1. ENTREPRENEURIAL SKILLS ENT3001/3003/4003
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. Factors influencing the growth of Entrepreneurship
Ideas
Capital
People
Technology

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
Economic
High unemployment
Increases the availability of unskilled & skilled labour at reasonable pay rates
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
Globalization
The world becoming “smaller”
Transportation & communication are easier and faster
General state of change
Paradigm shifts taking place in expectations & possibilities

44. FACTORS INFLUENCING THE GROWTH OF ENTREPRENEURSHIP
Globalization
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

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

51. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political
Government policies
Have been reducing Government ownership of businesses by privatizing state owned enterprises (JPS, the telecommunications sector, Air Jamaica, the sugar companies, etc.)

52. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political
Government policies
Government’s role has been changing to that of facilitator & referee, rather than owner & operator evidenced by the establishment of bodies such as the Office of Utilities Regulation -OUR, Fair Trading Commission - FTC, Anti-Dumping Commission, Financial Services Commission.

53. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Business facilitation strategies
E-government initiatives e.g. Jamaicatradepoint.com
To reduce bureaucracy and lost man-hours; one stop shop for importers/exporters. Certain taxes can be paid on-line
Government entering into bi-lateral agreements with friendly governments to facilitate business.

54. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Access to loan and grant funds for business start-up
The Jamaica Business Development Company
JAMPRO Jamaica Trade & Invest

55. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Business facilitation strategies
Low interest rate schemes for business loans
Lowering of import duties, removal of unnecessary red tape

56. FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Business facilitation strategies
Provision of technical assistance (JBDC)
Tax holidays for businesses which create employment
National Infrastructure Improvements
e.g. Highway 2000; the potential benefits, jobs, other economic spin-offs, the multiplier effect

57. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA

58. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
High Input costs
Cost of economic inputs- due to depreciating exchange rate e.g. Imported materials, rent etc.
Security
Utility and other costs
Transportation of workers
Labour laws – sometimes unfriendly to business

59. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
Crime & violence
Extortion
Robbery & Murder
Population size
Small society, everybody knows everyone else; could restrict individual opportunities e.g. after business failure
Small local market for sale of goods & services

60. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
Geography
Where people live – helps determine & limit the types of opportunities open to them (e.g. Kingston or Portmore vs. rural farming community)
Socialization
Parents & family tends to encourage their children to select more traditional careers in less risky, established professions.

61. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
Anti-entrepreneurial Education System
The system tends to unfairly promote the Sciences as superior to the Arts and other creative endeavours
Entrepreneurship is traditionally promoted as being for persons who are unable to progress in the traditional professional streams

62. CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
Open economies such as Jamaica have little option if we are to survive in this global environment
Jamaica has to find a way to take advantage of opportunities to create and grow businesses to compete against imports, create local employment and increase the standard of living for its peoples.

63. Mistakes Entrepreneurs Make
Poor management
Lack of leadership ability, sound judgment and knowledge necessary to make the business work
Lack of experience
Poor Financial Control
Weak Marketing Efforts
Failure to develop a Strategic Plan

64. Mistakes Entrepreneurs Make
Overconfidence
Uncontrolled Growth
Poor Location
Improper Inventory Control
Incorrect Pricing
Inability to make the “Entrepreneurial Transition”

65. How to Avoid the Pitfalls
Know your business in depth
Set clear goals
Develop a Solid Business Plan
Learn to manage people effectively
Manage Financial Resources
Understand Financial Statements

66. Summary Concept of Entrepreneurship
Rewards and drawbacks of Entrepreneurship
PEC’s of Successful Entrepreneurs
Factors driving the growth of Entrepreneurship
How to avoid the mistakes of Entrepreneurship

67. END OF LECTURE #1 & 2

68. TUTORIAL ACTIVITY What are your strong PECs? What are your weak PECs?
List five of them
What are your weak PECs?
You will need to devise ways of improving each weak area
Identify one specific strategy that you could use to improve each weak PEC

69. TUTORIAL ACTIVITY Select one successful local entrepreneur
Explain why you think this person is successful
Identify four major PECs that this person exhibits
Substantiate your views with evidence of actual events/activities where these PECs were demonstrated

70. TUTORIAL ACTIVITY
Historians classify Albert Einstein as an inventive genius and Henry Ford as an entrepreneurial genius.
Do you agree?
Why?

71. TOPIC TO BE REVIEWED FOR DISCUSSION
Importance of Entrepreneurship in Economic Development
Assess the impact of entrepreneurship on national development.
Research the role of agencies which support the growth of entrepreneurship
What are the emerging business opportunities?