David StokesNicholas Wilson

Small Business Management and Entrepreneurship

Fifth Edition

Lecture outlineWhat is entrepreneurship?How is an entrepreneur?Why become an entrepreneur?Motivations for starting a businessWhat does it take to become an

entrepreneur?

What is a entrepreneurship?It is seen as a fundamentally important part

of modern economic and social life. Entrepreneurs play a key role in our lives, and yet there is an extraordinary lack of clarity concerning both what entrepreneurship is, and exactly what entrepreneurs do and what sets them apart from other managers.

An Austrian economist defined entrepreneurship as the “competitive behavior that drive the market process”.

Thus it creates value for both market and the society

So lets look at some simple definitions of entrepreneurship and entrepreneurs………………………

Entrepreneurship is a way of thinking, reasoning and acting that is opportunity-based. It results in the creation, enhancement, realization and renewal of value not just for the owners but for all the participants and stakeholders.

Entrepreneurship is the process of creating something new of 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.

In short entrepreneurship comprises of the following three behavioral components:Identification, evaluation and exploitation of an

opportunityThe management of a new or transformed

organization to facilitate the production of new goods and services

The creation of value through the successful exploitation of a new idea

Do you think that entrepreneurship is commonly linked directly to small business management?

What problems can small business face in terms of entrepreneurship?

Motivations for starting a businessPull influences

Desire for independenceDesire to exploit an opportunityTurning a hobby or previous work experience

into a businessFinancial incentive

Push influencesRedundancyThreat of unemploymentDisagreement with previous employer

Do you think age, gender, marital status, social class, education and ethnicity has anything to do with the production of entrepreneurs?

Age: 35-50, and then 65+Gender: they account for 40% of workforce in

UK but less than 25% are into small businessMarital status: being married increases the

chances that an individual will be self employedSocial class: Education: there is no clear co-relation between

the twoEthnicity: minorities are among the most

entrepreneural

Types of owners-managers and entrepreneursWe can classify them as follows:

The craftsperson – who provide a service themselves and enjoy doing it, e.g. hair dressers

The promoter - often starts, grows and sells several different businesses in the pursuit of personal wealth

the professional manager – the owner who adopts a more structured approach to building an organization on the lines of a “little big business’.

Entrepreneurial traitsWhat does it take to become a entrepreneur?

Big five personality traitsNeed for achievementNeed for autonomy or independenceLocus of control – ability to control their

environmentRisk taking propensity – different levels of

risk takersSelf efficacy – belief in their ability to

undertake and accomplish some particular task or activity

Other personality traits Proactive approachSelf motivationTolerance of uncertaintyOpportunistic behaviorCreativeVisionaryManipulativeImpatientEnergeticCharismatic

Towards the entrepreneurial pathPlease refers to the history of the two

entrepreneurs provided to you.

The building blocks of successful entrepreneurshipPersonal attributes

InnovativeDeterminedExternal focusTeam leader

Technical skillsProduct/service knowledgeMarket/industry knowledge

Entrepreneurial managementOpportunity identificationResource leveragingNetworkingDecision-making

Management competenciesMarketingFinanceHuman relations