Small business management and Entrepreneurship David Stokes Nicholas Wilson Small Business Management and Entrepreneurship Fifth Edition

Lecture outline What is entrepreneurship? How is an entrepreneur? Why become an entrepreneur? Motivations for starting a business What 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 opportunity The 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 business Pull influences Desire for independence Desire to exploit an opportunity Turning a hobby or previous work experience into a business Financial incentive

Push influences Redundancy Threat of unemployment Disagreement 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 business Marital status: being married increases the chances that an individual will be self employed Social class: Education: there is no clear co-relation between the two Ethnicity: minorities are among the most entrepreneural

Types of owners-managers and entrepreneurs We 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 traits What does it take to become a entrepreneur?

Big five personality traits Need for achievement Need for autonomy or independence Locus of control – ability to control their environment Risk taking propensity – different levels of risk takers Self efficacy – belief in their ability to undertake and accomplish some particular task or activity

Innovation Proactive approach Self motivation Tolerance of uncertainty Opportunistic behavior Creative Visionary Manipulative Impatient Energetic Charismatic

Towards the entrepreneurial path Please refers to the history of the two entrepreneurs provided to you.

The building blocks of successful entrepreneurship Personal attributes Innovative Determined External focus Team leader

Technical skills Product/service knowledge Market/industry knowledge

Entrepreneurial management Opportunity identification Resource leveraging Networking Decision-making

Management competencies Marketing Finance Human relations