The evolution of the concept of entrepreneurship
Basically, the
concept entrepreneur is derived from the French concept “Entreprendre” which
literarily is equivalent to the English concept “to undertake”. From the
business point of view, to undertake simply means to start a business
(QuickMBA, 2010). From the historical point of view, Schumpeter (1951) coined
out that the French economist Richard Cantillon, was the first to introduce the
concept "entrepreneur" in his work in 1755. He viewed the
entrepreneur as a risk taker (Burnett, 2000).
Entrepreneurship
defined
Ø The process of identifying business opportunities,
allocating resources, and taking risks to produce goods and services of value,
through creative and innovative processes, to satisfy unmet consumer demands.
Ø Entrepreneurship refers to the capacity required for
identifying and generating innovative business ideas, mobilizing resources,
organizing production of goods and services and marketing the products.
Ø Is the process of
exploring the opportunities in the market place and arranging resources
required to exploit these opportunities for long term gain.
Terms commonly used in
Entrepreneurship
Ø Business
opportunity. These are prospects of going into a
successful business brought about by identifying gaps in the market or the
market needs that are not addressed or satisfied.
Ø A Need. Needs are the basic things that an individual must have in
order to survive as human being. The example of needs includes Food, Shelter, Clothing.
Ø A service. Is an intangible offer from one person to another where the
receiver gets satisfaction but not real ownership.
Ø Resources. Refers to the endowments that may exist in an area or
locality. Eg Human resource,
Material, Financial, Technical resources e.g. Machines
Ø A good. Is tangible item that has monetary value and can be sold or
purchased.
Ø Asset. Assets are resources owned by business and have future
economic value. There
are three types of assets. They include, Current/non-current assets, Non-current
assets/fixed assets and Intangible assets
Ø Current/non-fixed
assets. Assets are resources that are owned
by business for short period of time less than a year. Eg Stock, cash at hand,
cash at bank, debtors.
Ø
Non-curent
assets/fixed assets. Assets are
resources that are owned by business for long period of time. They are used for
running of the business and are not intended for resale. Eg, Land, Building, Machinery, Equipment,
Computers, Furniture
Ø
Depreciation.
Is the gradual reduction in the value of fixed assets through usage in the
production process and in the business operation
Ø
Liabilities. Refers
to the financial obligation of the business. They are claims against the
business which the business will pay. They are debts that must be paid after a
long period of time. They include Bank loan, Bank
overdraft, services that other people paid for in advance, outstanding
expenses. Liabilities are divided into (Types of liabilities): -
I.
Non-current Liability. These
are obligations which may be paid or settled after long period of time. They
take more than one trading period (1 year).
II.
Current Liability. These
are obligations which must be settled quickly within a year. Eg creditors, Bank
overdraft, outstanding expenses.
Ø
Sole proprietorship.
Is the type of business that belongs to one person. He/she is responsible for
financing, management, receives all profits and bears all costs.
Ø
A limited liability company. This is business formed when two or more people come
together and subscribe to its share capital and thereby become its owners. Its
legal entity that can sue or be sued. A limited liability has perpetual life
separate from its owners.
Ø
A cooperative society.
Is legal form of business set by people who share a common interest. Such an
interest may be to supply themselves with goods and services at a reasonable
costs than it would be if the bought it from retailers/middlemen, to supply
their goods and services in large quantity to large market at higher price.
Ø Personal selling. It is where teams of sales person
are employed to sell directly to customers. Eg Hawkers.
Ø Stock cards. These are documents where information regarding stock items
are kept in a written form
Ø Stock
taking. Is the actual counting of the stock
available in the store. In the same way Physical
stock counting is also where the stock is physically counted to ascertain
what is available and cross checks to what is expected to be there as per the
stock cards. Therefore, Stock taking and Physical stock counting mean the same.
Ø Re-order
level. Is the minimum level below which
stock should not fall before fresh orders are placed.
Ø Lead time. Refers to the time it takes between when an entrepreneur
places an order and the actual time when the ordered goods are received.
Ø Capital. Refers to the money invested into the business by owner.
Ø Fixed
capital. This is capital tied inform of
fixed assets which are maintained in business for long period of time. Eg land,
Plants, furniture.
Ø Working
capital. Is the difference between current
assets and current liabilities of a business.
Ø Circulating
Capital. Is the value which is necessary to
keep the business running and to meet day to day running of the business.
Ø Liquid
capital. This is the value of current assets
in liquid or cash form
Ø Operations
budget. Is the summary of income and
expenditure projections or income and expenditure of an enterprise over
particular period of time.
Ø Book
keeping. It is the process of recording
business transactions accurately and systematically. Book keeping consists of
recording, classifying and summarizing of business events that results into the
transfer of money from one person to another.
Ø Financial
plan is the plan that covers financial
requirement s of the proposed business ideas.
Ø Production
plan. Is the analysis of project need for
manufacturing or producing proposed products (goods and services)
Ø Marketing
plan Is the analysis of possible
position and opportunities of the business being planned in the present market
situation.
Ø Money. Refers to the medium of exchange. It refers to anything that
is generally accepted as medium of exchange.
Ø Debit note. Is document sent by the seller to the buyer to correct an
under charge from original invoice.
Ø Credit note.
Is document sent by the seller to
the buyer to correct an overcharge from original invoice.
Ø Drawings: Refers to the money or goods taken out of
the business by the owner for own use
Why
we study entrepreneurship
ü It introduces
learners to marketing skills with the aim of making profits
ü Its promotes the
spirit of creativity and innovation in the learners.
ü Enables the
development of positive attitude and culture towards work, business, self-employment,
entrepreneurship creativeness and other careers in the business area
ü Helps individuals
to learn how to make use of available resources in the economy
ü Helps to teach
entrepreneurs how to mobilize resources to start up small businesses.
ü Helps to acquire
knowledge for scanning the environment to identify relevant business
opportunities, selecting a product or project and manufacturing the product.
Push
Factors of entrepreneurial activity.
Ø Under
employment/low payments (government salary scale for the lab technicians
750,000.
Ø Poor working
conditions i.e. working from early morning to late evening
Ø UN employment i.e.
every year over 700 laboratory assistants qualifies and they all search for
jobs and 350laboratory technicians qualify and over 250 lab- technologists
qualifies.
Ø Lack of job
security. The rate of employee termination is high due to the complicated
employment terms and conditions.
Ø Self-reliance:
i.e. self-employed, employing others, etc.
Ø Attractive returns
for example profits employment opportunities to the people.
Ø Prestige/respect
(Godon wavamuno, Madhavani, Mulwana, Agarkhan campany, Mukwano, Basajjabalaba, etc).
Ø Discovery of the
new resources i.e. New technologies and methods of diagnosing diseases,
Ø New technology for
example the automation of the laboratory work, gene expert technology,
Ø Government
incentives/assistance. Organized groups for the youth groups
Ø Peer pressure. In
most cases when our groupments start up business we get motivated to start
businesses also.
Role of entrepreneurship in economic development
·
Promotes capital formation. Entrepreneurship promotes capital formation by mobilizing the idle or unused resources in an area.
·
Provides employment. It provides immediate
large-scale employment. Thus, it helps
in reducing the Unemployment problem in
the country.
·
It promotes balanced regional development. As it helps to reduce the concentration of economic power.
·
It simulates the equitable redistribution of wealth/income in the
country.
·
It encourages effective resource mobilization of capital and skills which might otherwise remain unutilized.
·
It also induces backward and forward linkages which
stimulate the process of economic development in the country.
·
It also promotes country’s export trade and improves balance of payment (BOP) position which leads to economic development.
Barriers to entrepreneurship
Barriers to entrepreneurship are factors
that hinder development of entrepreneurship.
Ø Poor entrepreneurial skills. Most entrepreneurs
and potential entrepreneurs have low or no entrepreneurial skills. They, lack
creativity, innovation, endurance, flexibility and other entrepreneurial
characteristics.
Ø Lack of business and technical skills. Business skills in
Marketing, accounting, management etc are required by all practicing
entrepreneurs to effectively manage their entrepreneur ventures.
Ø Lack of role models: Uganda is
seriously short of role in the field of entrepreneurship which limits the
number of people who willingly aspire for a carrier in entrepreneurship. Many
people have a very low opinion of struggling entrepreneurial upstarts while
they consider the few successful entrepreneurs to the supper lucky individuals
who can only be admired but no be emulated.
Ø Lack of business ethics: Many
entrepreneurs have failed or been compromised, because of unethical behavior.
Unpaid loans, Unpaid or highly exploited employees, unpaid suppliers,
substandard goods, tax evasion, corruption, smuggling etc. Characterize many
business today.
Ø Lack of continuity: Very few firms in Uganda are known
to survive the death of their founders. Very few entrepreneurs have the
opportunity to pass on their enterprise to the new generation and watch from
the side as the enterprises continue to prosper.
Ø Political instability: Political
instability has dogged different regions of Uganda for the past 40 years. This
state of affairs has robbed Uganda of many entrepreneurs, and many more
entrepreneurs have lost lifetime savings and business assets, while others have
been forced by instability to close.
AN ENTREPRENEUR
The term “entrepreneur” was applied to business initially
by the French economist, Caltillon, in the 18th century; designate a
dealer who purchases the means of production for combining them into marketable
products. A Frenchman J.B.
Say expanded Cantillon’s ideas and conceptualized the
entrepreneur as an organizer of a business firm, central to its distributive and production functions. Beyond
stressing the entrepreneur’s importance to the business, say did little with his entrepreneurial analysis.
According to J.B. Say, an entrepreneur is the economic agent who unties all means of production, the labour force of the
one and the capital or land of the other and who finds in the value of the
products his results from their employment, the
reconstitution of the entire capital that he utilizes
and the value of the wages, the interest and the rent which he pays as well as profit belonging
to himself. He emphasized the functions of co- ordination, organization
and supervision. Further,
it can be said that the entrepreneur is an organizer and speculator of a business enterprise.
The entrepreneur lifts economic resources out of an area of lower
into an area of higher productivity and greater.
The New Encyclopaedia Britannica considers an entrepreneur as “an individual who bears the risk of operating a business in the face of uncertainty about the future condition.
Briefly, an entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the organization going with his ability to identify them.
An entrepreneur:
Is someone who has
the ability to spot and evaluate business opportunities, gathers necessary
resources, starts a business and takes necessary actions to ensure its success.
An entrepreneur is a person who has the ability to sport and
evaluate business opportunities, gather the necessary resources, starts a
business and takes appropriate actions to ensure its success.
An entrepreneur must add value to the existing resources to
produce goods and service. The one who simply buys and sells goods is not an
entrepreneur but a trader.
Example. When you buy maize grain from Masindi and come to
sell it direct to another person in Maracha without grinding and packing it you
are a trader but if you do grading and pack aging and branding, you are an
entrepreneur because your action of grinding, packaging, branding adds value.
An entrepreneur is also defined as a person who observes the
economic social and natural environmental, identifies opportunities in the
business or non-business environment, gathers necessary resources for the
activity, implements the activity, receives financial or social and is
concerned about the possible damages to the natural and social environment.
QUALITIES OF SUCCESSFUL ENTREPRENEURS
Qualities
or Personal Entrepreneurial Characteristics (PEC) of successful entrepreneurs
refers to the desired traits which enable an entrepreneur to do what is
expected of him or her and succeed in business. The word “quality” can be used
interchangeably with “Personal entrepreneurial characteristics” also popularly
known as PECs. These are;
Ø Persistence: Continuously
and consistently struggles to achieve success in the business despite the
difficulties he may encounter.
Ø Risk taking: The
entrepreneur takes moderate risk after assessing the advantages and the
disadvantage personally. He/she states a preference for situation that involves
calculated
risk that are moderate risks.
Ø Demand for efficiency and equality: The entrepreneur does things that meet or surpass
existing standards. He/she strives to do things better, faster, cheaper, etc.
Ø Goal setting:
He/she sets clear and specific short term objectives. He/she also sets long
term goals.
Ø Information seeking: Personally seeks information on clients, suppliers or
competitors and make positive efforts in finding relevant information for use
in the business. He/she looks into information source, individuals, agencies,
etc for use in making decisions and improving knowledge and business fields.
He/she consult experts on business for technical advice.
Ø Systematic planning and monitoring: He/she keeps data and controls points for efficient
monitoring of activities. The entrepreneur develops and uses logical
step-by-step plans in order to reach goals. He/she monitors progress and
switches to other alternatives strategies when necessary to achieve goals.
Ø Persuasion and networking: He/she links positively with other individuals,
agencies and other groups in order to maintain business contacts at a higher
level. Convinces others to work or help for the cause of the business in a
positive manner. Uses deliberate strategies to influence or persuaded others.
Ø Self-confidence: The entrepreneur has a strong belief in self and own
abilities. He/she expresses confidence in own abilities to complete difficult
task or meet a challenge.
Ø Perseverance: Entrepreneurs continue to
operate despite the challenges they may face, there action oriented, learn
quickly and adapt techniques to perform better and even to improve their
business.
Ø Leadership skills: They have the ability to
give direction to the others and to influence others in the lines of businesses
and profit generation.
Ø Interpersonal
relationship: Entrepreneurs are more concerned with satisfying the peoples’/customers’
needs. They have senility to the people’s needs with the intensions of
achieving the set goals.
Ø
Confidence. Confidence is the reliance on self that one could do
something. ‘I can do’ or ‘I shall overcome someday’ like mental makeup. It is a
belief on own ability. It is not fiction about self. A critical self-analysis
could bring about such confidence.
Ø
Tasks or Result Oriented. The
entrepreneurs are tasks or result-oriented persons and direct all their actions
toward achieving that desired result only. They will never lose their tracks to
achieve the predetermined results.
Ø
Profit-oriented. Profit orientation is the
commitment to the economic utilization of the resources to ensure a profit.
Entrepreneurs take venture for making a material gain. This gain is the profit
that drives them to take ventures.
Ø
Versatile. The entrepreneurs are the jack-of-all-trades, that is they
undertake any activity on their way. Therefore, they are not rigid.
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