Entrepreneurship

Presented
By
Dr. S.M. Gumbe
 ENTREPRENEUR

• “one who brings resources, labour and other assets into

combinations that make their value greater than before and also
one who introduces changes, innovations and new
order---”Hisrich and Peters (2008)
• “someone who innovates a process or product for the first time,--
opens up new source of raw materials or factors of production
and creates a new industrial structure” Schumpeter (1946)
• “an entrepreneur is an individual who establishes and manages
business for the principal purpose of profit and growth. The
entrepreneur is principally characterised by innovative
behaviour and will employ strategic management practices in the
business” Carland (2014)
 Meaning of Definitions

• Capital investment and growth/accumulation and inherent risk

• Managerial co-ordination in the pursuit of profit
• Creativity-exploring new ways of solving a problem
• Innovation or invention
• Strategic management-opportunity identification and long term
management
• Therefore entrepreneurship goes beyond owning a small
business
Entrepreneurship Elements
 ELEMENTS OF ENTREPRENEURSHIP

• The entrepreneur- human capital and social capital

• The opportunity-a gap in the market that provides a source of
profit
• Organisation/management ability- the ability to come up with a
relevant structure that facilitates growth
• Resources- mobilising the necessary resources: labour, finances,
etc.
 Human Capital
• Knowledge- this can either be acquired or learned.
Acquired is that which we learn in informal environments, while
learned is that which we accumulate in formal environments
Social capital- this is the social networks one creates
• Social networks are a result of one’s socialisation processes-
family, friends, etc.
• Opportunity= the difference between the desired and the
prevailing situation
Should be sustainable
Should be profitable
Should have a relative advantage over existing ones
Should be compatible with society’s values and beliefs
Should not inflict injuries to potential buyers
Should be easy to communicate the benefits of the
product/service
Should be that which can be produced and marketed by the
organisation better than competitors
 Management abilities

• This refers to the process of achieving set objectives through

planning, organising, leading and controlling organisational
resources.
Managing also includes the ability to manage the organisation
strategically- to ensure long term survival
Team building capabilities are also critical
 Resource Mobilisation
• This is the ability to bring together all the required resources to
ensure that the business takes off-
Financial resources
Manpower resources
Equipment
 The Environment
• This refers to the context in which entrepreneurial activities
occur
• That context must be supportive
• It includes:
The general environment-PESTLE
The institutions- universities, financial institutions; research
institutions
Corporates, public institutions, etc.
 Types of Entrepreneurs
• Start-up entrepreneurs-those who venture into setting up
business ventures in any sector :
Habitual=owners of a life time, sometimes in one or in several
businesses, mainly for personal satisfaction. Income is
secondary. Usually there is no succession planning.
Growth entrepreneurs= life time owners seeking major success-
legacy
Harvest entrepreneurs= business owners with an exit plan
Spiral/helical= alternate growth and stability periods determined
by personal and family needs
Occasional= those with another job and pursue entrepreneurship
periodically
• Corporate entrepreneurs- those who engage in
entrepreneurial activities within their employment (employees)
• Social entrepreneurs-engage in entrepreneurship to improve
societies for no profit
• Technopreneurs-engage in entrepreneurial activities in the
field of technology:
High technology ventures in internet, life sciences and bio-tech;
ICTs and electronics
Service firms where technology is critical to their mission-
FEDEX, e-bay, e-learning, etc.
 Some popular technopreneurs
• Bill Gates- Microsoft
• Mark Zuckerberg-Facebook
• Jack Dorsey- Twitter
• Steve Jobs (late)- Apple
• Kevin Systrom- Instagram
• Larry Page- Google
• Ellon Musk- Tesla
 Significance of entrepreneurship

• Opportunity to create own destiny

• Opportunity to make a difference
• Opportunity to reach full potential- self actualisation
• Opportunity to make a profit
• Opportunity to do what to one enjoys and have fun
• Employment creation
• Seedbed for large businesses and technology advances
• Linkages with large enterprises
• Creates national competitiveness
• Contributes to GDP
 Drawbacks of entrepreneurship
• Uncertain incomes
• Risk of failure and loss of entire investment
• Increased responsibility
• Lower quality of life until business is firmly established
• Need to be knowledgeable in all business areas
 Approaches to Entrepreneurship

• The macro view- the approach argues that the success or

otherwise of entrepreneurial ventures is based on external
processes (External locus of control)
• The micro view- it argues that the potential entrepreneur has the
ability to control the outcomes of major influences (internal locus
of control)
 The Macro View
The environmental school- focuses on the external
forces that shape a potential entrepreneur
Institutions
Morals and values
Government policies
Work environment
Social networks
The financial/capital school- focus is on availing capital
resources
Financial management is viewed as the pillar for
entrepreneurial growth
Setting up of financial institutions
Concessionary interest rates
Special fund for specific sectors
Grants to specific targets
The displacement school-focus is on an individual or
group of individuals finding themselves “out of place” or
literally displaced
Political displacement- a political system that rejects free
enterprises/restricts certain industries
Cultural displacement- focuses on social groups precluded
from certain professional fields
Economic displacement- focuses on economic variations
(bad times)
Recessions;
Job loss
Capital shrinkage
 Micro View

The Entrepreneurial Traits School- based on the

common characteristics found in successful entrepreneurs
need for achievement, technical knowledge, creativity and
determination-being the common ones
 family development and educational incubation
 Entrepreneurial traits
• Commitment, self reliance and tenacity- do not easily give up but
know when to stop
• High need for achievement- are ambitious, but not driven by
envy. They have their own targets and work towards achieving
them
• Opportunity driven- always seeking opportunities and exploiting
them
• Responsible- they get a task done at the best of their
abilities. They stretch themselves to give the best
• Problem solving abilities
• Team building abilities
• Initiative- go beyond what a task requires thus extend
tasks into new frontiers
• Internal locus of control- believe destiny is
in their own hands hence no external
forces shape their destiny
• High ambiguity tolerance- able to work in
situations where solutions are not
obvious, are risk takers
• Integrity and consistency- honest, truthful and possess
strong ethics
• Creativity and innovation-finding solutions to problems
outside the conventional ways and being able to
commercialise them
• Self-efficacy- strong belief in one’s ability to perform tasks
or reach their goals
• Persuasive- a communicative behaviour intended to
change, modify or shape the responses, attitudes or
behaviour of the receiver
Venture Opportunity School-argues that an individual’s
ability to identify opportunities and ability to be creative
and innovative determines entrepreneurship
Strategic Formulation School- success in venture
creation is based on ability to strategically plan and
manage a business
 What is industrialisation?
• It is a progressive transformation of an economic system from
rudimentary productive methods to more complex manufacturing
processes.
• It is systematic change that aims to reshape the productive
forces of a given country
• This is achieved through innovating existing systems of
production through addressing their weaknesses
• This can also be through producing goods and services that
address customer needs
• Industrialisation implies development of new technologies-
equipment, production processes, new products, services,
etc
 The business environment
• It is made up of three environments namely:
The general environment- this is an environment over
which managers have no control
It is characterized by the Political, Economic, Social,
Technological, Legal, and Ecological factors (PESTLE)
The task /the industry environment- this an environment
which managers have no control but can influence it
It is characterized by customers, competitors and
suppliers
The internal environment- this the environment that
managers have control over
It is characterized by what the organization owns-
resources of the organization (employees/skills;
organizational culture; structure; equipment; cash; etc)
 SWOT Analysis
• Organisations need to make decisions regarding their
continued existence/business continuity concept
• Such decisions are anchored on the developments in their
environment
• Thus organisations need to assess factors that may allow
it to grow (Opportunities) and those that may threaten
their existence (Threats)
• Ability to assess the opportunities and threats requires
understanding an organisations Strengths and
Weaknesses
• Strengths are those that add Value, are Rare; are
Inimitable and allow organisations to gain competitive
advantage (VRIO)
 Creativity vs. Innovation

• Creativity refers to process of identifying solutions to

problems/opportunities/gaps
• “---a process of being sensitive to problems,
deficiencies, gaps in knowledge, missing elements,
disharmonies---identifying the difficulties; searching
for solutions, making guesses or formulating
hypotheses about deficiencies testing and retesting
them; and finally communicating results.” Jalan and
kleiner
 Forms of Creativity
• Idea creativity- thinking of a new concept eg. Product,
service or a way to solve a problem
• Material creativity- inventing and building a new tangible
object eg. Product, advertisement, report , photograph,
sculpture, etc.
• Organisation creativity- organising people, project,
organisation , etc.
• Relationship creativity-innovative ways of creating win-
win relationships with others eg collaborations, strategic
partnerships, etc.
• Event creativity- ability to produce an event or occasion
eg weddings, awards ceremonies, etc.
• Inner creativity-ability to change one’s self
• Spontaneous creativity- ability –ability to act on the spur-
of –the-moment/spontaneously
 Cultivating Creativity
• Need to recognise that anyone can be creative
• Need to shift the paradigm = a preconceived idea of
what the world is, what it should be and how it
operates
• Include creativity as a core value-important to
evaluate the extent of its achievement in the
organisation annually-a performance indicator
• Encourage diversity-hire people from different
backgrounds
 Allows for diverse contributions
• Expect creativity-this should be communicated to employees eg.
The brain storming board
• Expecting and tolerating failure-avoid punishing for failed ideas
• Changing scenarios-changing the environment that one works
in- familiarity breeds contempt
• Accepting that problems are challenges-need to work on
resolving them-employees should carry their own monkeys
• Providing support for creativity- most importantly is to
provide time for employees to be creative-work on pet
projects (something they like doing)
Also provide financial support to promising ideas
• Develop a system of capturing the creative ideas
• Talk to customers
• Find alternative uses for organisation’s services or products in
the market
• Reward creativity-recognise creativity to reinforce the
creative culture
• Talk to children/youths-they help you remove self imposed
barriers (shift paradigms)
• Model creativity-start at the top
Convergent thinking- evaluating the ideas generated
through divergent thinking
Could involve looking at similar ideas; related ideas; those
that could be linked; etc
• Incubation- divorcing oneself from the process to allow
more time to reflect on the generated ideas
• Illumination- settling on an idea that seems feasible
 Barriers to creativity
• Seeking the right answer
• Need to follow logic
• Need to be practical
• Need to follow rules
• Need to avoid ambiguity
• Need to avoid errors
• Need to demonstrate maturity
• Need to stick to area of specialisation
• Need to appear intelligent
• Accepting defeat- “I am not creative”
 What is Innovation?
• Many definitions have been proffered including:
That it is creativity
Coming up with new products/services
Entrepreneurship
Designs
Inventions
• However the weaknesses with these definitions is that
they focus on the outcomes of innovation
• They take a narrow perspective- innovation is an event
• However innovation is a process-
“innovation is not a single action but a total process of
interrelated sub processes. It is not just the conception of
a new idea, nor the invention of a new device, nor the
development of a new market. The process is all these
things acting in an integrated fashion” Myers and Marquis
(1969)
NB: the concept of new has to be understood in the
following context
That new is relative-being applied or used by the
concerned party for the first time
Thus it is measured by the lapse of time since its last use
or discovery
• Invention is translating intellectual thoughts into an
artefact-tangible process or product
• Thus innovation goes beyond invention
• In summary:
Innovation = theoretical conception + technical invention+
commercial exploitation
 Theoretical Conception
• Developing an idea about a solution to a social problem-
long distance communication;
• Is supported by creativity
• Level of creativity is also determined by knowledge
possessed by the individual
Recall discussion on Human capital earlier-acquired vs
learned knowledge
 Research and Development

• It is the purposeful and systematic use of scientific knowledge

to improve men’s lot even though some of its manifestations
do not meet with universal approval eg. Cloning
• R&D differs from organisation to organisation
• However it is always anchored on a firm’s heritage and
resources
• Components of R&D:
Basic research-seeks to broaden knowledge about a
particular area; thus it is general in nature
Curiosity-driven basic research-this is research that
does not seek to address a particular market problem but
just to satisfy an area of interest
May result in the discovery of technologies or products
• Applied research-focuses on addressing particular needs
through use of existing scientific knowledge resulting in
new technologies
 What is technology?
• Refers to the process of applying knowledge to achieve a
practical result- eg. Vacuum cleaners, washing machines,
laptops, etc.
• Technology is dependent on knowledge
• Need to invest in knowledge creation-Research
 Invention
• Process of converting the idea into tangible product or
process
• Need science and technology
• Science being the knowledge about the subject area-
communication
• Technology being the process of converting the knowledge
into a tangible solution
 Commercialising
• Creating demand for the invention-need for marketing
function
 Benefits of Innovation
• Improved social standards
• Increase knowledge base
 Importance of Innovation
• Allows for firm growth
New customers/markets
Firm competitiveness
Firm profitability
Shareholder value
National acceptance
Allows for employee growth
• Allows for national economic growth
Contribution to national GDP
Improves nation’s competitiveness
Grows national productivity and income levels
 New Product Development
• Idea generation-this is the creative process driven by gaps
in the market or within the organisation
The process may also be driven by the desire to create
convenience for the market or the organisation-3M
experience (creating needs)
• Idea screening- vetting ideas that were generated in the
creative phase
The organisation seeks to innovate the ideas/create value
for the organisation
Use of defined criteria-organisation’s objectives,
resources, organisation’s capabilities, impact on existing
offerings, etc
• Concept testing-sampling potential customer’s view on the
new product idea
Oral or written presentation of the product idea
Seeks reactions of the market to the idea-how will the
market respond to the idea
Normally there is a presentation followed by relevant
questions
• Business analysis- this involves analysis of the potential
impact of the product idea on the overall business
performance
Costs
Sales
Environmental changes-reaction of competitors, suppliers,
government, etc.
• Product development-developing the idea prototype
Requires the it is produced at a price that will make it
acceptable (that the target market is prepared to pay)
Product must be produced at the a level where its
functionality will be tested (all dimensions must be met)
The stage also allows the organisation to asses its
capabilities in production
• Test marketing-introducing the product in selected
markets
This is mainly to assess the extent to which the product
will be accepted
Also assists in understanding the marketing challenges
the product will face
Important to select markets that are representative of
target markets
At times organisations use simulated test marketing-
giving out free samples and seeking customer opinions
• Commercialisation- refining and finalising the budget in
preparation of full scale manufacturing and marketing of
product
 Feasibility Studies

• “A logical tool used in considering a new operation

or launch of a new product/service in order to make
sure that the total investment needed will
successfully bring the project to completion” Bridge
S et al (2003)
IPTV industry “a preliminary study undertaken before the
real work of a project starts to ascertain the likelihood of
the project’s success…
it is an analysis of possible solutions to a problem and a
recommendation on the best solution to use.”
 FEASIBILITY STUDIES
Product/service
• The product – performance, legality, purchase or
produce, reliability, design, etc.
• The skills of entrepreneur/venture team- skills
possession, market understanding,
• Suppliers
 MARKET FEASIBILITY
• Customers- who are they, where are thy, how often do
they buy, their profile, etc.
• Competition- who are they, how many are they, how
do they operate, their likely reaction, etc.
• Marketing strategies- how much to spend on
advertising, selling strategies, sales promotions,
discounts, credit facilities, etc.
 Financial Feasibility
• Total initial capital outlay required
• Owner contribution
• Financing the balance
• Sales to be generated
• Costs of producing and operating
• Is it profitable
• Is it worth investing in
 What is a Business Plan?

• A business plan is a written document prepared

by the entrepreneur that describes all the
relevant internal and external elements and
strategies for starting a new venture.
• It is a integration of functional plans such as
marketing, finance, manufacturing, sales and
human resources.
 Outline of a Business Plan

• Introductory Page
– Name and address of business
– Name(s) and address(es) of principal(s)
– Nature of business
– Statement of financing needed
– Statement of confidentially of report
 Outline …

• Executive Summary – Three to four pages

summarizing the complete business plan
– What is the business concept or model?
– How is this business concept or model unique?
– Who are the individuals starting this business?
– How will they make money and how much?
 Outline …

• Environmental and Industry Analysis

– Future outlook and trends
– Analysis of competitors
– Market segmentation
– Industry and market forecasts
• Description of Venture
– Product(s)
– Service(s)
– Size of business
– Office equipment and personnel
– Background of entrepreneurs
 Outline …

• Production Plan
– Manufacturing process (amount subcontracted)
– Physical plant
– Machinery and equipment
– Names of suppliers of raw materials
• Operational Plan
– Description of company’s operations
– Flow of orders for goods and/or services
– Technology utilization
 Outline …

• Marketing Plan
– Pricing
– Distribution
– Promotion
– Product forecasts
– Controls
• Organizational Plan
– Form of ownership
– Identification of partners or principal shareholders
– Authority of principals
– Management-team background
– Roles and responsibilities of members of organization
 Outline …

• Assessment of Risk
– Evaluate weakness of business
– New technologies
– Contingency Plans
• Financial Plan
– Pro forma income statement
– Cash flow projections
– Pro forma balance sheet
– Break-even analysis
– Sources and applications of funds
 Using and Implementing The
Business Plan
• The business plan is designed to guide the
entrepreneur through the first year of
operations.
• Implementation of the strategy contain control
point to ascertain progress and to initiate
contingency plan if necessary.
• Business plan not end up in a drawer somewhere
once the financing has been attained and the
business launched.
 Measuring Plan
Progress

• Entrepreneur should check the profit and loss statement, cash

flow projections, and information on inventory, production,
quality, sales, collection of accounts receivable, and
disbursements for the previous month.
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements
 Updating the Plan

• The most effective business plan can become out-of-

date if condition change.
• If the change are likely to affect the business plan,
the entrepreneur should determine what revisions
are needed.
• In this manner, the entrepreneur can maintain
reasonable targets and goals and keep the new
venture on a course that will increase probability of
success.
 Why Some
Business Plans Fail
• Goals set by the entrepreneur are unreasonable.
• Goals are not measurable
• The entrepreneur has not made a total commitment to the
business or to the family.
• The entrepreneur has no experience in the planned business.
• The entrepreneur has no sense of potential threats or
weaknesses to the business.
• No customer need was established for the proposed product or
service.
 Business Registration
• Business registration is done by the Registrar of
companies in Harare.

• The registration process is administered through the

Companies and Other Businesses Act Chapter 24
Steps in Private Business Corporation
registration
1) Online name search (CR2 form)
2) Confirmation of reserved name-CV4
3) Submit CR28 (Incorporation
Statement) forms in duplicate
together with accounting officer’s
professional certificate, eg CIS,
ACCA, CIMA,
4) The Registrar shall issue a certificate
of incorporation
eps in Private Limited Company registratio
1) Online name search (CR2 form)
2) Confirmation of reserved name-CV4
3) Submit in duplicate: The Memorandum
and Articles of Association together with
two copies of Form CR5 (Registered
company address) and Form CR6 (List of
directors and secretaries)
4) The Registrar shall issue to a successful
applicant a certificate of incorporation
Steps in Public Limited Company registratio
1) Online name search (CR2 form)
2) Confirmation of reserved name-CV4
3) Submit in duplicate the Memorandum
and Articles of Association together with
two copies of Form CR5 (Registered
company address), Form CR6 (List of
directors and secretaries), Form CR19
(Affidavit section 158 of the Act), Form
CR20 (Consent to act as directors), CR
21(List of persons to act as directors)
Steps in Public Limited Company
registration
4. Submit in duplicate a copy of
prospectus or a statement in lieu of
prospectus.
5. The Registrar shall issue to a
successful applicant a certificate of
incorporation
6. The Registrar shall also issue a
certificate to commence business
FORM TITLE

CR1 Applications for authority to use an electronic mail address,

website, portal or other interactive electronic link.
CR2 Application for search the availability of name
CR3 Notice of Registration of Assumed Names
CR4 Application for Replacement of lost, defaced and destroyed
documents
CR5 Notice of situation and postal address of a company’s registered
once registered principal place of business and of any change thereto.
CR6 List of Directors and Secretaries
CR7 Notice of change of entity name
CR8 Special resolution
CR9 Notice of conversion, consolidation and split of Share Capital
CR10 Notice of increase of share capital
The End
Thank you
for
Time