Entrepreneurship and SMMEs

Entrepreneurship and SMMEs

• This chapter covers defining entrepreneurship, the relationship between entrepreneurship and SMEs, types of entrepreneurial businesses, corporate entrepreneurship, success factors, and dealing with external factors
• Learning outcomes includes defining entrepreneur and entrepreneurship, explaining various types of entrepreneurial businesses, explaining corporate entrepreneurship, explaining key success factors, and explaining how entrepreneurs should deal with external factors
• Employment growth in private and public sector organisations.
• Entrepreneurial activity impacts the wealth of the nation
• Job creation correlates to the level of entrepreneurial activity

Defining Entrepreneurship

• Entrepreneurs have the ability to identify opportunities, create and develop businesses, while adding value.
• Entrepreneurship is the process of establishing a business from opportunity identification to growth management.

Entrepreneurship and SMEs

• SMEs start as small or micro enterprises, managed by a single person aiming to grow.
• Entrepreneurs become small business managers once satisfied with initial growth.
• Entrepreneurs may lack the expertise to implement ideas effectively.
• Good managers should be able to plan, organize, lead and control business functions
• Good managers should be able to ensure communication during scheduled meetings.
• Good mangers should be able to compile and implement policies and procedures.

Types of Businesses

• Businesses include informal, micro, very small, small, medium and large
• Formal small businesses operate in the small and micro sector
• Micro businesses have five or fewer employees and turnover less than R100,000
• Very small businesses has 1-10 employees
• Small businesses has 11-50 employees

Corporate Entrepreneurship

• Corporate entrepreneurship involves business creation within an existing large business using new ideas
• Makes it possible for large businesses to diversify, experiment in their market and establish new businesses
• Franchising is an arrangement where a franchisor grants a franchisee the right to sell products/services under specific guidelines.
• A franchisor is an entrepreneur.
• A franchisee is a corporate entrepreneur.
• Franchisees do not have the freedom to conduct their business according to their own vision.
• Franchisors fall into the medium to large business category.

Key Success Factors

• Each entrepreneur demonstrates a unique combination of factors.
• Successful entrepreneurs have distinctive traits.
• Entrepreneurs possess various characteristics or skills with no "typical" model.
• It is important to know strengths and weaknesses as an entrepreneur to succeed.
• Strengths can be positively applied
• Weaknesses can be addressed by personal development, training, and hiring experts.
• Skills are manual labor and skills based, expertise is knowledge gained through experiences, and aptitude is one's born talents
• Personal characteristics include confidence, commitment, well rounded skills in multiple areas and calculative risk taking.
• Work with good human relations, innovate and be creative as well as have a positive attitude.
• An entrepreneurs management skills dictate how well they perform important tasks in a business

Essential Aspects of Management Skills

• Planning the business before it starts
• Management skills and use of advisors
• Knowledge on customer service and competitors
• Market Awareness
• Delivering consistent quality
• Accounting for your own purposes
• Understanding of insight to expenditure, income, profit and loss

External Factors

• Factors like economic conditions and technological changes influence an entrepreneur's potential
• Monitor social and cultural forces for market growth opportunities.
• Being aware of political changes.
• Utilise high tech communication to expand internationally.

Summary

• The importance of business enhances wealth and creates jobs
• Entrepreneurs apply talents and skills
• Many entrepreneurs start small and stay small due to lifestyle preferences.
• Entrepreneurs are found in various types of businesses.
• Success factors: skills, expertise, aptitude, personal qualities, management skills, external factors.