Section No. 4.

Developing Entrepreneur
Topics Covered: Entrepreneurial Profile, Trait approach to understanding entrepreneurship, Sources of Innovative opportunities, The innovation Process, Risks involved in Innovation

Entrepreneur: (Definitions and Its Types):

An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome !r Entrepreneur is defined as "The entrepreneur shifts economic resources out of lower and into higher productivity and greater yield# !r Entrepreneur can also be defined as "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labor !r Entrepreneur in English is a term applied to a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome !r An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative Types of Entrepreneurs are as follows$ % & ' Social entrepreneur$ Serial entrepreneur$ (ife)style entrepreneur$ Each is e*plained below$

Social entrepreneur A social entrepreneur is motivated by a desire to help, improve and transform social, environmental, educational and economic conditions +ey traits and characteristics of highly effective social entrepreneurs include ambition and a lack of acceptance of the status ,uo or accepting the world -as it is- The social entrepreneur is driven by an emotional desire to address some of the big social and economic conditions in the world Serial entrepreneur: A serial entrepreneur is one who continuously comes up with new ideas and starts new businesses In the media, the serial entrepreneur is represented as possessing a higher propensity for risk, innovation and achievement Serial entrepreneurs are more likely to e*perience repeated entrepreneurial success They are more likely to take risks and recover from business failure Lifestyle entrepreneur: A lifestyle entrepreneur places passion before profit when launching a business in order to combine personal interests and talent with the ability to earn a living .any entrepreneurs may be primarily motivated by the intention to make their business profitable in order to sell to shareholders In contrast, a lifestyle entrepreneur intentionally chooses a business model intended to develop and grow their business in order to make a long)term, sustainable and viable living working in a field where they have a particular interest, passion, talent, knowledge or high degree of e*pertise !ther Important Types of Entrepreneurs with their relevent definitions are as$

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Et#ics $nd Social %esponsi&ility 'f Entrepreneurs:

The entrepreneur must establish a balance between ethical e*igencies, economic e*pediency, and social responsibility A managers attitudes concerning corporate responsibility tend to be supportive of laws and professional codes of ethics Entrepreneurs have few reference persons, role models, and developed internal ethics codes Entrepreneurs are sensitive to peers pressure and social norms in the community as well as pressures from their companies /hile et#ics refers to the -study of whatever is right and good for humans,- &usiness et#ics concerns itself with the investigation of business practices in light of human values The word -ethics- stems from the 0reek thos, meaning custom and usage 1evelopment of !ur Ethical 2oncepts Socrates, Plato, and Aristotle provide the earliest writings dealing with ethical conceptions3 earlier writings involving moral codes can be found in both 4udaism and 5induism American attitudes on ethics result from three principle influences$ 4udeo)2hristian heritage, a belief in individualism and opportunities based on ability rather than social status Research on business ethics can be broken down into four broad classifications$ %6 Pedagogically)oriented in,uiry &6 Theory)building without empirical testing '6 Empirical research, measuring the attitudes and ethical beliefs of students and academic faculty 76 Empirical research within business environments

Entrepreneurial C#aracteristics or Traits or ersonality or (ualities:

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A series of interviews were conducted with distinguished entrepreneurs They were asked what characteristics they felt were essential to success as an entrepreneur 0ood health was a characteristic mentioned by every entrepreneur interviewed Entrepreneurs are physically resilient and in good health They can work for e*tended periods of time, and while they are in the process of building their business, they refuse to get sick At the end of the eight)hour day, when everyone else leaves for home, the entrepreneur will often continue to work into the evening, developing new business ideas Entrepreneurial 8ualities9Traits92haracteristics are as follows$ % Self 2ontrol & Self)2onfidence ' Sense of :rgency 7 2omprehensive Awareness ; Realism < 2onceptual Ability = Status Re,uirements > Interpersonal Relationships ? Emotional Stability Each is e*plained below$ !. Self*Control: Entrepreneurs do not function well in structured organi@ations and do not like someone having authority over them .ost believe they can do the Aob better than anyone else and will strive for ma*imum responsibility and accountability They enAoy creating business strategies and thrive on the process of achieving their goals !nce they achieve a goal, they ,uickly replace it with a greater goal They strive to e*ert whatever influence they can over future events In large structured organi@ations, entrepreneurs are easy to recogni@e by the statements they make, "if they wanted that Aob done right, they should have given it to me# A dominant characteristic of entrepreneurs is their belief that they are smarter than their peers and superiors They have a compelling need to do their own thing in their own way ). Self*Confidence: Entrepreneurs are self)confident when they are in control of what they are doing and working alone They tackle problems immediately with confidence and are persistent in their pursuit of their obAectives .ost are at their best in the face of adversity, since they thrive on their own self) confidence +. Sense of ,rgency: Entrepreneurs have a never)ending sense of urgency to develop their ideas Inactivity makes them impatient, tense and uneasy They thrive on activity and are not likely to be found sitting on a bank fishing are biting /hen they are in the entrepreneurial mode They are more likely to be found getting things done instead of fishing Entrepreneurs prefer individual sports, such as golf, skiing or tennis, over team sports They prefer games in which their own brawn and brain directly influence the outcome and pace of the game They have drive and high energy levels, they are achievement)oriented, and they are tireless in the pursuit of their goals 4. Co-pre#ensive $.areness: Successful entrepreneurs can comprehend comple* situations that may include planning, making strategic decisions, and working on multiple business ideas simultaneously They are farsighted and aware of important details, and they will continuously review all possibilities to achieve their
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business obAectives At the same time, they devote their energy to completing the tasks immediately before them Accounting reports illustrate this characteristic Accountants spend hours balancing the accounts and closing them out Bor them, the achievement is to have balanced books The entrepreneur only wants to know the magnitude of the numbers and their significance for the operation of the business /. %ealis-: Entrepreneurs accepts things as they are and deal with them accordingly They may or may not be idealistic, but they are seldom unrealistic They will change their direction when they see that change will improve their prospects for achieving their goals They want to know the status of a given situation at all times Cews interest them if it is timely, and factual, and factual, and provides them with information they need They will verify any information they receive before they use it in making a decision Entrepreneurs say what they mean and assume that everyone else does too They tend to be too trusting and may not be sufficiently suspicious in their business dealings with other people DcontinuedE 6 0. Conceptual $&ility: Entrepreneurs possess the ability to identify relationships ,uickly in the middle of comple* situations They identify problems and begin working on their solutions faster than other people They are not troubled by ambiguity and uncertainty because they are used to solving problems Entrepreneurs are natural leaders and are usually the first to identify a problem to be overcome If it is pointed out to them that their solution to a problem will not work for some valid reason, they will ,uickly identify an alternative problem)solving approach ". Status %e1uire-ents: Entrepreneurs find satisfaction in symbols of success that are e*ternal to themselves They like the business they have built to be praised, but they are often embarrassed by praise directed them personally Their egos do not prevent them from seeking facts, data, and guidance /hen they need help, they will not hesitate to admit it especially in areas that are outside of their e*pertise 1uring tough business periods, entrepreneurs will concentrate their resources and energies on essential business operations They want to be where the action is and will not stay in the office for e*tended periods of time 2. Interpersonal %elations#ips: Entrepreneurs are more concerned with peopleFs accomplishments than with their feelings They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business 1uring the business building period, when resources are scarce, they seldom devote time to dealing with satisfying peopleFs feelings beyond what is essential to achieving their goals Their lack of sensitivity to peopleFs feelings can cause turmoil and turnover in their organi@ation Entrepreneurs are impatient and drive themselves and everyone around them They do not have the tolerance or empathy necessary for team building unless itFs their team, and they will delegate very few key decisions 3. E-otional Sta&ility:
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Entrepreneurs have a considerable amount of self)control and can handle business pressures They are comfortable in stress situations and are challenged rather than discouraged by setbacks or failures Entrepreneurs are uncomfortable when things are going well They will fre,uently find some new activity on which to vent their pent)up energy They are not content to leave well enough alone Entrepreneurs tend to handle people problems with action plans without empathy Their moderate interpersonal skills are often inade,uate to provide for stable relationships 5owever, the divorce rate among entrepreneur is about average

4actors influencing Entrepreneurs#ip: 'r %easons of 5usiness failure: 'r T#e 6a7or Deadly 6ista8es of Entrepreneurs#ip:
Studies have indicated that there are common reasons for new business ventures to fail These causes of small business failure may include$ % & ' 7 ; < = > ?
%G %% %& %' %7 %; %<

.anagement mistakes (ack of e*perience Poor financial control /eak marketing efforts Bailure to develop a strategic plan :ncontrolled growth Poor location Improper inventory control Incorrect pricing
Inability to make the "entrepreneurial transition# Hribing Attitude 0reediness of becoming successful overnight /eak Husiness Strategy !ver 2onfidence /rong I Immoral business ethics Cot hearing advices from e*perience persons

Entrepreneurial Trait $pproac#:

Entrepreneurs generally posses the following Traits$ %6 &6 '6 76 ;6 <6 =6 >6 ?6 High Need for achievement: Ceed to always achieve new bold goals Risk taking pros taking propensity: willing to take financial risks Tolerance for ambiguity: Co fear of the unknown Internal Locus of Control: belief that the future is determined by their own actions Innovation: Ability to create new or modify e*isting business concepts Proactive: Plans for events before they occur Lo need for conformity: :nhappy in environment with strict rules Intuition: .ake decisions based on "gut feelings# High need for independence ! autonomy: make own decisions

!. 9ig# Need for $c#ieve-ent: o o o o Strong desire to set own goals and carry them out /ant to take responsibility for actions Tend to do well in competitive situations Are results)drivenJ
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o o o o o o o o

1islike routine activities Predisposition to be preoccupied with ,uality, service, customer satisfaction 1esire to solve problems, gain satisfaction Ability to take moderate risks after assessing alternatives Ceed for feedback as a measure of success /ant to work independently and be their "own boss# Attitude may result form resentment of authority figures Dparent, bank manager6 .ay impede firmFs growth due to reluctance to delegate or let go control

). %is8 Ta8ing ropensity: Take calculated risk 2onsider alternative solutions before reaching decision Bor the Entrepreneur, the new business may be considered less risky than other alternatives

+. Tolerance for a-&iguity: Ambiguity means lack of complete and definitive information Ability to perceive ambiguity in a positive and challenging way Trait seen as an asset because allows Entrepreneur to organi@e thoughts and make decisions under conditions of uncertainty 4. Internal Locus of Control: Refers to EntrepreneurFs perception that all events are under their control They are able to influence events and determine outcomes of their own actions 1onFt attribute outcomes to "fate# or "luck# or e*ternal environment Individuals tend to be alert, discover opportunities and scan environment effectively 1rucker defines innovation as the "mechanism by which Entrepreneurs create or increase wealth# Arises from search for opportunity in internal9e*ternal situations Internal$ une*pected occurrences, incongruities, process needs E*ternal$ economic or political trends, change in customer preferences

/. Innovation:

0. roactively:

Ability to take control of events Ability to take initiative in solving problems Ability to set obAectives and implement solutions

". Lo. need for confor-ity 1islike rigid environment

6otivations for Entrepreneur 'r :#at -a8es so-eone an entrepreneur:

/ho can become an entrepreneurJ There is no one definitive profile Successful entrepreneurs come in various ages, income levels, gender, and race They differ in education and e*perience
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Hut research indicates that most successful entrepreneurs share certain motivational factor9motivations, including the following$ % & ' 7 ; < = > 2reativity, 1edication, 1etermination, Ble*ibility, (eadership, Passion, Self)confidence, Smarts

!. Creativity$ It is the spark that drives the development of new products or services or ways to do business It is the push for innovation and improvement It is continuous learning, ,uestioning, and thinking outside of prescribed formulas ). Dedication$ it is what motivates the entrepreneur to work hard, %& hours a day or more, even seven days a week, especially in the beginning, to get the endeavor off the ground Planning and ideas must be Aoined by hard work to succeed 1edication makes it happen +. Deter-ination$ It is the e*tremely strong desire to achieve success It includes persistence and the ability to bounce back after rough times It persuades the entrepreneur to make the %Gth phone call, after nine have yielded nothing Bor the true entrepreneur, money is not the motivation Success is the motivator3 money is the reward 4. 4le;i&ility$ It is the ability to move ,uickly in response to changing market needs It is being true to a dream while also being mindful of market realities A story is told about an entrepreneur who started a fancy shop selling only Brench pastries Hut customers wanted to buy muffins as well Rather than risking the loss of these customers, the entrepreneur mod ified her vision to accommodate these needs /. Leaders#ip$ It is the ability to create rules and to set goals It is the capacity to follow through to see that rules are followed and goals are accomplished 0. assion$ It is what gets entrepreneurs started and keeps them there It gives entrepreneurs the ability to convince others to believe in their vision It canFt substitute for planning, but it will help them to stay focused and to get others to look at their plans ". Self*confidence$ It comes from thorough planning, which reduces uncertainty and the level of risk It also comes from e*pertise Self)confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated 2.S-arts: It consists of common sense Aoined with knowledge or e*perience in a related business or endeavor The former gives person good instincts, the latter, e*pertise .any people have smarts they donFt recogni@e A person who successfully keeps a household on a budget has organi@ational and financial skills Employment, education, and life e*periences all contribute to smarts Every entrepreneur has these motivations9motivational factors in different degrees Hut what if a person lacks one or moreJ .any skills can be learned !r, someone can be hired who has strengths that the entrepreneur lacks The most important strategy is to be aware of strengths and to build on them The Environment, Socio 2ultural factors and Support Systems$ D/rite it6
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