BM2104 The Challenge of Entrepreneurship

What Is an Entrepreneur?

• An entrepreneur launches a new business amid risk and uncertainty, aiming for profit and growth through opportunity recognition and resource assembly.
• Joseph Schumpeter identified entrepreneurs as agents of change, driving the process of creative destruction within economies.
• High levels of entrepreneurial activity signal a flexible economy, adapting to competition and creating better services to meet evolving needs.

Characteristics of Entrepreneurs

• Desire for Responsibility: Entrepreneurs take accountability for their ventures and prefer control over their resources.
• Preference for Moderate Risk: They engage in calculated risks rather than reckless gambles.
• Self-Reliance: Especially in start-ups, entrepreneurs often fulfill multiple roles to drive success, compensating for limited resources.
• Social Entrepreneurs: Focus on solving societal issues while building profitable ventures; they aim for social and environmental impact.
• Self-Actualization: Owning a business allows entrepreneurs to express creativity and reach personal goals, empowered by their achievements.
• Profit Motivation: While not the sole driver, profits are a significant factor in business decisions.
• Community Contribution: Entrepreneurs positively impact local economies and are often trusted community members.
• Pursuit of Passion: Successful entrepreneurs frequently turn their interests and hobbies into their business ventures.

Potential Drawbacks of Entrepreneurship

• Uncertainty of Income: No guarantee of sufficient income; initial wages may be low as businesses establish.
• Investment Risks: Business failure can lead to financial ruin, reflecting a high failure rate among new ventures.
• Long Hours: Small business owners average 51 hours of work weekly, significantly more than traditional employees.
• High Stress Levels: Entrepreneurs risk total financial loss, leading to anxiety and stress related to company outcomes.
• Complete Responsibility: Entrepreneurs face pressure to make informed decisions without adequate guidance, which can be overwhelming.
• Discouragement: Building a business is challenging; entrepreneurs must navigate obstacles and maintain optimism despite setbacks.

Forces Driving Entrepreneurship

• Hero Status of Founders: Entrepreneurs like Bill Gates and Jeff Bezos are celebrated, inspiring new generations and establishing models for success.
• Rising Interest in Entrepreneurial Education: Increasing numbers of students are pursuing entrepreneurship as a primary career option.
• Demographics and Economics: Over 75% of entrepreneurs emerge between ages 20-44, capitalizing on economic opportunities developed during their formative years.
• Shift to a Service Economy: Services have become a significant part of economies due to their low start-up costs and increasing demand, especially in the Philippines.
• Technological Advancements: Modern technology enables small businesses to compete effectively with larger firms, previously hampered by high costs.
• Family Businesses: A significant portion of businesses, especially in the Philippines (80%), are family-owned, impacting economic dynamics.
• Copreneurs: Entrepreneurial couples often share responsibilities based on expertise rather than gender biases.

Avoiding Business Pitfalls

• In-Depth Industry Knowledge: Aspiring entrepreneurs should gain experience and education relevant to their chosen business sectors for informed decision-making.
• Networking: Engaging with industry peers through trade associations and events can provide crucial insights and connections for business success.
• Building a Viable Business Model: Developing a strong business model is essential for startup sustainability and growth.