Introduction to Entrepreneurship (PDF)

BMSH2301 INTRODUCTION TO ENTREPRENEURSHIP The path to entrepreneurship is frequently treacherous, full of surprising turns, obstacles, and dead ends. In the past, initiating a business was daunting, leading many aspiring entrepreneurs to fail due to their limited understan...

BMSH2301 INTRODUCTION TO ENTREPRENEURSHIP The path to entrepreneurship is frequently treacherous, full of surprising turns, obstacles, and dead ends. In the past, initiating a business was daunting, leading many aspiring entrepreneurs to fail due to their limited understanding of product creation or inability to purchase raw materials in large quantities for resale purposes. Despite these challenges, many people start their businesses yearly to realize their dreams and meet societal needs. Fast-forward to 2023 — there are now thousands or even millions of entrepreneurs worldwide. Furthermore, there is a simple reason behind this growth in entrepreneurship: the number of opportunities has exploded and multiplied (McCreanor, 2023). The Role and Significance of Entrepreneurship in the Society What is Entrepreneurship? The word “entrepreneur” came from the French word “entreprendre,” which means "to undertake." During the Middle Ages, traveling merchants and artisans would visit different kingdoms to offer goods and services in exchange for payment. This practice was common and played an essential role in the economy of the time. These merchants and artisans were known as “tradespeople” and often specialized in a particular trade or craft. Although the core definition of entrepreneurship has mostly stayed the same over the decade, the opportunities available to would-be business owners have advanced considerably. The modern definition of entrepreneurship emphasizes creating, organizing, and operating a new business venture to generate profit while taking on financial risk. (Beattie, 2022). Who are the Entrepreneurs? Entrepreneurs are people who take on the risks and challenges of starting new businesses. They introduce new goods, services, or concepts to the market to make a profit. The process is often tricky, but entrepreneurs are willing to take on the risk of failure to achieve their goals. Usually, entrepreneurs think of ideas to captivate a particular market's interest. It could be an innovative or a re-envisioned service or product (Hayes, 2023). As highlighted by Jonathan Scott (2022) in his book "The Entrepreneur's Guide to Building a Successful Business," owning a business offers numerous advantages, such as the ability to work flexible hours, make independent decisions, be free from obligation to others, and have complete autonomy and power. However, to be a successful entrepreneur, besides having a good idea and good reasons, it is essential to be curious about new knowledge and have the desire to explore the unknown. An entrepreneur must understand that a journey laden with risk, hard work, sacrifices, and setbacks lies ahead. Importance of Entrepreneurship in the Society Entrepreneurship is one of the driving forces behind the development and improvement of society. Entrepreneurs can influence the world and shape the future by producing everything from innovative ideas and goods to jobs. The following are the five (5) most essential roles of entrepreneurship in society (Guillebeau, 2023): Employment Creation. Entrepreneurs frequently hire employees to help with various tasks and responsibilities when launching their businesses. As a result, employment increases and unemployment declines, which can benefit the economy as a whole. 01 Handout 1 *Property of STI  [email protected] Page 1 of 7  BMSH2301 Economic Development. Entrepreneurial businesses drive economic growth by expanding operations, investing in state-of-the-art technology and equipment, and strengthening the workforce. These factors are all vital in contributing to a country's overall prosperity. Technological Advancement. Entrepreneurs often bring new ideas and products that change how people live. These innovations range from groundbreaking technologies to more efficient and effective business models. For example, the rise of the tech industry and the Internet has created countless jobs and transformed how people communicate and access information. Market Dynamics. The emergence of new competition may expand the options accessible to consumers and result in the provision of better goods and services at cheaper costs. As a result, entrepreneurs with existing businesses are encouraged to enhance their products or service offerings to remain competitive. Socio-Cultural Changes. Entrepreneurship is revolutionizing the way societal challenges are being approached and solved. Entrepreneurs are taking the initiative to tackle social and cultural challenges by creating innovative, effective, and sustainable business solutions instead of relying on the government or big businesses to take action. Types of Entrepreneurship Based on the book “Entrepreneurship 101” published by Rebecca David in 2022, there are different types of entrepreneurship, each with unique characteristics and goals. Listed below are the 10 most familiar types of entrepreneurship and their specific characteristics. 1. Agripreneurship deals with the production and selling of various agricultural goods and inputs. The most profitable agribusiness ideas include crop cultivation, production and processing, aquaculture, animal health and feeds, agro-bio products, biotechnical service, energy-saving, and ecological agro-production systems. Edita Aguinaldo Dacuycuy. She is a 73-year-old multi-awarded farmer-scientist and innovator from the Ilocos Region. Edita established the initial organic dragon fruit farm in Northern Philippines after being inspired by a rare type of cactus plant that brought therapeutic relief to her daughter, who has cerebral palsy. Refmad-V Enterprise, her business, has received awards for Business Excellence and Best Business Company at the 2015 Golden Globe Annual Awards (Agrea, 2019). 2. Buyer Entrepreneurship involves business individuals who possess substantial capital and utilize it to acquire established companies or merge with smaller businesses. These acquired companies or small businesses have an established brand, customer base, and approved revenue-generating activities. Tony Tan Caktiong. Tony Tan Caktiong has shown expertise in acquiring successful brands such as the Greenwich pizza chain, Chowking Chinese Fast food chain, Red Ribbon Bakeshop, and Mang Inasal grilled chicken. He also owns one of the most famous and world- renowned original Filipino fast-food chains, Jollibee (Adalia, 2022). 3. Ecopreneurship involves people who want to create a "green" business. It comes with opportunities to save the Earth while making a good profit. Jamico Yco Jamlang. He is a licensed Chemical Engineer and the founding director of an online business—The Bamboo Company. It is a social enterprise that aims to solve global issues by 01 Handout 1 *Property of STI  [email protected] Page 2 of 7  BMSH2301 promoting and enhancing bamboo production and showcasing a more human side by embracing a more eco-friendly lifestyle (Roy, 2019). 4. Imitator Entrepreneurship creates a business by copying or adapting an existing business concept or a successful product or service in the market. Bin Lin. He is a Chinese entrepreneur, co-founder, and vice president of Xiaomi. The company copied Apple's iPhone design and used Google's Android system to make an easy-to-use interface. Critics think this happened because of China's weak laws protecting intellectual property. China's smartphone company is now the third largest in the world, after Apple and Samsung from South Korea (Yang, 2021). 5. Intrapreneurship is the act of being an entrepreneur within a company or organization. It involves taking risks, being innovative, and developing new ideas to improve the company's products or services. Paul Buchheit. In 1999, he embarked on his professional journey at Google and proudly joined the company as its 23rd employee. He had been developing a web-based email that could provide a search engine within the existing email service. The Founders of Google, Larry Page and Sergey Brin, supported Buchheit in his Gmail project after realizing the vast potential and impact it could give the company. Today, Gmail has evolved from a mere experiment to a crucial component of Google's product portfolio (Fastrecap, 2020). 6. Large Business Entrepreneurship involves taking calculated risks to develop new market offerings to remain competitive and better respond to changing markets and customer needs. Ernest Cua. He owns Globe Telecom, a giant telecommunications company in the Philippines with a long history in the communications industry. Through its partnership with Mynt and Ant Financial, Globe is leveraging its trusted brand, customer accounts, and network to deliver financial services such as mobile banking, credit scoring, and online lending (Globe, 2022). 7. Scalable Startup Entrepreneurship involves launching a small-scale enterprise intending to quickly expand and transform into a highly lucrative company. It is focused on disruptive innovation and can continue or renew itself indefinitely. Roland Navarro de Ros. He is the Founder and President of Kumu, the most prominent social entertainment app in the Philippines, proudly made by Filipinos. Covering as much ground as possible, Kumu invited creators and personalities of all stripes—chefs, basketball coaches, spoken word artists—to get on Kumu. In its third year, Kumu has already racked up more than seven (7) million registered users and two (2) million monthly active users and does about 40,000 live streams daily (Pascual, 2020). 8. Small Business Entrepreneurship involves starting a business on a smaller scale rather than expanding it into a large corporation or opening multiple branches. It is easy to manage because it employs minimal employees or is often just a one-person team. Nericel Bonus. She is a micropreneur who found major success by doing a live selling of thrift clothes, also known as “ukay-ukay,” during the COVID-19 pandemic. After sharing her rags-to- riches journey, her story became famous nationwide, especially on social media platforms. 01 Handout 1 *Property of STI  [email protected] Page 3 of 7  BMSH2301 Examples of small business entrepreneurship are single-location restaurants, one grocery shop, or a retail shop to sell goods or services. A sari-sari store business is among the most common small businesses in the Philippines. 9. Social Entrepreneurship focuses on innovating and creating novel solutions to address pressing social issues. Thus, they play an essential role in having innovative approaches to social issues, such as poverty, education, and healthcare. Bryan Benitez McClelland. He is an active Environmental Consultant at GawadKalinga and the President of Bambike. Bambike manufactures handmade bamboo bicycles. He aims to alleviate poverty while advocating the importance of going green. Moreover, he partners with GawadKalinga to provide programs such as scholarships, teacher sponsorship, and skills training (BusinessMirror, 2018) 10. Technopreneurship solves complex business problems and brings uniqueness and novelty to the business process by combining entrepreneurial skills and technology. Diosdado Banatao. He worked for different tech companies and later excelled. He developed the first 10-Mbit Ethernet CMOS with silicone coupler data-link control and transceiver chip, the first system logic chipset for IBM’s PC-XT and the PC-AT, and the local bus concept and the first Windows Graphics accelerator chip for PCs (Hilotin, 2021). Small, Medium, and Micro-sized Enterprises (SMME) SMMEs are any business activity or enterprise engaged in industry, agribusiness, and services, whether single proprietorship, cooperative, partnership, or corporation, whose total assets are inclusive of those arising from a loan but exclusive of the land on which the business is situated, under the following capitalization (Arat, 2023): Type of Enterprise Capital Requirement Micro Less than P50,000 Cottage P50,001 to P500,000 Small P500,001 to P5,000,000 Medium P5,000,001 to P20,000,000 Table 1: Capital Requirement for Small, Medium, and Micro-sized Enterprises Forms of Business Ownership One of the initial obstacles entrepreneurs face is determining the ownership structure they wish to adopt. Before setting up a business, it is essential to understand business ownership clearly. Knowing who owns the business and their rights and responsibilities can significantly impact the decisions and actions taken as an entrepreneur. Therefore, taking the time to properly understand ownership structures and legal frameworks is crucial for business success (Hayes, 2023). 01 Handout 1 *Property of STI  [email protected] Page 4 of 7  BMSH2301 Type of Ownership Advantages Disadvantages Sole Proprietorship Easily created and terminated Unlimited personal liability – it is initiated, Ownership and rewards in one Limitations in capital organized, owned, and person It ends when the owner dies or managed by a single Flexibility to changes becomes seriously ill person Minimum regulation and Limited skills and capabilities taxation Partnership Pooling of resources Unlimited liability – solitarily – two (2) or more Ability to obtain capital liable partners who co-own a Incentive for each partner Termination can happen business to make a profit Limited regulation and taxation Difficult in reconciling personal or business interests Problems in share liquidation Corporation Limited liability for stockholders Legal formality and regulations – exist in contemplation Legal entity protected by law Costly and time-consuming of law; the business has Ownership is transferrable Separate taxation its own identity separate Obtaining capital is easier Owner’s potential loss of and distinct from Employee benefits control in the business stockholders Right to vote for a significant decision Cooperative Open and voluntary Limited interest in shares – a duly registered group membership Inequality of profit distribution of persons with a Democratic control by members Pro-poor bias might deviate common interest to Education is mandated from the profit orientation voluntarily join to Cooperation among members achieve a lawful social Direct benefits to members and and economic end. community Tax privileges Table 2: Forms of Business Ownership Entrepreneurial Competencies and Motivation According to Maryville University (2023), the idea of becoming a boss may have appeared daunting for many people. It could be attributed to the intricate dynamics and responsibilities of leading a team or organization. Today, entrepreneurship is becoming more accessible and feasible for some individuals. The key is approaching this role with confidence, dedication, and a solid commitment to personal and professional growth aided by advancements in science and technology and a more supportive business environment. Successful businesspeople also have specific characteristics and skills that help them make it big in the business world. Possessing a wide range of essential entrepreneurial skills is paramount. These skills entail comprehending the correlation between the risks and rewards of the business endeavor and devising a comprehensive strategy for contingencies as situations evolve. Below are the core competencies that entrepreneurs need to make their businesses thrive (Scott, 2022): Leadership. Entrepreneurs display their passion, vision, and mission for the business in every interaction with investors, employees, and external stakeholders. 01 Handout 1 *Property of STI  [email protected] Page 5 of 7  BMSH2301 Articulate. Entrepreneurs recognize the importance of facilitating communication in all directions within an organization. Communication skills are vital in various business areas, such as closing sales, boosting employee morale, resolving conflicts, and negotiating contracts. Sociable. Entrepreneurs recognize that aligning the organizational approach with the unique characteristics of the business and its employees is crucial when managing people. Adaptable. Entrepreneurs must be decisive, passionate, adaptable, and willing to make changes. Collaborative. Entrepreneurs know it is crucial to connect with managers, investors, partners, and stakeholders as equals. They understand the value of each person's contribution and do not focus on a hierarchical structure. Multifaceted. Entrepreneurs must be adaptable and multi-skilled. They must manage all business aspects, including sales, marketing, and client and stakeholder management. Resilient. Entrepreneurs embrace failure and never give up easily. They constantly seek motivation and view setbacks as chances to gain wisdom and advance. Proactive. An entrepreneur should take the initiative to address problems before they happen, whether about finances, branching into a new market, or benchmarking the competitors. Innovative. Entrepreneurs can grow their businesses and satisfy customers by developing new market offerings that meet the changing demands. Risk-taker. Entrepreneurs are aware of the potential risks of starting a business and are proactive in mitigating these risks. Creative. Entrepreneurs who succeed possess a relentless curiosity that drives them to constantly explore novel concepts and prospects that evolve into profitable business ventures. Passion. Entrepreneurs' passion is a constant source of motivation and drives them to achieve their targets of revolutionizing outdated methods and introducing innovative business concepts. Motivation Theory Theories of motivation suggest that behavior is not random but rather driven by a purpose to achieve specific objectives. In other words, entrepreneurial motivation refers to an entrepreneur's drive to continue engaging in entrepreneurial activities. Entrepreneurial behavior can encompass a variety of actions, such as taking risks, identifying new opportunities, and pursuing innovation (McCreanor, 2023). There are two (2) types of motivation: 1. Extrinsic Motivation. It is about motivating individuals to complete a task by offering rewards such as money, gifts, or treats. However, this type of motivation fades away when the reward is absent or not at par with their interest. 2. Intrinsic Motivation. People do the task at hand because they are passionate about the business. The following are the categories of intrinsic motivation: Achievement motive - Have a strong motivation to succeed, achieve greatness, and conquer any difficulties and hurdles in the quest for objectives. Power motive - The desire for control, influence, and the ability to impact others and change circumstances. Affiliation motive - The act of pursuing, upholding, or revitalizing an emotional connection with others. References Adalia, J. (2022). Rags to Riches Story of Jollibee’s Tony Tan Caktiong. https://www.businessnews.com.ph/rags-to-riches-story-of- jollibees-tony-tan-caktiong-20210202/ 01 Handout 1 *Property of STI  [email protected] Page 6 of 7  BMSH2301 Agrea (2019.) Women Empowerment Must Be Our Legacy: Drago Fruit Queen of The Philippines. https://agrea.ph/news/women- empowerment-must-be-our-legacy-dragonfruit-queen-of-the-philippines Beattie, A. (2022). Who Coined the Term 'Entrepreneur'? https://www.investopedia.com/ask/answers/08/origin-of-entrepreneur.asp BusinessMirror (2018). Social entrepreneur rides on sustainable, scalable revolutions through the Bambike. https://businessmirror.com.ph/2018/05/09/social-entrepreneur-rides-on-sustainable-scalable-revolutions-through-the- bambike/ David, R. (2022) Entrepreneurship 101. Florida. R. Davids & Associates LLC. Fastrecap (2020) The Path to $100B, by Gmail creator Paul Buchheit. https://medium.com/fastrecap/the-path-to-100b-by-gmail- creator-paul-buchheit-85e022e1a4a3 Globe (2022). Globe’s Ernest CU Hailed as Best Telco CEO by the Global Economics. https://www.globe.com.ph/about- us/newsroom/corporate/ernest-cu-hailed-best-ceo-global-economics.html#gref Guillebeau, C. (2023) Gonzo Capitalism: Discover New Radical Ways to Monetize Your Creativity, Talents, and Time. New York. Little Brown Company. Hayes, A. (2023) Entrepreneur: What It Means to Be One and How to Get Started. https://www.investopedia.com/entrepreneur.asp Hilotin (2021). Filipino tech billionaire Dado Banatao: From farm boy to billionaire, a rags-to-riches story in Silicon Valley. https://gulfnews.com/photos/business/filipino-tech-billionaire-dado-banatao-from-farm-boy-to-billionaire-a-rags-to-riches- story-in-silicon-valley-1.1623339047491 MaryVille University (2023). Importance of Entrepreneurship: Types, Benefits, and Styles https://maryville.edu/entrepreneurship/ McCreanor, N. (2023). Brilliant Business – Entrepreneurship. Notthingham. Dagda Publishing. Pascual, J. (2020). How did Kumu get so huge? https://www.rappler.com/life-and-style/arts-culture/kumu-streaming-philippines/ Prater (2023). 70 Small Business Ideas for Anyone Who Wants to Run Their Own Business. https://blog.hubspot.com/sales/small- business-ideas Roy (2019). The Bamboo Company: the business for the eco-friendly millennial. https://beta.entrepreneurship.org.ph/2019/09/24/the-bamboo-company-the-business-for-the-eco-friendly-millennial/ Scott,J. (2022). The Entrepreneur's Guide to Building a Successful Business. Brussels. EFMD Publishing. Yang (2021) How Xiaomi Became an Internet-of-Things Powerhouse. https://hbr.org/2021/04/how-xiaomi-became-an-internet-of- things-powerhouse 01 Handout 1 *Property of STI  [email protected] Page 7 of 7