chapter two Flashcards
Entrepreneur
An entrepreneur is an energetic moderate risk taker
Differences between entrepreneurship and self-employment
a)Has invested in different businesses. Normally have one business.
b)Not everyone can be an entrepreneur, it is a
title bestowed upon you.Anyone can be self-employed because
anyone can have a business idea, register a company and try to make the business work.
c)One cannot start a business as entrepreneur to be an entrepreneur.One can start as self-employed and not as an
entrepreneur.
d)You can have people who are working with you and not just under you i.e. partners.
You can have people working for you i.e.
employees
e)The business outruns the existence of the owner because, workers are working with
him hence understand vision, mission and value of the business.
If one decides to retire, the business dies as
well because workers are working for him,
hence just run the business of the owner, they
do not understand the mind of the owner.
The importance/advantages of self-employment
i. Being your own boss: One is control of all key decisions affecting his business because it
is your business you have started. Control over working conditions the working surroundings you cannot be fired, transferred.
ii. Flexibility: To decide hours of operation, working conditions, business location. You do
not have to go where your employer forces you to do work.
iii. Harmony with your life: If you are working for yourself, chances are you will be doing
ok that you enjoy hence self-fulfillment.
iv. Income generating: If all goes well and you are making money, chances are you will make
more money than you did while working for someone else.
v. Profitable: You get to enjoy all the business profits. If your business is doing well, you may
not have to share proceeds with anyone else
Requirements for entry into self-employment
i. Will you enjoy your work?
ii. Skills-Skills help the entrepreneur to start and operate an enterprise.
iii. Entrepreneurial skills: Acquired through attending formal courses, working with
qualified people or listening to friends.
iv. Capital: includes personal savings, money from friends and relatives or from financial
institutions.
v. Assets- Machinery, equipment and tools acquired using entrepreneur’s capital raised.
vi. Premises: Can be rented, family-owned premises, construct their own. Permanent premises
give confidence to customers.
The role of an entrepreneur in business
- Initiator: One who initiates the process of creating a business by coming up with the idea
for the business and planning out how to turn that idea into a reality. - Risk taker: He/she is the biggest risk taker in business because he is the one who invests
capital and accountable in the face of failure. - Accepting risk: Through enterprising they accept risk to provide solutions to people’s
problems.
Psychological theory: Advocated by David McClelland
The need for achievement
Internal locus of control- Entrepreneurs enjoy taking personal responsibility for actions
and decisions made by them. Believes he is personally responsible for the way his life turns out to be. Success to them is a product of personal effort not luck or fate.
iii. Risk taking propensity- The probability of receiving rewards associated with success of
a proposed venture which is required by an individual before he/she will subject
himself/herself to the consequences associated with failure
Factors inhibiting Entrepreneurship culture
1) Religion: Religious beliefs control people’s behaviours.
2) Language barrier: The absence of a common language inhibits one from investing in particular areas, for people tend to relate with people who speak their language.
3) Attitudes towards innovations: There are some cultural practices that are against innovations, change or new ways. They fear that new things will interfere with their way of life.
4) Networks: Without proper networks to provide information entrepreneurship cannot thrive.
5) Technology: Many people completely have not adopted to technology out of free will,
while others have not been able to access technical skills and new knowledge inhibiting entrepreneurship.
6) Beliefs: Beliefs in the existence of all-powerful forces that controls everything hinder
human activities in entrepreneurship.
Entrepreneurship culture in Kenya is influenced by
- Availability of funds * Modern technology * Availability of developed infrastructure *
Appropriate knowledge and skills * Appropriate training * Government policies * Individual
strength and talents * Availability of markets * Availability of resources * Culture
Sociological theory
The impetus for entrepreneurship forces include the following:
i. Negative displacement which include marginalization of a person or groups of people
from the mainstream of society (Somalis, Jews etc).
ii. Between things- People who are between things are not in the ‘middle of things’ do not
belong in either and therefore are likely to seek entrepreneurial activities e.g. between
student life and career/ prison and freedom.
iii. Positive pull from potential partners, mentors, parents or customers through
encouragement by sharing experience, helping the work and spreading the risk.
iv. Positive push through such things as a career path, education, experience may offer
entrepreneurial opportunities.
