. The Expectancy theory on the other hand, talks of behavior as being
determined by a combination of forces in the individual and the
environment.
6. A similar focus is found in locus of control theories that conclude
that an entrepreneur will probably have strong internal locus of
control (Low and Mac Millan 1988).
This means that an entrepreneur believes in his or her capabilities to
commerce and complete theories and events through his or her own actors.
However, prior research has suggested that individual involvement in
entrepreneurial activity cannot be predicted by a simple set of characteristics
(Sandbarg and Hofer 1987), But the above theories give us a clean indication
that entrepreneurship characteristics are a subset of the personality
characteristics of an individual as brought out clearlyby the psychologists. In
view of the above, the study will summaries the characteristics into those
most commonly identified with entrepreneurship. These will include among
others.
 Achievement motivation.
 Affiliation needs.
 Loans of control.
 Risk taking propensity.
 Tolerance for ambiguity.
Researchers have said that there is no characteristic predisposition or set
of traits of the individual entrepreneur level of analysis that consistently
“predicts” entrepreneurial activities the study skill aims at establishing a
close link between entrepreneurship and human psychology. To achieve this,
we shall analyze each of the above traits in detail.

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Achievement Motivation
The root of the achievement motive lines with the Weberian concept of
the protestant work ethic.
McClelland (1961) proposed that the need for achievement was a
psychological motive derived from particular types of familiar socialization
intervening between ideological values the entrepreneurial behaviors.
Achievement motivation can be defined as behaviors towards
competition with a standard of excellence (McClelland 1953). People who
have high levels of achievement motivation tend to set challenging goals and
try to achieve these goals. These people value feedback and increase it to
assess their accomplishments Achievement motivation is accepted as
important characteristics of the individual and influences work behavior to a
great extent
Certain characteristics of individuals with high achievement need may
lead to different levels of entrepreneurship styles. For organization
McClelland and Koestler (1992) suggested that people with high levels of
achievement motivation will be future anointed and will take tasks seriously
if they believe that current tasks will influence future goals.
Besides, achievement motivation refers to a desire to outperform other
people, people with achievement motivation find satisfaction in companying
themselves to others and is motivated by this comparison.
Affiliation Need
Affiliation need refers to a desire to be close to other people in order to
feel re assured that the self is acceptable (McClelland, 1953). In his research
or the theory of psychological motivators McClelland found out that
entrepreneurs are also driven by the need to stay in harmony with their
environment, being of service, a problem swore and to make beneficial
contribution to the welfare of their immediate society.
Locus of Control
Locus of control refers to the perceived control over the events in one’s
life (Rotter,(1996) people with internal locus of control what happens in their
lives on the other hand, people with external locus of control tend to believe
that most of the events in their lives result from being lucky, being at the
right place at the right time, and the behaviors of powerful individuals
people’s beliefs in personal control over their lives influence their perception
of important events their attitude towards life, and their work behaviors.

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Locus of control may be related to pro – activeness. When individuals
believe that they can make a difference in their lives by performing certain
actions, they may be more willing to think about the future and act
proactively; research indicates that people with higher degrees of internal
locus of control tend to monitor the environment to obtain information.
Internal locus of control may also be related to risk taking orientation
research shows that internals tend to estimate probability of failure as lower
and decide in favor of risky options.
There is also reason to expect a positive relationship between the locus
of control, innovativeness and competitive aggressiveness, to the extent that
individuals feel that being compressively aggressive or being innovative are
ways of exerting control over the environment we can expect a positive
relationship between these variables.
Risk – Taking Propensity
This is defined as the “perceived probability of receiving rewards
associated with the success of a situation that is required by the individual
before he will subject himself to the consequences associated with failure,
the alternative situation providing less reward as well as less several
consequences that the proposed situation “risk taking is defined as a trait that
distinguishes entrepreneurs from non-entrepreneurs.
Risk taking propensity of the entrepreneur is expected to be related to
the risk-taking level of the entrepreneurial firm. When entrepreneurs have
the ability to influence the actions of the organization with their personal
decisions, their personal characteristics may be reflected in the actions of the
organized as a result the organizing be more risk taking the propensity may
positively influence innovativeness especially product innovativeness,
product innovativeness requires a certain degree of tolerance for taking risks,
because innovativeness benefit it’s from a willingness to take risks and
tolerate failures the risk – taking propensity of the entrepreneurs will
positively influence innovative attempts of employees and as a result the
organization may adopt an innovative orientation to face the competition.
Tolerance for Ambiguity
This refers to a tendency to perceive ambiguous situations in a more
neutral way people who have low levels of tolerance for ambiguity tend to
find unstructured and uncertain situations uncomfortable and want to avoid
these situations. A certain level of tolerance for ambiguity may influence
organization success positively because organization events are uncertain

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and UN structured most of the time and organization success requires the
willingness and ability to cope with uncertainty. Tolerance for ambiguity
may be related to certain entrepreneurial styles. Tolerance for ambiguity
found to be related to personal creativity (Terano 1990) and the ability to
produce more ideas during brain storming. These findings suggested that
creativity and innovative less requires a certain level of tolerance for
ambiguity. The ability to tolerate ambiguous situations may also be
positively related to the risk – taking style of the organization.
Tolerance for ambiguity may also be positively related to pro –
activeness.
This requires a desire to think about the future and take actions to
answer future situations and threats proactive organization need to think
beyond.
Conventional ways of operating and question the strong quos as a result pro
activeness requires the capability to handle the unknown, people who are
able to tolerate ambiguity may lead their organization to become more
proactive.
2. Sociological Aspect of Entrepreneurship
Sociological theory tries to explain entrepreneurship as a process
whereby the individual’s sociological background is one of the decisive push
factors that can influence such an individual to become innovative and
creative in a particular field of activity and thus become an entrepreneur.
Entrepreneurship is seen as a response to inferior social conditions, people
become creative (entrepreneurial) in the areas where they are socially
deprived or seen to have the possibility of being disadvantaged. It is said that
if people are disadvantaged they will become entrepreneurs and spear head
the drive for economic change.
The entrepreneurial skills are highly affected by sociological
environment which distinguishes different opportunities that one may be
able to exploit. That is to say, entrepreneurship can be affected by a number
of factors which surround a particular society they include:
i) Child Family Environment
The family environment of the entrepreneur includes birth orders,
parents’ occupation and social status, and relationship. It has been found that
being a first born or an only child is postulated to result in the child receiving
special attention and thereby more self-confidence. In terms of occupation of
the entrepreneur’s parents, there is strong evidence that entrepreneurs tend to

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be self-employed, or entrepreneurial fathers. Having a father who is self-
employed provides a strong inspiration for the entrepreneur. The overall
parental relationship regardless of whether they are entrepreneurs is perhaps
the most important aspect of the child hood family environment in
establishing the desirability of entrepreneurial activity for the individual.
Parents of entrepreneurs need to be supportive and encourage independence,
achievement and responsibility.
The family network influences the ability to mobilize resources
necessary for the business or enterprise. The capital can be mobilized
through inheritance patterns, family loans and cheap loans and cheap labor in
the family. Most successful businessmen belong to groups with internal
relationship and trust.
ii) Family Background
The family background has great influence on the growth and
development of entrepreneurship. The nature of activities that a particular
family undertakes determines the type of entrepreneurship that will be
adopted by the growing entrepreneurs. For example, if the family deals with
hand crafts there is a greater possibility of developing entrepreneurs in such
a field.
iii) Religion
In the sociological aspect of entrepreneurship, it has been found out that
religion plays a major role towards entrepreneurship. For example, some
religious communities in India i.e. Parseers, Marwarsand Sindlees are seen
to have an affinity for industrial activities. Religion exercises a strong
influence on attitudes towards material gains relatively to efforts.
iv) Environment
A complex and varying combinations of financial, institutional, cultural
and personal factors determines the nature and the degree of entrepreneurial
activity at any time. The personal background of the entrepreneur are
determined mainly by the environment in which they are born and brought
up and work.
A multiple of environmental factors determine the entrepreneurial spirit
among people. The entrepreneur in turn creates an impact on the
environment. Thus the interaction between the entrepreneur and his
environment is an ongoing process. At any one given point of time, the
entrepreneur delivers meaning from the environment prevailing at that time
and tries to adopt and or change the environment to suit their needs.

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The environment especially the external is dynamic and it keeps
changing and affects different organizations to a varying extent. For
example, government policies, political excessive red tape, ideological and
social conflicts, rising costs of input etc. Therefore, entrepreneurship is
environmentally determined and the most important tool for entrepreneurial
growth is the presence of a favorable business environment.
v) Race
There is no link between race and entrepreneurship. Entrepreneurs have
sprung from all region of the world without any bias to any particular region
(race). Evidence however exist which shows entrepreneurship in Africa is a
reality. For instance, African entrepreneurs raise start – up and operating
capital from community resources such as rotating credit systems involving
social groups.
vi) Time and Age
The time and age of entry into entrepreneurship are important factors to
most entrepreneurs. In terms of chorological age, most entrepreneurs initiate
their entrepreneurial careers between the ages of 22 and 55 (Hisrich and
Peters 1995). They also said although a career can be initiated before or after
these years, it is not as likely because an entrepreneur requires experience,
financial support, or high energy level in order to successfully launch and
manage a new venture. According to the study carried out in India, it was
found that two thirds of the entrepreneurs entered into entrepreneurship
before the age of 25 years. People from mercantile communities entered into
entrepreneurship comparatively at younger age due to their early orientation
and guidance by their parents. The important thing to note here is that a
person can join entrepreneurship at any age provided he/she has ability and
interest of becoming an entrepreneur.
vii) Culture
Hofstadter (1991) defines culture as the collective programming of the
mind which distinguishes the members of the group or category of people
from another. The mental programming referred to above consists of shared
values, beliefs and norms. These mental contracts influence how people
socialize their particular culture, and the way they perceive events. They also
help to determine what behaviors are considered appropriate or inappropriate
in various social situations.

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Hofstede Identified from Value-Oriented Dimensions of Culture that
may be used to Describe Cultural Groups. They Include
 Power Distance
This is the general measure of the degree of interpersonal influence that
those who hold power in a social structure can exert over those who lack
power. According to Hofstede, it is the difference between the extents to
which
Superiors in a social hierarchy can determine the behaviors of a
subordinate compared to the extent that the subordinate can determine the
behavior of the superior.
In high power distance societies, inequality between social groups is
expected as part of “natural’ order. Consequently, there tends to be large
social and economic gaps between those who have power and those who do
not. In addition, movement between high and low power groups is restricted
creating a tendency towards distinct social classes with little exchange
between the groups.
In contrast low power distances societies attempt to minimize inequality
between classes, emphasizing the ideal of equal rights for all members of the
society even if it is not perfectly achieved. Social mobility is relatively easy
in low power distance societies and a large middle class is usually present to
bridge the gap between more or less privileged groups.
In high power distance cultures because of the social inequality
characterizing high power distance regions, access to educational systems
and economic resources may be restricted to the privileged class.Moreover,
members of the lower classes may not be accepted into entrepreneurial roles,
or lf they assure such roles, their activities may be devalued or considered
illegitimate.
 Uncertainty Avoidance
The level of anxiety experienced by members of cultured due to
ambiguous events may vary as a function of the society’s values and beliefs.
Uncertainty evidence is a measure that indicates a group’s level of anxiety
regarding future event. It evaluates the degree of tolerance of a culture of the
ambiguity that is internet in a continuously unfolding future.
Societies attempt to manage uncertainty through rules, technologies,
laws and initials in order to protect members from anxiety. These devices
standardize the behaviors of society members and make the outcome of
social processes more predictable.

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 Individualism
This is the measure that indicates the degree to which individual identity
and self-concept are linked to collective groups of the society. In
individualistic societies, personal values and goals are prime determinants of
behaviors and self-identity.
Of all Hofstede’s value dimensions, the one most directly associated
with Weston ideals of entrepreneurship is individualism. In the Weston
model, the activities of the entrepreneur are quite essentially individualistic.
 Masculinity
Hofstedes final cultural direction is masculinity. Despite its name, this
construct does not measure specific differences between male and female,
rather it refers to learned styles of behavior that have been (stereotypically)
applied tomales and females.
The masculinity measure evaluates the general tendency to act either
assertively (Masculine) or in a nurturing manner (feminine) In high
masculinity societies, individuals tend to set high performancestandards and
act forcefully to achieve these standards. In societies with a low masculinity,
nurturance issues are prominent.
Its relation to entrepreneurship would seem to be through the
assertiveness and high need for achievement characteristics of “masculine”
culture. In masculine societies and material success achieved through
successful entrepreneurial ventures is valued and entrepreneurs who attain
such success are recognized and esteemed. Conversely in relatively feminine
cultures, achievements motivation, at least in the material sense, is relatively
weak and success is defined in terms of pleasant human relationships.
viii) Migration
Research has it that some entrepreneurs are / were migrants having
come from different places with in the state from outside limited knowledge
of the language or culture of the majority or discrimination against the
immigrants led to difficulties in securing jobs in existing firms. A viable
alternative in this inhospitable work environment is striking out ofone’s own.
Therefore the explanation forimmigrants high rate of business creation is a
combination of their social costiveness and difficultiesincluding exploitation
they encounter in the broader labor market one such explanation associated
with the early work of Ivan light among others, argued that the more
hardship and frustration in migration experienced in the main stream
economy, the more likely they were to seekemploymentand develop stronger

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economic and social bonds with in their ownethnic community. These in turn
complete in the broader market by providing them with information
networks services of credit, a loyal consumerbecause for their goods, and
steady supplyof co- ethnic laborers.
It should be noted however, that among immigrants, the traits of risk
taking and ambition are like
ix) Occupational background
It is widely held, but untested consensus that past experience is a better
predictor of decision, performance, and behavior than education (Bird 1993).
Thus, the most powerful way of learning is through ones occupation that is
direct experience of the subject matter. It is therefore, assured that one might
learn that entrepreneurship is desirable feasible and profitable from the
concrete experience of working in one own or other persons firms.
Occupational background or previous work experiences are described
etc formative and may encourage entrepreneurial behavior. The skills gained
through formative experience may be managerial, financial attitudinal or a
combination of these, and may build business competence, high lighting
opportunities for the individual
Small businesses have been suggested as incubators for future
entrepreneur, although they may be viewed as formative, it can also be
viewed as a reactive experience due to the fact that the organization
environment may be unstable and job prospects are limited as are rewards.
x) Gender
Gender is one of the sociological angles from which the theory of
entrepreneurship can be viewed Depending on the social, political, cultural
economic and historical as well as religious settings of the gender the theory
of the entrepreneur changes. In India the caste structure was such that social
mobility was estimated and this people born in a specific caste confirmed
themselves to particular look at women in this case study it was found that
women were in the lower caste particularly demised access to education
acquisition of skills other than those that would confide them to motherhood
and house care and as such the majority of them contented themselves with
the role of child upbringing and housekeeping. Not with standing this they
were economically marginalized and psychologically biased towards
initiation of business or in visionary ventures. As a result few of them ever
ventured into entrepreneurial activates. They therefore did not from their
perspective have the impetus to become innovators. Some religions societies

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like the Parsees, Marwari and Sindlees on the other hand in India had an
affinity for industrial activity and as result some of the women from such
societies tended to have an affinity for industrial occupation and
entrepreneurship in the same field.
Dominance of certain ethnical groups / sexes in entrepreneurship is
global phenomenon. The protestant ethics in the west, the samurais in Japan,
the trending classes in U.S.A and the family business concerns in France
from those we can clearly observe putting into consideration, family
background, the type of industry that could be started, the type of ownership
and the average annual, monthly income of the family all played down
heavily on the ideas of what an entrepreneur was from a gender perspective.
xi) The Handicapped
The handicapped in India also formed asset of their own in India.(these
of course transcended in all cases, education background, religious affiliation
and physical capacity. the handicapped formed quite a number in the Indian
community mainly due to the then high prevalence of polio and poor
working conditions. From their perspective they were already
psychologically and physically impaired as a result very few of them even
dreamt let alone really achieved the status of entrepreneur. They tended to
regard themselves as a less privileged caste of their own and did not very
much venture into entrepreneurship or become entrepreneurs not
withstanding that society as a whole already viewedthemnegatively all in all
m, the perspective of the entrepreneur was such that considering the social
economic and political settings of their surroundings, the handicapped did
not (generally) a result few of them ventured into entrepreneurships it
therefore acted (handicraft as a sort of barrier to expression but not complete
inability.
xii) Education
The early entrepreneurship theorists advocated that entrepreneurship
cannot be taught or learned in schools, they believed that entrepreneurship
has been recognized that one must be born with. Currently entrepreneurship
has been recognized as a discipline that can be used to help an entrepreneur
to acquire important traits which he might not possess.
Formal education; helps an entrepreneur to develop entrepreneurial
skills like resourcefulness. However, the lack of higher education is not an
obstacle or limiting factor. The study conducted in India reveals that
majority of entrepreneurs lacked higher education. Most of these were young
persons with higher education seemed to prefer white color jobs in the

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government. However engineers, technicians and other professionals are
however coming forward as entrepreneurs.
The level of education that the society possesses may contribute
substantially to the kind of entrepreneur that will grow in such a society.
Education helps the entrepreneur to know what is going on in other parts of
the world and can enable him / her to improve in all aspects of his or her
activities. Therefore, education is important factor that can influence
development of entrepreneurial skills or creativity.
xiii) Schools and Institutions
Schools and institutions form an integral and fundamental grouping in
society. As seen above the level of education is one of the key factors that
influence entrepreneurial participation in a society. Much as the individuals
in these schools/institutions in India were all in away affected by their
individual historical background which includes size of family, type of
family and economic status of family. According to Hadimahis study,
Zamidar family helped to gain access to political power and exhibited higher
levels of entrepreneurship.
We also observe that family status of the individual greatly influenced
social and physical mobility of a person. These institutions however were
also affected by religion, which exercises a strong influence on the attitude
towards material gain relatively to efforts. Max Weber propounded the
theory that the ‘protestant ethic’ among Christians fastened the right attitude
for entrepreneurial skills like resourcefulness however the lack higher
education is not a limiting factor. Since education and technical knowhow is
primarily acquired in schools/ institutions and we know that education is the
best means of developing man’s resourcefulness which encompasses
different decisions of entrepreneurship
It is important on this wrote to reveal the studies of AsdlokKuhar who
found that many of the very successful entrepreneurs were graduates and
post graduates particularly in engineering and other technical discipline and
also that Kamma and Brahim entrepreneur were relatively more educated
than others. This may be expected that higher levels of education may enable
the entrepreneurs to exercise their entrepreneurial talent more efficiency and
effectively. Therefore, it can be said that people from schools (institutions
are helped to acquire / discover themselves potential as entrepreneur. This is
focus, the elite perceived themselves as highly potential entrepreneurs had
high option of becoming as identifying them as one, hence explaining why
the greater majority of entrepreneurs are institutional outputs.

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3. Economic Theory of Entrepreneurship
This one looks at an entrepreneur as an innovator who is capable of
identifying opportunities, exploiting them and turning into Marketable ideas.
He adds value in the form of time, money, skills and accepts the rises of
competitive markets with regard to implementation of ideas or exploitations
of opportunities and eventually the community benefits from his effort.
Schumpeter (1934) defines entrepreneurship “essentially a creative
activity consisting of doing such things as are generally hot done in the
ordinary course of business.
Timmons (1999) defines entrepreneurship “as a way of thinking,
reasoning and acting that is opportunity obsessed holistic in approach and
leadership to exist, an activity ought to produce something different,
something specific, that changes and upgrades field from resources.
According to Hertzberg (1998) the entrepreneur’s business has two main
purposes. The first is to create the next satisfied customer “string to fulfill
some need, either real or perceived. The second purpose is to “out with
navels by (beating) the opportunities not yet taken and therefore to make the
largest profit possible. He creates satisfied customers by developing needs.
The entrepreneur is also important in that he improves an existing good
or service through innovations or develops a new one. This is an economic
action that can also create a need for a commodity by investing or marketing
it in a new way. An entrepreneur must also be constantly aware of what
people are looking for and also be aware of potential uses of client goods and
services when an entrepreneur is successful, he will make profit.
Schumpeter’s Theory of the Entrepreneur
He said the development of entrepreneurship was a Factor of Production
(F.O.P). He sees the entrepreneur as having a decision-making role and his
/her main function is to be viewed in a wide perspective and induces the
introduction of a new methods of production; opening of new market and
creation of new types of individual organization.
Schumpeter looks at entrepreneurship as the avenue through which
technological change comes. The resultant technological change comes. The
resultant technological change in essence means a form of economic
development. Scamper argues that as the economy develops progress will
eventually come to be “mechanized”.
Another salient aspect of the Schumpeterian view is that it emphasizes
the idea of the entrepreneur as a sow ice of disequilibrium in the economy

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Schumpeter argued that equilibrium and optimization, is the horn of a
healthy economy and the central reality for economic theory and economic
practice.
Also, Schumpeter initially sees innovation and hence economic growth
and development as being the province of bold individual entrepreneurs.
The Entrepreneur and Technological Change
Basic innovations are more or less exogenous to the economic system in
that their supply is perhaps influenced by market demand in some way, but
their genesis lies outside the existing market structure accordingly
Schumpeter argues that the entrepreneur seizes upon these basic inventions
and transforms them into economic innovations. In this aspect we may see
the entrepreneur as playing a key role in technological change in industry.
Micro economic theory points out that resource owners and producers
invest their talents and other resources in production with an aim of reaping
returns, similarly Schumpeter late that the successful innovator reaps level
short term profit which are soon bid away by imitators.
Schumpeter’s theory however portrays the bold entrepreneur as one who
does not let off because of the said imitators come into play there is always
new knowledge with in the entrepreneurs’ sphere. Indeed, the job of the
entrepreneur is precisely to introduce new knowledge.
The Obsolescence of the Entrepreneur
The obsolescence of the entrepreneur becomes clear when we look at
telemeters’ elaboration on the nature of large corporations and its role in his
theory Schumpeter believed that economic history influences economic
theory. Perhaps because of the changes he saw in contemporary economics
(rapid industry and increased expenditure on research and development in
large cops) Schumpeter argued that the entrepreneur role was gradually
being assimilated by the corp. He saw the inventive activities as singly under
the control of large firms and this reinforces their competitive position.
There is a historical trend in Schumpeter is idea that the entrepreneur will
eventually become “less important” or obsolete” and large firms would
occupy a more prime position.
This social function (entrepreneurship) is already losing importance and
is bound to lose it at an increasing rate in the future even if the economic
process itself of which entrepreneurship was the prime mover went on
unabated.

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The Entrepreneur and Disequilibrium
Schumpeter argues that in a world of limited knowledge,
entrepreneurship is necessarily an unpredictable and extra rational activity.
This argument leans towards a liberal social order continently, the
Schumpeterian view asserts that the capitalist process aided by
entrepreneurship) progressively raises the standards of life of the razzes.
Economics aim at bringing those things that once were for the elite to the
reaches of common individuals. And this Schumpeter says can only be done
through the success of risk takers (supported by entrepreneurs) similarly, the
rate of general economic progress will depend on the ability of individuals to
commend resources and direct them in unconventional and surprising
directions.
Yet, it’s the same process of innovations, Schumpeter argues, that thrice
dynamic disequilibrium, basically inventions are more or less exogenous to
the economic system. Entrepreneur base upon opportunities and strive to be
pioneers in production of new products. Those who are successful reap large
short-term profit. This as we noted earlier encourages competitors into the
market in the form of imitators. Similar, great innovations lead to the
elimination of jobs and firms. Schumpeter called this “creative Destruction”
the effects of entrepreneurship not only create progress, jobs, firms, and
improved standards of living, but also put some jobs, firms and products out
of business.
Schumpeter therefore argues that innovation leads to disequilibrium and
alternation of the existing market structure but as time goes on, the situation
eventually settles down to wait for the next wave of innovation. The result is
a punctuated pattern of economic development that is perceived as a series of
business cycles.
Israel Kirzners View of Entrepreneurship
Israel Kirzners procedure is based on an analogy, or a parallel between
what he calls the entrepreneurial element in individual decision making and
entrepreneurship in the market interaction. He isolates the entrepreneurial
element by contrast in routine optimizing behavior with what he claims we
can know about time individual action by means of a close inspection.
To Kirzner, close inspection reveals that individuals spontaneously
discover means of satisfying their wants. For example, an individual light
follow a sub conscious vision that is either vision or impression) and as a
result experience an unexpected gain he calls such spontaneous discovery –
the entrepreneurial element.

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Kirzner further identifies what he regards as a crucial kind of action in a
market economy that is arbitrage (this is the purchase and sale of same or
equivalent securities in order to profit from piece discrepancies). Kirzner
associates entrepreneurship in the market economy primarily with this
action. He further argues that as the entrepreneurial element in individual
decision making leads to a more efficient personal allocation of resources or
co-ordination of the individual’s plans, so also does entrepreneurship in the
market economy that arbitrage leads to economic coordination or the more
efficient allocation of resources in the economy.
The Discussion Will Focus on The Following
1) Entrepreneurial Element in Individual Decision Making
The attracting point for understanding Kirzners definition of
entrepreneurship is the isolated actor. This isolated learning is linked to
entrepreneurial characteristics which (sporadically) a rise from people in
their various isolated environments.
a) Spontaneous Learning
Kirzners idea of entrepreneurship is based on what he calls bounteous
learning. This he said is not planned learning. Thus, it is sub conscious
subconscious learning is synonymous with the transformation of a
previously recognized entrepreneurial vision into recognized contributor to
satisfaction, when Kirznerls says that an individual belief. Lay constitute an
entrepreneurial vision he was hot reforming to a conscious belief. He would
in essence bet that his belief was correct. His action would therefore be
indelibility choice.
b) Alertness
Kirzner calls the state of mind that enables spontaneous learning to
occur as alertness. According to kirznersjust as leaving is spontaneous, so
also is alertness. This state of mind cannot be produced as improved upon;
it’s part of human nature. Individuals may differ in their alertness.
c) Transformation of Spontaneous Learning into Conscious
Knowledge
After an entrepreneur has recognized his vision (or hunch), it’s longer
subconscious. According to Kirzner it becomes a factor of production. The
individual how takes it into account in his decision making. This when
individual recognizes that following previously subconscious vision is a
means of increasing his satisfaction, he simultaneously discovers that he
possesses a factor of production This entrepreneurship is a discovering
process although a subconscious one.

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d) Motivation for Subconscious Learning
In spite of the fact that spontaneous learning is a subconscious process,
Kirzner says that it’s encouraged by the possibility of gain. He says, lf we
know anything atall about theprocess of spontaneousdiscovery of
information, it’s thatthis processis some low altogether more rapid when the
relevant informationwill be of benefit to the potential discoverer.
2) The pure entrepreneur and the entrepreneur economy
According to Kirzner a pure entrepreneur is decisions maker whose
entire role arises out of his alertness to hitter to unnoticed opportunities. This
activity of these pure entrepreneurs can then explain how prices and input
and output quantities and qualities charges.
3) Alertness and Arbitrage
For Kirzner, the first characteristics of an entrepreneur is alertness the
crucial question (in the task of the theory of the market) concerns the nature
of the forces that bring about changes in the buying, selling, producing and
consuming decisions that make up the market. This force Kirzner says
consists of learning from mistakes for example the help to explain how
yesterday market experience can accounts for change on plans that might
generate alterations in prices in outputs or in the uses of inputs hence the fact
that men learn their experience in the market.
The learning which Kirzner has in mind is subconscious, and the
changes are hot consciously chosen Kirzner is hot referring here to market
participants who, each motivated by his personally protected gain from trade,
He is referring to a subconscious process. The expectation that traders have
of other’s plans change subconsciously. Traders are subconsciously alert to
changes.
In short, the pure entrepreneur first subconsciously discovers what he
regards as an opportunity to earn money by buying and selling (or by buying
F.O producing a good and selling it) then he fiancés his venture by burning
money from a capitalist, the entrepreneur uses the funds for his
entrepreneurial venture, and then he pays back the capitalist, including
interest and keeps the pure entrepreneur profit” A good descriptive label for
the behavior performed by the pure entrepreneur is arbitrage. Thus the
defining characteristics of entrepreneurship in the market economy are
arbitrage.
a) Differences among Individuals
Individuals in market differ in their alertness. For example, if two

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individuals buy and sell of the basis of sub conscious visions, the first may
be more correct, in the eyes of the superior insight, than the second. The
money earned by the first win corresponding be grater similarly if two
individuals buy and sell on the basis of some subconscious vision one may
come to subconsciously realize that the vision, in gain while the other
remainsinward of his vision contribution to his earnings. Leaving has
therefore accrued in the first instance only.
b) Learning as discovery and transformation
Learning in the market according to Kirzner, consists of a
transformation of a non-means into a means at least to the individual who
experience it. If an individual subconsciously learns that his perilous
subconscious vision enabled him to gain in a market. Later he experiences a
similar choice situation. At the later time, his knowledge, not his vision
would enable him to make a correct choice. At the time that the vision is
discoursed, it gets transformed into F.O.P knowledge. This alertness,
subconscious learning, and entrepreneurship are discovery processes.”
c) Encouragement of subconscious learning in a market
Subconscious learning in the market can be encouraged in two ways
according to Kirzner.
It can be encouraged by others advertising if the advertiser profits his
message to the potential consumer, or with conic illustration or a compared
by a certain piece of music surely this is because the advertiser knows hot
merely how to lower the cost to the consumer of learning his message but
how to encourage spontaneous learning by the closure with no deliberate
search for all”
Subconscious learning can be encouraged by institutional arrangement;
institutional arrangement determines the gains that are available to different
individuals when they subconsciously learn, because subconsciously
learning in some individuals is superior to that in other, it’s important that
those who are superior receive higher gains.
4) Entrepreneurship as Equilibrating
From a Logical Definitional Standpoint, Kirzner’s Notion of
Entrepreneurship as Equilibrating Combines Three Ideas
 The first is the subconscious learning is equilibrating to the isolated
actor.
 That subconscious learning about arbitrage opportunity is
equilibrating in markets.

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 The subconscious learning would lead to a general equilibrium of
there were no changes in the non-entrepreneurial determinants of
DD and SS.
He states that, it’s only entrepreneurship which might eventually lead to
equilibrium (Kirzner 1999).
a) Subconscious learning is equilibrium:The tendency of purposeful
human beings to become aware of available opportunities (by
means subconscious learning tends, with greater or lesser rapidity,
to eliminate misallocation error. From Kirzners view point,
misallocation of resources means wrong decisions and these would
lead to disequilibrium.
b) The subconscious learning about arbitrage opportunities is
equilibrating in the market in the market economy, what Kirzner
calls the “entrepreneurial element in individual decision making
“impacts through arbitrage. Like the isolated individual, the
arbitrageur behaves according to subconscious vision. he a observes
price and follows his subconscious vision to arrange an exchange a
cow dollar value and a buyer who attaches a higher dollarvalue
given that his visionis correct, the result is entrepreneurial or market
“profit”
c) Subconscious Learning Win Lead to General Equilibrium:
Kirzner says that just as there is a tendency for arbitrage to lead to
equilibrium in a particular market there is also a tendency for it to
lead to an optimum general equal or equity in all markets. An equal
state is one in which to further learning resisting from following
subconscious vision is possible all the Knowledge of wants abilities
and knowledge that the economists assumes to be element from the
stand point of supervisor insight has been acquired by the various
individuals.
Cassion’s theory of Entrepreneurship
Like Schumpeter and Kirznercasson is another author who tried to
advance the economic theory of entrepreneurship Casson (1982) specifically
defines an entrepreneur as someone who specializes in taking judgmental
decision about the coordination of scarce resources after identifying new
opportunities the entrepreneurs persona comparative advantage lies in
processing information which requires considerable judgment. This is
because the information collected is sometimes conflicting and often
incomplete.

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In one of his essays on entrepreneurship Casson says the not effective
way to synthesize the lights of transactions of the firm is to build the theory
of the firm around the personality of the entrepreneur. The theories that
neglect the entrepreneurial dimension in explaining the behavior of the firm
can only after a partial explanation...
He continues that an entrepreneurial theory of the firm can encompass
all the major issues regarding the nature of the firm like the boundaries of the
firm the formation, the internal organization of the firm, the growth and
diversification of the firm and the role of the entrepreneur which he argues to
be the most fundamental.
Caisson’s theory from Economic Perspective Considered Four
Categories
i) Innovation
As the economy undergoes some economic changes, newer and better
methods of dealing with such changes are initiated by the entrepreneur. This
is because he is the one who can observe such opportunities through
information synthesis and makes considerable judgment of this information
to make a gain out of it.
ii) Uncertainty
Successful entrepreneurs must be optimistic and self-confident in order
to compete for resources (Rss) from rival entrepreneurs and to like with risk
but their judgment may turn out to be wrong the uncertain judgment. To
obtain widest possible synthesis of the latest information, they cultivate
networks of social contacts that feed them the information they require for
making judgment decisions
Caisson emphasizes here that information (knowledge) is very important
he argues that all other things being equal; it’s the optimistic and self-
confident entrepreneur who will prevail- whereby he takes a more favorable
view of the economic environment than others,and is therefore prepared to
pay more for, the Rss for which they are competing. In this way are
competing. In this way the entrepreneur believes to have better knowledge
than the others and outcome of his judgment becomes less certain.
iii) Entrepreneurial Businesses
The trend here is that as changes occur in the economy entrepreneur’s
getter as much information as possible. Then competition impacts on the
entire market situation resulting in improvement inform of new business,
normally one phase of entrepreneurship triggers off subsequent phases, for

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example which includes new firm formations; partnership formations;
diversification; inter firm joint ventures; merger; and growth through
learning such improvement automatically lead to economic growth.
iv) Equilibrium
If an economy is in equilibrium there are unexploited gains to be made
An entrepreneur is someone who notice some of the opportunities for
profitable trade and exploits them returning to the original equilibrium
position can either be achievement through increasing or decreasing price, or
through increasing or decreasing qualities entrepreneurs normally anticipate
such changes and plan in advance how to exploit them and gain out of them
entrepreneurs therefore move the economy to equilibrium.
Caisson attempts to identify a shared element between Schumpeter is
Kirzners and his theory by introducing the concept of entrepreneurial
judgment. The attempt to identify a shared element suggests that caissons
theory has generality and may be applied to all kinds of entrepreneurship. In
Caisson’s view, the concept of entrepreneurial judgment is of paramount
importance which is based on individuals their perceptions and the
information that they have available or choose to acquire.
Central to this concept is the recognition that different individuals will
make different outhouse because information is necessarily impotent and
costly to acquire in cognizance of this, Casson recounts that the
entrepreneurial theory of the firm suggests that a market economy driver by
practical judgment through a proper synthesis and coordination of
information mainly around the personality of the entrepreneur, is likely to
prove the most successful

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Chapter - 2
Types/Classification of Entrepreneurs
Literature on entrepreneurship is paying greater attention to the diversity of
entrepreneurs. Certain characteristics of the firms and the entrepreneurs who
own them can be more easily and clearly understood if we group and classify
certain types of entrepreneurs differently. The following are some of the
distinctions that can be used to classify entrepreneurs.
Motivation to Engage in Entrepreneurial Activity
Push (Forced): Push entrepreneurs are those whose dissatisfaction with
their current position for reasons unrelated to their entrepreneurial
characteristics, pushes them to start a venture.
Pull Entrepreneurs: Are those who are lured by their new venture idea
and initiate venture activity because of the attractiveness of the business idea
and its personal implications.
“Push” and ‘pull’ Entrepreneurs: Are combinations of the above two.
They are normally more motivated and thus outperform other types of
entrepreneurs. However, “push” entrepreneurs were found to be more
successful than ‘pull’ entrepreneurs. They are more determined and
persistent because they normally have nothing to fall back to.
Levels of Creativity and Innovation
Innovative Entrepreneur: Assemble a large variety of information and
combine a range of factors experimentally to produce new possibilities in
terms of markets, techniques, or products. Countries with a very
underdeveloped industrial base hardly produce this type of entrepreneur,
because of lack of the necessary infrastructure.
Imitative (Adoptive) Entrepreneurs: They imitate and adopt the
technology and techniques innovated by others. They are particularly
important in underdeveloped countries although not highly regarded in more
developed economies. However, imitative entrepreneurs also need to be
creative in order to modify innovations to suit their special conditions.
Opportunistic Entrepreneurs: They constantly look for and exploit

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serial opportunities because of their wide skills and knowledge accumulated
from a wider educational background, experience or exposure. They start by
exploiting small opportunities seeking and exploiting a series of, often
varied, opportunities as they grow. They ambition involve building large
organizations and are not afraid of borrowing to achieve this growth. They
usually find it easy to delegate and hire competence.
Visionary Entrepreneurs: They have almost similar characteristics to
the opportunistic Entrepreneurs however, while “opportunistic”
entrepreneurs pursue, serial business opportunities, the “Visionary”
entrepreneurs, concentrate on the unwavering pursuit of a single, powerful
opportunity. In Practice, this fixation may represent a false opportunity’ that
is ahead of its time or falls to consider significant obstacles to
implementation.
Craftsman entrepreneurs: They own the businesses in which they
operate, but tend to restrict their business to their individual skills and
experiences usually accumulated from limited education and exposure. They
have minimal growth ambitions, keeping their enterprises small as a means
of maintaining control. Control is normally autocratic, with little delegation
and strong paternalistic attitudes towards their workers. They avoid risk and
the use of loan money. Normally, they are not marketing oriented preferring
to build very strong with their existing customer.
Drone Entrepreneurs: At some instant in their business, craftsman
entrepreneurs are so comfortable with their achievements that they decide
not to tamper with what they consider a winning formula. Those
entrepreneurs that will not change under any circumstances are referred to as
drone entrepreneurs. Slowly but surely, this entrepreneur will be forced to
close.
Fabian Entrepreneurs: Are also reluctant to change, but are sometimes
forced by circumstances to change. They respond very slowly to changes in
the market, and this affects their growth and competitiveness. However, by
following a proven path, these entrepreneurs are protected from the
uncertainty of new innovations; they are therefore likely to survive for a long
time. They however grow very slowly or do not grow at all because they fail
to exploit new innovations that are normally more profitable.
Solo Entrepreneurs: At the level of organization these are
entrepreneurs who developed their business ideas on their own. The solo
entrepreneur is limited to his means and capabilities.
Network Entrepreneurs: These are entrepreneurs who get their ideas

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from the social networks, and develop them suing the networks are found.
These network entrepreneurs can draw from the means and capabilities
within the network to supplement his individual means and capabilities. The
network entrepreneur is therefore more likely to grow better and faster.
Coprenuers: Are entrepreneurial couples that work together as co-
owners of an enterprise. Although some scholars consider business co-
ownership a recipe for divorce, some researchers have described it as an
exciting proposition that involves nurturing and growing, a business with
someone you love – much like raising a child. It is important, however, to
first build a successful relationship before launching the enterprise.
Individual and Institutional entrepreneurs – Most start-up firms are
dominated by entrepreneurs acting individually, or coming together
individually. However, as the business grows and becomes more complex, it
becomes imperative to develop the entrepreneurial skills through a corporate
body.
Part Time Entrepreneurs: Starting business on a part time basis is a
popular gateway to Entrepreneurship that allows one to get the best of both
worlds by getting the benefits of Entrepreneurship and the security of a
regular salary. It also allows part timers to hedge against the risks of a
venture flop, and tests the waters before making the final commitment. Part
time entrepreneurs are normally suited for young enterprises because as
enterprises grow, they tend to take up more time until the entrepreneur
decides to become full time.
Corporate cast off and dropouts: Are produced by retrenched and
retiring employees and have become an important source of entrepreneurial
activity. Armed with adequate experience, severance packages, knowledge
of the industry, and a network of connections; these former employees will
normally have better start up options and a higher chance of entrepreneurial
success.
Under Further Study of Entrepreneurship, Entrepreneurs Have Also
Been Classified According to
 Male or female entrepreneurs.
 Rural or urban entrepreneurs.
 Small and large-scale entrepreneurs.
 First, second and third generation entrepreneurs.

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Importance of Entrepreneurs
1. They bring technology intensive, often risky, innovations to the
commercial market – and in the process, even help to develop
whole new industries. Entrepreneurs are driving a revolution that is
transforming and renewing economies worldwide. While in Uganda
we still depend on the same commercial products introduced almost
a century ago for our economic growth, the USA gets more than
half of its economic growth from industries that barely existed a
decade ago.
2. Entrepreneurship through innovation is the heart of economic
progress. It is the very basis of any nation’s economy and
wellbeing.
3. Entrepreneurs are the source of innovation, which is believed to be,
the heart of economic progress. Innovation is the very basis of any
nation and community’s economic progress.
4. Entrepreneurship is the catalyst that enables a country to compete
more favorably in the global market place. It enables nations to
compete in the global market place as respectable stakeholders and
not beggars at the mercy of others.
5. Entrepreneurial innovation raises the prospects for more productive
and satisfying lives by supplying new effective tools and methods,
and solutions to problems and inconveniences. Entrepreneurship is
the essence of free enterprise because the birth of new businesses
gives a market economy its vitality.
6. New ideas alter the fabric of society and keep the world fresh and
moving forward. New and emerging businesses creates a very large
proportion of innovation products and services that transform the
way we work and live, such as personal computers, software, the
Internet, and drugs.
7. Entrepreneurs are creators of jobs. It is a fact that entrepreneurship
and employment go hand in hand. As new products and services are
introduced, more staff will be required to produce, sell, and deliver
them.
8. An important aspect of entrepreneurship is social entrepreneurship.
In this case, the objective is not make profits per se, but to achieve
social good through the similar process of identifying opportunities,
exercising creativity, and building new structures. It is no accident

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that business entrepreneurs are also well equipped to play a role to
champion social causes.
9. Entrepreneurs, in an effort to market and promote their enterprises
support churches, schools, and communities, produce goods, feed a
hungry world, and keep their homes and families, while they invest
in the future to build a better community.
10. Entrepreneurial success comes when they can anticipate and deliver
what the consumers want and it in a way that satisfies them.
Entrepreneurs understand that making money begins with giving.
Entrepreneurship works best and creates the greatest wealth and
human progress for all when it aims at satisfying customers.
11. Entrepreneurs turn worthless waste, weeds, rocks and other
undesirable into coveted riches. Oil was worthless until
entrepreneurs with ideas and the freedom and faith to take risks
managed to locate it, extract it, and put it to work for humanity.
12. Governments balance their budgets by stimulating new wealth,
wealth from investment attributed to entrepreneurs.
13. Entrepreneurs are and have always been leaders in communities and
nations.
14. Entrepreneurs help to keep industries relevant by creating the
necessary timely innovation. They help the industry to evolve
slowly, maintaining stability and measured change at the same time.
They help to maintain the industry at “the edge of chaos,” where the
components of a system never quite look into place, and yet never
quite dissolve into turbulence either.
Benefits of Entrepreneurship
Research shows that people who seek a career in entrepreneurship work
harder and take higher risks than people employed in the regular salaried
jobs. However, more and more people are joining entrepreneurship, and
more still are starting too serious consider it’s a viable and interesting career
option. This is mainly because of the following reasons:
An Opportunity to Gain Control Over One’s Destiny:
entrepreneurship provides n entrepreneur the opportunity to achieve what
they consider to be important. Entrepreneurs are noted or wanting to always
be in full control of their lives, and entrepreneurship enables them to achieve
the full control they desire.
An Opportunity to Make a Difference: Entrepreneurship enable

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participating individuals to makes a difference in any a matter that is of
importance to the individual.
An Opportunity to Reach Ones Full Potential: Working for or under
other people will normally create barriers to one’s development in terms of
rules, policies, precedence and acceptable procedures. Entrepreneurship is an
instrument that allows entrepreneurs to challenge all their skills, abilities and
endurance without any external limitations.
An Opportunity to Make Lots of Money: Although money may not be
the primary motivator of entrepreneurs, it is still recognized as an important
motivation. Owning their own businesses give entrepreneurs the opportunity
the opportunity to earn salaries, dividends and profits; making so much cash
in the process.
An Opportunity to Contribute to Society and to be recognized for it
– An entrepreneur is always associated with his or her businesses, its
products and its services. In an effort to generate profits, they contribute to
the development of society and in the process become recognized for their
efforts.
An Opportunity to enjoy one’s Work: Entrepreneurship is about
doing what one enjoys.
Barriers to Entrepreneurship
Barriers to entrepreneurship are factors that hinder the development of
entrepreneurship. They hinder people from acquiring the practicing
entrepreneurial skills, but also prevent practicing entrepreneurs form
achieving the full benefits that entrepreneurship has to offer. Many of these
barriers are mainly perceptual obstacles, rather than any concrete, objective
obstructions in the way of making the entrepreneurial decision. Barriers can
arise from the social, economic and political environment with which the
individual interacts. They can also be caused by the adverse conditions
within the organization with which the individual works. However, most
barriers are a direct result of an individual’s failures and weaknesses.
Barriers or Threats at the Individual Level
Individual Weaknesses: This poses the biggest threat to
entrepreneurship in Uganda. Such barriers are ignored, as focus is normally
on the environmental factors. Since one can easily act to remedy these
weaknesses they usually form the main focus of entrepreneurship training
programs. Barriers at the individual level would include:
Poor Entrepreneurial Skills: Most entrepreneurs and potential

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entrepreneurs are short on entrepreneurial skills. They are risk adverse, lack
creativity, innovation, endurance, flexibility, and other entrepreneurial
characteristics. This means that many people will start business that are
images of existing businesses resulting in very intense competition in very
narrow fields that provide little returns for the investors. Entrepreneurial
characteristics can help businesses people to look for and exploit new
opportunities.
Lack of Business and Technical Skill: Business skills in marketing,
accounting, management, etc… are required by all practicing entrepreneurs
to effectively manage their entrepreneurial ventures. Many ventures also
require specialized technical know how to set up, operate and manage. Lack
of such skills many times limits the capacity of entrepreneurs to effectively
exploit the full potential of their ventures. Moreover, owing to the high rate
the illiteracy, many enterprising individuals even lack the capacity to
appreciate and acquire these skills.
Low mobility and Exposure: Mobility and exposure normally offers
the biggest revelation for new ideas that shape creativity and innovations that
shape entrepreneurship. However, Ugandans generally do not travel widely,
do not read widely and do not explore, ask or investigate. As a result, even
highly educated people remain largely narrow minded. This limits the
creativeness and innovativeness of Uganda’s potential and practicing
entrepreneurs.
Lack of Role Models in Entrepreneurship: Uganda is seriously short
of role models in the field of entrepreneurship, which limits the number of
people who willingly aspire for a career in entrepreneurship. Many people
have a very low opinion of struggling entrepreneurial upstarts, while they
consider the few successful entrepreneurs to be super lucky individuals who
can only be admired but not be emulated. As a result, very few people are
attracted to entrepreneurship as a career of choice. Most are forced into
entrepreneurship as a last resort, without enough interest and commitment.
Inspiration is a key characteristic of entrepreneurship. New entrepreneurs
need to be inspired entrepreneurs that they admire.
Lack of Business Ethics: Many entrepreneurs have failed, or been
compromised, because of unethical behavior. Unpaid loans, unpaid or highly
exploited employees, unpaid suppliers, substandard goods, tax evasion,
corruption, smuggling etc. characterize many business ventures in Uganda
today. While such tendencies may sometimes result in a quick profit, many
times these ills come back to haunt the entrepreneur, many times crippling
them completely.

Page | 33
Complacency (Lack of Motivation): Because of lack of role models
and limited exposure, entrepreneurs in Uganda tend to be satisfied with
relatively small and modest achievements. They tend to have little
motivation for higher or extraordinary achievement. The tendency to
prematurely celebrate success limits the growth of many entrepreneurial
ventures.
Lack of Continuity: Very few firms in Uganda are known to survive
the death of their founders. Very few entrepreneurs have the opportunity to
pass on their enterprises to new generations and watch from the side as the
enterprises continue to prosper. Moreover, many firms are known to change
business or diversify very fast before gaining he required experience. Lack
of continuity affects the learning cycle of the firm and the entrepreneur and
therefore the long-term competitiveness of the enterprise.
Career Dependency: Ugandans especially the educated have long been
dependent on their careers to provide for their livelihoods. Entrepreneurship
has for long been regarded as a last resort effort mainly reserved for the
under-educated. Although this mindset is rapidly changing, its effect is still a
big barrier to entrepreneurship in Uganda.
Uncertainty of Income: In most cases the initial stages of the
entrepreneurial career are filled with uncertainty, and many entrepreneurs
will not have enough money even for their basic survival. There is no regular
income, and many entrepreneurs are forced to draw from their savings. This
is the most trying stage of any entrepreneur.
Risk of Losing the Entire Investment: Business failure is a reality that
threatens entrepreneurs at all level, but most especially the new enterprises.
Business failure will result not only in the loss of a job, but also the entire
investment and sometimes the entire livelihood. This threat becomes even
greater for entrepreneurs who mortgage all their savings and assets to
finance their enterprises.
Long Hours of Hard and Challenging Work: Without adequate
support structures and resources, entrepreneurs have no option but to engage
their own mental and physical energies to move their investments especially
during the early stages. Hard work and long hours is therefore a reality of
many an entrepreneurship career.
High levels of Stress: The pressure of hard-long hours of work and the
uncertainties associated with entrepreneurship result in highly stressful life
styles for entrepreneurs. Most entrepreneurs put significant investments in
their enterprises, have no steady incomes, have mortgaged everything to

Page | 34
finance their businesses, and the line between their success and their failure
is every thin; causing enormous anxiety and stresses to the entrepreneur.
High Levels of Responsibility: Entrepreneurship brings the thrills of
being the boss, but also the responsibility for decisions that not only affect
the entrepreneurs and their families, but also the livelihood of employees,
suppliers and other stakeholders who somehow depend on the firm for their
own survival.
Barriers Arising from The Environment: The environment also
presents numerous barriers to practicing and prospective entrepreneurs in
Uganda. Some of these barriers are discussed below:
The Political-Legal Environment: Political Instability has dogged
different regions of Uganda for the past 40 years. This state of affairs has
robbed Uganda of many entrepreneurs, and many more entrepreneurs have
lost lifetime savings and business assets, while others have been forced by
Instability to close. This affects continuity and experienced and resource
accumulation are essential in today’s competitive environment.
Business Administrative Procedures: In many cases, the business
environment is dominated by complex and burdensome regulations,
favoritism, corruption, and weak enforcement mechanisms. As a result,
businesses are forced into the informal economy, countries are unable to
attract investment, and participation of the private sector in the decision-
making process is limited. As a result, businesses are forced into the
informal sector, and the country is unable to attract investment, and the
participation sector in decision making is limited.
Government Economic Policy: The formulation and delivery of
business policy is based on a narrow conception of conventional big
businesses and a consequent lack of specific attention to the circumstances
and needs of entrepreneurs. Moreover, the bulk of government’s monetary
and fiscal policies are aimed at appeasing the donor agencies and multilateral
financial Institutions, many times at the expense of business in general and
entrepreneurs in particulars.
Insensitive Government Institutions and Departments:
Entrepreneurs blame government Institutions and departments for having
little qualification and a minimal appreciation and understanding of the
importance of business and business formation among entrepreneurs. This
limits entrepreneurs’ access to these Institutions as support mechanisms or
potential clients. Arbitrary Interpretation of the regulations b officials has
cost many entrepreneurs much time and money.

Page | 35
Excessive, Complex, and Arbitrary Taxation: The tax system in
Uganda is complicated, voluminous, confusing, changes rapidly and in most
cases beyond the comprehensive of the entrepreneur. The tax administration
is arbitrary and many times misunderstood, resulting in Adhoc tax
administrative solutions which foster rampant corruption. Very high taxes
also serve to discourage potential entrepreneurs.
Economic Environment
Lack of access of Finance: Banking System and Practices in Uganda
impose impossible demands on entrepreneurs. Banks have little incentive to
extend credit. The term of credit are unreasonable, requiring difficult
collateral and guarantees to secure the loan. Borrowers default on their loans,
resulting in high interest rates which are a very heavy burden to could be
entrepreneurs. Additional burdens include unreasonable demands, for audits,
inspections, and documentation; and the incompetence and insensitivity of
most banking staff.
Low Purchasing Power: Low incomes and a high rate of
unemployment limit the purchasing power of a relatively small Ugandan
population. This makes it hard for businesses in general and entrepreneurs in
particular to acquire the necessary economies of scale.
Poor Infrastructure: Uganda is still plagued with a very poor physical
and social infrastructure in terms of roads, electricity, water, bridges, schools
and hospitals. These hinder business development in many parts of the
country, and act as barriers to entrepreneurship.
Economic Instability: Due to over reliance on donor assistance,
borrowing, the import bill that far outweighs the export earnings, and over
reliance on imports, the Ugandan economy is very fragile and easily
destabilized by any small shocks in the international environment.
Social Barriers to Entrepreneurship
The Social Environment May Also have Certain Aspects that act as
Hindrances to Entrepreneurship. Such Hindrances Include the
Following
 Lack of adequate social support groups to support entrepreneurs and
innovators who are out to challenge the status quo.
 Many socio-cultural settings get stuck in the traditional ways and
norms – they are not willing to change these norms. This situation
discourages people from trying anything new and acts as a barrier to
creativity innovation and entrepreneurship.

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 In many of our communities, there is a stigma attached to failure.
People look down upon failed attempts, preferring those that do not
tray at all. This works to discourage experimentation and
entrepreneurship.
Barriers Arising from the Employing Firm
There are also issues internal to the organizations that serve to block
entrepreneurial tendencies within the firms. When entrepreneurship within
the firms is obstructed, it has a negative impact on the general level of
entrepreneurship within the community. Barriers within the firms include:
 Too much bureaucracy.
 Inadequate communication and consulting within the organization.
 Slow decision making resulting from bureaucracy and lack of
effective communication are familiar to many who work in large
organization.
 Strong and rigid punishments for those who make mistakes and
those who divert from the accepted norms create an aversion to risk
and failure. People become too timid to make bold decisions and
stand out from the crowd. Employees fear that they will be blamed
if things go wrong and that it is better to keep their heads down.
 Lack of resources.
 Poor and inequitable reward for entrepreneurial effort tends to kill
the enterprising spirit.
Solutions to Barriers of Entrepreneurship
To achieve successful Entrepreneurship Development, three elements
stand out, namely; the individual, The Environment, and the firm.
The Individual
The MAIR model suggests four factors that have to come together in
order to create an entrepreneur. These are Motivation, Ability, Ideas and
Resources. These factors form the acronym MAIR by which the model is
known as:
Motivation: Refers to the force that influences an individual to opt and
take up Entrepreneurship as a career. These may be PULL and PUSH
factors. Individuals react differently to these stimuli, therefore are motivated
by different factors. Recognizing and rewarding innovation is a key
motivating factor.

Page | 37
Ideas: Ideas are starting point for any entrepreneurial venture, however
not all ideas will be viable or marketable. The ideas of interest to ED are the
ones that are both viable and marketable. The challenge of ED is to support
and encourage innovations through actively exposing people to new ways,
products, methods and information.
Ability: For nay enterprise to survive, it requires a constant supply of
relevant skills from both the owners and the employs. Although some of
skills are naturally endowed to certain individuals, the majority are acquired
through training, observation, experience, experimentation. Individuals need
entrepreneurial and business skills as well as technical skills relevant to the
industry to start and grow enterprises. The challenge of ED is to propagate
these skills widely and effectively in order to support entrepreneurship.
Resources: Any enterprise will require resources to survive and thrive.
While some resources are naturally endowed to an individual, a firm or a
nation (community), the majority of resources must be sourced, and
entrepreneurs will need to have the ability to acquire resources. The
challenge of ED is to enable the individual to obtain the necessary resources
to operationalize their ideas and to create easy and affordable means access
to resources.
The Environment
Entrepreneurship and ED will be successful only where there is a
conducive environment for them to flourish. The following environment
factors are critical to the growth of entrepreneurship: Economic
environment, challenging circumstances, external rewards for
entrepreneurship, training facilitates, external leadership and learning
opportunities.
The Economic Climate: In general, an environment that is ideal for
business growth is conducive to entrepreneurship. Four areas are particularly
pertinent.
Government Economic Policy (Monetary, Fiscal & Regulatory):
Expansionary monetary policy is more conducive to entrepreneurship
development than contractionary: Fiscal policy is more to government
revenue and expenditure and the expansionary fiscal policy is more
conducive to ED. Situations where government leaves the forces of demand
and supply to control the distribution of resources allows Entrepreneurship to
flourish, since it has more rewards for the innovations.
Infrastructure should be well developed and maintained to ease

Page | 38
communication. But also, government institutional policies and practices
should open up their services to entrepreneurs.
The financial systems including banks and non-bank intermediaries,
securities markets, and financial instruments like treasury bills, bills of
exchange, credit cards, cheques etc. must exist and operate efficiency to aid
business transaction.
Legal Framework: should not be too stringent to inhibit
Entrepreneurship, but should be clear and effective enough to provide
adequate protection to entrepreneur against fraud.
Challenging Circumstances: Challenging circumstances tend to bring
out latent creativity in people, and lack of challenge breeds complacency.
Competition for jobs and resources are good examples of challenging
circumstances. ED involves giving room for creativity and innovation and
eliminating the fear of making mistakes as a way tackling these challenging
situations.
External Rewards for Entrepreneurship: How the society recognizes
and rewards entrepreneurs is important for Entrepreneurship development.
Entrepreneurs should be the first beneficiaries of their innovations.
Situations where pirates and copycats take the profits from other people’s
innovations are not good for Entrepreneurship Development. Benefits should
not only come inform of profits, but recognitions in form of awards, role
modeling, special considerations etc.
Training Facilitates and Learning Opportunities: Availability and
quality of training facilitates and Entrepreneurship Development programs
and supply of role models for the young generations to emulate. Stimulate
the teaching entrepreneurship within educational institutions to enable
students read patterns and trends so as to envision the future the future, and
integrate knowledge acquired in responding to society needs.
External Leadership: Business leaders, political and cultural leaders,
and technological leadership can play a big role in Entrepreneurship
Development. Business leaders can encourage an environment that allows
generation and growth of new ideas. Political leaders can set policies that
support the development of Entrepreneurship, but can also participate
directly by setting up business, mobilizing and supporting people into
entrepreneurship, and generating new ideas and passing them to the public.
Entrepreneur support groups could be developed.

Page | 39
The Firm
Internal and External Interrelationships have a Strong Influence on
Entrepreneurship. These Will Include Factors Such as
Organizational Culture: These are acceptable norms and behaviors
within the organization. If these permit new idea generation and
implementation, then the culture is supportive of ED. This requires
flexibility in operations and openness to change. It should support
experimentation and tolerate some degree of failure as a natural consequence
of innovation.
Organizational Structure: Define the reporting relationships and
interdepartmental communication. If the structure allows a smooth flow of
ideas and permits even lower level technical staff to exercise their creativity.
To support ED, the organization needs to open up channels of
communication, encourage frank exchange of ideas and freedom of
interaction at all levels.
Leadership: A strong leadership is required to direct change, which is
the driver of innovation. Leadership should actively participate and support
constructive change.
Reward structure: Organizations should be able to recognize
innovation and reward it appropriately. This requires formulating means of
measuring entrepreneurial effort so that reward is dispensed in a fair and
equitable manner. Reward can be in form of recognition, material, or
promotion.

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Chapter - 3
The Entrepreneurial Process
The entrepreneurial process involves all the functions, activities and action
associated with perceiving opportunities and creating organizations to pursue
them.
The process of starting a new venture is embodied in the entrepreneurial
process, which involves more than just problem solving in a typical
management position. An entrepreneur must find, evaluate, and develop an
opportunity by overcoming the forces that resist the creation of something
new. The process has five distinct phases.
i) Identification of opportunity – idea generation.
ii) Evaluation of the opportunity.
iii) Development of the business plan.
iv) Determination of the required resource, and
v) Management of the resulting enterprise.
Although these phases proceed progressively, no one stage is dealt with
in isolation or is totally completed before work on other phases occurs.
1) Identify the Opportunity
A person gets an idea for a new business either through a deliberate
search or a chance encounter. Where do would be entrepreneurs get their
ideas? More often than not it is through their present line of employment or
experience.
Ideas, Inventions & Innovations
Everybody has ideas; ideas are relatively easier to come by compared to
inventions. It takes knowledge, time, money and effort to refine and idea into
a workable invention. Turning an invention into an innovation-a new product
launched into, and accepted by the market place – takes even more effort and
a little luck. Inventors are individuals who conceive a new product, process
or services. Typical inventors have neither the interest nor the resources to
commercialize their inventions. Innovators are people seek to commercialize
inventions.

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Innovation may be defined as a complex series of activities, beginning
with an idea and followed by a succession of interwoven steps – research
and development, financing, marketing and production. Innovation is only
completed when the market accepts a product, process or service.
Entrepreneurship is identified with innovation. Innovation does not
always mean inventing something physical (technological innovation), but
could involve redefining the way something is done (social
innovation).Innovation is the specific instrument or entrepreneurship. It is
the act that gives resources the capacity to create wealth. Innovation creates
resources. There are no resources until entrepreneurs find a use for it through
innovation.
Drucker (1986) Looks at Seven Major Sources of Innovation That
Include
1. The Unexpected Success, Failure or Unexpected Event: Keeping
track of what is going on in the firm, the industry, the economy and
the environment. Monitor these activities as they have a high
indicator of change that has occurred or is waiting to happen many
people ignore. Failure normally frowned upon without examining
the root cause of failure that could highlight new opportunity.
2. Incongruities are Discrepancies or Dissonances Between “what
is” and “what was expected”: Incongruities are a sign of change
that has occurred, and therefore a sign of opportunity.
3. Process Needs: Necessity is the mother of invention. Once a need
is felt the innovator identifies what is need, and how it can be
produced. This involves understanding the problem, accumulating
knowledge of how it can be produced. This involves understanding
the problem, accumulating knowledge of how to satisfy the need,
and fitting the solution within people’s expectations.
4. Industry and Market Structure: Many times last a long time, and
are sometimes considered part of the order of nature destined to
endure forever. In reality however, these structures are quite fluid
and can be dismantled-sometimes with little effort. When such a
change occurs, everyone in the industry has to act, giving an
opportunity for innovation. Industry and market change are likely to
change if the industry grows very fast, convergence of technologies
or development of new technologies. Outsiders usually see the
opportunities while insiders see them as threats.

Page | 42
5. Demographics: Define changes in population size, age structure,
composition, employment, educational status and income. The
consequence of these changes can be predicted and are o good
driver of innovation. However, it is common for established firms
to ignore these changes if they do not conform to their expectations
giving an opportunity to innovators.
6. Change in Perceptions: The way people perceive situations is
constantly changing. Understanding these perceptions will help
people innovate (health and fitness, healthy foods, security).A
change in perception does not necessarily change facts; it changes
the meaning of already existing facts. Timing is a critical factor in
innovations based on perceptions because perception changes very
fast and some of them are fads that disappear within a short time.
7. New knowledge: Knowledge based innovation is the most
publicized and recognized innovations. The knowledge may not
necessarily be scientific or technical. It can be social. It is
characterized by a long-time frame, large casualty rate,
unpredictability, and the big challenges it poses to the entrepreneur.
These innovations are normally a convergence of several different
kinds of knowledge from a variety of disciplines.
2) Evaluating the Opportunity – Feasibility Study
Whether the opportunity is identified by using input from consumers,
business associates, channel members, or technical people, each opportunity
must be carefully screened and evaluated. This evaluation of the opportunity
is perhaps the most critical element of the entrepreneurial process, as it
allows the entrepreneur to assess whether the specific product or service has
the returns needed compared to the resources required.
This evaluation process involves looking at the length of the
opportunity, its real and perceived value, its risks and returns, its fit with the
personal skills and goals of the entrepreneurs and its uniqueness or
differential advantage in its competitive environment.
The market size and the length of the window of opportunity are the
primary basis for determining the risks and rewards. These risks reflect the
market, competition, technology and amount of capital involved.
The amount of capital needed provides the basis for the return and
rewards.
The methodology for evaluating risks and rewards frequently indicates

Page | 43
that an opportunity offers neither a financial nor a personal reward
commensurate with the risks involved.
Finally; the opportunity must fit the personal skills and goals of the
entrepreneur. It is particularly important that the entrepreneur be able to put
forth the necessary time and effort required to make the venture succeed.
Opportunity analysis, or what is frequently called a feasibility study, is
one method for evaluating opportunity. It is not a business plan
A feasibility study includes the following; a description of the product
or service, an assessment of the opportunity, an assessment of the
entrepreneur and the team, specifications of all the activities and resources
needed to translate the opportunity into a viable business venture, and the
source of capital to finance the initial venture as well as its growth.
3) Developing a Business Plan
A good business plan must be developed in order to exploit the defined
opportunity. This is a very time-consuming phase of the entrepreneurial
process. A good business plan is essential to developing the opportunity and
determining the resources required, obtaining those resources and
successfully managing the resulting venture.
4) Determine the Resources Required
The resources needed for addressing the opportunity must also be
determined. This process starts with an appraisal of the entrepreneur’s
present resources. Any resources that are critical need to be differentiated
from those that are just helpful. Care must be taken not to underestimate the
amount of variety of resources needed. The downside risks associated with
insufficient or inappropriate resources should also be assessed.
5) Manage the Enterprise
After resources are acquired, the entrepreneur must use them to
implement the business plan. The operational problems of the growing
enterprise must also be examined. This involves implementing a
management style and structure as well as determining the key variables for
success.
A control system must be established, so that any problem areas can be
quickly identified and resolved. Some entrepreneurs have difficulty
managing and growing the ventures they created.

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