ENTREPRENEURIAL SKILLS ENT3001/3003/4003

1. ENTREPRENEURIAL SKILLSENT3001/3003/4003 LECTURE #1 & 2 INTRODUCTION TO ENTREPRENEURSHIP

2. INTRODUCTION TO ENTREPRENEURSHIP Objectives • Explain the concept of entrepreneurship • Outline the rewards and drawbacks of entrepreneurship • Identify the main personal , entrepreneurial characteristics (PEC’s) of successful entrepreneurs • Identify Supporting Enabling factors (SEF’s) • Identify the factors that are driving the growth of entrepreneurship • Explain how to avoid the mistakes of entrepreneurship

3. What is entrepreneurship? Many see entrepreneurship as the mere emergence of new businesses through the following ways • New Business / New idea • New Business / Existing idea • Buying Existing Business • Buying a franchise • Entering into a family business

4. What is entrepreneurship? • The way to make the economy more productive and compete more effectively in the global economy • The essence of free enterprise because the birth of new businesses gives a market economy its vitality ( new jobs, products)

5. What is entrepreneurship? • A new style of doing business • An approach – way of seeing things and of doing things differently • Style of management ( Peter Drucker) • High risk activity • Ability to see change/ difficulties as a business opportunity

6. What is entrepreneurship? Almost all definitions of entrepreneurship include: • Initiative taking • The organizing and reorganizing of social/economic mechanisms to turn resources and situations to practical account. • The acceptance of risk or failure

7. Concept of Entrepreneur • Comes from the French meaning “between-taker” or “go-between” • Earliest Period • Marco Polo who attempted to establish trade routes to the far east • The money person (forerunner of Capitalist) entered into contract with the go-between to sell his goods. • Early Capitalist

8. Concept of Entrepreneur • Middle Ages • The term entrepreneur was used to describe both an actor and a person who managed large production projects. • This person did not take any risks, managing the project with the resources provided. • A typical entrepreneur was the cleric who managed architectural projects.

9. Concept of Entrepreneur • 17th Century • The entrepreneur was a person who entered into a contract with the government to perform a service • 18th Century • The entrepreneur was distinguished from the capital provider. Eli Whitney & Thomas Edison were unable to finance invention themselves. • Both were capital users (entrepreneurs), not capital providers (venture capitalists.

10. Concept of Entrepreneur • 19th & early 20th Century • Viewed mostly from an economic perspective • Contributes his own initiative, skill and ingenuity in planning, organizing, and administering the enterprise … assuming the chance of loss and gain (risk taker) • Andrew Carnegie is an example, building the American steel industry through competitiveness rather than creativity

11. Concept of Entrepreneur • Middle 20th Century and Beyond • The notion of an entrepreneur as an innovator was established. • Innovation, the act of introducing new, is one of the most difficult tasks for the entrepreneur. • John Pierpont Morgan and Edward Harriman are examples of this type of entrepreneur. • This ability to innovate is an instinct that distinguishes human beings from other creatures and can be observed throughout history.

12. DEFINITION OF ENTREPRENEURSHIP • The process of creating value by pulling together resources to exploit an opportunity • Entrepreneurship is the dynamic process of creating incremental wealth

13. DEFINITION OF ENTREPRENEURSHIP • The process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.

14. Who is an Entrepreneur? To the economist , an entrepreneur is one who brings resources, labour, materials, and other assets into combinations that make their value greater than before, and one who introduces changes, innovations, and a new order.

15. Who is an Entrepreneur? Definition Someone who perceives an opportunity and creates an organization to pursue it

16. Reasons for becoming an Entrepreneur • To increase earnings • To introduce a new and creative idea • To provide a needed service • To enjoy the satisfaction of developing your own successful venture • To become your own boss

17. Reasons for becoming an Entrepreneur • independence • enjoyment, challenge, more room for creativity • personal satisfaction • feeling of autonomy and freedom

18. Rewards of Entrepreneurship • Opportunity to gain control over ones own destiny • Opportunity to reach one’s full potential • Opportunity to benefit financially • Opportunity to contribute to society and be recognized for one’s efforts • Freedom from supervision and rules of bureaucratic organizations • Freedom from routine, boring and unchallenging jobs • Freedom from the limits of standardized pay

19. Drawbacks of Entrepreneurship • Uncertainty of income • Complete responsibility • Risk of losing your entire invested capital • Long hours and hard work • Emotional loneliness • Disruptions to personal life • Strong possibility of failure • Lower quality of life until the business gets established

20. Drawbacks of Entrepreneurship • Which drawbacks are most disturbing to you and why? • Can anything be done to reduce them?

21. How to Reduce the Drawbacks of Entrepreneurship • Mental preparation • Planning – Develop a thorough Business Plan • Research • Training • Start small • Start & operate business on the side • Start early

22. KEY ELEMENTS IN ENTREPRENEUR’S BACKGROUND √ Supportive childhood family environment √ Having a parent who is self-employed helps √ Education is important √ Aged 22 – 45 when starting venture √ Work history: dissatisfied with company job but has technical knowledge

23. ENTREPRENEUR VS INVENTOR • An inventor creates something for the first time. While the entrepreneur falls in love with the new venture, the inventor falls in love with the invention and often requires the expertise of an entrepreneur to launch a new venture • Historians classify Albert Einstein as an inventive genius and Henry Ford as an entrepreneurial genius.

24. The Entrepreneur • The classic entrepreneur is often seen as one who possess certain innate traits, often referred to as Personal Entrepreneurial Characteristics ( PECs)

25. PEC’s of (Successful) Entrepreneurs • Committed to success • Have high work standards • Self-motivated & able to motivate others • Enjoy working and sharing ideas with people at all levels • Hardworking • Enthusiastic and Optimistic • Accept Responsibility • Are good leaders • Analyze situations easily and make and implement decisions quickly • Creative thinkers, able to identify a positive trend within a negative situation • Good planners and organizers

26. PEC’s of (Successful) Entrepreneurs • Trustworthy people with integrity • Disciplined and determined • Committed to their projects • Self confidence • Enjoy a challenge • Energetic, always on the go • Information seeking • Persuasive and good networkers

27. PEC’s of (Successful) Entrepreneurs • There is really no neat set of behavioral attributes that allow us to separate entrepreneurs from non-entrepreneurs • From studies done, it has been observed that entrepreneurs have a greater desire to be in control of their own fate, having a strong desire to be successful / high achiever

28. PEC’s of (Successful) Entrepreneurs • Are PECs innate or can they be taught? • Two opposing schools of thought: • True entrepreneurs are born with special personality traits that create business. These traits cannot be taught or learned. • Entrepreneurial tendencies can be learned and developed through experience and business training.

29. Supporting & Enabling factors (SEF’s) • Supporting and Enabling factors (SEF’s) are factors which are largely outside of the control of the entrepreneur but which nonetheless played a critical role in the success of the entrepreneur (Orville Reid 2011). • The concept of SEF’s concedes that for success to occur the entrepreneur must have PEC’s as well as SEF’s which contributes to success.

30. Supporting & Enabling factors (SEF’s) • Work experience • Prior business experience • Finance knowledge • International experience • Technical support • Recession / crisis • Outside support • Owning assets • Family support • Market growth

31. Entrepreneurship –The fear of failure • What is failure ? • Is it OK to fail? Many cultures, including ours stigmatize failure • A business may fail and many do • An entrepreneur only fails when he never tries again • Entrepreneurs use business failures as opportunities to start over again and to learn from them

32. Capital Ideas Technology People Factors influencing the growth of Entrepreneurship

33. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Social Factors • Natural entrepreneurial spirit • Said to be part of the Jamaican psyche • Probably connected with “Anancyism” – from stories of Bro. Anancy who tricked others to get what he wanted. • Sometimes motivated by necessity – it is said that “necessity is the mother of invention” • Some persons have no option but to hustle

34. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Social Factors • The fulfillment of being your own boss • The desire for self actualization

35. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Social Factors Cont’d • The role of the schools & other training institutions • Entrepreneurship training is being introduced in schools especially at the tertiary level • HEART Trust/NTA ensures trainees are exposed to entrepreneurship

36. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Social Factors Cont’d • The role of women in entrepreneurship • More women are engaging in business – to support their family and fulfill higher aspirations.

37. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Cultural factors • Ethnic groupings • Some ethnic groups (Chinese, Jews, Indians) have a tradition of being involved in business in Jamaica. • Cultural penetration • Cable TV – showing foreign cultures; promoting wealth & affluence

38. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Economic The state of the Jamaican economy is both a push and pull factor for persons to engage in entrepreneurship • Stable economy • Helps business planning, gives confidence for starting new business • High inflation • Wreaks havoc with business planning but encourages trading (buy-&-sell) operations

39. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP • High unemployment • Increases the availability of unskilled & skilled labour at reasonable pay rates Economic • The effect of interest rates • High rates reduce ability to repay loans, makes loan financing unattractive for funding business • Stable exchange rates • Helps keep prices constant, builds business confidence

40. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Economic • Information & Communications age • Technology replacing employees • Technology increases business efficiency, but reduces need for certain human skills. • Creativity, innovation & business start-up seen as solutions • Opportunities are created for start-up of new high tech businesses

41. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP • Economic • Globalization & Liberalization • Removal of trade barriers between & within countries • Increases trade with the rest of the world

42. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Globalization • The ongoing process of integration of regional economies, societies & cultures through international exchange • Has economic, technological, socio-cultural, political and biological components • Include the transnational dissemination of ideas, language and popular culture

43. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP • The world becoming “smaller” • Transportation & communication are easier and faster • General state of change • Paradigm shifts taking place in expectations & possibilities Globalization

44. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP • Technology used to do things better, to do new things • Mobile technology • Empowering people. Bringing the world to you. Control your view of the world at the touch of a button • Robotics, Management Information Systems, Expert Systems, • Marketing possibilities via the Internet • Showcase your products and services to the world at a small cost Globalization

45. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP Globalization • The impact of liberalization on local & international markets • Lowering/removal of barriers to trade of goods & services • Exporting possibilities • Lower import cost, increased specialization, increased export possibilities

46. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP Globalization • Mobility of labour / jobs • Live anywhere / work anywhere possibilities increasing via telecommuting, telemarketing

47. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP Regionalization - one component of Globalization • Regional trading blocks • CARICOM - Caribbean Common Market • Allows free movement of capital & labour • CSME – CARICOM Single Market & Economy • Deepening the integration process, provides a unified market for goods within CARICOM

48. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP Regionalization - one component of Globalization • Regional trading blocks • FTAA – Free trade area of the Americas • Opening up of markets (North America, Central America, South America & the Caribbean) • NAFTA – North American Free trade Agreement (Canada, USA & Mexico) • EU – The European Union

49. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Political What specifically have governments done to promote entrepreneurship • Adopted a capitalist free market economy for Jamaica • Encourages the private sector to be the engine for economic growth

50. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP Political • Encourage & speak of the need for entrepreneurship • HEART Trust/NTA created an entrepreneurial unit for training, development & promotion of entrepreneurship in Jamaica