Untitled Quiz

• Entrepreneurship is explored in Chapter 2.

Entrepreneurship Definition and Characteristics

• An entrepreneur is an individual with a unique personality who can create new businesses and enjoys the rewards.
• Entrepreneurs set up businesses, take on financial risks, and hope for profits.
• Entrepreneurship identifiesconsumer needs and delivers what theconsumer wants with the best possible value.
• Entrepreneurs are those who become aware of a need and decide what products and services should be produced, how, by whom, and for whom.
• Entrepreneurship is a continuous process in dynamic environments that entails creating and building something of value from resources amidst risks and uncertainty, with a sustained effort to succeed.

Common Denominators of Entrepreneurial Activities

• Job creation.
• Stimulating economic development.
• Generating income.
• Making a positive contribution to national economies and local communities.
• Entrepreneurship is evident in the formal and informal sectors.
• Entrepreneurs and entrepreneurial activity can be defined in accordance with general business management terms.
• Common associations with entrepreneurs are being creative, innovative, and opportunity-seeking, risk-tolerant, and open to change.

Contributions of Entrepreneurship

• Establishes new businesses and creates employment, also strengthening market competition and increasing productivity.
• Creates businesses that create jobs and grow into larger businesses, in turn creating even more jobs.
• Through stimulating and supporting entrepreneurial activity, the small business sector becomes a valuable source of opportunity.
• Contributes to increases in productivity and strengthening market competition.
• Creates new businesses, new investments, and potentially improves existing businesses.

Entrepreneurship in South Africa

• The contributions of entrepreneurship, entrepreneurial activity, and small businesses towards the growth and development of South Africa should not be underestimated.
• According to the GEM report 2021/2022, there is a significant increase in the total early-stage entrepreneurial activity amongst South Africans.
• Factors that shape entrepreneurship in South Africa include societal attitude towards entrepreneurship, the Established Business Ownership (EBO), and the Entrepreneurial Employee Activity (EEA), as well as, the Business Exit rate.

Role of Entrepreneurs and Small Business Owners

• People with entrepreneurial talents and skills and an entrepreneurial orientation are able to achieve more by mobilizing productive resources by starting enterprises that will grow.
• Entrepreneurs constitute a resource that greatly contributes to the production of services and products.
• Entrepreneurs set in motion the creation of employment opportunities.
• Entrepreneurs are driven to achieve, have an internal locus of control, possess innovation and creativity, tolerate risk, and have a propensity to pay-it-forward.

Types of Entrepreneurial Activity

• Necessity-based early-stage entrepreneurial activity Percentage of those involved in early-stage entrepreneurial activity who claim to be driven by necessity as opposed to opportunity, also described as survivalist-driven motivation.
• Opportunity-based early-stage entrepreneurial activity Percentage of those involved in early-stage entrepreneurial activity are driven purely or partly by opportunity, as opposed to finding no other option for work.
• Taking advantage of business opportunity or having a job but seeking a better opportunity.

Opportunities Arising from Outsourcing

• Outsourcing occurs when work is done for a company by people other than its full-time employees.
• Outsourcing is part of a company's strategic plan, which the company does to acquire specialty skills unavailable in-house or are not cost-efficient to handle in-house.

Entrepreneurial Process

• The entrepreneurial process is a framework for decision-making about new ventures.
• The framework considers personal beliefs, preferences, practices, characteristics, and goals.
• The process identifies if the decision to become an entrepreneur will generate ideas and opportunities for growth. -Resources available include contact opportunities, seed/venture funds, and capital growth.
• A feasibility assessment/study must be done to analyse all aspects including business plans and attraction and management skills
• Skills such as, leadership direction, management, and learning are imperative for implementation

Skills Required for Entrepreneurship

• Strategy, planning, communication, and marketing skills
• Financial, project management, and human relations skills

Resources Needed to Start a Business

• Financial, human, operating, and educational resources

Business Opportunities and Growth Industries

• Finding a good idea is the first step in converting an entrepreneur's creativity into a business opportunity.
• With the move towards more use of online platforms, there is the opportunity to grow, enhance, and promote the application in wider contexts.
• A scientific approach to search for ideas involves a thorough search of the business environment for ideas and patterns that emerge from various environmental trends.
• New venture ideas come from growth industries, such as education, healthcare, tourism and privatization of government and semi-government services.

New Venture Opportunities

• The opportunity must have the potential to grow, reward both investors and entrepreneurs, solve a problem, and be scalable.
• There are many fundamental requirements for a good investment opportunity.
• A clearly defined market need must exist for the product or service.
• There must be sufficient opportunity to present the product or service to exponentially more people without incurring high operating costs.
• The timing of the opportunity must be right.

Buying an Existing Business: Advantages

• The groundwork in setting up the business will have been completed.
• Easier to obtain financing as the business already has a track record.
• Familiar business location.
• Established customer base.
• Experienced employees.
• Planning can be based on known historical data.
• Supplier relationships are set in place.
• Inventory and equipment is already in place.

Buying an Existing Business: Disadvantages

• The purchase price may be inflated to cover the initial groundwork costs, like professional fees for accountants and solicitors.
• Working capital for cash flow may require more investment if the business was neglected.
• The business location may become undesirable or threatened.
• The image of the business will be difficult to change.
• Employees are inherited rather than chosen.
• Difficulties changing the way the business is run. Existing business contracts may generate liabilities.
• The existing inventory and equipment may be obsolete.

Franchising

• Franchising gives an entrepreneur the opportunity to start a business that has been proven in the marketplace.
• The entrepreneur becomes a franchisee.
• The franchisor gives the franchisee the right to operate a business, using the franchise company's name, products, and systems.
• The franchisee pays the franchise company for this right on an ongoing basis.

Corporate Entrepreneurship

• Corporate entrepreneurship is a way for a corporation or large business to introduce new and diversified products or services to an existing business.
• This happens through internal processes using the corporation's resources.
• Corporate entrepreneurship creates opportunities for a corporation to diversify and to create new industries and profits by establishing new businesses within a business.

Feasibility of the Idea or Opportunity

• An idea must be subjected to a feasibility test to prove that it has value.
• A feasibility study is the collection of data that helps forecast whether an idea, opportunity, or venture will survive and may result in a decision to move forward or to abandon the idea.
• Once the feasibility of an idea has been assessed, the entrepreneur can commit to implementing the idea or abandon the idea altogether, depending on the outcome.

Entrepreneurship and the 4IR

• Industrial Revolution
• Artificial intelligence
• Machine learning

Small Businesses: Key Characteristics and Role

• Independently owned and financed
• Managed and operated with flat management structures.
• Small market share.
• Operates independently from a larger corporation.
• SMEs and SMMEs have fewer than 200 employees.
• Have an annual turnover of less than R64 million.
• Have capital assets of less than R23 million.
• Have direct managerial involvement by owners.
• The strategic role of small businesses in the economy revolves around production of products and services, aiding big business, innovation, and job creation.