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Samenvatting Project: Company Assignment Business Administration
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Project: Company AssignmentCHAPTER 1 – Introduction of Entrepreneurship
What is entrepreneurship and why is it important?
Entrepreneurship derives from ‘entre’, meaning between and from ‘prendre’, which means to take. The word was
originally used to describe people who ‘take on the risk’ between buyers and sellers or who ‘undertake’ a task such
as starting a new venture. Investors and entrepreneurs differ from each other. An investor creates something new. An
entrepreneur assembles and then integrates all the resources needed (money, people, business model, strategy and
risk-bearing ability) to transform the invention into a viable business.
Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources,
they currently control for the purpose of exploiting future goods and services. It can also be seen as an art of turning
an idea into a business (Fred Wilson). In essence, an entrepreneur’s behaviour finds him or her trying to identify
opportunities and putting useful ideas into practice. The tasks called for by this behaviour can be accomplished by
either an individual or a group and require creativity, drive and a willingness to take risks.
Established firms with an orientation toward acting entrepreneurially practice corporate entrepreneurship.
Entrepreneurial intensity: the range from highly conservative through highly entrepreneurial.Entrepreneurial firms
are typically proactive and are not averse to taking calculated risks. In contrast, conservative firms take more of a
‘wait and see’ posture, are less innovative and are risk averse.
One of the most persuasive indications of entrepreneurship’s importance to an individual or to a firm is the degree
of effort undertaken to behave in an entrepreneurial manner.
Why do people become entrepreneurs?
The three primary reasons that people become entrepreneurs and start their own firms are:
• Be their own boss
Many entrepreneurs want to be their own boss, because either they have had a long-time ambition to own
their own firm or because they have become frustrated working in traditional jobs. By starting a business,
part time individuals gain valuable experience, tuck away the money they earn and find out if they really like
the business before deciding to leave their job. Some other entrepreneurs will time their departure from
their job with the point of time where their client list is large enough and profitable enough to support a
full- time business.
• Pursue their own idea
Some people are naturally alert and when they recognize ideas for new products or services, they have a
desire to see those ideas realized. If the idea is valuable enough to support a business, people decide to
commit tremendous time and energy to start their own business.
• Realize financial rewards
This motivation, however, is typically secondary to the first two and often fails to live up to this hype. The
average entrepreneur does not make more money than someone with a similar amount of responsibility in a
traditional job.
Characteristics of successful entrepreneurs
• Passion for their business
The passion stems from the entrepreneur’s belief that the business will positively inf 氀 uence people’s lives.
Passion is particularly important for both profit and non-profit entrepreneurial organizations because
although rewarding, the process of starting a firm or building a social enterprise is demanding. It is
important to be enthusiastic about a business idea, but it is also important to understand its potential f 氀 aws
and risks.
Entrepreneurs should understand that the most effective business ideas take hold when their passion is
consistent with their skills and is in an area that represents a legitimate business opportunity. There are five
primary reasons why passion is important. Each of these ref 氀 ects a personal attribute that passion engenders,
, removing one of them would make it more difficult to launch and sustain a successful entrepreneurial
organization.
o The ability to learn and iterate
It takes passion and drive to solicit feedback, make necessary changes and move forward and these
won’t always be obvious.
o A willingness to work hard for an extended period of time
Entrepreneurs work longer hours than people with traditional jobs and to do this on a sustained
basis, you need to be passionate.
o Ability to overcome setbacks and ‘no’s’
The energy to continue comes from passion for an idea.
o The ability to listen to feedback on the limitations of your organization and yourself
You have to be willing to listen to the people with good intentions and make changes if it helps. You
have to be able to brush aside feedback from people with bad intentions without letting them get
you down.
o Perseverance and persistence when the going gets tough
Passion is what provides entrepreneurs the motivation to get through tough times.
• Product/ customer focus
The two most important elements in any business are products and customers. An important part of product
and customer focus is the diligence to spot product opportunities and to see them through to completion.
• Tenacity despite failure
Because entrepreneurs are typically trying something new, the possibility of failure exists. In addition, the
process of developing a new business is somewhat similar to what a scientist experiences in the laboratory.
They have to try multiple times to find an optimal combination that can accomplish a certain objective.
Setbacks and failures inevitably occur during this process.
• Executing intelligence
This is the factor that determines whether a start-up is successful or fails.
o Chinese saying: ‘to open a business is very easy, to keep it open is very dif 케 cult’.
o Jeff Bezos: ‘ideas are easy, it’s execution that’s hard’.
o Jodi Gallaer: ‘the most challenging part of my job is doing everything for the first time’.
Common myths about entrepreneurs
• Entrepreneurs are born, not made
This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs.
It is a function of environment, life experiences and personal choices. However, there are personality traits
and characteristics commonly associated with entrepreneurs. These traits develop over time and evolve
from an individual’s social context. This because of the fact that direct observations of other entrepreneurs
reduces the ambiguity and uncertainty associated with the entrepreneurial process.
, • Entrepreneurs are gamblers and take big risks
Entrepreneurs are usually moderate risk takers as are most people. The idea that entrepreneurs are gamblers
originates from two sources:
o Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set
of possibilities than managers
o Many entrepreneurs have a strong need to achieve and often set challenging goals, a behaviour
that is sometimes equated with risk taking.
• Entrepreneurs are motivated primarily by money
Money is rarely the primary reason entrepreneurs start new firms and persevere.
• Entrepreneurs should be young and energic
The majority of individuals who start companies are in their thirties and forties. The majority of business
owners have experience prior to launching a new venture. Although it is important to be energetic, investors
often cite the strength of the entrepreneur as their most important criterion in the decision to fund the new
ventures. Experience, skills, reputation, passion and track record makes the entrepreneur strong. Rather a
strong entrepreneur with mediocre business idea than a strong business idea and mediocre entrepreneur.
• Entrepreneurs love the spotlight
The majority of entrepreneurs do not attract public attention; they avoid public notice.
Types of start-up firms
• Salary-substitute firms
Small firms that yield a level of income for their owner that is similar to what they would earn when working
for an employer. The firms offer common, easily available and not particularly innovative products or services to
customers. Examples: hairstyling salons, restaurants, retail stores.
• Lifestyle firms
They provide their owner the opportunity to pursue a particular lifestyle and earn a living while doing so.
They include personal trainers, owners of bed & breakfast. These firms are not innovative, nor do they grow
quickly.
• Entrepreneurial firms
They bring new products and services to the market by creating and then seizing opportunities. The essence
of entrepreneurship is creating value and then disseminating that value to customers. Value refers to
worth, importance or utility. Dropbox and Facebook are examples. One characteristic is that they partner
with other firms and organizations, often to obtain the boost they need to realize their full potential.
The positive effects of entrepreneurship and entrepreneurial firms
Creative destruction means that entrepreneurs develop new products and technologies that over time make current
products and technologies obsolete. Creative destruction stimulates economic activity. The new products and
technologies may also increase the productivity of all elements of a society. The creative destruction process is
initiated most effectively by start-up ventures that improve on what is currently available. Small firms are ‘innovators’.
• Economic impact of entrepreneurial firms
For two reasons, entrepreneurial behaviour has a strong impact on an economy’s strength and stability.
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