Lecture 1
What is an Entrepreneur?
An entrepreneur is someone that creates a new business. An entrepreneur: Sees an opportunity,
plans, Starts the business, Manages the business. Receives the profits.
What is Entrepreneurship?
The capacity and willingness to develop, organize and manage a business venture along with any
of its risks in order to make a profit. One example is the starting of new businesses.
In economics, entrepreneurship combined with land, labor, natural resources and capital can
produce profit.
Characteristics of Entrepreneurs
1.
2.
3.
4.
5.
6.
High degree of commitment
High energy level
Self confidence
Awareness of passing time
Need to achieve
Desire for responsibility
Drawbacks of Entrepreneurship
1.
2.
3.
4.
5.
Risk and uncertainty of income.
Risk of losing their entire investment.
Long hours and hard work
High levels of stress.
Lower quality of life until the business gets established.
Entrepreneurial Process
An entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that
resist the creation of something new.
The Entrepreneurial Process Steps:
I.
II.
III.
IV.
Deciding to become an entrepreneur.
Developing successful business ideas.
Moving from an idea to an enterprise.
Managing and growing the enterprise.
Challenges Faced by Entrepreneurs
Choosing What to Sell
recruit a freelance researcher who has experience in whatever type of field you’re considering
entering. Have them conduct market research and create a report with suggested niches, backed
by potential profit margins and a complete SWOT analysis
The Capital
There are many ways to earn funding, from traditional bank loans to family or friend. Instead of
trying to launch a multi-million-dollar corporation overnight, focus on your initial core
customers. Word-of-mouth will spread, and more customers will come looking for you. develop
systems and business processes that allow you to delegate tasks without sacrificing quality
Marketing Strategy
it’s a good idea to outsource your marketing strategy. Give your planner a budget and tell them
to craft a plan that efficiently uses that budget to produce profits.
Hiring Employees
Pre-qualify candidates through exclusive help wanted ads that are ultra-specific in what it takes
to be hired at your firm. Once you have many interviewees, arrange for a “walking interview”,
take candidates on a tour of their working environments. Ask questions relevant to the job. Take
the time to seek real references: people who can honestly attest to their work ethic and
potential.
Cashflow
Proper budgeting and planning are critical to maintaining cash flow, but even these won’t always
work. One way to improve cash flow is to require a down payment for your products and
services. Your down payment should cover all expenses as well as some profit for you. By
requiring a down payment, you can at least rest assured you won’t be left paying others’ bills.
Time Management
Create goal lists: You should have a list of lifetime goals, broken down into annual goals>>
monthly goals>> weekly goals. Then distribute weekly goals into specific tasks by day. If any tasks
do not mesh with your goals, eliminate them. If any tasks do not absolutely have to be
completed by you, delegate them. Consistently ask yourself: “Is what I’m doing right now the
absolute best use of my time?”
Delegating Tasks
Find good employees and good outsourced contract help. Be ultra-specific as to what you want
done. It will take a little more time at first but write down detailed steps listing exactly what you
want your help to do.
Business Growth
Create new processes that focus on task delegation. It is the only way take yourself out of the
production end, and segue into management and, finally, pure ownership.
Strapped Budget
Every entrepreneur struggles with their budget. The key is to prioritize your marketing efforts
with efficiency in mind — spend your money where it works — and reserve the rest for
operating expenses and experimenting with other marketing methods. there are areas you can
skim to free up more funds.
Myths of Entrepreneurship
Have No Boss
when you are the boss, you are responsible for everything, including the fate of your company.
In fact, you may find you are accountable to even more people than before: employees,
customers, shareholders, lenders, tax authorities
Have More Time
not only are you trying to build a product or solve a problem, you’re also the IT department, the
bookkeeper, the head of sales, the recruiter, the social media manager, and a hundred other
roles.
Best Idea Wins
Ideas are cheap, execution is everything, the only way to make it successful is to act.
Entrepreneurs know exactly what they want, and how to get it
many entrepreneurs have no guide how to achieve their entrepreneurial passions.
Entrepreneurship is a series of trying, failing, trying again, and succeeding.
Entrepreneurs are usually rich.
Some entrepreneurs might become rich, but they certainly don’t start that way.
Entrepreneurship requires huge funding.
Most of an entrepreneur’s “funding” is from his own back pocket. Some entrepreneurs will get
lucky and funded, but it’s definitely not a prerequisite for the trade.
Entrepreneurship is genetic
it has nothing to do with genes. You can acquire characteristics of being successful
entrepreneurs.
Age
No specific age.
Why Small Business Today?
1.
2.
3.
4.
5.
Economic changes
Globalization
Increased competition
Advancing technology
New market niches
The 3 Basic Legal Forms
Sole Proprietorship: unincorporated business owned by an individual for profit
Partnership: Unincorporated business owned by two or more people
Corporation: owned by stockholders (shareholders) who share in profits and losses. have three
distinct characteristics
➢ Legal existence: a firm can (like a person) buy, sell, own, enter into a contract, and sue
other persons and firms, and be sued by them.
➢
Limited liability: firm and its owners are limited in their liability to the creditors ‫مسؤولية‬
‫الل شارك بيه بس‬
‫يعن كل واحد مسؤول عن ديون بالمقدار ي‬
‫ ي‬,,‫محدودة‬
➢ Continuity of existence: a firm can live beyond the life spans and capacity of its owners,
because its ownership can be transferred through a sale or gift of shares.
Business Plan
Document including
1.
2.
3.
4.
5.
6.
7.
Clear vision
Management team
Critical risks that could threaten success
Target Market
Realistic financial projections
Industry & competitors
Sources & uses of funds
Foundation of Small Business
1. Finance:
realistic, feasible plans for the short and long term
2. Operations:
Make sure you have efficient processes, and always have a plan B
3. Accounting:
keep track of your expenses, your profit, and most especially of which investments yielded the
biggest profit. The more data you have, the better you will be able to understand and improve
your small business.
4. Marketing:
Marketing is vital, it will expose you to new markets and put you in everyone's mouth
Business Life Cycle
Phase One: Launch sales are low, revenue is low and initial startup costs are high, businesses
are prone to incur losses in this phase.
Phase Two: Growth rapid sales growth. the profit cycle still is behind the sales cycle, the profit
level is not as high as sales. the cash flow during the growth phase becomes positive,
representing an excess cash inflow.
Phase Three: Shake-out sales continue to increase, but at a slower rate. Sales peak. Although
sales continue to increase, profit starts to decrease. This growth in sales and decline in profit
represents a significant increase in costs. Lastly, cash flow increases and exceeds profit.
Phase Four: Maturity sales begin to slowly decrease. Profit margins get thinner, while cash
flow stays relatively stagnant. As firms approach maturity, major capital spending is largely
behind the business, and therefore cash generation is higher than the profit on the income
statement.
Phase Five: Decline In the final stage of the business life cycle, sales, profit, and cash flow all
decline. Firms lose their competitive advantage and finally exit the market.
Tactics // Ways to Become a Business Owner
Start a New Business: Advantage develop and design own way. Disadvantage long time to get
off ground and to make profitable
Buy an Existing Business: Advantage shorter time and existing track record. Disadvantage
need to pay for goodwill Tactics Ways to Become a Business Owner
Buy a Franchise an agreement to sell a product or service with help from the owner
Advantage management help is provided by owner. Disadvantage lack of control
Lecture 2
Leaders
Leaders may be political who lead the nation using policies
Leaders may be motivational who lead the nation by their thoughts
Leaders may be entrepreneurs who lead the universe by their actions
Leader is a person who has been spontaneously considered or chosen as being influential
Leader is the servant of the group. The position of leader is an essential mechanism of
effective group organization.
Leaders are persons who are selected by the people because of their special interest or
fitness to work on several phases of the local programs.
A leader is one who, in a social situation, can stimulate positive reaction from other
members of the group.
Entrepreneur
1.
2.
3.
4.
Individual who organizes or operates a business or businesses.
He brings in overall change through, innovation for the maximum social good.
Human values remain his priority and inspire him to serve society.
He has firm belief in social improvement, and he carries out this responsibility with
conviction.
5. He accelerates personal, economic as well as human- development.
Qualities of an Entrepreneurial Leader
1.
2.
3.
4.
5.
6.
Act as a role model
Assist employees
Executive and flexible
Father figure
Always open to change
Expert in human relations and in technical field
Good Leader
1. Clear goals
2. Vision
3. Good example
4. Integrity
5. Inspiration
6. Focus on team interests & needs
7. Encouragement
8. Stimulating work
9. Clear communication
10. Expects the best
LEADERSHIP
Leadership is essential in simply influencing attitudes and actions of one or more persons
leading towards the achievement or so purpose.
The resource that an individual or group use to enable the organization to do what it
needs, should or wants to do.
The ability to persuade others to seek defined objectives enthusiastically.
The process who in any social situation with his ideas and actions influence the thoughts
and behavior of other Leadership.
Are the process of influencing the thoughts and behavior of others towards goal setting
and goal achievement.
Types of Entrepreneurial Leadership
laissez-faire leader
lacks direct supervision of employees and fails to provide regular feedback to those under his
supervision. Highly experienced and trained employees.
The autocratic leader
allows managers to make decisions alone without the input of others. Managers possess total
authority.
Participative leadership
Democratic. Participative leadership values the input of team members and peers, but leader
makes final decision. improve employee morale due to contributions to the decision-making
process.
Transactional leadership
Managers receive certain tasks to perform and provide rewards or punishments to team
members based on performance results. Employees receive rewards, such as bonuses, when
they accomplish goals.
Transformational leadership
Depends on high levels of communication from management to meet goals. Leaders motivate
employees and enhance productivity and efficiency through communication and high visibility.
Leaders focus on the big picture within an organization and delegate smaller tasks to the team to
accomplish goals.
AN ENTREPRENEUR CAN USE A COMBINATION OF ALL THESE TYPES BUT
MORE TRANSFORMATIONAL TYPE TO RUN AN ENTERPRISE SUCESSFULLY
BOSS
LEADER
Drives employee
Inspires fear
Says I
Depends on authority
Places blame when breakdown
Uses people
Take credit
Coaches employee
Generates enthusiasm
Says we
Depends on goodwill
Fix breakdown
develops people
Gives credit
Similarities between leader and entrepreneur
1.
2.
3.
4.
5.
Innovative
Inspiring personality
Challenge whole quo
Do right things instead of doing things right
Develop and organization
ACRO
The ACRO model was introduced to focus on the attitudes, skills and behaviors needed to enable
young people to meet the needs of business in the 21st century.
A-Attitude
▪
▪
Self-knowledge, belief and confidence
Motivation • Aspiration • Determination • Competitiveness
C-Creativity
▪
Problem solving • Ideas generation • Spotting and creating opportunities • Innovation
R-Relationship
▪
Working with others • Managing difficult situations • Negotiation, persuasion and
influence • Presentation • Communication
O-Organization
▪
Planning • Managing resources • Decision making • Research and understanding
• Managing risk • Vision and goal setting
Lecture 3
Managing Small Business Finances
Budget
Will be used as a guiding tool in every decision you have to make. A budget is the basis for all
business decisions, so write one before you begin.
Separate Your Business and Personal Accounts
It is important to maintain a business account separate from your personal account. This will
ensure that you can keep track of all business finances and will make any future accountant's job
much easier.
Run a Lean Business
Going all out when starting up can create financial problems in the long run. Cut down the
amount you spend in every category. Keep costs low from the beginning so you have more
money for the future.
Be on Salary
If you are the only employee in your business, you can adopt a bad habit of treating your
business account like your personal account. Unfortunately, this tactic can lead to overspending.
It is a much better plan to put yourself on salary and stick to spending that amount of money on
yourself.
Know Your Worth
Your time equates to a certain amount of money. Therefore, keep in mind your worth when
looking at revenue. Chances are, if you're working 60-80 hours a week, you may be losing
money.
Use Technology
keep in mind that there are several resources on the internet to help you get the word out about
your business, including free marketing platforms and scheduling tools.
TIPS FOR MANAGING SMALL BUSINESS FINANCES
Demonstrate Steady Cashflow
By being able to demonstrate you have steady cash flow, you are ensuring to potential financers
that you have plenty of money to pay creditors, employees and others on time.
Positive Payment History
A financer needs to see that a business has a record and on time. A financer may have of paying
down debt, obtained a third-party credit report on your Business.
Prove Business Judgement
lenders are interested to see that you have the management in place necessary to overcome any
obstacles that might come your way.
Shop around for Financing
Don’t assume your bank or the vendor will offer the best terms. Compare rates, lease terms, fees
and options and use only established financing providers.
Invest in Cloud-based Accounting Software
Web-based software provides you with real-time insights as most access data from allow you to
store, update, track, and anywhere at any time.
Monitor & Measure Performance
Keep looking at your company’s financial performance in comparison to the past financial
statements to project your future revenue, expenses and cash flow.
Lecture 4
The Benefits of Entrepreneurship
1.
2.
3.
4.
5.
6.
Create their own destiny
Make a difference
Reach their full potential
Generate impressive profits
Do what they enjoy and have fun at it
Contribute to society
Trends of Entrepreneurship
1.
2.
3.
4.
5.
6.
7.
8.
Considering entrepreneurs as heroes
Entrepreneurial education
Demographic and economic factors
Shift to a service economy
Technological advancements
Independent lifestyles
Commerce and the Internet
Additional international opportunities
Entrepreneurs Include
1.
2.
3.
4.
5.
6.
7.
8.
Young Entrepreneurs
Women Entrepreneurs
Minority Enterprises
Immigrant Entrepreneurs
Part-time Entrepreneurs
Home-Based Businesses
Family Businesses
Co-preneurs
Why Entrepreneurs Fail?
1.
2.
3.
4.
5.
6.
7.
8.
9.
Management mistakes
Lack of experience
Poor financial control
Weak marketing efforts
Failure to develop a strategic
Uncontrolled growth
Poor location
Improper inventory control
Incorrect pricing
How to Avoid the Pitfalls?
1.
2.
3.
4.
5.
6.
Know their business in depth.
Develop a solid business plan
Manage financial resources.
Understand financial statements.
Learn to manage people effectively.
Keep in tune with who they are.
Duties of CEO
1.
2.
3.
4.
5.
6.
7.
Deciding on a strategic direction for the company.
Being the public face of the company.
Reporting to the board of directors
Developing direction for human resources
Creating a business network.
Finding acquisition opportunities.
Final thoughts
Managing Cashflow
1.
2.
3.
4.
5.
Keep regularly updated management accounts
Have more than one payment option
Ensure timely payments from customers/clients
Offer customers incentives to pay you early
Work with suppliers who are prepared or can afford to offer you options to pay later.
What does it take?
▪
▪
▪
▪
Passion
Idea: what? how? when? to whom?
Differentiation: Unique Selling Proposition, Customer Experience
Organization & Calculation: SWOT analysis, Management, Profit & Loss, Budget
Differentiation
▪
▪
Not bad to imitate just do it better, cheaper, faster
Create your own unique offering: A Unique Selling Proposition, something that offers
customers a new experience
Organization & Calculation
3 reasons why start-ups fail
1. wrong assessment of capital needs
2. overestimation of self-competence
3. lack of business plan
SWOT Analysis
What is SWOT Analysis?
Planning tool used to understand Strengths, Weaknesses, Opportunities, & Threats involved in a
project/business.
Strengths
Characteristics of the business or a team that give it an advantage over others in the industry.
Examples: Abundant financial resources, Well-known brand name, Economies of scale, Lower
costs.
Weaknesses
Characteristics that place the firm at a disadvantage relative to others. factors which do not
meet the standards we feel they should meet. However, weaknesses are controllable.
Examples: Limited financial resources, Weak spending on R & D, Very narrow product line
Opportunities
Chances to make greater profits in the environment - External attractive factors that represent
the reason for an organization to exist & develop. Examples: Rival firms are complacent,
Changing customer needs/tastes, New uses for product discovered
Threats
External elements in the environment that could cause trouble for the business - External
factors, beyond an organization’s control, which could place the organization’s mission or
operation at risk. Examples: Entry of foreign competitors, Introduction of new substitute
products, Product life cycle in decline
Aim of SWOT Analysis
1.
2.
3.
4.
5.
To help decision makers share and compare ideas.
To bring a clearer common purpose and understanding of factors for success.
To organize the important factors linked to success and failure in the business world.
To analyze issues that have led to failure in the past.
To provide linearity to the decision-making process allowing complex ideas to be
presented systematically
Who Needs SWOT Analysis
1. Job Holder: When supervisor has issues with work output • Assigned to a new job • New
financial year – fresh targets • Job holder seeks to improve performance on the job
2. Business Unit • When the team has not met its targets • Customer service can be better
• Launching a new business unit to pursue a new business • New team leader is
appointed
3. Company • When revenue, cost & expense targets are not being achieved • Market
share is declining • Industry conditions are unfavorable • Launching a new business
venture
How to Conduct SWOT Analysis
1. Analyze Internal & External Environment
2. Perform SWOT Analysis
3. Prepare Action Plans & Document
Benefits of SWOT Analysis
1. Provides a framework for identifying & analyzing strengths, weaknesses, opportunities &
threats
2. Provides an impetus to analyze a situation & develop suitable strategies and tactics
3. Basis for assessing core capabilities & competencies
4. Evidence for, and cultural key to, change
5. Provides a stimulus to participation in a group experience
Pitfalls of SWOT Analysis
1. May cause organizations to view circumstances as very simple due to which certain key
strategic contact may be overlooked.
2. Categorizing aspects as strengths, weaknesses, opportunities & threats might be very
subjective as there is great degree of uncertainty in market.
3. To be effective, SWOT needs to be conducted regularly.
4. The pace of change makes it difficult to anticipate developments.
5. The data used in the analysis may be based on assumptions that subsequently prove to
be unfounded [good and bad].
6. It lacks detailed structure, so key elements may get missed.
SWOT Analysis Tips
1. Introduce the SWOT method and its purpose in your organization to gain acceptance.
2. Discuss and record the results. Prepare a written summary of the SWOT analysis to give
to participants.
3. Be willing to break away from traditional methods.
4. While doing a SWOT analysis for your job, invite someone to brainstorm with you.
Points to Ponder
1. Keep your SWOT short and simple but remember to include important details.
2. Get multiple perspectives on you / your business for your SWOT analysis.
3. Apply your SWOT analysis to a specific issue.