Introduction to Entrepreneurship

Introduction to Entrepreneurship

• Entrepreneurship is a process of actions initiated by an entrepreneur to identify something new and convert that thing into opportune gain
• An enterprise is a business or other organization started by an entrepreneur, or business person
• An enterprise can be a for-profit or a non-profit venture
• Business management skills, marketing knowledge, understanding demand, and risk management analysis are crucial for entrepreneurship

Objectives of Entrepreneurship

• To Understand the meaning and nature of Entrepreneurship
• Compare and contrast various views of people regarding Entrepreneurship
• Recognize and understand the principles, growth, and economic development of venturing
• Interview a successful entrepreneur in the food, hotel, or travel industry and document the experience

Meaning and Concept of Entrepreneurship

• The word "entrepreneur" is derived from the French verb "entreprende", which means "to undertake"
• An entrepreneur is someone who "undertakes" the risk of new enterprises
• The process of creating such enterprises is called "entrepreneurship"

History of Entrepreneurship

• The meaning of entrepreneurship has evolved over time
• The term originally comes from Western societies where it means "to undertake"
• In the 18th century, it described a dealer who buys and sells goods at uncertain prices

Entrepreneurship According to Economists

• Richard Cantillon (1697-1734) defined an entrepreneur as someone who organizes a business, assumes the risk and reaps the profits
• Frank H. Knight (1885-1972) refined Cantillon's idea by distinguishing between risk and uncertainty
  • Risk is insurable, while uncertainty is not
  • Risk involves recurring events with known frequencies from past experience
  • Uncertainty involves unique events with subjectively estimated probabilities
  • Example: For a restaurant owner, the risk is whether people will dine at the restaurant and make it profitable
• Joseph Schumpeter (1883-1950) emphasized the role of innovation in entrepreneurship
  • An entrepreneur creates new combinations by introducing new products or processes, identifying new export markets or sources of supply, or creating new types of organization
• Peter Drucker (1909-2005) described an entrepreneur as someone who looks for change, reacts to it, and uses it as a chance to improve things
  • Innovation is a key tool for entrepreneurship
  • Example: The changes in communication, such as the move from typewriters to personal computers and then to the Internet
• Friedrich A. Hayek and Israel M. Kirzner explained that in a market economy, entrepreneurs provide price information by giving price quotes, which invites others to trade with them

Principles of Entrepreneurship

• Entrepreneurship is a process of actions of an entrepreneur who is always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty
• Successful entrepreneurs share creativity, dedication, flexibility, leadership, passion, self-confidence, and "smarts"

Why Become an Entrepreneur

• Independence: Gain control over decisions and work schedule
• Passion: Pursuit of what you love and solving problems you care about
• Financial Rewards: Potential for significant financial gains
• Creativity: Bring innovative ideas to life
• Personal Growth: Develop a wide range of skills and learn continuously
• Impact: Make a positive difference in society
• Flexibility: Design a work-life balance that suits you
• Legacy: Build something lasting for future generations
• Excitement: Enjoy the dynamic and challenging journey
• Networking: Connect with like-minded individuals and build a supportive community

Growth Risks

• Financial Risk: Issues with funding and cash flow management
• Market Risk: Potential lack of customer demand in new markets
• Operational Risk: Strains on processes and resources due to rapid growth
• Human Resource Risk: Challenges in hiring, managing, and retaining talent
• Regulatory Risk: Navigating different regulations and compliance requirements
• Competitive Risk: Increased competition as visibility grows
• Customer Retention Risk: Maintaining customer satisfaction and loyalty
• Technology Risk: Cybersecurity threats and system failures
• Scalability Risk: Ensuring the business can handle increased demand
• Reputational Risk: Managing public perception and maintaining a positive brand image

Growth Benefits

• Increased Revenue: Higher sales and improved profitability
• Market Expansion: Access to a larger customer base
• Economies of Scale: Reduced costs and increased efficiency
• Brand Recognition: Enhanced visibility and market presence
• Attracting Talent: Ability to draw top talent
• Innovation and Development: Investment in research and new products
• Competitive Advantage: Stronger position in the market
• Access to Capital: Easier to attract investors and lenders
• Customer Loyalty: Improved customer satisfaction and retention
• Long-Term Sustainability: Continuous adaptation and opportunity seizing

Role of Entrepreneurs in Economic Development

• Job Creation: Provides employment opportunities and reduces unemployment
• Innovation: Introduces new products, services, and technologies that enhance productivity
• Economic Growth: Contributes to GDP growth and boosts local economies
• Competition: Encourages better products, services, and prices for consumers
• Wealth Creation: Generates wealth for founders, employees, and investors
• Improved Standards of Living: Enhances the quality of life and living standards
• Attracting Investment: Draws domestic and foreign investments
• Social Change: Addresses societal issues and promotes community development
• Resource Utilization: Optimizes the use of natural, human, and capital resources
• Government Revenue: Contributes to government revenue through taxes

For-Profit Ventures Examples

• Retails
• Restaurants and Cafes
• Tech Start ups
• Manufacturing Companies
• Consulting Firms

Non-Profit Ventures Examples

• Charitable Organizations
• Cultural Institutions
• Educational Non Profit
• Environmental Groups

Elevator Pitch Group Activity

• Practice concise and persuasive communication skills
• Students pretend to meet a potential investor in an elevator
• Students have 60 seconds to pitch their business idea
• Preparation Time: 15 minutes
• Feedback: After each pitch, classmates provide feedback on what worked well and what could be improved and highlight strengths and suggestions