FOUNDATIONS of ENTREPRENEURSHIP CLASS TWO: INTRODUCTION TO ENTREPRENEURSHIP Elikem Nutifafa Kuenyehia

Class Outline Hand in class questionnaire Recap of class 1 Recap of real life case study Introduction to entrepreneurship Definitions

Recap of Class One What did you learn about entrepreneurship from Class One? What did you learn about opportunities and challenges of entrepreneurship in Ghana? What did you learn from the Guest Speaker Kwaku Ofosu-Bediako

Class Questionnaire Hand in to Malik now please

Case Study Write Up

Introduction to Entrepreneurship History and Development of Entrepreneurship - Entrepreneurship evolved from French word “entreprendre” meaning “to undertake” - Other referrals include middleman, director of resources, tax contractor - Richard Cantillon maintains entrepreneurs as middlemen in his postulation of agents of economy (landowners, entrepreneurs, hirelings - In mid 20th century definition of entrepreneurship were based on economic situations

Some Definitions An entrepreneur is ‘a necessary destabilising force bringing economic growth through the disequilibrium of constant change and innovation’. -Joseph Schumpeter ‘Individual who undertook formation of an organisation for commercial purposes’. - Adam Smith ‘It is possessing the know-how to find, marshal and control resources (often owned by others) - Timmons

My Definition ‘Is the process of risking resources based on an idea (or series of ideas) to develop the idea or ideas into goods and/or services that people perceive as valuable and are willing to pay for, in such a way as to maximise profit for the enterprise risking the resources’

Entrepreneurship as a process Entrepreneurial process begins with an idea which develops into an opportunity or vice-versa eg. Elizabeth Villars – Camelot idea in 1974 Idea and opportunity are intertwined by size of willing patronisers Idea must remove an existing pain Key resources risked include time, human and capital resources One Cycle Entrepreneurship vs Repeated Cycle

Entrepreneurship as a state of mind or series of attributes Entrepreneurship as a characterisation of attributes that enable people to exploit opportunities for financial reward - Motivation factor is the individual’s state of mind Entrepreneurship as a pattern of behaviour Ability to build a vision from nothing-Timmons Complementing one’s skills by building a venture team

Forms of entrepreneurship Social Entrepreneurship Creating social change through an enterprise Enterprises include non-profit organizations and businesses set up with a social purpose Examples – Grameen Bank, Sinapi Aba Trust, Teachers Fund Financial Services Intrapreneurship Formation of new idea within an existing organisation Entrepreneurial concept belongs to the organisation and not the intrapreneur. Financial rewards also go to the company (Intrapreneur’s reward is limited) Examples – Google (3M), MET Insurance (MET2U)

Forms of entrepreneurship cont’d Extrapreneurship Break off from existing company New company may carry similar idea from parent company May have financial and social support from parent company New enterprise may be in the same business line as the existing company or a supplier to it

Incubation Involves “nurturing” start-up business with an enabling environment, material and intangible resources Set up by universities or high tech parks Examples - Busy Internets Incubation Program, Meltwater Foundation to establish a Non-Profit Incubator In Ghana?

Opportunity entrepreneurship vs. Necessity entrepreneurship Opportunity entrepreneur develops an idea to exploit an existing opportunity Necessity entrepreneurs result from lack of alternatives Entrepreneur vs. Businessman All entrepreneurs are businessmen but not all businessmen are entrepreneurs A Businessman establishes a business for personal goals while an entrepreneur establishes an enterprise for profit and growth –Beaver and Jenkins

Evolution of entrepreneurship in Ghana Entrepreneurship began before the arrival of the Europeans Europeans were also entrepreneurs as they risked resources to identify trading opportunities in Ghana Post independence witnessed the introduction of a mixed economy in Ghana Nkrumah’s Government encouraged private enterprise The NLC government also supported local entrepreneurs when it published in 1968, ‘The Promotion of Ghanaian Business Enterprise’ Busia’s government was the first to extensively draw up policies and establish bodies to aid entrepreneurs

Evolution of entrepreneurship in Ghana cont’d Rawlings Government introduced ERP and SAP Kufour’s government is dedicated to making the private sector the engine of growth in the economy. Policies aimed at encouraging entrepreneurship can be found in ‘KOE’ Mills Government ‘better Ghana agenda’ aim to provide various incentive schemes to ease credit delivery to entrepreneurs, to establish export trade houses, and develop an incubation policy

Role of entrepreneurship in a country’s economy development Creates jobs Drives economic growth Frees up states resources Fosters competition Fosters innovation Increases productivity Provides a tax base for government

Challenges facing Ghanaian Entrepreneurs Access to finance Low incomes and corresponding low savings culture Little initiative by banks to be creative Human Capital Unfriendly government machinery Political and economic instability Access to information

Factors favouring entrepreneurship Political stability Macro-economic stability Secure property rights Ease of starting a business Free flow of information The rule of law and mechanism for contract enforcement Availability of human capital Access to finance Size of the market in terms of numbers and income levels Regulation of businesses Culture

Institutions that help entrepreneurship to thrive An independent central bank An independent judiciary An independent media and easy access to credible information Neutral and professional army or security forces

Why become an entrepreneur? Most graduate students take regular executive or civil service career paths while Some, after a few years of experience quit to start their own enterprise or buy one. Appeal for joining ‘Corporate Ghana’ or civil service: More security Certainty of income Greater training opportunities Lower levels of stress Smaller personal risk Responsibility Autonomy & desire to control one’s own destiny ....etc

Why become an entrepreneur? Others still prefer entrepreneurship because; Autonomy & Desire to control own destiny Flexibility Opportunity to reap unlimited profits Unemployment & Underemployment Family