Cairo University
Entrepreneurship
Under the Supervision of
Professor Mohamed Othman Elkhosht
President of Cairo University
Written and Edited by a Committee of
Professors at Cairo University
Requirement for Cairo University Students
First Edition
September 2019
Entrepreneurship is one way of
developing the Egyptian mind and
changing ways of thinking. The
aim is to achieve comprehensive
development and movement into a
new era.
Professor Mohamed Othman Alkhosht
President of Cairo University
Entrepreneurship
]ii[
]iii[
Editorial Board
Chair: Professor Mohamed Othman Elkhosht, President of Cairo
University.
Academic Advisors
Chair: Professor Mohamed Othman Elkhosht, President of Cairo
University.
Professor Abdallah Eltatawy, Consultant of the President of Cairo
University and Previously Vice President of Cairo University.
Professor Sami Mohamed Nasr, Previously Dean of Faculty of Education
(Graduate Studies)
Professor Moataz Sayed Abdallah, Consultant of the President of CU and
Previously Dean of the Faculty of Arts.
Professor Abdelhamid Abou Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Professor Hala Mohamed Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Authors
Professor Abdelhamid Abou Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Professor Hala Mohamed Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Translation Committee
Supervisor: Professor Loubna A. Youssef, Previously Vice Dean of
Postgraduate Studies, Faculty of Arts, Cairo University.
Members:
Professor Hoda Ayad
Professor Loubna A.Youssef
Professor Heba Aref
Dr. Somaya Ramadan
Dr. Ahmed Hany
Dr. Sayed Saad
Mr. Mahmoud Elsherif
Cover Design: Dr. Aliaa Aly, Cairo University
Book Design: Mr. Ahmed Hussain
Publisher: Cairo University Press
Preface
By Professor
Mohamed Othman Elkhosht
President of Cairo University
Entrepreneurship
]2[
]3[
Preface and Introduction
Preface
Prof. Mohamed Othman Elkhosht
President of Cairo University
Based on the vision of Cairo University and its strategic objectives to
be a third generation university in the broad sense that includes facing
current national challenges irrelevant to third generation Western
universities, it was emphasized that Cairo University should go beyond its
traditional educational role to serve national goals. The university must
therefore, enter into the era of third generation universities. The first
generation university aims only at education. Its role is to defend the truth,
teach only general disciplines, and produce staff. Its orientation is local, and
consists of faculties where management is based on simple administrative
work. The second generation university aims at teaching and at scientific
research. Its role is to discover nature, teach distinct specializations, and
produce employees and scientists. Its orientation is regional, and includes
faculties where management is often bureaucratic. A third generation
university combines education, scientific research and knowledge
development, and its role extends to the production of added value to the
economy. Teaching is based on interdisciplinary studies, the development of
entrepreneurial thought, enterprise management, and training programs to
prepare students for the labor market, and instruct them on small productive
enterprises. The university produces employees, scientists and
entrepreneurs, and its orientation is global. It includes colleges and
institutes. Research is based on academic management, universal values and
business ethics.
A futuristic vision, therefore, inspires the educational process at Cairo
University. The national challenge is to build a new Egyptian personality,
prepare technically trained personnel to realize development, and establish a
modern state through new curricula that promotes development of research
enterprises, and distinguished performance of students and researchers. The
evolution of the administrative system, research in community and state
issues, and diagnosis of needs are other challenges that should also be
Entrepreneurship
]4[
addressed. New science means "application", or in the language of
economics, "immediate return".
The most important element of this vision is to develop the Egyptian
mind, and change the students’ way of thinking. Knowledge is power, and
learning changes the life of the individual and the country. Building a
responsible, conscious, free, and critical personality, able to invest, revise
and develop knowledge and learning is the guarantee for a real revival.
Educational institutions - from nursery to university - are not merely
institutions for the transfer of knowledge, but institutions that build a
personality. The citizen is the core of the state and the basis of national
security and stability.
The national challenge is to create a new Egyptian personality, achieve
development and establish a modern state. The current stage thus poses
many challenges: how to focus attention in education on ways of thinking,
revealing facts, and establishing the spirit of innovation, not indoctrination,
conservation and conformity. The aim is to expand human knowledge, and
enhance the ability of students and researchers to use this knowledge to
realize the goals of the nation. How can we provide the best environment for
a quality education? How can we transport our graduates to a global level, to
enable them to enter the international labor market? How can we overcome
the triangle of scientific research: funding, equipped laboratories, and
management?
Creating a personality capable of political, intellectual and
administrative action is an integral part of the educational process; education
is the most influential factor in developing a personality which is
psychologically and socially compatible. It is our role to help in the
formation of a cohesive, solid, and ambitious personality, able to plan its
ambitious future, not afraid of experience, but exercising free will and
independence. We can thus have a real human capital represented not only
by the number of educated individuals with the skills and ability to produce,
but also by their quality.
There is no value for education without focusing at the same time on
the values of work, innovation, and creativity, to develop awareness and a
scientific approach, and activate the role of a critical, positive and creative
]5[
Preface and Introduction
mind to replace the receiving and negative mind, whether knowledge comes
from developed nations or from our ancestors. Without developing the
mind, we cannot make use of knowledge. The mind, according to Abu
Hamid al-Ghazali in his book Revival of Theology, is an instinct that
apprehends pure sciences.
To realize this vision and its strategic goals, the development of the
Egyptian mind and the ways of thinking has been an important goal the
university seeks to achieve through the decision to add two core courses:
Critical Thinking and Entrepreneurship. All students at Cairo University
studied Critical Thinking during the second semester of the academic year
2018-2019. The course has been well received by students, media and
cultural milieu. Through the course, and in the context of a promising
cultural system, the mind of a Cairo University graduate is reformulated to
acquire the awareness and the ability to rationally diagnose problems, and to
search for applicable scientific and practical solutions.
This new course on entrepreneurship is another core course for all
students at Cairo University to prepare them to graduate with more
awareness of the nature of the social and cultural variables. Acquiring skills
and work experience through accurate scientific methodology should lead to
success. A graduate is prepared for the regional and international labor
market through standards of creativity and innovation consistent with the
rhythm of the stage and the futuristic vision of Cairo University. The
university strategy aims to link a graduate’s study to the requirements of the
labor market to promote economic development. Hence the idea of
preparing this course as a university requirement for all disciplines to
complement the methodological goals achieved by the Critical Thinking
course.
The purpose of this book is to introduce students to the concept of
entrepreneurship, and the reason for the global, regional and local interest in
the field in the hope of providing students with high-level skills in the
preparation of small diverse enterprises in economics, medicine,
engineering, agriculture, pharmacy, trade, literature, law, and other fields.
The book provides examples of the life experiences of entrepreneurs
on the global and local levels through tracking their positive efforts to
combat failure and succeed through systematized approaches to address
Entrepreneurship
]6[
failure and guarantee success. The book starts with the basic concepts of
entrepreneurship, the difference between entrepreneurship and small
enterprises, with a focus on creative and innovative aspects, and the
development of entrepreneurial skills through multiple evidence, examples
and real experiences. The book then moves to the qualified entrepreneur
who has refined his skills through study in the field, and observes how he is
different from a businessman in terms of the ability to innovate and develop,
risk, create and take risks.
The book analyzes the characteristics and abilities of the entrepreneur
by comparing successful international models and even more successful and
distinctive Egyptian models, revealing to students the secrets of
entrepreneurs’ success. Through patience, perseverance and endurance, they
knew the secrets of their professions, realized the nature of the steps to
success, faced the challenges through empowerment and efficiency in their
field, and enhanced their intellectual abilities. They knew how to deal with
the human element, and recognized the importance of creativity and
innovation to achieve job security for the entrepreneur, his workmates, his
community, and those around him.
The book systematically analyzes the types of small enterprises and
the methods of establishing them. That begins from recognizing the value of
small enterprises and their importance in enriching the national economy
and addressing unemployment, to business incubators, and the role of
enterprises whether small, medium or large.
The book proceeds to ways of generating and studying the feasibility
of the entrepreneurial idea through its criteria, sources and methods of
development to the stage of preparation, incubation and mental illumination,
to the stage of actual achievement in reality. This is linked to the
exploitation of capital and the study of the strategic plan for the
entrepreneurial enterprise. Related are the value of structuring a plan, the
setting up of the enterprise, supplying elements of production, delegation of
authority, leadership, direction, control, and other financial and technical
needs of the enterprise to finally achieve professional enterprise
management.
]7[
Preface and Introduction
Through providing our students with this knowledge, combined with
practical training to develop their capacity for creative thinking based on
research, discussion and innovation, we hope to achieve the aspirations of
the university by developing students’ skills to fulfill their own ambitions
and contribute to promote our country to one of the really developed
nations. I wish all students at Cairo University a bright future, and our
country pride and prosperity.
My sincere thanks and appreciation are due to all who contributed to
this book; fellow members of the Academic Guidance Committee, and the
winners of the Entrepreneurship Competition Awards for their outstanding
efforts which made this book possible.
Entrepreneurship
]8[
]9[
Preface and Introduction
Introduction
Entrepreneurship
]10[
]11[
Preface and Introduction
Introduction
During the past few years, Cairo University has been ambitiously
working through the efforts of its staff and faculty members, on the
university vision and strategic objectives to become one of the "third
generation" universities. In the broad sense of the term, a third generation
university combines education, scientific research and the employment of
knowledge. It has a role in the production of value added to the national
economy, developing the concept of entrepreneurship and enterprise
management, training programs that qualify for the labor market, offering
guidance for small productive enterprises, and other distinctive features
related to the cultural nature of Egypt.
The development of the Egyptian mind and changing the ways of
thinking among university students, promoting their personalities to be able
to assume their responsibilities, realize their own ambitions and those of
their country have been the most important strategic objectives of the
university. To achieve this, all students at Cairo University study two
courses within the university requirements: Critical Thinking and
Entrepreneurship. The students have already finished the Critical Thinking
course during the second semester of the academic year 2018-2019. The
experiment was by all standards successful, with regard to the content of the
course and the teaching and evaluation methods. For the first time at Cairo
University, the exam was an open book exam that measured the critical
thinking abilities of students through solving practical problems and
handling situations covered by the exam. As the students' response to the
course was encouraging, a complementary course on entrepreneurship will
be studied by all students of the university. Results of studies and research
proved that individuals who study a course in "entrepreneurship" increase
their chance of establishing their own entrepreneurial enterprises. Study
contributes three to four times more to the chances of the success of the
enterprise, compared to the enterprises of individuals who do not take a
course in entrpreneurship. Those who do make 20% to 30% more profit,
according to research (Hirsch et al., 2010). The university hopes to put
students on the right road from the beginning, to avoid the risk of failure and
financial loss and to guarantee success of their enterprises. A centre for
entrepreneurial work will be initiated by the university to support
outstanding students and bring their enterprises to light within its vision of
the University of the Third Generation.
Entrepreneurship
]12[
A number of logical questions may be asked by a student studying the
course. What is meant by entrepreneurship? How important is the study to
an entrepreneur? Why is it given increasing concern in both developed and
developing countries? Does it play a role in a country’s economy? Such
questions and their answers reflect the universal concern of entrepreneurs,
universities, and organizations, both governmental and non-governmental.
If you choose to be an entrepreneur, you should know what
entrepreneurship exactly means. It means providing a product, service, or a
creative and pioneering idea that no one has ever thought of before. That is,
your idea must be distinct and different from others’; it must be an original
and creative idea. The rule, says one prominent entrepreneur is, “Do not
look for customers for your products, but look for products for your
customers.” This is how you can get into the market, stand among big
entrepreneurs, and even compete with them. Entrepreneurs succeed through
ideas, not money. There are many entrepreneurs who started out as young
people like you and with very small capital, but they were distinct from
others, possessing the qualities and capabilities of the creative entrepreneur.
They succeeded and made fortunes and are viewed as heroes and not just
entrepreneurs.
Each chapter of the book will begin with a success story of a
pioneering enterprise that began with an original and creative idea, a man’s,
a woman’s, or even a child’s, and turned into a huge company. Under the
title “A Success Story”, the article explains how the entrepreneur reached
the top. The purpose of presenting the life experiences of these pioneers is to
learn from them and follow their example. We learn from them the value of
the critical mind, creative thinking, innovation, perseverance, patience, and
constant work to make any entrepreneurial work successful.
For many practitioners and experts, starting an entrepreneurial
enterprise is easy, but maintaining its success is the most challenging. To
achieve this, the book introduces students to the world of entrepreneurship
in Chapter one, by presenting the basic concepts of entrepreneurship. The
key question, “Can I be an entrepreneur?” is answered in Chapter two, with
a presentation of the factors of success or failure of an entrepreneurial
enterprise, to observe the factors of success and avoid the causes of failure.
The third chapter surveys types of creative entrepreneurial work and
methods and alternatives to establish them.
]13[
Preface and Introduction
The fourth chapter deals with the first practical steps to transform the
idea into an enterprise, through the generation of entrepreneurial ideas and
feasibility studies. The fifth chapter focuses on the preparation of the
strategic plan/business plan for the pilot enterprise. Chapter six examines
the establishment and preparation of the enterprise for operation.
Chapter seven deals with the requirements of changing from a small
enterprise to a large one. Professional management is needed for the success
of the enterprise through scientific planning, organizing activities, leading
and controlling personnel, marketing products and managing finances. The
book includes an appendix of organizations supporting entrepreneurial
work, starting from the idea until it emerges as a successful enterprise, a
second appendix of the websites of organizations supporting small business,
and a third of the basic terms and concepts of the course.
We hope that this course will achieve the desired goal of introducing
our students to the ideas of entrepreneurship as a modern discipline that will
benefit both entrepreneurs and the entire nation.
This book further develops the ability to create, stand out, and
innovate achieved by the Critical Thinking course. It is the right of students
of Cairo University to recognize how they distinctly belong to the most
prestigious Egyptian university which gives them the opportunity to interact
with the present and to be ready for the future.
Chapter One
Main Concepts of
Entrepreneurship
Entrepreneurship
]16[
]17[
Chapter One: Main Concepts of Entrepreneurship
Chapter One
Main Concepts of Entrepreneurship)*(
Intended Learning Outcome:
After reading this chapter, the student should be able to:
1. Understand the concept of entrepreneurship.
2. Have knowledge of entrepreneurship and its area of study.
3. See the difference between entrepreneurship and small
enterprise.
4. Identify the different forms of entrepreneurship enterprises to
start.
5. Realize that the essence of entrepreneurship is a unique idea
for a product or service.
6. Identify and be able to refute the false concepts about
entrepreneurship enterprises.
7. Realize that the study of entrepreneurship is indispensable for
an entrepreneur.
8. Come up with a unique and creative idea for a product or a
service.
Key Concepts:
1. Definition of entrepreneurship and area of study;
2. The process of entrepreneurship.
3. The importance of entrepreneurship.
4. The entrepreneur.
5. The difference between entrepreneurship and small
enterprises.
6. Examples of entrepreneurship enterprises.
7. False concepts about entrepreneurship enterprises and how to
respond to them.
8. How to reach perfection as an entrepreneur.
)*(
This chapter is by Professor Abdelhamid Abu Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]18[
]19[
Chapter One: Main Concepts of Entrepreneurship
A Success Story
Kngine, The Egyptian Company that Fascinates Samsung
One CEO at Samsung Electronics wrote at the South Korean
website The Investor that Samsung Research in the United States
had acquired 100% of the Egyptian artificial intelligence search
engine Kngine in October 2017.
This acquisition was a remarkable success for a developing
Egyptian company that had worked hard to increase investments
after this first round and moved to the United States to attract more
investments. Kngine was started in 2008 as a research enterprise by
the two Egyptian brothers Haitham and Ashraf Alfadeel, who
decided to turn the enterprise into a developing company in 2010.
The company then won the “Global Entrepreneurship Program”
competition held in Cairo in January 2011, and successfully secured
investments worth $ 775,000 from Sawaris Ventures. Kngine strived
for more investment, and eventually moved to Palo Alto in the
United States to promote the launch of the application, opening an
office at Dog Patch Labs to continue work on the enterprise.
Kngine is the most intelligent search engine:
Kngine, which is the short name for Knowledge Engine,
meaning a search engine for knowledge, is an intelligent search
engine that understands and answers questions, and provides
answers in different languages. It is built to use a web 3.0
technology and semantic search feature, and execute user commands
in English, Arabic, German, and Spanish.
Who are the two founders?
Haytham El-Fadil, founder and CEO of Kngine, studied
computer science and self-learning programming. When he
graduated, he took a job as a software engineer at a major Egyptian
Entrepreneurship
]20[
company, and then moved to a multinational company.
Ashraf Fadil has been programming and coding since he was
in elementary school and has eight years of experience in software,
database and network engineering. In the six years before Kngine,
he worked for several software companies. The two brothers jointly
lead the US-based Kngine team, which began in Egypt.
How does Kngine work?
Kngine is built on the belief that there are people who have
questions, and that there is enough information on the web to
answer those questions, especially for smart phone users who need
an answer, not pages of links that may or may not lead to direct
answers. Kngine works under the slogan “Links are not answers”. It
is the world's first multilingual engine, with support from English,
German, Spanish and Arabic. Kngine uses human logic and works
in two phases:
1.Understanding: It constantly reads what appears on the Internet,
and accommodates its contents, and then updates and expands its
knowledge base.
Answer: Kngine recognizes questions, processes them and
subdivides them into sub-questions, and forms a solution plan.
Kngine then searches thoroughly in the knowledge graph, combing
knowledge from millions of documents to find thousands of
possible answers. In the process of gathering evidence for each
possible answer, and eventually arranging them, Kngine provides
the best answer.
www.egyptindependent.com, www.kngine.com
]21[
Chapter One: Main Concepts of Entrepreneurship
Chapter One
Main Concepts of Entrepreneurship
Introduction
This chapter begins with a set of questions. What is
entrepreneurship? What are the steps of the process? What is the difference
between entrepreneurship and small enterprises? Who is the entrepreneur?
What are the main misconceptions about entrepreneurship? Does
entrepreneurship and small enterprises have a role in developing the
economies of countries and reducing unemployment? The chapter concludes
with a key question, “Does the entrepreneur need to learn the fundamentals
of the process of entrepreneurship inasmuch as an engineer needs to study
engineering, or a doctor needs to study medicine ?”
Bridge et al., (2012) support the importance of entrepreneurship and
microenterprises and their role in the success of the national economy. They
must be seen as an indispensable component of the advanced economies
that have heavily relied on them for their progress. One important example
is the countries of Central and East Asia, where these businesses have
played an important role in their development. When there is a need to
generate more jobs, small enterprises , more than large ones, better achieve
this goal.
It is, therefore, useful to recognize the importance of
entrepreneurship and the impact of small enterprises in spreading the culture
of self-employment, and the creation of career opportunities for university
graduates to positively resolve the unemployment crisis and its negative
effects. The focus of this chapter will be to introduce the concept of
entrepreneurship.
First: A Definition of Entrepreneurship, and its Topics of Research:
The first appearance of the concept of entrepreneurship dates back to
the 18th century, and it simply meant that a person starts a private business.
The term “entrepreneurship” began to spread in the 1950s to express the
desire to start and run a business, whether it is a new one, or one bought and
developed by a person who possessed a free entrepreneurial spirit. The idea
was to start new businesses the entrepreneurs would finance, plan and
supervise in order to gain profit and financial independence. Some
economists further developed the definition of an entrepreneur as “anyone
who can take the risk of venturing with a new idea if there is a great
Entrepreneurship
]22[
opportunity to make profits.”
In other words, this is an administrative term which means having a
creative idea that can be transformed into an innovative product or service
that is valuable to people, and can be well managed by its creator to reach
perfection and achieve career and material satisfaction for its owner. It also
means creating an entrepreneurial idea that is risky, innovative, adds new
value to the national economy, and facilitates people's lives. Google, for
example, came in 1998 with an innovative and unprecedented idea to
“organize the scattered world information and make it useful and accessible
to all.”
Entrepreneurship can therefore be defined as “the process of creating
something creative or innovative that has a value and represents a risky
opportunity by properly exploiting available resources in a manner that
maintains its sustainability in order to achieve long-term material and moral
gains for an existing or new organization” (Hala Enaba, 2017).
Second: The Entrepreneurship Process
Entrepreneurship is an integrated process and not a title. It means
taking the lead in a field and managing it well, beginning with the idea that
introduces something new that has value for people and that facilitates life
for them. Entrepreneurship is not a new phenomenon, nor is it the product of
the 21st century, but the word was first used by economist Richard Canelton
and Jay Saifi in the early 19th century (Khaled El Bagoury, 2017). But the
sudden success of some companies overnight, such as Facebook and
Instagram, made many think that success is immediate and that
entrepreneurship is easy. The opposite may be true. It is a long and difficult
journey that requires a lot of learning and seriousness.
We must reaffirm that entrepreneurship is an integrated process that
means creativity and the introduction of something valuable and innovative.
Time and effort are required together with financial, physical, and social
risks. There is also the risk that the desired results are uncertain. Success, in
return, will achieve the material and personal satisfaction of the
entrepreneur (Hisrich et al., 2010, p.6.l).
Previous definitions of entrepreneurship illustrate that this process
has six main components:
1. The creative process: creating a completely new idea that has a
unique value for the entrepreneur himself, and for everyone who will
use it. The creative idea is the essence of the process of
]23[
Chapter One: Main Concepts of Entrepreneurship
entrepreneurship.
2. Dedication: devoting all time and effort necessary to transform the
new and original idea into a product or service. An entrepreneur
should devote his mind and time completely to his enterprise and
idea.
3. Getting in return what is satisfactory to the entrepreneur: the more
creative the idea is, the more the entrepreneur gets in return, in terms
of independence, personal satisfaction, and financial return, since
money is a certain indicator of how successful an entrepreneur is.
4. Taking risks, financially, socially and physically: continuing to
work, develop, and create in spite of the risks and the uncertainty of
success.
5. Preparing an integrated strategic plan for the success of the product
or service: this includes determining the form, mission and
objectives of the enterprise, the industry in which it will operate, and
the marketing, production, human and financial plans required.
6. Managing the enterprise by defining the management and leadership
model required for the success of the enterprise: identifying the
basics of success and continuity, applying them, laying the
foundations for monitoring and evaluation, and finally the strategy
for the future growth of the enterprise.
A distinctive creative idea is therefore at the heart of the
entrepreneurial process. According to Walter Lehmann, “When everyone
thinks the same way, it means no one thinks.” Entrepreneurs are inspired by
their immersion in their environment, their interaction with those around
them, and their openness to life. They are provoked by the obstacles and
problems facing their societies to see entrepreneurial opportunities that
fulfill their ambitions. Entrepreneurial ideas are always there, from time
immemorial, around us and in our daily lives, but they are only picked up by
creators and entrepreneurs. The idea of a mobile phone has been an
opportunity since the invention of the phones, but it was Motorola that
transformed this opportunity into an indispensable product that has entered
all our lives. Pioneering ideas usually address problems for customers. If an
entrepreneur can turn these problems into creative products or services, he
or she creates an entrepreneurial enterprise that is beneficial to oneself and
others. There is a difference between the entrepreneurial idea and the
traditional idea: the entrepreneurial idea is creative and has a positive value
Entrepreneurship
]24[
in people's lives, while the traditional idea is within the norm and does not
develop or add new value.
Third: The importance of entrepreneurship
There are many aspects that highlight the importance of
entrepreneurship to both the individual and the society, as illustrated by
Ahmed Fahmy Galal and his colleagues (2018).
A. Entrepreneurship is of great importance in the development of
individual skills, and by reviewing the progress of
entrepreneurs, it becomes clear that they share the following:
 Independence: ownership of the enterprise allows entrepreneurs
independence and the opportunity to achieve what they want.
 Opportunities for excellence: entrepreneurs can achieve distinct
goals different from others.
 An opportunity to achieve maximum ambitions: entrepreneurs
find pleasure in their business and investment by realizing their
potential and proving themselves
 Profit Opportunity: profits generated by entrepreneurial
enterprises are among the most important drives for establishing
these enterprises.
 An opportunity to contribute to the welfare of the community:
entrepreneurs enjoy confidence and respect in their communities
through the exercise of social responsibility for enterprises or
organizations.
 Creating other job opportunities for others: in the same context,
it can be said that pioneering enterprises are a factor of stability
and social and economic development, through creating new
jobs and directing savings towards profitable opportunities.
B. The growth of the economy is based on the contribution of the
entrepreneurial process with a number of benefits to the
national economy, the most important of which are:
 Creating wealth through the provision of products (goods and
services that meet the advanced needs of customers). Hence the
expansion and growth of organizations, and the development of
areas where they exist.
 Creating new business and economic activities, providing jobs,
and opening new markets.
 Improving the national income and export volume through high
]25[
Chapter One: Main Concepts of Entrepreneurship
economic growth rate.
 Activating production factors through investment in
entrepreneurial capabilities in the society.
 The level of development of a national economy depends on the
level of entrepreneurship and its ability to maintain competition
with local and foreign businesses.
C. Entrepreneurship is a fundamental motivation to change the
culture of a society by changing the culture of business.
Perhaps the most important economic impact of entrepreneurship is
economic growth at the macro level. The role that entrepreneurs play in
promoting economic growth is important and varies from one country to
another. In most developed and developing countries alike, micro and small
enterprises make up the overwhelming majority of the total number of
enterprises in most sectors, producing the bulk of value added in most
developing countries, and providing their economies with the largest
number of goods and services they produce. Most medium and large
companies, especially in the IT, R and D sectors, have often started as small
entrepreneurial enterprises and have become giants over time. All
economies are particularly interested in micro, small and medium
enterprises, and have developed policies and programs to create an
environment contributing to their development.
The creation of jobs, self-employment and the employment of others,
has a very important economic impact, especially in light of the difficult
economic conditions on the global level and the high unemployment rate in
the world.The importance of entrepreneurship in providing jobs has
increased at a time when the capacity of governments and large corporations
to absorb new entrants into their labor markets has declined, due to the
substitution of new technologies at the expense of human labor in large
corporations and governments alike.
The second dimension is reducing and limiting the spread of poverty.
Poverty has become one of the most serious problems facing the world,
especially in developing countries. Entrepreneurship and job creation reduce
poverty, improve living conditions and the quality of life of individuals in
various societies.
Fourth: The Entrepreneur
Dees (2017) brings together the definitions and opinions of leading
writers and pioneers of entrepreneurship (SchumpeterDrucker, and
Entrepreneurship
]26[
Stevenson) during the twentieth century. Austrian economist Joseph
Schumpeter, known as the “father of entrepreneurship,” describes
entrepreneurs as the creators who manage the process of capital in order to
reform or revolutionize the pattern of production in a number of ways, such
as making use of an invention, employing untested technological
possibilities to produce a new commodity, producing an old product in a
new way, finding a new source of material supply, or opening a new market
for products. According to Schumpeter, entrepreneurs are the creators of
change responsible for changing the economy through new market service,
or finding new ways to do things until the economy moves forward.
Innovation is the essence of the entrepreneurial process.
Peter Drucker, an Austrian economist, added to Schumpeter's
definition the factor of “opportunity”. Entrepreneurs do not have to make a
difference, but they must exploit the opportunities change creates, whether
in technology, consumer preferences, social norms, etc…. An entrepreneur
is always looking for change, responding to it and taking it as an
opportunity. Entrepreneurship, aimed at exploring market opportunities and
arranging resources for long-term gains, is achieved through the cumulative
impact of this class of entrepreneurs.
Who is the entrepreneur then? In Arabic, the term refers to the first
person who starts an enterprise, and paves the way for others with this
breakthrough. An entrepreneur is the person who initiates an enterprise
based on a creative and new idea, and takes a high risk with no guarantee
that the enterprise will succeed. According to Robert Price (2004), an
entrepreneur is “a person who starts with almost nothing, establishes an
enterprise, and manages it professionally, and takes the risks aiming at
making profit and growth.”
Although the word entrepreneur is relevant to many disciplines, it has
been associated with the business sector. Not every businessman must be
entrepreneurial; a businessman makes profit, but it is the entrepreneur who
seeks creativity, innovation, development, risk, as well as profit.
Fifth: The Difference between Entrepreneurship and Small Enterprises
Some often confuse the small businessman with the entrepreneur. In
fact, there is a big difference between them in terms of the idea of the
enterprise, the degree of risk each takes, the value the enterprise adds to the
owner, the customers and the country, the income or wealth the enterprise
generates, and finally the society's opinion of the enterpriser.
]27[
Chapter One: Main Concepts of Entrepreneurship
Table (1-1) The difference between the entrepreneur and
the small businessman
Factor
the idea of
enterprise
added value
risk
Small enterpriser
the regular or duplicate
“copy and rip”
simple
low, may be new in
execution
realised income
reasonable
effect of the good or minor
service on humanity
wealth
enterprise ongoing income that
aims to generate
satisfies the owner and
is better than a job
Entrepreneur
completely new and
original
very high
very high, rich in idea
and execution
a wealth
major
the speed of making made during the
wealth
lifetime of its owner
and takes a long time to
make
creativity and
ordinary enterprises not
innovation
characterized by
creativity or innovation
Simple
made by the
entrepreneur in a
relatively short time
(5-10) years
characterized by
creativity and
innovation compared
to small enterprises
very high
restaurant
clothes factory
relatively small
Facebook
Google
exceeds thousands
Minimal
Huge
ordinary person
Hero
competitive
advantage
example
number of
jobs created
Impact on
national economy
image of
owner
Source: Prepared by the author
aims at a great and
lasting wealth beyond
simple dreams
Entrepreneurship
]28[
Sixth: Types of Entrepreneurial Enterprises
An individual who wants to set up a small entrepreneurial enterprise
but has no creative idea ready for a product or service might ask, “What
activity would I prefer to start my business with?” This is perhaps the first
question to be answered. The main sectors where an individual can establish
a small pilot enterprise are:
1. The industrial sector
There are many industrial activities a beginner can start, including a
printing press, a bakery, a pastry enterprise, a toy factory, pickles and jams,
furniture, clothes of all kinds (children - men - women), and feeder
industries of major industries such as cars. Toyota, for example, among
many other major industries, does not make cars, but relies on thousands of
small enterprises, each specializing in making certain parts of the car.
Almost all of the previously mentioned enterprises do the same
tasks--converting a range of inputs (raw materials, machinery, workers) into
a range of outputs, which are finished products of a quality acceptable to the
market and offered for an adequate price. Any of these enterprises will
certainly not continue unless it offers products of more value than those of
its current major competitors in terms of excellence, quality and price.
2. The commercial sector
The second type of a small pilot enterprise is the commercial sector,
both wholesale and retail. The wholesaler buys the goods from the industrial
sector (previously referred to) and then sells them to the retailer. The
retailer, who buys from a wholesaler, is the supermarket, the car dealer, the
pharmacy, or the furniture store etc., from which we as consumers buy our
needs directly.
3. The service sector
It is the new and attractive sector for future small enterprisers. The
chances of setting up small enterprises are increasing rapidly. Examples
include dry cleaning shops, shoe repair shops, hairdressers, restaurants,
tourism and petroleum enterprises, selling online, etc…. These enterprises
do not require large investments when compared, for example, to the
industrial sector enterprises.
4. Electronic enterprises sector
It is the future for entrepreneurs who have ideas but don't have
money. Creative ideas bring money. The owner of the site Otlob designed
his own site, and then sold the idea when it had turned into a successful
]29[
Chapter One: Main Concepts of Entrepreneurship
enterprise for one million pounds. The site was lately sold for 300 million
dollars. E-commerce, which does not need much capital, is an attractive
field for entrepreneurs, especially if we know that the volume of ecommerce in the world reached $ 3.8 trillion in 2016, and that e-commerce
markets in the Middle East, North Africa, Central Europe, and India account
for 2.5% of global e-commerce expenditure and represent a huge potential
for growth.
It is predicted that the number of Internet users worldwide will rise
from 3.2 billion users ( 43 percent of the world population) to 3.8 billion
users by 2020, which means that the global stretch rate will rise to 49% .
More than $106 billion have been invested in technology and e-commerce
companies since 2012 (Saudi Communications and Information Technology
Commission, 2018)
Seventh: Misconceptions about Small Enterprises among Egyptian
Youth
Due to the importance of small enterprises for the economy through
their innovative products and services and the job opportunities they create,
countries are beginning to be concerned about them, but they are challenged
by a set of misconceptions outlined in a study by Aida Rizkallah in 1997,
and can be summarized as follows:
1. Technical expertise is the first requirement for the success of a small
enterprise.
2. The small size of a enterprise is an obstacle to creativity;
3. Inability to carry out marketing activities due to lack of financial
resources.
4. No marketing plan is needed at the beginning of a small business.
5. A women is less capable than a man to manage a small business.
Below are the practical responses to these beliefs:
(1) Technical expertise is not the only requirement for the success of
a small enterprise
The results of the study indicated that 91.7% of the study sample had a
misconception that the technical ability of the enterpriser is the most
important requirement for starting a small enterprise. Technical knowledge
in the field of a small business is only one dimension. There are three basic
dimensions: (a) entrepreneurship, (b) the technical dimension, (c) and the
administrative dimension. The relative importance of these dimensions
varies.
Entrepreneurship
]30[
A. The Entrepreneur
This is the most important dimension. An entrepreneur has unique
qualities that make him different from others. Anything, no matter how
small, is an opportunity for him. He is the dreamer who lives in the future,
who has vision and imagination, and who can create in an obscure
atmosphere of uncertainty. He can always find alternatives and has an
extraordinary urge to control both people and events. He lives in his own
world, which is full of opportunities, but is also full of risks.
B. The Manager
He is a practical figure, without whom there is no planning,
organization, or forecast. While the entrepreneur seeks to control, the
manager seeks to organize. The entrepreneur looks for change, but the
manager is after stability. The manager sees his small enterprise as a house
where he wants to live forever, while the entrepreneur sets up an enterprise
to start another once it is set up. The manager creates a world based on order
and organization, but the entrepreneur creates what the manager organizes.
Given the fundamental differences in the personality of the two, the conflict
between them is inevitable.
C. The Technician
Matters are made more difficult through the technician, who is the
third dimension in the enterprise. He does the work himself, and believes
that no one can perform with the same skill. He considers the business work
and not a dream. He lives in the present, and must have feelings for the
work to be able to do it. The technician does not trust those around him.
The technician does not like to think. He believes thinking is useless if
it has no connection with the work that needs to be done. He is afraid of
obscure ideas, and thinking for him does not help work but stands in its
way. Thinking should only help to do the work better. The technician
believes that without him, there will be so many problems in this world.
Nothing will be done because many others only think but do not work.
These three dimensions exist for each small business owner, and if a
balance can be reached, the result is the guaranteed success of the enterprise.
The entrepreneur will be free to search for what is new and interesting, the
manager will find pleasure in realizing order and organization, the
technician will carry out the work he loves and has the skill to do, and
productivity will increase because everyone works the way one likes.
]31[
Chapter One: Main Concepts of Entrepreneurship
Given the fundamental differences among these three personalities,
conflict is unavoidable. Table (1-2) shows the differences among these three
dimensions which must all exist for a small enterprise at the same time.
Now, dear student, let us examine the enterprises that failed because they
could not integrate these three dimensions without which a small enterprise
will not achieve the desired success.
Table (1-2)
Differences among the entrepreneur, the manager, and the technician
Entrepreneur
creates work
the small enterprise is a
dream
lives in the future has a
vision
has
control
and
leadership source of
happiness
deals better with mystery
creates alternatives and
possibilities
always thinks
has a dream
enterprise is a home to
build and he also plans
for another
no creation without him
creating harmony out of
chaos
events are opportunities
to take
thinks to
imagine
create
and
controls people and
events
does not approve of the
technician and the
manager because they
hate change and hinder
his sense of imagination
Manager
manages work
the small enterprise is a
system
he lives in the past
Technician
does the work himself
The small enterprise is
work
lives in the present
order and organization
source of happiness
work
is
happiness
approaches
mystery
cautiously
organizes alternatives
created by entrepreneur
always organizes
grumbles
enterprise is a home to
live in forever
hates
obscurity
uncertainty
one way to do work
no enterprise without
him
organizing interrelated
jobs
trusts
events
and
considers
them
problems
thinking
should
concentrate on solving
problems
control the system
work not done without him
does not approve of the
technician because he
is against the system
and does not like the
entrepreneur because
he creates chaos that
has to be organized
does not like the manager
because he is part of the
system and does not like
the entrepreneur because
his ideas are difficult to
implement
source
of
and
always works
examines
enterprise is livelihood
one job at a time
does not trust workmates
thinking is a waste of time
if
not
related
to
performance
control work
Entrepreneurship
]32[
(2) The size of a small enterprise is an obstacle to innovation
A large proportion of young people (72.5%) believe that the size of a
small enterprise hinders innovations, and many connect size and innovation
on the basis that a large enterprise has the potential and resources to
mobilize the minds of many experts to help them innovate and avoid loss.
Despite the theoretical advantages, history and figures prove the superiority
of small enterprises where innovation is concerned. An economic study has
shown that 34% of technical innovations came from mega enterprises,
employing more than 10,000 workers, a small percentage to contribute to
the industry. Studies show that many inventions have started as small
enterprises, and that half of the major technical innovations introduced in
this century have started with individual inventors and small enterprises. Air
conditioning, the helicopter, insulin, instant camera, penicillin, the
photocopier, Facebook, and Google are only a few examples among many
others. More importantly, these innovations were the foundation upon which
many key industries were built. Figures point to the superiority of small
enterprises in innovation, which begins with an entrepreneur with an
unprecedented, pioneering and innovative idea.
(3) Inability to carry out marketing activities for lack of financial
resources
Lack of financial resources is doubtless one of the main obstacles
facing the small entrepreneur, especially at the beginning. The idea of the
enterprise may be innovative, and the good or service it provides in demand,
and the market encouraging, but due to lack of financial resources, the
marketing activities required to drive the small enterprise during its first
steps are not given due attention. Marketing and particularly advertising
require much more money than the budget of a small enterprise allows. An
exploratory study showed that 87.5% of enterprisers believe in the
importance of traditional marketing activities for a small business, while
100% think it is difficult to achieve a distinguished position in the market in
case of financial inadequacy.
Although traditional marketing methods are important for a large
enterprise, they are not suitable for the small enterprise. The latter needs
unconventional methods and methods to achieve a distinctive position in the
market, methods based on creativity, not on a large budget. Marketeers tend
to use this kind of creative and unconventional methods to achieve their
goals.
]33[
Chapter One: Main Concepts of Entrepreneurship
Many of these marketing methods available to the small
entrepreneur (Table 1.3), offer free opportunities to build his business,
establish a position in the market, and achieve targets. The success of
entrepreneurs in the use of these methods depends on proper choice.
Table (1-3)
Effective marketing techniques that can be used by a small enterprise
Technique
Examples
methods that can be name, quality, color, logo, distribution,
used by beginners
marketing plan, personality, pricing, and
customer address list
methods
not writing papers, invoice form, marketing
recognized as part of while waiting for the customer on the
marketing
phone, decorations, and staff clothes
Attitude
answering telephone calls, orderliness,
smile, speed, follow-up, customer contact
time, greeting and farewell, public
relations, enthusiasm and competition
methods interesting community participation, display windows,
to the unsuccessful professional membership, sales training,
enterprise
newsletters, customer welcome drink,
contacts, bill boards
methods
that working hours and working days, allowing
facilitate
purchase credit, catalogues, samples, honesty,
from
small customer satisfaction
Enterprises
methods often abused brands, audible word, publications, public
relations, and telephone sales.
methods that achieve directions within store, participation in
immediate results
trade exhibitions, product offers, live
display of the item, direct mail, and sales
representatives
conventional stronger advertising,
reputation,
newspaper,
methods of longer magazine,
radio
and
television
duration
advertisements.
Entrepreneurship
]34[
The previous study showed that only 45.8% of those who responded are
of the opinion that a marketing plan is essential once an enterprise begins.
The false beliefs of many young people reflect what is happening in reality.
Although a marketing plan does not cost cash, many small business owners
do not have written marketing plans, and rely on contradictory advice from
different parties to make their everyday unplanned decisions. Some may
have the financial means to hire service in this area, but the plan is wasted
for lack of operational experience.
(4) Women are less able than men to manage their small enterprise
Although this belief is widespread, there is no scientific evidence for
its validity. The study showed that 69% of the study sample believe that
women are less able than men to manage a small business. An enterprise
starts with a dream, and women’s dreams may be different from men’s.
Women have a long history of small business, and many of them have
started their own successful small businesses, or stood by their husbands
and families and away from the public eye to contribute to the success of the
family business. In the United States, for example, approximately 6.5
million small enterprises (500 employees/workers or less) are owned and
run by women, accounting for one third of all small enterprises. The
number is expected to rise as the number of enterprises set up annually and
conducted by women is twice that by men. To prove that women are no less
able entrepreneurs than men, we will demonstrate the case of Azza Fahmy, a
successful and distinguished Egyptian female entrepreneur. Azza Fahmy is
the designer of jewelry that has achieved outstanding innovations
recognized internationally.
]35[
Chapter One: Main Concepts of Entrepreneurship
A Success Story
Jewellery designer, Azza Fahmy
Beginnings
The story of Azza Fahmy with jewelry started when she bought a
German book on traditional medieval jewelery in Europe in 1969. She
decided to take training in jewelry design, and worked as a trainee for Haj
Sayed, one of the jewelers in the old Khan el-Khalili market in Cairo. She
trained under the best craftsmen, and was the only woman who worked
nights at Haj Sayed’s workshop. She moved from metal filing to jewelry
design, but kept her job as an illustrator of books issued by the Egyptian
government to afford training in jewelry design and later to manufacture
them. Later, the British Council awarded her a scholarship to study jewelery
at the Polytechnic University in London.
Fahmy’s pioneering enterprise
Azza Fahmy opened her own workshop in one of Cairo's remote
districts, where she developed her style using Arabic words and Arabic
poetry to carve inscriptions on silver jewelery pieces inlaid with gold. In
2006, she collaborated with the prominent designer Julian MacDonald to
make jewelery specifically for his fashion shows, where Fahmy Jewelry has
distinctive, exceptional and iconic designs.
Developing a global brand
Fahmi never forgot her beginnings and the challenges she faced in a
male-dominated sector. She remained enthusiastic, committed and
persevering, with a thirst for learning. Fahmi's mindset at work is “my limit
is the sky.” She is in a pursuit to improve and develop her work where her
mission is to revive Arab and Islamic heritage. Her brand won international
acclaim and prestige among prominent jewelry brands such as Cartier and
Bulgari. The company has also dressed Paris Fashion Week models, as well
as Queen Rania of Jordan, famous singer Rihanna and British supermodel
Naomi Campbell, and her designs featured in a variety of international
publications such as Vanity Fair and the New York Times. She collaborated
with international brands such as Preen and Julien MacDonald and was
Entrepreneurship
]36[
invited to create special collections for The British Museum and the
Louvre.
Azza Fahmy set up a number of local stores, and distribution outlets
in London, Jordan, Qatar, Bahrain and Dubai. She realized that with this
rapid expansion, internal change was needed to accommodate the growth of
the company. “You have to work to make the brand's products meet market
demands,” she says, “Creating a balance is the intricate part of the process.
You need to win world recognition without giving up the brand’s identity.”
Institutional leadership
A vital element that transformed a family-owned enterprise into a
competitive global business is restructuring the company. The business has
evolved from an entrepreneur-run company, to one with an established and
strategically structured operations team comprised of marketing, sales,
design, planning and quality control departments, supported by strong
financial and human resource teams. Today, Azza Fahmy Jewellery —the
first Egyptian designer jewelry label—employs over 200 people varying
between skilled labor, designers, engineers and marketers. Now, Fatma
Ghaly, Fahmy’s daughter, has taken the helm as Managing Director and is
poised to expand the company’s presence in the Middle East, Europe, and
North America.
The Grand Prize
Initiated under a corporate social responsibility (CSR) umbrella in
2011, Fahmy co-founded enterprise Nubre, meaning “Design” in Nubian,
with the European Union (EU), to enhance the local culture of contemporary
jewelry design through workshops. Evolving Nubre to the next level, Fahmy
established the Azza Fahmy Design Studio (AFDS) in 2013, a joint venture
and partnership with Alchimia, Contemporary Design School based in
Florence, Italy. Fahmy’s vision to drive economic growth, job creation, and
enhancement of related industries in the region is also channeled through
the Azza Fahmy Foundation, which focuses on providing vocational
education through exchange programs and development enterprises, which
feed creative industries and facilitate knowledge-transfer across the jewelrymaking industry.
But Fahmy—who in 2007 was named one of the 25 most influential
businesswomen in the Middle East by the Financial Times—is no overnight
success. She founded the company almost 45 years ago in 1969, having
stumbled upon a book on medieval European jewelry and realized that she
had found her true calling.
]37[
Chapter One: Main Concepts of Entrepreneurship
Eighth: Entrepreneurship is an indispensable discipline for those with
entrepreneurial qualities
There are some important questions to ask at the end of this chapter.
Is a businessman born with the genes of an entrepreneur? Does the process
need preparation and instruction? Is entrepreneurship an art or a science or
both?
The best answer comes from a prominent entrepreneur who says,
“An entrepreneur, like a doctor or an engineer, is adequate for his
profession, but at the same time needs education, training and scientific
grounding. Practitioners of all professions such as medicine, law,
engineering, accounting, and pharmacy engage in very rigorous education
and training systems to be equipped for their professions and be able to
make real success. This is also true for professional entrepreneurs.”
This prominent entrepreneur further adds, “Think of this situation:
can an engineer design a bridge at 1000 feet high as a first enterprise
without having studied this design in the Faculty of Engineering? Do you
accept, if you need an appendectomy to be operated on by an intern who
performs this operation for the first time in his life? Is it better to rely on
skill or on experience?” The same applies to setting up a pilot enterprise.
The question now arises, “How can you become a professional
entrepreneur? How can you, dear student, possess the knowledge and the
experience to succeed and outperform all others? Advanced courses in
business administration to learn traditional and modern concepts of business
management are not enough, and will not qualify a person to be an
entrepreneur. If you want to be a professional entrepreneur, you need to
acquire specific skills and gain access to specialized, non-traditional
knowledge of entrepreneurship. This is proved by the fact that business
students themselves are studying this course.
Another entrepreneur says, “I was born an entrepreneur. I started
without guidance, but over time, I felt I needed to shape my skills through a
combination of traditional learning and experience to create a truly
pioneering and distinguished enterprise.”
Being a professional entrepreneur implies a different commitment
other than that of a small business owner. We are here considering
entrepreneurs who create hundreds of job opportunities and earn hundreds
of millions of pounds. Your commitment as an entrepreneur means that you
are not an employee who works from 9-5, and enjoys a stable life. You will
Entrepreneurship
]38[
work 7 days a week even if you are on vacation. Working 12 hours or more
a day is the normal rate for a professional entrepreneur; you are always
working and planning. You are always passionately involved in your
enterprise; you dream of it. All entrepreneurs usually keep papers and pens
in their bedrooms. If an idea emerges, they wake up and write it down
before they lose it. An entrepreneur must know that entrepreneurship is not
a title to get, but a difficult journey, and like many professions, it needs
perseverance and learning to mature and succeed. An entrepreneur is
constantly seeking knowledge and experience of anything new to develop
his/her skills.
How can you reach perfection in the development of your skills? A
successful entrepreneur answers, “By constantly learning; by taking
successful models as your example; by sharing experiences with others
through workshops and training programs.” He adds, “When I find an
opportunity to learn, I take it; I attended 10 seminars in the best universities
in the world during the past 30 years, apart from workshops and training
programs; I attended these scientific forums to prove myself and develop
my skills in accordance with the latest developments in entrepreneurship.
All these institutions and the certificates I got have provided me with a
tremendous amount of knowledge, as well as creative methods for solving
my problems. I have committed myself to learning that will never end.”
This position strongly supports the decision of Cairo University to
teach this course to all its students in all faculties. Research proved - as
already stated in the introduction to this book - that individuals who study a
course in "entrepreneurship" increase the chance to start their enterprises
and contribute to its of success by 3-4 times higher than their peers who
start their enterprises without this study. They earn more than their
counterparts who do not take this course by 20-30%. (Hisrich et al., 2010)
In conclusion, entrepreneurship is the art of possessing
entrepreneurial qualities, but it must be supported by learning and
professionalism, like any other discipline, such as engineering, medicine,
pharmacy, law, sports, religion or politics, etc. This is the subject of the
following chapter.
]39[
Chapter One: Main Concepts of Entrepreneurship
Exercises and Questions
Search-Discuss-Imitate-Innovate
Question 1:
1. The story of the founders of Kngine:
• What do you like about the brothers Ashraf and Haitham AlFadeel?
• What are the main lessons learned from their story?
• Did they have any effect on the national economy? How?
2. The story of Azza Fahmy
• What do you like about Azza Fahmy's success story?
• What are the main lessons learned from her story?
• did she have an impact on the state economy? How?
3. Access the internet for the following Egyptian companies'
websites (Orascom Group, Egypt Gold Company, Al Arabi
Group) to know their success stories. Did they rely initially on
entrepreneurs, and what do you learn from their stories?
4. Othman Ahmed Othman succeeded in establishing a huge
entity, the Arab Contractors, which has spread throughout the
Middle East. How did the story of this giant corporation begin?
What are the characteristics of Othman as an entrepreneur and a
leader? This huge corporation started with one construction
operation and the number rose to three. Othman moved on a
bicycle to check work on the three sites and pay wages. This
bike was the nucleus of the thousands of cars of every colour
and size owned by the company now.
5. Choose the story of an Egyptian entrepreneur in the field of
technology and its applications. What did he achieve and what
was his creative idea?
6. Set up a team of yourself and your colleagues. Think of an idea
for an innovative product or service that you think is good for a
pioneering enterprise. The idea can also be individual.
Entrepreneurship
]40[
Question 2:
Determine whether the following statements are true or
false:
1. A student may have ideas and funds, but the problem is that he/she
does not know how to use them to create a pilot enterprise.
2. There is a strategic question that the student should answer, “Do I
want to be an employee or an entrepreneur?”
3. Entrepreneurship means providing a pioneering product, service or
creative idea that others have never provided before.
4. Many practitioners and experts believe that starting an
entrepreneurial enterprise is one of the most difficult things, but
maintaining its survival and easier and does not pose any
challenge to the entrepreneur.
5. Creative ideas are always there. What matters is who catches them.
6. Ideas always come from people's problems. As an entrepreneur,
always be around them.
7. An entrepreneur or a small enterpriser’s knowledge of the secrets of
the profession alone ensures the success of the enterprise.
8. A professional is the one who carries out a profession regularly and
constantly for the purpose of acquiring money, with full
concentration and devotion to the work.
9. The term entrepreneur in Arabic means the first to launch an
enterprise, and pave the way for others with this breakthrough.
10. When everyone thinks the same way, it means that no one thinks.
Question 3:
Choose the correct answer in front of each of the
following:
1. An entrepreneur's mental and intellectual ability
means…….
A. knowledge of the profession.
B. the ability to comprehend.
C. the skill of dealing with others.
D. a passion for achievement.
]41[
Chapter One: Main Concepts of Entrepreneurship
2. The idea of a pilot enterprise should be ………
A. ordinary or repetitive.
B. copy and paste.
C. completely new and innovative.
D. both A and B.
3. The best entrepreneurs in the world are those who……..
A. enjoy entrepreneurial talent.
B. have studied.
C. have not received any education.
D. both A and B.
4. Entrepreneurship is……….
A. a characteristic of the entrepreneur.
B. an easy journey.
C. a difficult journey
D. a journey with no risks
5. An entrepreneur is ……… in the eyes of his country and
people.
A. an ordinary person
B. a hero
C. a person of average intelligence
D. none of the above
6. Income acquired through successful entrepreneurship is
usually......
A. a wealth.
B. a reasonable income.
C. an average income
D. A and B.
7. Entrepreneurship risk is usually……..
A. low.
B. medium.
C. very high.
D. none of the above.
Entrepreneurship
8. The impact of a pilot enterprise on the national economy is
usually…...
A. very huge.
B. weak.
C. very weak.
D. medium.
9.Job opportunities created by a long-term entrepreneurial
enterprise are usually ……..
A. innumerable.
B. very few.
C. few.
D. medium.
10. To be a successful entrepreneur, it is best to……….
A. look for your customers for your products customers.
B. look for a new product for your customers.
C. imitate successful products in the more developed world.
D. all of the above.
11. Individuals taking a course entrepreneurship earn more
than their counterparts by……….
A. 20-30%.
B. 40%.
C. 50%.
D. no definite rate.
]42[
Chapter Two
Characteristics and Capabilities of
the Entrepreneur
Entrepreneurship
]44[
]45[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
Chapter Two
Characteristics and Capabilities of the
Entrepreneur)*(
Intended Learning Outcomes:
By the end of chapter two, the student should be able to:
1. Know the characteristics and capabilities that the entrepreneur
ought to have.
2. Measure how far the successful entrepreneur has capabilities
that can lead the individual to have a pioneering enterprise.
3. Identify how the pioneering enterprise can make its owner
gratified.
4. Become aware of the privileges and problems of establishing
the pioneering enterprise and how far it can gratify the
entrepreneur.
Key Concepts:
1. The characteristics and capabilities of the entrepreneur
2. Why establish a pioneering enterprise? The importance of the
pioneering enterprise to the entrepreneur.
3. How far do you have the capabilities of the entrepreneur?
)*( This chapter is by Professor Abdelhamid Abou Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]46[
]47[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
A Success Story
Mahmoud El-Araby:
Receiving the Order of the Rising Sun from the Emperor of Japan
A self-made business man started from scratch. He started a journey
that involved a struggle and persistence, until he became one of the
prominent men of trade, industry and economics in Egypt. He is a humble
man and the positions he held did not change him. He did not accept the
political prestige that he was offered, believing that economics has its
proponents and politics has its own. He managed to build a big industrial
fortress and have a prominent economic status without anyone’s support. He
is a good role model for whoever has the ambition to succeed.
Mahmoud El-Araby started working at the age of six with a capital
of thirty piasters. He opened the first store in his own name in 1964 because
the fixed job did not satisfy his ambitions. Al-Araby said, “The secret of
success is to function with knowledge and logic, and to avoid being a
swindler.”
His Life and Upbringing:
He was born in 1932 in one of the villages of the governorate of
Menoufia. His father was a farmer who earned his living by cultivating land
he did not own. He sent his son to the Kuttab at the age of three, so his son
studied the Qur’an, but could not get a formal education because of his
father’s financial condition.
The Young Merchant
Al-Araby started to trade at a very young age. About this stage he
said, “I used to save forty or fifty piasters every year to give them to my
brother to buy me products from Cairo before Eid El-Fitr (Feast of Breaking
the Fast). These were fireworks and balloons that I displayed on a stone
bench in front of our home to sell them, earning around fifteen piasters. I
Entrepreneurship
]48[
would give all the money I collected to my brother to buy me similar
products for the Bairam Feast. I continued doing this until the age of ten. At
that time my brother suggested to my father that I go to Cairo to work in a
perfume factory in 1942. I did this for only one month because I do not like
jobs, closed places and routine work.”
Al-Araby had his own philosophy concerning the term ‫ تاجر‬tager,
meaning merchant, who carried out an activity that he believed in and
practiced. For him, each of the four letters of the Arabic word had a
significance: “‫ ”ت‬refers to taqua ‫ تقوى‬meaning piety; “ ‫ ا‬refers to amana ‫أمانة‬
meaning honesty; “‫ ”ج‬refers to gara’a ‫ جرأة‬meaning audacity; and “‫”ر‬
refers to rahma ‫ رحمة‬meaning mercy.
Al-Araby later worked in a store in Al-Hussain district. His salary
was 120 piasters a month and he continued working in this store until 1949.
His salary became 320 piasters. At this point he decided to work in a
wholesale rather than a retail store in order to develop his expertise in trade.
His first salary from the new store was four pounds and he worked for this
store for fifteen years. His salary increased to twenty seven pounds.
In 1963, Al-Araby wanted to trade independently, but he did not
have the means to start. Together with one of his colleagues at work, he
thought about joining forces with a rich person. He and his colleague would
contribute their time and effort, and the contribution of the other party
would be financial. The budget of the enterprise was five thousand pounds.
This is how he established his first store in Al-Mousky in Cairo, which he
still owns until now.
The Secret of the Profession
Al-Araby said that the time he was drafted into the army taught him
the value of strength, how important it is to own weapons to protect oneself,
and not to wait for others to protect you.
Al-Araby trade was based on school supplies, but in the 1960s the
Egyptian government decided to provide the students with these supplies for
free. This implied that Al-Araby trade was of no use, so he traded in
electrical appliances instead. In the 1970s, Al-Araby shifted completely to
electrical appliance at the time of the launching of the Open-Door Policy.
He considered becoming the agent for one of the international companies.
He met one of the Japanese students studying at the American University in
Cairo who worked for the Japanese Company Toshiba and visited his store
often. He wrote a report to his mother company and assured them that Al-
]49[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
Araby can be the best in representing Toshiba in Egypt. The company
agreed to have him as an agent.
In 1975, Al-Araby visited Japan and saw the factories of the
company that he represents, stating “I do not deserve to live or the food that
I eat.” When he saw the progress in Japan when he visited the Toshiba
factories, he asked those in charge to build a factory for the manufacture of
electrical appliances in Egypt. This happened based on the arrangement that
40 % of the components of the products would be locally made, which was
later raised to 60 %, and then 65 % and now 90 %. With the development of
production, the Toshiba Al-Araby Company was established in 1978.
Al-Araby started his business with one employee, but now has
twenty-two thousand employees that he calls his partners. He said, “Thank
God I started in 1964 with one laborer. I was hoping I had ten, and when
they became ten, I was hoping they became one hundred. In the year 2000
we had twenty thousand, now in 2018 we have twenty-five thousand and in
2010 we will have forty thousand. Having money is not what is important,
what money! What is important is to serve others, employ human beings
and help people.” He explained that the mother company in Japan employs
one hundred and eighty thousand, and he hopes this will be the case in
Egypt in order to help the youth and help overcome the problem of
unemployment.
The Social Role of the Company
The Al-Araby Firm was established to serve the community. It makes use of
Zakat and gives some people monthly support. This firm is also in charge of
enterprises, like those concerned with the cleanliness of water in Asyut
governorate. This enterprise will move on from Asyut to Suhag to the New
Valley governorate.
The Japanese Award
The business man Mahmoud Al-Araby, who received the Order of the
Rising Sun from the Emperor of Japan, said “I took an award from the
Emperor of Japan known as the Order of the Rising Sun, not because I am
handsome, since they make no undeserved compliments, but because I had
an impact on the Japanese economy; thank God.”
Source:
Interview with Mahmoud Al-Araby. Al-Masry Al-Youm, 2018.
Entrepreneurship
]50[
]51[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
Chapter Two
Characteristics and Capabilities of the Entrepreneur
Introduction
Since the entrepreneur is at the heart of entrepreneurship, this
chapter will focus on the characteristics and capabilities that an entrepreneur
ought to have. It is necessary to know that the entrepreneur is creative by
nature and that creativity is the synonym of entrepreneurship. Creativity
could be in having a new idea, service, material, enterprise or a new method
of marketing. An entrepreneur must learn what entrepreneurship is, its
basics and constituents because entrepreneurship involves a scientific and
rational process that has firm foundations, as discussed in the previous
chapter. Everyone would like to be rich by means of having a pioneering
enterprise, but before hoping to be rich, we have to make sure that we have
the tools for it. The number of enterprises that fail are more than those that
succeed. In order to become a successful entrepreneur, you must know that
there are requirements other than luck for the enterprise to succeed and be
sustainable. Among these requirements are serious work and that the work
environment can best be described as being enigmatic and is characterized
by a great deal of uncertainty. The entrepreneur must understand well the
environment in which s/he works and must interpret the needs in terms of
unique and creative products and services.
Many contemporary entrepreneurs like Al-Araby whose story is
presented in the opening section of each chapter, and future entrepreneurs,
often raise three difficult and strategic questions, namely,
1. Am I actually an entrepreneur?
2. Do I have the capabilities, characteristics and factors that will lead to
success?
3. Do I have the background and enough experience to start and
manage a new entrepreneurial enterprise?
Accordingly, the purpose of this chapter is to measure how far the
individual is capable of having a pioneering enterprise through answering
these questions and others. The fact is that the requirements of the
entrepreneurial enterprise must be in harmony with the aptitude,
capabilities, desires and ambitions of the entrepreneur; and that the
enterprise will fulfill these ambitions. The conclusion of this chapter will
deal with the privileges that the individual will reap from the entrepreneurial
enterprise, shedding light on the challenges that will be faced in order to
address them.
Entrepreneurship
]52[
First: Characteristics and Special Traits of the Entrepreneur
For the entrepreneur to succeed in turning a creative idea into a
successful innovative enterprise, several features, and cognitive, personal
and leadership capabilities are needed. The following are the most
important:
1. Technical Competence in the Specific Field
One of the most important factors that leads to the success of a small
entrepreneurial enterprise is excellence and efficiency in a specific field of
business. The entrepreneur needs to have creative ideas that are new in the
market and that can be transformed into a product that is different or
innovative services. The implication is the owner must have a
comprehensive view of what he is doing, and it should be done in a creative
way. Although this seems simple, in fact it is not. We daily hear of dozens
of enterprises that fail because the owner does not have the efficiency and
awareness of what the business requires. The first factor, therefore, that
leads to the success of small entrepreneurial enterprises is how the business
is run.
2. Mental Ability
The entrepreneur is the one who guides others and is the source of
new ideas in the business. Thus, the entrepreneur uses this ability in
formulating comprehensive and competitive plans for the enterprise. In
order to be able to do this, he must have a broad vision of the enterprise. If
the entrepreneur’s technical ability and expertise in the business helps him
in figuring out how every activity can be carried out, his mental ability helps
him in connecting these activities together in order to have a final product or
service. At times the entrepreneur plays the role of the leader, indirectly by
supporting the employees who face problems at work, by pushing them
forward through advice and not letting them down.
3. Human Relations
The human element is a determining factor in any organization
because it is the factor that leads to success through utilizing and bringing
together all aspects of the business. Therefore, one of the most important
qualities of a successful entrepreneur is to be able to figure out the strengths
of each employee and guide him/her in the right direction. In addition to
this, the entrepreneur must be able to have harmony between his employees,
followers, consumers and his surrounding environment. In short, s/he should
be skilled in communicating with those who work with him/her, in
]53[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
encouraging them in ways that suit them, and in leading them to have a
sense of belonging for the success of the enterprise. The entrepreneur ought
to encourage his employees to disagree with him/her, listen to their advice
with an open mind, so that they would not hesitate to voice their own point
of view, and to be honest and truthful when there is a problem. Finally, the
entrepreneur must have a strong relationship with his employees because
this will enhance their dedication and hard work. Remembering their
birthdays and sharing his/her private car or supporting them during crises
can be effective (Abou Naaem, 2018).
4. High Achiever
Successful entrepreneurs often have great accomplishments and can
take decisions. They are thus wo/men of action not words. They assess what
they do through results and always ask the following question: Did my
efforts succeed?
The motivation to be an achiever is identified by how far the
individual strives and perseveres in order to achieve his/her goals and
succeeds, resulting in satisfaction. This is the case in contexts that involve
assessing one’s performance with a view to a level of excellence. Atkinson
identified the most important indicators that are motivations for
achievement as follow,
 Trying to reach a goal with persistence.
 Competing with others and knowing the effort and speed needed
to achieve the goal.
 Achieving what must be accomplished according to standards of
excellence at work.
 Avoiding doing anything that is below standard.
 Feeling responsible for the results of one’s actions and the level
of one’s work.
 Gathering information and understanding it well.
 Being concerned about the future and working towards a level of
performance that influences the future.
5. Independence
This refers to the desire of the individual to perform the activities
independently and with confidence that this is the way to achieve the goals.
The one who seeks to be independent refuses to follow the group that s/he
belongs to in every way. Such groups force individuals to play specific roles
and act in specific ways. This hinders individuals from being independent.
Entrepreneurship
]54[
6. Curiosity
Being curious is to be inclined to search for what is new, or the
desire deal with contexts that are different and somehow unusual in order to
discover and raise questions about these contexts. In more general terms,
these are known as follows,
 to be inclined to deal with events or situations that are attractive and
relatively new and exploring details about them.
 to be inclined to deal with exciting events or situations that are
unusual and finding out about them.
 to be inclined to deal with varied attractive operations.
7. Risk-taking
This is one of the characteristics that reflects how far the person
desires to act in a way that involves a high level of risk-taking. It is
interesting that risk-taking is closely linked to creative thinking. Torrance
defines creativity as adventurous thinking which is characterized by
avoiding traditional and dogmatic ways of thinking. If a risk-taker chooses
to take risks rather than a traditional route, s/he in this case is a creative
person who seeks to get rid of stereotypes and avoids rigidity. Therefore,
researchers claim that risk-taking is a decisive quality of character in the
creative behavior of the entrepreneur.
8. Persistence
Persistence is the inclination of the individual to continue trying in
order to accomplish a certain mission, despite the hardships and difficulties
one faces, and holding on to the goal despite negative results and
frustrations. Simply put, it is the ability of the person to endure adversities
and challenges to achieve the goal. In this sense, persistence is a feature that
is closely linked to creative thinking that leads to original ideas for
innovative enterprises. The role of persistence is not limited to how efficient
the individual is in dealing with traditional problems, but is extended to how
to face unusual or unconventional problems. (Moataz Abdallah 2007)
9. Non-conformism
By nature, those who are creative tend to avoid conforming to what
is prevalent in society in terms of standards and strict molds. The results of
various studies have shown that there is a positive link between creativity
and non-conformism. The results also show that creativity and adhering to
the prevailing traditions in different fields brings about a negative outcome.
The person who is prone to creative thinking generally criticizes the
]55[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
conformity that others follow, the stereotypes and molds that are prevalent
in society. Such a creative person has special interests that are different in
content from those that pertain to the clear and general concerns of the
society.
10. Self-actualization
Maslow defined the motive to self-actualization as “the full
realization of one’s potential” and of one’s “true self.” It is the desire of the
individual to achieve what s/he would like to accomplish. This is the context
in which the individual uses all capabilities, talents and expertise to the best
of his/her ability in order to improve him/herself. This also means that the
individual can make use of what is available to accomplish the goal, through
achieving the peak of one’s potential. A self-actualized person reaches the
apex of what s/he would like to be.
Maslow identifies a group of characteristics that distinguish those
who achieve self-actualization. Some of these are, they
 Perceive reality efficiently and can tolerate uncertainty;
 Accept themselves and others for what they are;
 Are spontaneous in thought and action;
 Are problem-centered (not self-centered);
 Have an unusual sense of humor;
 Can look at life objectively;
 Are highly creative;
 Are resistant to enculturation, but not purposely unconventional;
 Are concerned with the welfare of humanity;
 Are capable of deep appreciation of basic life-experience;
 establish deep satisfying interpersonal relationships with a few
people;
 Have peak experiences;
 Need privacy;
 Have a democratic attitude;
 Have strong moral/ethical standards. Maslow (1968 5)
11. Creativity
A. Originality
This is the most important quality needed for creative production. It
refers to producing something new, unique, not a duplication. This is
accompanied with the use of the imagination and behaving in an unexpected
Entrepreneurship
]56[
way, which is unconventional. In this case we are faced with a person who
has the two basic qualities of creativity, namely being unique and ingenious.
Behaving in a way that is different and based on the imagination, make this
person, thus, has the two qualities necessary to describe him/her as creative.
If a third quality is added to the previous two, namely relevance, we are then
faced with real and comprehensive creative behavior.
B. Intellectual Fluency
This refers to the ability of the person to introduce as many ideas as
possible in a specific time period, so long as these ideas are meaningful and
relevant to the issue at hand. These ideas are significant in dealing with the
issue or in discussing a certain problem. In such a case, the person can
provide a comprehensive view of the issue.
C. Flexibility
This means the individual’s mental ability to be flexible, change his
perception in considering various situations, and move from one way of
dealing with an issue to another without being limited to one way of
thinking. Such a person will not insist on adopting a certain position, if a
better or different one proves to be better.
Guilford, who defined flexibility as the ability to simultaneously
propose a variety of approached to a specific problem, dealt with it from
three angles; first, the ability to adapt in contexts that require changing one’s
perspective while doing simple everyday tasks. Second, one has to be able
to be free from rigidity in solving problems. Third, one has to be able to
spontaneously change his/her perspective when this is needed.
D. Sensitivity to Problems
The creative person can be critical and is aware that reform is
needed. In such a case, s/he has a theory of reform. That is s/he does not
accept the status quo throughout, but explores possibilities and is critical,
meticulous and experimental. Everything ought to be studied and errors
should be detected in contexts that others regard as ideal. Having a critical
sense, asking questions, following up dealing with details and areas that can
involve multiple perspectives are all necessary activities (Ayman Amer
2003 and Zain Alabedeen Darwish 1983).
E. Maintaining Direction
This refers to the ability of the creative person to continue trying in
one direction or the other until s/he reaches the goal. An idea becomes the
seed of a fruitful tree through effort, hard work and dynamic energy until the
]57[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
creative person reaches the peak of creativity in various ways. The
following are the four ways of being creative,
A. Innovation is to introduce something new that the market needs,
that is no one has preceded the entrepreneur in introducing this
enterprise or service before. Ideas and chances are available since
the dawn of history, as many claim, but it is the successful
entrepreneur who grabs the opportunity. Hilton, the founder of the
well-known chain of hotels in his name, said that he succeeded
because he managed to seize the opportunity while others failed. He
said that others could have successful if they had done what he did,
but they did not take the initiative.
B. “Only Connect” involves bringing pieces together and coming up
with something new. The owner of a small business can collect the
pieces, link and put them together to figure out the possibilities and
manage to have a successful enterprise.
C. Imitation indicates that if the person cannot be an innovator,
imitating good ideas by others can help. This requires exploring
what the leaders in the field of this business are doing. Many
pioneering enterprises can start by modifying a service or a product.
D. The Transfer of Successful Ideas is also possible through applying
successful ideas from one field to another. When the owner of Mac
Donald’s started having a chain of stores all over the United States,
for example, others carried out the same plan but with different
products. Now, chicken and pizza, and even ice cream are available
in chains like Mac Donald’s.
12. Making Use of the Experience of Others
Learning about the experiences of those who preceded us in the field
we are interested in is the most important step that a person must take before
becoming an entrepreneur. These experiences give the person enough
information about the steps that lead to success in order to follow them, and
those that lead to failure in order to avoid them. This is why this book
introduces the experiences of successful entrepreneurs at the beginning of
every chapter. These can be a source of light for an entrepreneur who would
like to start a small enterprise for the first time.
Dear reader, now you can ask yourself whether you have all the
requirements of a successful entrepreneur discussed earlier or only some of
them? What is the ratio of what you have compared to what you do not
Entrepreneurship
]58[
have? The relative success of your enterprise will depend on the
characteristics and capabilities you have or do not have. If you have them,
your enterprise will have a 100% chance of success. If you only have 10%,
chances are your enterprise will have a 10% chance of success. In order to
assess how far you can become an entrepreneur, answer the questionnaire at
the end of the chapter.
Second: Why have an Entrepreneurial Enterprise?
What is the importance of an Entrepreneurial Enterprise for the
Entrepreneur?
Why do some of us desire to have a small entrepreneurial enterprise of their
own rather than have a job? The answer is there are special ambitions that
cannot be fulfilled except through this enterprise. Therefore, the next section
will deal with the benefits of such an enterprise, together with the problems
that inevitably happen with enterprises like these.
1. The Benefits of Establishing an Entrepreneurial Enterprise
An entrepreneurial enterprise has the following benefits:
A. Independence
An entrepreneur has good qualities that can prepare him/her to be a
leader. Consequently, such qualities allow him/her to object if the boss
requires that s/he follows the rules and regulations more strictly. The
entrepreneurial enterprise gives one the chance to be one’s own boss; in
other words, one does not have a boss who gives orders or limits one’s
freedom in applying creative ideas. One successful business man said “I
cannot and would not like to work under anyone’s leadership. I prefer to be
my own boss. A private enterprise allows you to implement your own plans,
follow your own ambitions and be independent in managing the enterprise.
Having a boss who gives you orders and controls you will limit your
freedom in applying your ideas.”
B. Financial Gains
If you are efficient in managing your own business, you will make a
fortune and become famous. You will get more money than you ever will if
you work for someone or have a government job. Your fortune will multiply
and what you can get from a small enterprise might be ten times as much as
what an employee receives.
C. Community Service
Entrepreneurship is regarded as a main generator of job opportunities
and, therefore, affects the growth on the national economy. Many of us
often observe that the society is in need of a product or a service that is not
]59[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
available. The doctor, who discovers a medicine to treat cancer, for
example, or virus C because this medicine does not exist, is serving the
community and the entire world. This is the same in any other job or
industry. The owner of a small entrepreneurial enterprise is, thus, serving
the community he lives in through this enterprise and rightly feels that s/he
is playing a role in developing his society. S/he is opening a new market and
fulfilling a need. S/he can also be making a new technological product or
service available that will make the lives of people easier. Facebook and
Microsoft are but two examples.
D. Job Security
Now that governments cannot employ all graduates, thousands and in
fact millions of graduates have the problem of finding jobs. This is why
when one thinks of a small entrepreneurial enterprise as an undergraduate,
one is solving the most important problem in one’s life, namely finding a
good job. If this idea is made possible, one has thus secured a job for
him/herself and for others as well.
E. Family Employment
One can benefit oneself and others as well. If job security involves
creating a job for oneself, having a small entrepreneurial enterprise can help
members of your family, neighbors and even colleagues who do not have
your ambitions can in time work for you. Al-Araby Firm has 22000
employees most of whom live in Menoufia and Qalyubia governorates. AlAraby in this case is serving his community. The other major benefit is that
the entrepreneur provides his/her children with a brilliant future full of
ambitions and chances through a successful enterprise in the market, one
they can pursue.
F. Challenges
One of the most important issues for the human being is to initially
prove himself to himself, and to the society in the second place. S/he proves
himself as a successful person who is productive and contributes to society.
Every one of us tries to prove that s/he can succeed like others, and can be a
successful entrepreneur like Talaat Harb, Othman Ahmed Othman, Sawiris,
Ghabbour and others.
But are there no problems in establishing and managing small
entrepreneurial enterprises? There are problems that must be known so that
the entrepreneur can face them through the ideas, principles, and practical
tools that are introduced in this book.
Entrepreneurship
]60[
2. The Problems of Entrepreneurial Enterprises
A. Sales Fluctuations
Often, major firms are stable, and the sales are at a higher rate than
small firms. The result is the employee who works in these big firms can
plan his life according to the internal stability of the firm in which he is
employed. The opposite is true in the case of small firms because the sales
are not stable and naturally this affects the employees in making them
insecure. In small enterprises the main problem is not having experts who
want secure jobs. The entrepreneur has to be able to attract skilled
employees and has to be able to keep them by giving them all the possible
incentives that will make a difference.
B. Competition
One of the main problems of small enterprises is competition. The
entrepreneur can start his/her enterprise and work for four or five years
without making satisfactory earnings. There are many famous restaurants in
Cairo, for example, but when Wimpy and KFC and others entered the
competition, these restaurants started suffering from the competition
because these multinationals are run by professional management. This is
why these are stronger than those run by individuals with experience and a
good reputation, which are not enough in facing giant international firms.
The same applies to supermarkets when big companies like Carrefour went
into business. In such a competitive environment, where there is
professional and scientific management, the owner of a small enterprise has
to have professional management as well. S/he has no other alternative.
C. Increased Responsibilities
The owner or the entrepreneur is responsible for almost everything
in his enterprise. The problem becomes more serious when the enterprise
grows. The owner plays the role of the accountant and oversees the account
book of the enterprise; makes the deals with customers; employs the
personnel; and manages the enterprise. The work load is, thus, heavy for
long hours and in fact throughout the week. And since the human being has
a limit in terms of time and energy, when the burden increases all the time
with the growth of the enterprise, the responsibilities of the owner of the
enterprise increase. The result is the owner becomes incapable of managing
all these aspects.
]61[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
D. Financial Losses
When one person is in charge of taking all the decisions (which are
varied: technical and marketing decisions, and those that have to do with
production or finances), it is impossible for all these decisions to be right.
What is stored could be more or less than what is needed, and the products
could be more or less expensive than what the competitors produce.
Reducing the price of the product might not lead to the expected increase in
sales, or the advertising campaign might not have the expected positive
results. These are all areas that involve decision making. The owner of the
enterprise bears all the losses that are the outcome of these decisions. If
many wrong decisions are made, the owner will be bankrupt. The solution is
to resort to specialists and consultants in taking these decisions so that the
owner can guarantee that the decisions are as correct as possible.
E. Relations with Employees
Because the number of employees in such an enterprise is small, the
owner supervises what they do directly. This direct supervision limits the
communication between the employees while they are at work. Considering
that the employee spends most of his time at work without talking, we can
imagine how this affects him/her. This does not mean that employees should
devote their time to talking to one another rather than work, but it is
important to allow them to socialize.
There is another problem in small enterprises and that is determining
who does what. Because those who work are few, the owner sometimes
pressures some to do many tasks, while others do less. The other problem
has to do with financial compensation: generally, there are no objective,
formal or just rule for the distribution of financial awards among the
employees which leads to dissatisfaction. The result is lack of concentration,
leading to having a bad product or service which makes the client angry.
Another possibility is the employee leaves the job in search for one that is
better, and in this case the enterprise losses a good employee.
F. Laws and Regulations
Like other enterprises, the entrepreneurial one must abide by laws and
legislations, the most important of which is the social insurance law for
those employed in these enterprises. The owner pays a sum of money as
insurance for everyone employed. The law also requires that taxes are
collected for every item sold (sales tax). One important step is the enterprise
must apply for a permit before initiating any activities and medical reports
Entrepreneurship
]62[
must be issued for all the employees who conduct work that has to do with
food, drink or coiffeurs, for example.
G. Risk of Failure
One of the most serious problems that the owner of an entrepreneurial
enterprise is faced with is the loss of part or all the money s/he invested in
the enterprise as a result of inadequate decisions. For instance, the enterprise
might not be able to continue because of an economic depression, unlike in
big companies that can withstand such a problem. If the owner loses all
his/her money, the result is bankruptcy, withdrawal from the market, and the
loss of the dream.
Third: How far do you have the characteristics and capabilities of an
Entrepreneur?
The following questionnaire (number 1-2) measures the preparation for the
entrepreneurial enterprise and how far the entrepreneur has the required
characteristics and capabilities:
Respond to the statements of the questionnaire to figure out whether you
have what is needed or not.
]63[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
Questionnaire (1-2) in Preparation for Entrepreneurship )*(
Guidelines
The following are expressions that revolve around some of the
personal qualities that distinguish the entrepreneur and that determine
whether s/he can succeed or not in his work. What you need to do is read
these expressions carefully and insert the following sign ) √ ( in the column
of your choice determining what applies to your behavior or conduct at
work.
You need to realize that there is no correct or incorrect answer, what
is important is the accuracy in choosing the answer that best reflects your
point of view.
Statements
1
2
3
4
5
6
7
8
9
10
11
12
Not
True1
I take the initiative in asking
questions to know what I need to
know.
I continue working for the longest
time hoping to reach a creative
solution.
I have confidence in myself and in
my ability to achieve my goals.
I love the tasks that challenge my
abilities.
I can discover the shortcomings
and weaknesses in my
surroundings.
I can proceed with my work despite
the difficulties I face.
I can change the direction of the
work to solve problems.
I quickly identify the problem I am
facing.
I distinguish between what I can
control and what I cannot in
determining the causes of the
problem.
New ideas come about one
following the other.
I can reach my goal despite the
seriousness of the difficulties.
I start the new enterprise with a
great deal of enthusiasm.
)*( Prepared by Professor Moataz Sayed Abdalla.
Scarcely
True 2
Moderately
True 3
Very
True
4
Fully
True
5
Entrepreneurship
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
I tried to find solutions for more
than one problem at the same time.
I can reconcile unusual issues.
Others find it difficult to cope with
me at work.
Once I wake up, I am constantly
working.
I move from one task to another
without resting.
I make a great effort to be special
in my field.
I feel I have excessive energy.
I prefer to lead different social
activities.
I think of more than one solution
for the problem that I face.
When I face a problem, I start by
finding out what the problem is.
I collect data about the problem I
am facing.
I assess the solutions after
examining the context of the
problem.
I enjoy work that involves
ambiguity and that can be puzzling
in finding solutions.
I use my own ideas and special
ways in dealing with the issues that
I face.
I deal with issues in my own way
that can be different from how
others deal with them, even if this
leads to conflict.
I enjoy changing the usual ways of
carrying out certain tasks.
I examine the problem from
different perspectives to be aware
of its varied aspects.
I can deal with problems that do
not initially have clear solutions.
Being adventurous is one of my
main qualities.
I often feel that life is boring, and
change is needed.
I have confidence facing the
changes that happen in my life.
Conventional administrators who
do not develop themselves annoy
me.
I am always in search for what is
new.
]64[
]65[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
The answers to the questions and assessing the grade that I got:
After addressing the previous reflection questions, count the grades that
you got:
 The questionnaire is made up of 35 reflections and the highest grade
you can get is 175 (35 x 5) and the least you can get is 35 (35 x 1).
 If you get more than 150 grades, you have the potential to be an
excellent and successful entrepreneur. You can establish an
enterprise and manage it efficiently and successfully.
 If the grade you got ranges from 100-149, you can become a very
good entrepreneur and can establish an enterprise and manage it
well.
 If you get a grade that ranges from 75-99, this means you have to
develop some of your skills and make an effort in order to be able to
establish an enterprise that can succeed.
 If the grade you get is less than 75, this means that you need to
study, assess your situation, find out what the difficulties and
problems that you will face are in order to become a successful
entrepreneur. You need to make sure that you can bear all the
difficulties and problems involved in having an enterprise of your
own. This can be done with the professor teaching the course.
Entrepreneurship
]66[
Exercises and Questions
Search … Discuss… Imitate… Create
Question One:
1. Search for: Mahmoud Al-Araby, the entrepreneur who started
working with three Egyptian pounds. He established Al-Araby
Group with his children and siblings. What king of work does this
firm do? Then, find information that you can use to draw a timetable
to show how this firm developed since it started until now and the
stages it went through. Discuss with your colleagues how you can
make use of this experience in starting your own enterprise.
2. What is the turning point that led him to become an entrepreneur?
3. What do you admire about Mahmoud Al-Araby’s journey?
4. What are the lessons that you can learn from this journey?
5. Did he have an impact on the country? What did he offer his
country?
6. Can you follow his footsteps? How? Explain.
Question Two:
Are these statements true or false?
1. Harmony between the requirements of entrepreneurship on the one
hand, and the talents, capabilities, desires and ambitions on the other
is not vital.
2. When the goals of the entrepreneur do not coincide with the benefits
that the enterprise accomplishes, this leads to achieving these goals
easily and consequently to the success of the enterprise.
3. Entrepreneurship is not a main driving force for creating new job
opportunities that leads to the development of the Egyptian
economy.
4. Competition constitutes one of the main problems of having a small
entrepreneurial enterprise.
5. Division of tasks and determining who works with who is one of the
problems of small entrepreneurial enterprises.
6. The most serious problem that the owner of an entrepreneurial
enterprise faces is losing most, or all the money invested in the
enterprise.
7. Individualism is the concept of having one strong person who take
all the decisions on his own in the enterprise. How far is this
appropriate?
]67[
Chapter Two: Characteristics and Capabilities of the Entrepreneur
Question Three:
1. Independence in taking decisions is one of the most important:
a. Benefits of the entrepreneurial enterprises?
b. Drawbacks?
c. Reasons for its failure?
d. Reasons for its success?
2. Bearing the responsibility is one of the most important
a. Benefits of the entrepreneurial enterprises?
b. Drawbacks?
c. Reasons for its failure?
d. Reasons for its success?
3. The philosophy centered on the team focuses on:
a. The employees contribute in decision taking.
b. One person taking the decision.
c. Identifying the structure of the enterprise.
d. All the above.
4. If the grade you get in the questionnaire concerning the capabilities that
equip you to be a successful entrepreneur is 100, you
a. Can become a successful entrepreneur.
b. Need to enhance some of your capabilities.
c. Should be better off working as an employee.
d. A and B.
5. If the grade you get in the questionnaire concerning the capabilities that
equip you to be a successful entrepreneur is 170, you
a. Can become a successful entrepreneur.
b. Need to study and make an effort.
c. Should be better off working as an employee.
d. A and B.
6.
If the grade you get is 75, you
a. Can become a successful entrepreneur.
b. Need to enhance some of your entrepreneurial capabilities.
e. Need to study and make an effort.
c. A and B.
7. There are --- ways to develop the creative process:
a. Four
b. Five
c. Three
d. All the above.
8. The entrepreneur is characterized by his appreciation for --accomplishments:
a. Scarce
b. Moderate
c. Ordinary
d. None of the above.
Entrepreneurship
]68[
Chapter Three
Types of Small Entrepreneurial
Businesses and Startup Methods
Entrepreneurship
]70[
]71[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Chapter Three
Types of Small Entrepreneurial Businesses and
Startup Methods )*(
Intended Learning Outcomes
This chapter provides information about the types of small
entrepreneurial businesses and methods of establishing them. After
carefully reading this chapter, the student is expected to be able to:
1. Distinguish the different types of businesses.
2. Recognize practical examples of the different types of businesses.
3. Realize the meaning and essence of the concept of small
enterprises.
4. Choose the most convenient method of starting small enterprises.
5. Recognize e-business and e-commerce opportunities and their
circle.
6. Describe and recognize the mobile commerce market, its
characteristics, and the mobile business opportunities it can offer.
Key Concepts
1. Types of businesses.
2. Concept of small enterprises.
3. Way to choose the proper method to startup small businesses.
)*( This chapter is by Professor Hala Mohamed Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]72[
]73[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
A Success Story
Ewing Marion Kauffman
Ewing Marion Kauffman was born on a farm in Missouri, United
States. A few years later, he underwent a fateful change in his life when he
suffered from a cardiovascular disease. His prescription was one year lying
in bed; he was not even allowed to sit up. Kauffman’s mother, a university
professor, came up with a solution to keep an active 11-year-old son lying in
bed – reading. According to Ewing, “I sure read! Because nothing else
would do, I read as many as 40 to 50 books every month. When you read
that much, you read anything. So I read the biographies of all the US
presidents, the frontiersmen, and I read the Bible twice and that is rough
reading.”
Another early childhood experience which influenced Kauffman was
learning to sell eggs from his family’s farm to customers door-to-door on a
daily basis (up to 36 egg cartons). In addition, he used to sell the fish his
father caught after cleaning and packing them to offer financial help to his
family who was living on a limited income. Nevertheless, he was always
extremely keen on appearing as a good-looking salesman when meeting his
customers.
Kauffman as a Youngster
During his early adolescence, Kauffman worked as a laundry
delivery person. He was also a distinctive member of a scout team as he
used to sell the largest portion of scout tickets enabling him to go free to a
two-week scout summer camp that his parents would not otherwise have
been able to afford. Describing this experience, Kauffman said, “This
Entrepreneurship
]74[
experience gave me some of the sales techniques which came into play
when subsequently I went into the pharmaceutical business.”
Later, Ewing went to junior college from 9 to 12 in the morning,
then walked 3 kilometres to the laundry where he worked until 7 pm. Upon
graduation, he went to work at the laundry as a full-timer for Mr. R. A.
Long, who eventually became one of his role models. His job as route
foreman involved being in charge of 18 to 20 route drivers, for whom he
would set up sales contests. Ewing said, “I got practice in selling and that
proved to be beneficial later in my career.”
Learning from His Role Model Boss
Mr. Long, the owner of the laundry, made money not only at the
laundry business but also on the many patents he obtained. Smart Ewing
learnt from his boss that success is not only about making money; but it is
also about the significant influence a person leaves on the field in which he
is working because money comes and goes. One of Mr. Long’s patents was
given to him for inventing a substance that would make clothes appear in a
good-looking, skin-tight shape. For Ewing, this meant that one can make a
fortune if he knows how to be clever at work. Money is not only generated b
physical labor; it is also made by work done intelligently.
Joining the Navy
Ewing’s sales ability was also useful when he joined the Navy. His
skill in selling convinced the Navy that he should start as a seaman first
class, rather than as a soldier or an apprentice seaman, thanks to his
experience as a Sea Scout. Assigned to the Admiral’s staff, he was the best
signalman (transmitting messages from ship to ship), because he was able to
read messages better than anyone due to his previous intensive reading at
the time when was sick.
Joining the Pharmaceutical Business
After the war was over, Ewing began his career as a pharmaceutical
salesperson. He worked on straight commission rather than receiving a
monthly salary or a steady income. By the end of his second year in the job,
]75[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
his monthly income from the sales was higher than that received by the
president of the company. The president, not liking this, cut the commission.
Eventually, Ewing was made a regional sales manager, where he made three
percent of everything his sales people sold and again continually made more
money than the president. When the president cut Ewing’s territory to
reduce the latter’s commission, Ewing eventually resigned his post and
established his own company, “Marion Laboratories”, which was named
after his father.
Speaking about founding the new company, Ewing commented,
“Before making the decision of establishing my own new company, I spoke
with some potential customers and asked them if I could sell them the
products they need at the same old price and of the same quality. They
welcomed the idea because I had been reliable and trustworthy with them
over the past years.”
Marion Laboratories started its business by marketing products
manufactured by another company. The company expanded to other types
of medicine and other markets. Afterwards, the company developed its first
prescription product, called Vicam, followed by another one called Oyster
Shell Calcium; and both achieved the company’s highest sales. Marion
Laboratories continued to grow and reached over a billion dollars a year in
sales due primarily to the unique relationship between Ewing and his
employees whom he regarded as associates, not as employees. “They are all
stockholders, they built this company, and they mean so much to us,” said
Ewing. The concept of “associates” was also part of two basic philosophies
of Ewing’s company; namely, “those who produce should share in the
results or profits” and “treat others as you would like to be treated!”
The company went public in the stock market which gave it the
opportunity to expand. In 1989, Marion Laboratories merged with Merrill
Dow with a total number of 3400 associates (employees). In 1998, the
number of associates reached 9000. Later, the company could buy several
European pharmaceutical companies. In 2002, the sales of the company
reached $ 16 billion.
Entrepreneurship
]76[
Kauffman was one of the greatest entrepreneurs of his time and a
highly-influential member in his society. He believe that his success was
attributed to his philosophy in life — that he needs to treat people the same
way he would like to be treated. Praising this philosophy, Kauffman said, “It
is the best means to bring you happiness if you adhere to it in your personal
life. It is the smartest technique and the most profitable one in your career.”
Kauffman did not only achieve success in his career; but he even
went further and illustrated his belief in entrepreneurship and the spirit of
giving back when he established the Kauffman Foundation. The foundation
focused on two areas: (1) Developing the potentials of young people and
providing them with the care and learning they need to launch their own
small-sized entrepreneurial enterprises; and (2) disseminating the culture of
entrepreneurship. These two areas will give birth to new entrepreneurs.
Source:www.Cauffman.Com
]77[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Chapter Three
Types of Small Entrepreneurial Businesses and Startup
Methods
Introduction
Business organizations are classified according to several criteria,
such as size, nature, objectives, and ownership of the business. In national
economy, such organizations vary and each has its own identity: there is
industrial economy, agricultural economy, public or capitalist economy, and
the economy based on small or large enterprises, and so on.
First: Types of Businesses
The types of businesses vary according to several criteria, such as
the type of ownership, the nature of owners, the size of the enterprise, and
the nature of business, among others. Figure (3–1) below sums up the most
important business subtypes:
The Types of Businesses
According to Ownership
The Private Sector
“Owned by Individuals and Not
Associated with the State”
Freelance
“Work from Home –
Independent Contractor”
Micro- and Small
Enterprises
The Public Sector
“Owned by the
Government”
Enterprises
“Family or Non-Family”
“Individual or Corporate”
Medium Enterprises
Large Enterprises
According to the Nature of Business Activity:
Industrial /Agricultural/Commercial/Service
Figure (3 - 1): Classification of Types of Businesses according to
Different Criteria
Entrepreneurship
]78[
Naturally, an enterprise can fall under more than one category within
this classification; that it, one enterprise can be a small, family, individual,
and industrial enterprise.
Examples of Egyptian companies of different sizes:1
 Independent Contractor: Such as a person who designs websites
on the Internet from home for clients.
 Micro Enterprises:
Thaat is owned by a social entrepreneur who is both a clothing designer
and manufacturer and it provides training to artisans on endangered
handicrafts. (The business is both industrial and service-oriented).
Masria Integrated Solutions, a provider of documents and products security
services, is an individual enterprise (both commercial and service-oriented).
For more information about it, visit: http://masriasystems.com.
With the wide-scale dissemination of the concept of selfemployment in Arab countries, several terms emerged and were sometimes
mistakenly thought to be identical. Some people fail to differentiate between
a freelancer (i.e., an independent contractor) and an entrepreneur and
mistakenly think of the two descriptions as two sides of the same coin.
There is, nevertheless, a considerable difference between both of them. An
independent contractor refers to a person who provides services to clients
1-For more information about the indicators of performance of the firms listed in the stock
exchange and other relevant details, refer to the following two databases: Kompass
Egypt Finance, yearbook 2013-2014 and Coface Egypt Finance, Yearbook 2010/2011.
]79[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
without working regularly for them or being the owner of a particular
business. Therefore, anyone working independently can be called a
freelancer – a person who has chosen a position in between both an
employee and a business owner, unlike an entrepreneur. According to Adam
Smith, an entrepreneur is defined as “a person who establishes a certain
organization for commercial purposes; expects the risks which are usually
related to starting new adventures; and competently provides the necessary
resources.”
Although the definitions of the two terms explain how each of them
is distinguished from the other, some use the expression “self-employment”
to refer to the implementation of traditional ideas usually by freelancers,
while entrepreneurship is related to the implementation of creative ideas.
This point of view cannot be said to be absolutely unarguable in all cases;
because a freelancer may enjoy some entrepreneurial characteristics without
establishing an enterprise for himself. That is, a freelancer may enjoy the
ability to offer creative, diverse, and up-to-date services, master the art of
marketing, and offer creative solutions to the problems of his customers in a
way that supports his specialized skills.
Therefore, the concept of entrepreneurship can be used in creating a
new, creative category of independent contractors who seek to act as
“entrepreneurial self-employees” to avoid the traditional service-providing
techniques even when offering the simplest services or abandoning the
belief that one should stick to only one way of doing what s/he does without
applying any upgrade whatsoever.
Self-employment can be considered an initial step towards gaining
more experience in dealing with customers that would in turn enable a
person to move to the second stage, namely entrepreneurship, where he/she
can establish his/her own enterprise. The following section will address the
concept of small-sized enterprises and the considerable controversy aroused
as to how to define them.
Second: The Concept of Small Enterprises
There is confusion between the small enterprises and the enterprises
of other sizes in terms of their definition; and this can be attributed to the
lack of a clear line drawn between the meaning of the words small, medium,
and large. This is because size is relative and differs from one country to
another and even from time to time in the same country. In general terms,
the various definitions of the concept of small enterprises can be classified
Entrepreneurship
]80[
into two main groups: a group of definitions which describe the
characteristics of small enterprises and can be generalized in all countries;
and a second group which includes the quantity-centered definitions which
describe them depending on some quantity-related criteria, such as the
number of workers or the amount of capital invested in such enterprises, and
so on.
This book provides a descriptive definition of a small enterprise as:
“A business which is independently owned and operated in a fullycompetitive market, usually in a local environment, and depends on factors
of production, the utilization of which is limited compared to other
enterprises in the same industry.”
The group of definitions which relies on quantity-related criteria in
clarifying what is meant by the word small has localized descriptions since
measuring size differs from one country to another. The criterion of
classifying enterprises depending on the number of its workers is one of the
most common criteria used to define small enterprises — although up till
now there is no agreement as to the number of workers a small enterprise
has. The range is between 9 to 500 employees. The size of the enterprise is
affected by the economic conditions of the country itself being a developing
or a developed country. While the maximum number of workers in a smallsized enterprise in the developed countries is 200 to 500, the number ranges
from 9 to 100 workers in the developing countries such as Egypt.
Accordingly, a uniform definition can be given to each group of countries
which share the same conditions and economic growth rate.
The second most common criterion of classifying small-sized
enterprises is based on the amount of capital invested in the business.
However, this criterion suffers from some shortcomings attributed to two
reasons: firstly, the continuous change of the value and rate of exchange of
currencies which differ from one country to another and from time to time
in the same country; and secondly, the difference in the concept of the
capital used.
In Egypt, the descriptive definition of the small-sized enterprises
was merged with the two quantity-centered criteria, namely the number of
workers and the capital invested in the business. The outcome was a
definition in Article 1 of Law No. 141/2004, namely the Small Enterprise
Development Law. Under this law, Small Enterprises are defined as: “All
companies or facilities undertaking productive, commercial, or service-
]81[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
providing economic activities, with a minimum capital of 50,000 EGP, a
maximum capital of 1,000,000 EGP, and a maximum of 50 employees.”
This law defines Micro Enterprises as “all companies or facilities
undertaking productive, commercial, or service-providing economic
activities, with a capital less than 50,000 EGP.”
Third: Selection of the Proper Method of Starting up Businesses
Having recognized the concept of small enterprises being the portal
into entrepreneurship and a main solution to the problem of unemployment
because of the job opportunities it can offer, any graduate who desires to
choose this alternative and enter into the business world should make an
important decision with regard to his/her approach of engaging in this
world. Based on the information presented so far about the different types of
businesses, the most important alternatives to choose from as a method of
starting small-sized enterprises can be summed up in Figure (3 – 2) below:
Entrepreneurship
]82[
Figure (3-2) Alternatives of Startup Methods to Choose from
The question which arises now is: Which of these is the best method
and what are the criteria of choosing the most convenient among these
alternatives?
In order to make the right decision, one should not provide
impulsive answers because the basics of decision-making in business
administration recommend that there is no one absolutely best alternative —
the decision is always based on examining the available alternatives and
choosing the most appropriate one among them as follows:
]83[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Comparing between
the advantages and
disadvantages
of
each method, then
choosing the best of
them based on the
available potentials
and
the
entrepreneur’s
conditions.
Choosing
the best and
most
appropriate
alternative is
dependent
on:
 Joining Business Incubators
 Acquiring a Franchise
Independent Contracting
 Micro Enterprise
 Purchase/Lease of an Existing
Enterprise
 Establishing a New Enterprise
 Supply Industries / Subcontracting
 International Businesses
 E-Businesses
 M-Businesses
Decisions are of considerable importance. Each of the above-mentioned
methods will be addressed and its disadvantages demonstrated in order to
evaluate it, based on each entrepreneur’s conditions:
(1) Joining a Business Incubator
One of the opportunities a graduate who desires to become an
entrepreneur and establish a small-sized enterprise needs to take advantage
of is joining a “business incubator”. The term “small business incubators”
refers to an integrated organization which regards every startup joining it as
a newborn baby who needs to receive intensive care and attention since the
moment of its birth to protect it against threatening risks, help it to move
forward, and strengthen it gradually until it becomes capable of growing and
equipped with all the tools it needs to achieve success by its own in the
future. A business incubator provides appropriately-equipped production
and administration units in exchange for a rental value for a period of no
more than 3 years (the incubation period). It also offers joint central
services, such as secretarial support; administrative, technical, and
marketing services; as well as specialized programs for funding, promising
and creative enterprises or helping expand existing ones. In addition, an
incubator can enable innovators to turn their ideas into marketable products,
samples, or processes with help from venture capital companies or
governmental funding programs, among others. Incubated enterprises are
linked to experience centers, universities, and research centers and are
Entrepreneurship
]84[
provided with equipment and computerized devices, office and guidance
support, and regular operational audits from the incubator to achieve the
desired objectives.
The various types of business incubators include the following:
A. “Incubators for General Non-Technology Enterprises”: They focus
on attracting agricultural enterprises and industries related to light
engineering or distinctive handcrafts.
B. “Technology-Based Incubators”: They seek to take advantage of
scientific research and technological innovations and transforming them
into successful enterprises, such as the Cairo-based Smart Village.
C. “International Business Incubators”: They focus on international
financial and technological cooperation aiming at qualifying the national
companies with help from international ones and enabling them to get
into foreign markets.
D. “Incubators without Virtual Walls” (Open Incubators): They include
incubators built up to develop already existing enterprises and industries
in industrial parks, such as an integrated center offering services and
support to enterprises and industries located nearby.
E. “Specialized Incubators”: They include creativity incubators
(multimedia and designs) and incubators concerned with women’s
businesses, among others. This type is more compatible with the smallsized industrial enterprises which can enter the field of supply industries
since usually an incubator of this type is associated with one of the largesized industrial enterprises.
F. “E-Business Incubators”: They are one of the means to overcome the
obstacles which prevent small enterprises from starting business.
“Internet Incubators” refer to “the organizations which help emerging
internet and programming companies to grow until they reach full
maturity.” The Social Fund for Development (SFD) has its own
“incubator” on its website; and there are also several other incubators for
governorates. Such incubators should be audited to recognize the
possibility of taking advantage of them as a business model.
To derive benefit from these incubators, the available ones need to
be audited. Some of the incubators existing in Egypt will be addressed under
the helpful organizations listed in Appendix (1).
]85[
(2)
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Acquiring a Franchise:
Acquiring a franchise is one of the methods of establishing smallsized enterprises since it opens up new horizons for those who desire to start
business, especially with the limited investment opportunities currently
available in the local market. The way franchise works can be further
elaborated as follows:
In a franchising system, the franchiser who owns a successful
trademark, invests by signing a franchise
agreement with the franchisee (sometimes
referred to as “the lessee”). When this agreement
is implemented, a franchiser licenses a franchisee
to use one or more intellectual or industrial
properties and provides the technical know-how
to the franchisee to produce a certain commodity
or distribute products or services under the
franchiser’s trademark, pursuant to the
franchiser’s instructions and under his
supervision exclusively in a specified geographical space and for a specified
span of time, while technical support is provided to the franchisee in return
for an amount of fees.”
The most important benefits of the franchising system can be listed
as follows:
A. Acquiring the right to use a famous trademark.
B. Benefiting from the trademark’s story of success and replicating it.
C. Receiving extensive training in the know-how and acquiring
professional knowledge and expertise.
D. Receiving technical support from the franchiser when needed
anytime.
E. Marketing for the trademark itself.
Since the franchiser-franchisee relationship is not merely confined to
the distribution of commodities produced by the mother corporation, the
franchiser grants several rights to the franchisee in return for retaining some
of these rights. Table (3-1) below outlines the rights and obligations of both
the franchiser and franchisee:
Entrepreneurship
]86[
Table (3-1): Rights and obligations of franchiser and franchisee
Franchiser
Franchisee
Rights
Continuously
following up and
supervising the
franchisee’s
business activity in
question during the
franchising period
and pursuant to the
rules and
regulations
stipulated in the
franchising
agreement.
Undertaking the
business activities
in a manner legally
and financially
independent from
the franchiser.
Obligations
Offering all assistance and
support needed to the
franchisee, such as providing
raw materials, training, and
technical support; and
marketing the products or
services, as applicable and
prescribed in the franchising
agreement.
Being committed to pay the
franchising fees to the
franchiser in exchange for
acquiring the license to
undertake the franchised
activities in question and use
the franchiser’s intellectual
property rights.
Being committed to preserve
the confidentiality of any
classified information
contained in the disclosure
document or any other
classified information received
from the franchiser before or
during the implementation of
the franchising agreement,
including any secrets,
commercial information, and
technical know-how.
]87[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
One of the most important businesses which involve franchising is
the fast-food business which has been dominating the franchising system
over a long period of time before being outdone by the service-providing
business. Franchising is prevalent among several various fields, such as
food industries and restaurants; service-providing businesses; sportswear
industries; bookshops; supermarket and retail store equipment; advertising;
construction; film shooting and processing; printing and copying services;
computer-assisted services; hotels; tourism and travel activities; vehicle
leasing; gas stations; and appliance stores. This diversity opens up unlimited
horizons for entrepreneurs to establish their own businesses, deriving
benefit from the advantages of the franchising system; to choose the
business which is most compatible with their field of study, experience, and
hobbies; and to select the most demanded business field (i.e., the one which
offers a viable entrepreneurial opportunity).
In 2005, Egypt became a member in the World Franchise Council
(WFC) through the Egyptian Franchise Development Association (EFDA) 2.
Graduates are recommended to obtain this kind of license; however, it is
hoped that they devise long-term plans so that they themselves can later
become franchisers granting these licenses to franchisees. To achieve this,
they initially need to gain the necessary experience by creating a successful
local trademark, then possessing three branches of the business to be able to
give licenses to others.
(3)
Independent Contractors Working from Home (SelfEmployment)
Doing business from home has recently started in Egypt, especially
among young people, although it has long been a widespread business trend
abroad. An independent contractor can be defined as “a person who
contracts to provide services to others without working as an employee for
them.” This is why every self-employed person is called an “independent
contractor”. Many people who had the capability of providing specialized
services managed to start their own businesses. Thus, they are called
“independent” because they can generate income for themselves by
themselves through working as freelancers.
2- For more information about franchising in Egypt, visit the EFDA’s website:
www.efda.org.eg.
Entrepreneurship
]88[
There are various businesses and professions which can be
conducted on a freelance basis: There are freelance physicians, nurses,
accountants, and plumbers, in addition to the professions requiring complex
or technical specializations such as programming, engineering, graphic
design, website development, and content creation, among others.
Moreover, there are also professions which require talent and practice,
including voice-over and translation; and other professions which do not
require a considerable talent or a sense of creativity, such as data entry or
audio transcription. When deciding to work as a freelancer, a person should
follow the following rules:
A. Decide what you are good at and what you excel at. Be creative and
innovative even if the services you are providing are traditional. Avoid
being traditional in providing or delivering your services or in charging
fees.
B. Identify the websites you can use. There are many international and
Arab websites which are of significant help to freelancers, such as
Fiverr, an international user-friendly portal suitable for beginners.
Another local website is FreelanceMe (www.freelanceme.net), an
initiative sponsored by Microsoft Egypt and the United Nations
Development Program (UNDP) and a tool helping owners of companies
to communicate with independent contractors by publishing the
available recruitment opportunities. A company hires the best
candidates after reviewing their résumés and portfolios. The initiative
enables independent contractors to search for job vacancies without
leaving the towns they live in and to work for more hours without being
committed to particular shifts. As for the language factor, a fair
knowledge of the English language is sufficient to use the portal and
users are enabled to use the simple translation websites, such as Google
Translate. It is recommended that a job seeker adds a formal personal
photo to the profile accompanied by a simple professionally-written,
error-free description demonstrating the freelance applicant’s skills,
fields of study, any certificates obtained, and the languages mastered. In
addition, freelancers are recommended to add to their profile links to
their Facebook or LinkedIn accounts, or their e-mails so as to add
credibility. They should be careful in classifying their work activity. An
accurately chosen classification directs the users of the websites to the
intended search keywords.
]89[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
C. Pay due attention to marketing and adopt a strategy in favor of diversity
to attract clients and build up a good reputation.
The awareness of small and medium-sized companies should be raised
as to the importance of self-employment and the recruitment of freelancers
so as to encourage them to adopt the freelance approach when seeking job
opportunities. This way of seeking job vacancies has advantages and
disadvantages for the freelancer, as summed up in Table (3-2) below:
Table (3-2): Advantages and disadvantages of working as an
independent contractor from home (self-employment)
Advantages
Full Independence: “You are your own
boss!” This is why working as a freelancer
suits those who favor independence since
they become able to choose when, where, and
how to perform their work. This means
adopting the slogan “work for me is a source
of pleasure!”
Full Control of Work: A company has no
right to direct and give orders to a freelance
service-provider as if s/he were a staff
member or oblige him/her to work during a
specific time. A company can only set the
delivery date and time pursuant to the
company-freelancer agreement. Therefore,
you need to avoid receiving or asking to
receive any training from your clients to
retain your full control over your work.
Should you need to hire other workers to
assist you in conducting your work, pay their
fees and put them under your own
supervision.
What a freelancer reaps are the fruits of the
volume and quality of the work she/he
performs. Therefore, if you desire to increase
your income, you need to search for more job
opportunities and enhance the quality of the
services you offer.
Disadvantages
Job security is unavailable
since no work means no
income.
The advantages and job
security of established jobs
are unavailable (such as
medical insurance, pension,
and so on) unless a
freelancer pays fees to
enjoy such advantages.
A freelancer receives no
compensation from the
client for work injuries
because the Labour Law
does not protect freelance
businesses.
Entrepreneurship
]90[
Generating Higher Income Compared to
that earned in Established Jobs: The
income a freelancer can earn is 20% to 40%
higher than that earned by employees
producing the same work. Companies prefer
hiring freelancers instead of permanent
employees to save the costs related to the
latter, such as the insurance, taxes, among
others. Your income is dependent on your
negotiation skills (known as the Tug-of-War
Technique).
Payment of Lower Income Tax: A
freelancer pays lower income tax compared
to employees working for a company.
Unlimited liability means
that if you fail, you would
lose
everything
you
possess because this means
you pay all your debts from
your private property.
Vulnerability to risks in
case client refrains from
paying the fees due to the
freelancer.
(4)
Buying or Renting a Small Existing Enterprise:
In this method, an entrepreneur buys or rents an already existing
enterprise in the business field intended. Making such a decision is based
on the conditions of the available alternative enterprise(s). Table (3-3)
demonstrates the most important advantages and disadvantages of this
method:
The Most Important Advantages
 Saving time, money, and effort.
 Minimizing risks related to the
establishment of a new enterprise.
 Potentiality of winning an
enterprise at an irresistible price
in case the owner is compelled to
sell or lease it.
 Taking
advantage
of
the
reputation of the enterprise.
 Ability to assess the value and
feasibility of the already existing
enterprise which facilitates setting
its price or rental value.




The Most Important
Disadvantages
The potential inconvenience of
the location of the enterprise.
The potential bad reputation of
the enterprise.
The aging of the equipment,
facilities, and products.
The overpriced purchase or
rental value of the enterprise,
especially
in
case
the
entrepreneur is not having
sufficient experience.
Figure (3-3): Advantages and disadvantages of buying/
Renting an Existing Enterprise
]91[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
The enterprise which is open for sale/lease (be it a workshop,
factory, store, farm, etc.) could be dilapidated and its renovation costs in
terms of money, time, and effort are higher than the cost of establishing a
new enterprise. In this particular case, the method of buying or renting an
already existing enterprise is a fatal mistake. An enterprise can be in good or
perfect conditions, but it is open for sale or lease because the owner is
suffering from a serious health situation or some personal issues; and in this
particular case buying or renting is an opportunity you should not miss. An
enterprise can enjoy either a good reputation from which the entrepreneur
can benefit or a bad reputation which can later harm him/her. Therefore,
taking such as decision is based on the conditions of the property open for
sale.
The following figure demonstrates three successive basic procedures
which need to be taken to evaluate the proposed purchase price or rental
value of the enterprise open for sale or lease and to decide whether it is
convenient to the entrepreneur or not. The issue of whether the objective of
the evaluation is to buy or rent the ready and equipped enterprise should be
taken into consideration since there are some differences between the two
objective: While identifying the appropriate rental value of the enterprise
requires the availability of information regarding the rental value of similar
enterprises located in the same neighborhood or in alternative areas; the
evaluation of the assets and equipment installed in the leased premises does
not differ significantly from evaluating the assets and equipment installed in
the premises open for sale. Price evaluation is a hard process and requires
that an entrepreneur enjoys sufficient experience and patience because
making a wrong decision might embroil him/her in an enterprise that will
later be a burden instead of being a success. Figure (3-4) below shows the
steps of evaluating and purchasing an enterprise open for sale:
Entrepreneurship
A. Evaluation of the
enterprise by:
1. Examining the
reasons why the
enterprise is open for
sale: imperative
reason, semiimperative reason, or
out of buyer’s
willingness.
2. Evaluating the
earning power of the
enterprise.
3. Evaluating the
enterprise’s expected
value.
4. Evaluating the
enterprise.
]92[
B. Negotiation
Setting a fair and
realistic price for the
enterprise, based on
the recommendations
of experts and
specifying payment
conditions, then
negotiating them with
the owner – a
technique called the
Tug-of-War.
C. Contracting
It is recommended
that a competent
lawyer draws up
the purchase
contract to include
all clauses
guaranteeing the
entrepreneur’s
rights and protect
him/her from any
legal loophole that
can later result in
negative and
harmful outcomes
to both the
entrepreneur and
the enterprise.
Figure (3–4)
Steps of evaluating and purchasing an existing enterprise
Due to the importance of expertise when taking the first step, we will
give it much attention in order to accomplish it .Acquaintances and relatives
who are experienced or familiar with the field of the enterprise can be
approached as a significant source of extending consultations to those
entrepreneurs, who have limited potentials when compared with the owners
of large enterprises that can seek consultation firms for conducting this
assessment. Some specialists working for small consultation bureaus
(accountant) can be approached for reasonable fees that suit the financial
potentials of the entrepreneur:
]93[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
A. Considering the reasons for selling the enterprise
Recognizing the reasons for selling the enterprise serves as a point of
strength or weakness when holding negotiation. The pressing reasons for
sale give the buyer more momentum during negotiation. The opposite is true
if sale is optional or a strong desire for purchasing exists. Information has to
be collected from different sources even from the enterprise owners,
customers or suppliers in order to know the true reasons for the sale.
B. Assessing the enterprise’s potential turnover
The enterprise will be more valuable if the return is high. This value
could be identified by checking the records of the enterprise and finances
presented by the owner to official bodies, such as tax authority. However,
caution is needed when checking these records because the owner has
prepared them for this purpose. Accordingly, these records cannot provide
an accurate description of the activities of the enterprise because the owner/s
may hide the exact status of the enterprise, particularly when they are
lucrative. However, when the enterprise is exposed to official bankruptcy,
the owners reveal all details. Therefore, the whole situation should be
considered carefully. On the whole, the documents of the enterprise may be
checked:
 to analyze the current financial position of the enterprise, and
 review the income lists and financial percentages in order to
determine the respective profitability, strengths and weaknesses. The
review process may expound that the enterprise failure may be
attributed to the lack of experience or efficiency of the owner;
therefore, the enterprise may prove profitable if it is well-managed.
C. Appraising the potential market value of the enterprise
The following equation can be utilized to appraise the potential
market value of the enterprise:
Enterprise value = anticipated revenue volume÷ the applicable return rate
of investment. If we assume that we choose one of the best enterprises for
sale, they should be compared in light of the information shown in the
following table (3-3):
Entrepreneurship
Statement
Anticipated
revenues in
(L.E. 1000)
÷
Return of
Investment
(ROI)
Enterprise
Market value
in (L.E.
1000,000)
]94[
Table (3-3)
Enterprise (A) Enterprise (B)
Enterprise
(C)
500
350
550
50%
33%
25%
1.0
1.1
2.2
The verdict: Enterprise (C) is the best one as it has the highest
market value. This example explains that caution should be considered; any
enterprise should not be approved on the ground that it achieves the highest
investment return rate because it may have the lowest market value.
D. Assessing enterprise assets
All enterprise assets must be assessed in order to appraise the
appropriate value of the enterprise from the perspective of the buyer. This
process decides whether the offered price will be accepted or refused. A list
of all assets of the enterprise can be prepared. Each asset is reviewed in light
of three values: the first value is the one you assign to the enterprise by
yourself or you seek the consultation of other experts; the second value is
the current market price; and the third value is the one offered by the seller.
This data assists in deciding upon the fairest value of each asset
through comparing the three values of the enterprise, then all the three
values will be added together in order to decide the enterprise value you set
yourself. This value will help you during the negotiation process. These
items usually involve the following items (considering that the types of
assets differ according to each enterprise):
]95[
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
1. Physical assets (equipment – buildings – vehicles … etc.). These
assets will be appraised by consulting experts as shown above. The
percentage of depreciation and usage should also be taken into
consideration.
2. Nominal assets (Non-physical assets): these assets reflect on the
value of the enterprise according to their circumstances. They are as
follows:
 Lease contracts of the rented production equipment and their current
prices.
 Concession rights and the conditions through which they can be
granted to the enterprise.
 Trained labour and the conditions for their continuity in the
enterprise.
 Trademarks, brand names, and production rights at Present and in
the future.
 The relations with suppliers and banks: their conditions and
continuity.
 Appraising the enterprise fame which will be decided in light of
expertise and personal judgment by studying the attitudes of
customers and suppliers. This process is deemed difficult.
3. Other considerations should be taken when appraising the enterprise:
they reflect upon the assessed value of the enterprise as this may be
up or down:
 The enterprise commitments for other entities (taxes – insurance –
debts – , etc.)
 The enterprise customers: whether they are available in varied areas
or concentrated in a certain place and the conditions that stipulate
how to deal with them.
 Current and future competitiveness.
 Supplies contracts.
In case you like to assess the method of renting an already existing
enterprise, we have to follow the same step used for assessing its content.
As for the rental value, the following factors have to be taken into account
because they affect this value:

Social and living standard of the areas as well as population and
growth rates.
Entrepreneurship

]96[
Types of the activities surrounding the rented place and how far it is
close to other related enterprises (similar/ or complementary). For
example, the rental value of restaurants goes up if they exist near
different entertainment centers unless this restaurant offers a
distinguished service for particular customers.
 The history of the place, such as Al Azhar … etc.
 The nature of the products which will be used (easy-elective-special)
will decide the area where the site will be rented and the rental value.
 Types of communication means used for reaching the site and how
far they are close to the varied communication means that suit the
nature of the enterprise (metro station/train/…).
 Rental conditions: the type of rented enterprise because the rented
place could entail various merits, such as the low rental value, its
establishment value when compared with the purchased one or
establishment of a new enterprise. However, the rented place could
be available for a limited time, thus constituting financial burdens
and overhead expenses for moving in to a new site because gaining
an extensive base of customers and making good reputation takes
much time.
 The anticipated sales volume: if the enterprise is huge and exists in
commercial areas or down town, the rental value hikes up. In order
to determine the suitability of the offered value, we can draw on the
revenue power of the Egyptian rental pound criterion so as to
determine the value of every pound we pay for renting. In order to
make the rental value of the place suitable, the Egyptian rental pound
value has to be reasonably higher than the pound.
The concept of this criterion is similar to the equation point analysis. This is,
if the revenue power of the pound in this place equals the pound or it is less
than it, the enterprise will not be lucrative. This value is calculated in the
following equation:
The revenue power of the rental pound for each site =
Annual sales ÷ Total annual rental value
The rental value of the place is deemed higher if it does not achieve suitable
revenue power from the perspective of the entrepreneur.
]97[
(5)
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Establishing a new small enterprise
Some prefer to set up a new enterprise for the merit it entails when
compared with purchasing or renting an existing enterprise. The
entrepreneur is free to take new decisions without being influenced by a
mental image, reputation or previous acquaintance with the enterprise,
products or treatment. The demerits of establishing a new enterprise,
contrary to the merits of purchasing an existing one, are embodied in the
time and efforts exerted in construction and encountering the problems
related to the high expenses of construction and time required for making
new fame.
The construction process of any enterprise undergoes some steps,
which can be outlined in the flow map as shown in the following figure
(3-5):
Entrepreneurship
Figure (3-5)
Step of constructing and processing small enterprise
]98[
]99[
(6)
Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Subcontracting
The small-sized enterprise may
aim to introduce an integrated product
and present it to customers, carry out
some tasks, or produce some parts for
other
parties
via
a
contractual
relationship.
First,
we
need
to
differentiate
between
contractual
businesses
(contractor)
and
subcontracting (subcontractor). Even though both processes mainly depend
on contracts and presentation of some services and potentials to the
customer, subcontracting, as being one of the contractual works, is
implemented by having an agreement with the contractor rather than the
customer.
The subcontractor is usually specialized in implementing a specific
part of the business and wants to create a network with the contractor who
can hold negotiation over large businesses that fall within his/her specialty
so as to ensure his/her continuity if he/she proves efficient and committed.
This is because the customer does not know the subcontractor; his/her main
concern is the commitment of the main contractor.
Although this method in the field of contacts is known as “a
subcontractor,” other enterprises rely on the concept of “subcontracting,”
which assists them in getting components and parts of the end-product in
which the owners of small-sized businesses specialize in accordance with
specifications and a timeline.
Accordingly, feeder industries are deemed a rich area for small-sized
enterprises, which can produce parts and components required for largesized enterprises at a lower cost due to specialization. A clear example is
“General Motors” Co. which deals with more than 30,000 small
entrepreneurs.
(7) International businesses (export and import)
Technological advancement and dissemination of the concept of
globalization facilitate communication with the external world and practice
of electronic businesses in an international way through export and import
for fewer requirements as compared with traditional international trade,
which has relatively benefitted from this advancement.
Though Egypt is famous for many industries, of which some have
Entrepreneurship
]100[
disappeared, and others are about to fade away, it has some competitive
edge to approach some markets which are able to revive these types of
unique products. Egyptian cotton and agricultural products are widely
welcome at international markets.
The field of export and import can be approached in three cases as
follows:
A. You are a trader or a whole sale trader seeking to import goods:
in this case, you need to know the steps for importing goods whether
you are a distributor or a store owner.
B. You are a trader or a factory owner seeking to export your
goods: in this case you need to find a foreign buyer or register at the
export and import platforms (such as Ali Baba), or via a go-between
who could find an importer for purchasing your goods.
C. Or you are a mediator: you will introduce the seller to the buyer in
return for an agreed-upon commission, or you export and import for
the sake of other parties. In the second case, you usually finance to
purchase, export, import, or sell goods to a local trader.
(8) Small E-businesses
Electronic businesses constitute one of the common small-sized
businesses nowadays due to the expansion of the electronic community,
which has attracted the attention of all age groups. Youths, for example,
practice some activities via electronic community more than the material
one.
The electronic world has become a main component of the child’s
life particularly alongside with the development of some fields, such as
games and learning, among others. This world will grow in par with the
spread of social media networks. Therefore, the electronic world represents
a large market, which allows diverse opportunities for small-sized
businesses. It can be approached for lower cost, fewer requirements and less
time when compared with the traditional one that has been in existence for a
long time, particularly if the entrepreneur proves professional in dealing
with this world. However, we should not think that this method of business
does not have any requirements because the entrepreneur needs to be
familiar with technological knowledge as one of the basic factors of success.
All businesses whether traditional or electronic require marketing studies
and research to determine the targeted markets and take diverse decisions
which should be included in the business plan to guarantee success.
]101[ Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
Internet and social media can be exploited for implementing all
electronic businesses or as a platform for electronic marketing only
alongside with practising other traditional businesses. With the emergence
of the “LDSL” and “Wi-Fi” which are available on mobile phones, the
Internet services have become available everywhere, thus serving these
businesses.
The Internet facilitates the collection of basic data on customers to
determine their needs and complaints. It does not only provide secondary
sources of data required for conducting market research and increasing
marketing abilities at local and international levels but also assists in
completing all selling process particularly electronic products, such as
books, consultations and learning, not to mention but few.
Electronic businesses can be practised through designing a special
website for the enterprise as an electronic store for practising electronic
trade which is basically similar to traditional trade. However, both types are
different in the methods used for completing them and the place where this
business is conducted.
The essence of any transaction (exchange) lies in the presence of
both parties who consent to buy and sell a certain product by using a certain
method and meeting in a certain place. For example, credit cards are
considered a common method for electronic dealing rather than banknotes
and commercial papers.
Digital market, including a website, a forum, a “Facebook” account,
a “Twitter” account or an electronic mail, could be the place where a buyer
and a seller meet and negotiate. Electronic trade circle, involving electronic
market, has several phases as outlined in the following Figure (3-6)3
3- For more information, accurate details and consultations necessary for this circle
practically, refer to:
Hala, Enabah (2017). Small-sized businesses for youths: in the wake of the age of
entrepreneurship.
Entrepreneurship
]102[
Figure (3-6) Phases of trade circle/electronic marketing
It is clear that the electronic marketing process undergoes eight
phases as shown in Figure (3-6) and supported by three external phases to
complete the electronic trade system; namely, planning for electronic
payment system which be used for completing transactions, supplying and
delivering products, and designing a database, which is deemed a vital
element of electronic businesses.
Electronic businesses are not conducted through electronic sites, but
electronic mail and social media can also by exploited since their
applications have sparked off a marked leap in the world of businesses and
created distinguished types of marketing. These types could be used, such as
]103[ Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
marketing through a spoken word or viral marketing, among others. Of
these significant methods are the “Facebook,” “Tweeter,” “Forums,”
“Youtube,” not to mention but few.
(9) Small Mobile Business
Experts expect that the world will witness more transformations
from e-commerce to mobile commerce alongside with the advancement of
wireless technology as embodied in 5G smart phones with their “Mobile
applications” by using “Wi-Fi” technology. Accordingly, the customer can
carry out his/her business anywhere, anytime, thus creating more
opportunities for small businesse.
The person can activate the “GPS” and rely on some applications
which direct the car to the best and fast way according to international maps
that determine the less crowded streets. Moreover, these applications allow
the person to immediately respond to voice emails, “whatsapp”, or SMS
messages. The person can also accomplish his/her businesses at crossroad
signals, watch or listen to any material on the “Youtube,” accompanied by
some options that suit his/her preferences in accordance with the 3 web
technology potentials.
The person can market on the spot and run many daily errands, such
as paying bills. These errands can also be performed on his/her way
anywhere around the world. Therefore, the person will be able to organize
his/her life in the manner that meets his/her needs, thus promoting
“individual marketing” as one of the common trends nowadays. The
aforementioned examples of the citizen’s life creates diverse opportunities
of businesses which could be exploited by entrepreneurs to offer fast
services for customers on weather, sports, health, traffic, entertainment,
food, knowledge, among others. With the marked spread of smart phones
among all social classes, this market will flourish in Egypt and the world
irrespective of their different demographic characteristics (age, profession,
gender, income…etc.). This technology will definitely open new vistas for
export and import.
“Digital” electronic and mobile businesses can be classified
according to the involved parties into the following categories:
 Businesses among organizations, known as B2B.
 Businesses between organizations and customers, known as B2C.
 Businesses among customers, known as C2C.
Undoubtedly, the “Whatsapp” applications have become one of the methods
for practicing these businesses.
Entrepreneurship
]104[
Exercises and Questions
Search – Discuss – Imitate – Innovate
Exercise One: Search
1. Review and ponder on “SMS” on your mobile phone that promotes
enterprises that depend on mobile businesses.
2. Search for one of the forums you have heard of or subscribe to,
examine the respective commercials, and go to the related links to
learn how to design your store electronically.
3. Attempt to access some marketing websites, such as “Jumia” or
“Amazon” and determine the enterprises that show their products
via these websites. Count the commercials available on these
websites, learn from them and table any proposals for
improvement.
4. The “Otlob.com” website is one of the pioneering and famous
enterprises which present their services in Egypt and the Arab
world, respectively. It was set up by two AUC alumni to offer
delivery services in the field of restaurants. Access this website,
appraise it and benefit from it when designing your enterprise.
5. Access any website of any company you have known via any social
media. Read the comments of the visitors and assess them in terms
of their positive or negative impact on the company. Watch the
viral marketing applications and the spoken word.
Exercise Two: Do it yourself (DIY).
1. Create an electronic mail and insert a list of your acquaintances.
Then, send them an SMS, promoting a business you intend to
launch, and appraise their responses
2. Set up a “Facebook” page to promote a dream enterprise.
Question One: Identify whether the following statements are True (T) or
False (F). Then, blacken the circle that reflects your choice on the answer
sheet:
1. Electronic mail is the only service that enables the electronic
entrepreneur when using the Internet.
2. Material market will remain the guaranteed method of increasing the
sales of small-sized enterprises.
]105[ Chapter Three: Types of Small Entrepreneurial Businesses and Startup Metods
3. The essence of the commercial operation (exchange) gets
influenced as a result of reliance on e-commerce.
4. Sharing profit is a side effect of concession rights for the licenseholder.
5. Technological incubators aim at benefitting from scientific research
and technological innovations and transferring them into successful
enterprises, such as those existent in “Mubarak City for Sciences and
Technology” in Alexandria and “Smart Village” in Cairo.
Question Two: Multiple Choice Questions (MCQ):
First: Choose the right answer and blacken the circle on the
answer sheet:
Second: Complete the following gaps with one of the suitable
choices:
1. …………. is defined as an instant local and international
communication means; it is a state-of-the-art mail.
a. A small-sized business
b. An electronic mail service
c. A web serviced. A social media
d. None of the above
Question Three: practical situations and exercises
2. “El Sewedy for Cables” Co. is classified as
a. a state business.
b. a private business.
c. a large-size business.
d. an industrial business.
3.
In light of the data of three alternative websites, which one of them
do you see most appropriate in terms of the rental value for an
enterprise of your own? Justify your opinion and determine the
criterion on which you took your decision and the method you will
adopt to startup your small-sized enterprise.
4. Revenue rental pound power of the website (A) =
a. 2 pounds
b. b. 1.5 pound
c. c. 2.5 pound
d. all of the above
Entrepreneurship
]106[
5. Revenue rental pound power of the website (B) =
a. 1.00 pound
b. b. 0.9 pound
c. c. 1.5 pound
d. 2.00 pound
e. None of the above
6. Revenue rental pound power of the website (C) =
a. 2.2 pound
b. 2.25 pound
c. c. 3.0 pound
d. (a) + (c)
e. None of the above
7. The criterion used for decision-taking is:
a. Investment return rate
b. Market value of the enterprise
c. Total annual rents
d. All of the above
e. None of the above
8. In light of the results, the best website is
a. (B)
b. (C)
c. (A)
d. All are equal
9. Why did you choose this alternative?
a. No justification
b. My brother chose it.
c. Its rent is lower.
d. It achieves the highest revenue rental pound power.
e. None of the above
10. Can you choose the closest alternative?
a. Definitely no.
b. Yes and without reasons.
c. Yes, if I found personal reasons that allow me to do this.
d. No, because it is always a must to accept the highest revenue
power.
e. None of the above.
Chapter Four
Generating the Entrepreneurial
Idea and its Feasibility Study
Entrepreneurship
]108[
]109[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
Chapter Four
Generating the Entrepreneurial Idea
and its Feasibility Study)*(
Learning Objectives
This chapter aims to study the entrepreneurial idea in terms of the way
it is generated and its feasibility. It should help the student to:
1. Realize the difference between a new idea and an opportunity
idea.
2. Distinguish the different sources of ideas.
3. Evaluate one's experience of (the phases of) creative thinking.
4. Realize the importance of adopting creative thinking
techniques.
5. Realize the importance and concept of each creative thinking
technique.
6. Realize the importance of turning an idea to business model.
7. Recognize the different types of feasibility study in terms of
content, how each is conducted and the information required
for each type.
Key Concepts
1. The criteria that make a new idea feasible to start a business.
2. The sources of generating new business ideas.
3. The mechanisms of crystallizing an idea in an entrepreneur's
mind.
4. How to develop an entrepreneur's ability to generate creative
ideas.
5. Studying the feasibility of an entrepreneurial idea
)*(This chapter is by Professor Hala Mohamed Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]110[
]111[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
A Success Story
Onassis: The Legend
If you dream to be a millionaire someday, but you are penniless do not give
up and remember that the twentieth century tycoon Onassis launched his
first business with $60 only. On 20 January 1906 Aristotle Socrates Onassis
was born in Ezmir, Turkey to a Greek merchant who lost his wealth few
years later. In 1923 Onassis went to Buenos Aires, Argentina dreaming of
making up for his father's wealth.
Argentina was not chosen indiscriminately by Onassis to start his
business; he was aware of the tax exemptions granted to investors so that in
six years he turned from a train operator to a millionaire making a fortune of
importing tobacco from Greece to Argentina. He was appointed vice of the
consulate general of Greece in Argentina at the age of 24. His post allowed
him to supervise the arrival and departure of ships carrying tobacco from
Greece to Buenos Aires and to know some information that paved the way
to make his second million dollars. At the time of the Great Depression in
the 1930s big maritime companies were forced to sell their fleets. He seized
the opportunity and bought six ships owned by a Canadian company for US
$120,000 where their real value wasUS$21million, that is, 1% only of their
original price.
In the following years Onassis managed to own a ship fleet and oil
tankers that established him as one of the world's wealthiest men especially
after closing the Suez Canal during the Tripartite Aggression. World
governments and international companies hired his fleet to carry oil through
the Cape of Good Hope which raised the shipping price of each cargo from
$4 to $60. He made an undreamt of fortune: US $2million for each cargo
with a total of US $80million during the crisis.
Entrepreneurship
]112[
Asked later about the secret to his success, he instantly replied that
there were five key success factors: working daily for twenty hours,
willingness to take risks, listening carefully even to whispers, offering
promotions and other benefits to clients, not waiting too long to achieve
success, and pursuing success no matter how much time it takes. The blow
dealt to his investments in Monte Carlo made him add a sixth factor: if you
make a mistake, do not hesitate to admit and correct it as fast as you can.
]113[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
Chapter Four
Generating the Entrepreneurial Idea and
its Feasibility Study
Introduction
Being an entrepreneur means the ability to generate creative ideas
for businesses because traditional ideas are not bound to succeed either in
the present or the future. It is important then to evaluate if the new idea is a
good opportunity to start business. According to Ammaar Bahi (Langecker
et al. 2008), many people may have ideas for new products and services that
they believe will be successful, but when offered on the market they are
appreciated by very few because they did not make a difference nor serve
real and concrete needs for them. Those people are not entrepreneurs
because an entrepreneur has the sense to recognize among the new ideas the
true entrepreneurial idea.1
For the idea to count as good investment opportunity, the product or
service based on it must satisfy a concrete need and offers the client
something of value, a solution to a problem for example, so that s/he is
confident it is worth paying for it. This section focuses on identifying the
criteria of evaluating the feasibility of an idea and whether it is a real
business opportunity. It aims to survey as well various fields that can serve
as sources of generating ideas using creative thinking techniques.
First: The Criteria that Make a New Idea a Business Opportunity
The following factors should be taken into consideration when
deciding on the idea that can be promising to start a business:
1. Market factors: the new product or service should serve a
specific need of the market at the right time.
2. Competitive advantage: an idea may have a competitive
advantage if it is found by the clients to outdo what is offered by other
competitors.
3. Economic viability: an idea should be economically viable
regarding profit making and expansion potentials; the profit should be
1- Enterpreneurial idea is an idea for investment that makes use of one of the elements of
wealth to satisfy a need. There is economic feasibility to implement it(marketable,
artistic, financial, social, or environmental). It is equally creative and risky which make
it suitable for investment at all levels (For a fuller definition see Enaba 2014).
Entrepreneurship
]114[
enough to handle problems arising and secure benefits, and the enterprise
should have a clear path to profitability to ensure expansion and attract
interested clients to invest in it.
4. Enthusiasm and persistence: an entrepreneur is usually able to
sense the promising idea based on their experience, skills and the ability of
the idea to secure financing and other sources that would turn it into
enterprise that is capable of growing. One example is space tourism services
that many may find far-fetched but not the British business magnate Richard
Branson who established the spaceflight company, Virgin Galactic to
organize commercial spaceflights before the end of this decade. Many
entrepreneurs could find such an idea unappealing, but it resonated with
Branson's interests and taste for adventure.
5. The possibility of turning the idea into business model: a
business idea should not be inherently flawed or likely to fail in the future.
According to John Osher, an entrepreneur who developed hundreds of
consumer products, 9 entrepreneurs out of 10 are subject to failure because
they have not been fully acquainted from the very beginning with the
intricacies of the business they are about to start. Weaknesses such as the
inability to secure stable financing or not conforming to environmental laws
should be anticipated to see the probability of a starting business to keep
successful in the future. A well-developed business plan can provide an
entrepreneur with a solid idea about problems likely to arise in the future
and whether they can be successfully handled.
Second: Sources for Generating New Business Ideas
Students engaged in focus groups to discuss the challenges of
starting a new business stressed the difficulty of finding a good business
idea, so they usually turn to familiar ones: starting their own poultry farm,
advertising agency or retail shop. The problem with this approach is that
they may be a surplus of these businesses on the market which limits the
prospects of profit. Entrepreneurs are advised not to "follow the masses" or
trending business activities to avoid marketing problems later. One example
from the local market is the sudden increase in the number of duck farms in
Fayoum few years ago which turned to a failing business because the supply
was more than demand. With no marketing experience, farmers were not
able to market the production in their area or neighbouring ones.
Though it is not easy to settle on a good idea that meets the criteria
outlined above, some tips can help aspiring businessmen to generate such
]115[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
ideas:
1. An idea can be close at hand: if you think for a while you will
realize that some of your needs are not satisfied and if you stretch
your mind you will realize the same within your family,
neighborhood or city. Do not strain your imagination nor move to a
new place in search of a new idea.
2. Listen carefully and talk to people: engaging with people with
different interests can give you an idea about their needs, problems,
and dreams
3. An idea cannot exist without a need that it attempts to fulfil and
make the client feel satisfied no matter how much you like the idea,
nor how long you or your family have cherished it. A need is not
only that verbalized by people, it may be something they have not
thought about before nor have been able to express. When aroused,
they realize how the idea it addresses is important to their life. A
recent example is the invention of mobile phone. When made
available we felt the urgent need for it in a way we could not
imagine.
The following table (4-1) lists some sources of ideas and how to make use
of them.
Entrepreneurship
]116[
Table (4-1)
Fields providing ideas for small businesses
Idea
Example
Moved by her experience as veilNeed is the mother of invention
Specific needs that people have and wearing woman in a hot country, a
can be surveyed and identified.
Saudi student participated in a
competition at King Faisal
University and presented an airconditioned abaya inspired by the
electric blanket.
Hotmail, the first electronic
mailbox was invented by Saber
Bahita because he needed to
communicate with his work
colleague without using the
Hidden needs that can be brought out company intranet upon the orders
under certain circumstances.
of his boss.
Where I live
Satisfying
the
needs
of
my
environment even if they are common.
These needs may relate to quantity
(shortage of goods)
or quality (enough quantity but low
quality)
Exporting the elements of wealth1
either raw or processed from a selfsufficient place to another to fill in a
Establishing
a
supermarket,
bakery, carpentry, clinical unit,
dental clinic, law firm.
The availability of clothes of low
quality on the market.
Exporting mango either raw or
processed from Ismailia to other
Egyptian governorates.
Exporting fish from Alexandria to
1- Element of wealth is any natural resource that can be directly or indirectly used to
generate other elements of wealth. Examples include land (agricultural, desert, or for
building purposes), agricultural crops (palm tree, wheat, herbal plants etc.), minerals
(oil, gold, marble etc.), fishery and marine resources, elements of the environment (sun,
sand, river, sea, wind), monuments (the Pyramids), livestock, even wastes and sewage
can be elements of wealth.
]117[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
other…
Exporting handmade carpets from
Akhmim to…
Exporting furniture from Demietta
Importing services or goods to satisfy to…
the needs of my environment (domestic Importing any of the above
import).
commodities from other areas to
where I live.
Painting or giving diving courses,
Satisfying my hobby
etc.
Making clothes from local
Preserving traditional handcrafts
materials
such
as
hand
Or developing them
embroidered tulle fabric in Upper
Egypt.
gap (domestic export).
Egyptian furniture made from
palm tree wood and frond can be
developed to compete with Asian
furniture.
Imitating/replicating foreign
products
Your area of study or expertise
Make use of any previous experience
Graduation enterprise
Ideas from family or friends
Family business
Expand your family business and make
use of the experience the older
generation has gained over years. Do
Think of a foreign product and try
to replicate it using local resources
If you are a doctor, for example,
you can have your own clinic,
work at a hospital, provide online
or telehealth consultation
Developing a software or mobile
phone application
Talking with family and friends
can acquaint you with their needs
or they may have some creative
ideas that can help you
An investor has a reefer container
that is not rented regularly. His
son, a marketing student, thought
of advertising it online and drafted
Entrepreneurship
]118[
not start from scratch, you can take
a feasibility study upon the
your family business to a new level and father's request. The idea proved a
show the entrepreneur spirit within you success and they managed to have
it rented all year through.
The Social Fund for Development
Entities that offer business ideas or
and similar bodies can offer a
have ideas bank
variety of business ideas for
emerging entrepreneurs.
A freelance architect can work for
Freelance work
a number of architectural firms.
An English-Arabic translator can
provide
their
services
for
embassies in Egypt
An engineer or a chemist can be
Subcontracting
subcontracted to supply material
or manufactured parts to big
companies and factories
A discovery or invention can be
Discovery or invention
turned to a product or service and
put on the market
People's problems, complaints,
Listening to people and interacting
dreams and suggestions can help
with them in person or through
generate a business idea that can
social media
be useful for them
Personal contact with people in
Street survey
different places can acquaint you
with business ideas other than the
ones you are already familiar with
at your area
New technologies always bring
New technologies
new ideas
Entrepreneurial ideas informed by
Sustainable development
sustainable development focus on
entrepreneurial ideas
preserving
the
nature
and
supporting the community to
create opportunities that can be
turned
to
future
products,
]119[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
processes and services to the
purpose of gain and consequently
sustainable development of the
society. Broadly defined, gain can
be economic and non-economic to
the individual, the economy and
the society. This definition of gain
may lead to ideas that explore
“what can be sustained” and
“what can be developed.”
Third: Mechanism for Crystallizing Ideas in the Entrepreneur’s Mind
A creative entrepreneur goes through a process of creativity composed of
five stages that are conscious and unconscious as well. The creative
processes belong to the right cerebral hemisphere of the brain whereas
logical and mathematical processes are in the left cerebral hemisphere.
Personal abilities vary according to the efficiency of each hemisphere.
These stages take place in sequence as the following figure illustrates (4-1):
Idea Generation Stage
Preparation Stage
Incubation Stage
Illumination Stage
Verification Stage
Figure (4-1)
The Stages of the creative process
These stages can be briefly defined as follows:
1. Generating the Creative Idea: A creative idea can serve as a new and
alternative solution to an existing or anticipated problem. A variety of
Entrepreneurship
2.
3.
4.
5.
]120[
creative thinking and idea generation techniques can help develop or
acquire this skill which will be discussed in depth later. Idea generation
can be practiced individually or collectively.
Preparation: This is the stage of search, data collection and analysis in
order to formulate the idea. Again, it can be carried out individually or
in group.
Incubation: An idea has to be considered thoroughly in order to mature.
A creative person may seem in short of an idea or a solution at this
stage but within they work to crystallize it which is an individuallyinduced process depending on the inherited and/ or acquired abilities of
the entrepreneur.
Illumination: In this stage the entrepreneur's conscious seeks help from
the subconscious that stores a limitless amount of information and is
always alert even when they are asleep. They try to find connection
between pieces of information and crystallize an idea. Again,
illumination is a purely individual process that may end happily with
the "Eureka" words if one is lucky enough.
Verification: The idea, now crystallized, is subject to the entrepreneur's
conscious mind to check its validity. The creative person in this stage
may listen to music or seem to think about "nothing" so people may be
surprised when a full-grown idea comes into being. But the truth is that
the creative person is always attentive deliberating over the problem.
The outcome of this stage either proves successful and ready to
materialize into an invention or needs to be further polished or is
rejected altogether.
Fourth: Techniques to Develop the Entrepreneur’s Ability to Generate
Creative Ideas
The above processes help to open the entrepreneur's mind to possibilities
and inspire them to use creative thinking techniques to generate more ideas
that can be contemplated and gradually polished until an original
entrepreneurial idea is born. In order to be a good business idea it has to
meet the criteria previously outlined in the first section of this chapter.
There are various techniques of promoting creative thinking. They can be
classified into individual or the more highly recommended collective
creative thinking techniques. They can be simple or sophisticated with the
latter requiring training to gain familiarity with it not only to generate an
]121[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
idea but to handle any problem or take a decision. They are important to
organize the thinking process and keep it focused and to condense ideas and
present them in a way that enables one to take a carefully thought out
decision.
Four creative thinking developing techniques will be outlined below.
They were selected because they are common techniques that tackle
different aspects of the idea generation process and how to turn it to a
simple business model, a preliminary step to implement the idea. A business
model is necessary to prepare for the stage of studying the environmental,
legal and economic viability of the idea as well as the profit prospects in
order to move to the stage of planning and designing a business plan.
1. Mind Mapping1
It is basically an individual technique that aims to break down a problem
into its underlying constituents/components yet it has been developed to be
practiced by groups especially when coupled by brainstorming. The
following figure (figure 4-2) illustrates simple and sophisticated mind maps
that can be employed depending on the amount of information related to the
problem or idea in question. With either technique the aim is to give a
general view of the idea and therefore help one keep focused, think
creatively and engage effectively in brainstorming.
Figure (4-2)
1- For more on mind mapping see Shih, P.C., et al., (2009). The Power of Mind Mapping.
Entrepreneurship
]122[
Simple and complex samples of mind mapping
This technique was first developed by Tony Bouza, an educational
consultant, the promoter of mnemonic systems and the author of a number
of best sellers on the use of the human mind, for example, Use Your Head,
Use Your Memory, Master Your Memory, The Mind Map Box This
technique offers a deeper insight to the bigger context of the problem and
expands one's ability to generate ideas which guarantees a greater
opportunity of success and more valid results. Mind mapping proceeds as
follows:
A. Start with the main topic/issue, for example, how to deal with hot
weather.
B. Think of some related primary subtopics: the hot weather at home,
work, on the street/in an open area.
C. Further divide each subtopic into secondary subtopics. The subtopic
the hot weather at home can be further subdivided into hot weather
at home in the morning or while sleeping.
D. Repeat steps B and C with every primary subtopic until the whole
chart is complete. You can repeat the same with every secondary
subtopic depending on the purpose of analysis whether 1
holistic/general or detailed.
For every division of an idea there can be a distinct mind map, for example,
one for the primary subtopics then one for the subdivision of each (primary)
subtopic.
Though one of the most successful creative thinking techniques-as
will be shown later- it cannot yield good results unless all the ideas are
written down which can be in some cases too many that may obscure one's
thinking. Group and individual mind maps can help then. The following two
pictures (4-3) show the difference between using the writing on board
technique and mind mapping in terms of time and effort spent and the focus
and scope each provides.
1 -To learn how to draw a mind map see /http://www.tony bouzan.com/about mind
mapping
]123[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
Figure (4-3)
A comparison between the efficiency of displaying ideas by a group
using mind mapping and the whiteboard
2. Brainstorming: It is usually performed by a group of 6-12 to
discuss a problem. All the ideas generated are presented regardless
of how naïve, unusual or crazy they are because the purpose is to
trigger one's train of thoughts. The same process is repeated until no
further ideas can be generated. All the ideas are then scrutinized to
choose the best and most innovative. The following table (4-2) can
be used to find out the value/score of each idea based on a number of
relevant criteria identified by the group.
Table (4-2)
Ideas evaluation model
Idea
Cost
Time
Resources
Technology Total
Idea (1)
Idea (2)
Idea (3)
In addition to group mind mapping that helps smooth out brainstorming,
there is another brainstorming technique that can generate business ideas
and proved immediate success.
An element of wealth-based Mechanism to Generate Business Ideas1
The element(s) of wealth in your governorate can be a source of creative
1- See Enaba, Hala (2014) p.576.
Entrepreneurship
]124[
ideas guiding you to the economic activity (industrial, agricultural, service,
or commercial) you can be engaged in and guarantees the availability of the
factors of production, a comparative advantage to you and your
governorate1. The proposed mechanism is a kind of brainstorming that can
be done with partners, colleagues or experts in the field. It includes seven
aspects covering the various stages of exploiting any element of wealth
(from raw material to final product or service). Wide-ranging as it is, it
provides many business ideas suitable for students from different
specializations: Figure (4-4)
1-Inputs
Trade/fertilizers/seeds/m
achines/drugs
4-Services
accompanying
cross industries
Maintenance/trans
port/information/c
ommunications
Element of wealth
Palm tree /wheat / oil / fish /
pyramid /sun / bees / wastes /
rivers / desert / poultry /wind
2-Services accompanying the
production/extraction/
maintenance of an element of
wealth Maintenance of
equipments/veterinary
medicine
6-Research and
development centers of the
wealth element and related
cross industriespalm wood research center
3-Cross industries based
on ideas from the
exploitation of element of
wealth or its wastes
Soft dates/ cheap furniture
5-Feeder industries to
provide for cross
industries
Packing / spare parts
7-Foreign and
domestic trade
Wholesale and
retail
trade/ brokerage
The Client
Figure (4-4) Industries making use of raw material in creative ways in
1- Any of the administrative divisions of the governorate (its capital, big towns or small
villages) can enjoy the comparative advantage.
]125[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
different fields/areas
The proposed brainstorming has been applied several times since
2008 as part of a training program for participants in “The Productive
Families” enterprise in Minya, Menufia, Qalubya and Beheira to help them
see that utilizing a natural element of wealth such as palm tree can be a
source of creative business ideas noting that there are about 7 to 9 million
palm trees in Egypt over 10 governorates producing 750 thousand tons of
soft and dry dates. The brainstorming sessions have proved successful with
the wealth of ideas for possible entrepreneurial commercial, service and
industrial enterprises all based on palm tree which would be a source of
income for them and contribute to the national income as well.
In 2015 the same training program was offered in Ismailia, the
Egyptian top producing governorate of mango. Several ideas for small
industrial enterprises were suggested that can make use of the parts of the
fruit: skin, seed and flesh in food, pharmaceutical, fodder and oil industries.
The same mechanism can be replicated with any element of wealth to
provide entrepreneurial ideas for small scale investment.
3. Six Thinking Hats Technique1
It is used to evaluate the idea(s) suggested in the brainstorming. Members of
the evaluation team wear six hats in different colors in the following
sequence: white-red-black-green-blue-yellow each standing for one thinking
style (creative, pessimistic, optimistic and so on). When the chair of the
session puts on a particular hat, this means that all the group members have
to adopt only the thinking approach that the particular color stands for and
not waste time and effort in discussing the idea(s) from different
perspectives which keeps the group discussion focused on one aspect of the
idea within limited time. Then the process is repeated with the rest of the
colors.
One of the advantages of this technique is the in-depth discussion of
the various aspects of an idea, one at a time allowing a greater opportunity
to collect relevant data and information for a more objective evaluation of
the idea. The following figure (4-5) outlines the meaning of each color and
the thinking approach it represents:
1- For more on this approach see De Bono, E. (2017)
Entrepreneurship
]126[
information/data/figures…gathering
all the missing information
emotions, intuition and the sixth
sense.
warning,
criticism,
analysis,
obstacles and weaknesses (negative
side).
White
Red
Black
creativity, innovation, growth,
energy, and brainstorming.
Green
organization,
summarization,
keeping an agenda, control, and
monitoring the discussion.
Blue
logic, positivity,
values.
benefits,
and
Yellow
Figure (4-5)
The Six Thinking Hats and the Thinking Styles they Stand for
:
4. Canvas Business Model1
It is a strategic tool that aims to turn a business idea into a simplified
business model that can be presented in one page. It is a nine-component
model that gives an entrepreneur a bird's eye view of their idea or an overall
look of their prospective enterprise. The following example illustrates a case
study using this model:
1- See Osterwalder, A., et al (2011)
]127[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
Key Partners
-(4) youths
-(1) lawyer
-(1) motorcyclist
-(1) taxi driver
-(5) workers
Key Activities
Accommodating
the client and acting
for them, e.g.:
Facilitating
required official
documents
-Providing
maintenance
workers and
supervising them
-Offering
transportation
-Taking some of the
client's
responsibilities
to allow them more
time for their
professional and
social life
Key Resources
-PC
-USB Internet
-Printer,
photocopier, and
scanner
-3 mobile phones
lines
-Database for
workers
-A directory of
procedures and
documents required
by governmental
departments
Cost structure
Value
Porposition
-Saving time
-More
convenience for
the client
-Reducing cost
-Better quality
-Relieving
stress
Customer
Relationships
Communicating
with clients online
or via mobile
phone
-If a client requests
10-12 services in 6
months in a row,
they will be kept
informed of new
services. They will
be surveyed on
other services they
may need as well
-Clients will
receive greetings
on their personal
occasions, annual
festivals, holy
feasts etc
Channels
-A website
- Facebook page
-Mobile phone
-Whatsapp group
Customer
Segmenets (s)
-The private
and investment
sector
employees
-Internet and
mobile phone
users
Revenue Streams
Website design LE 10000 + Domain reservation 10% of the total cost of the
$15 subscription for one year (15×8=120) + PC service(s) offered
LE4000 + three mobile phones LE6000 +
printer, photocopier, and scanner LE3000 +
USB Internet for one year LE1500 + printer
paper LE300 + printer ink LE800 + overhead
expense LE2000=LE 27720
Figure (4-6) Canvas Business Model for a Small Enterprise Exmaple
Entrepreneurship
]128[
Fifth: Feasibility Study of the Idea
The above business model briefly outlined in one page describes how
a specific value can be attained and made use of as basis to devise a
business plan at a later stage. It is sometimes believed enough to evaluate
the feasibility of idea and move on to the business plan while for others it
can be micro business plan. However, a feasibility study that aims to answer
the question "Will it succeed?" is a kind of economic evaluation of the
proposed business idea in terms of profit, loss, cost, and production to
ensure that the aims of the business idea are likely to realize. Feasibility
study spans two phases:
1. Initial Feasibility Study: It helps to make an initial decision either to
accept or reject the business idea to save the time and/or effort that
will be put into the study proper. An idea can be rejected if it is
profitable but environmentally hazardous or breaches environmental
laws for example.
2. Final Feasibility Study: It is a detailed study of the initially feasible
business idea in terms of marketability, financing, productivity as
well as the technical and legal aspects. I t focuses on evaluating the
business profitability according to specific criteria: rate of return on
investment, payback period, realized return/cost.
Prediction and financial analysis help in conducting feasibility study and
specifying the profit earning capacity of the business and the options of
generating financial resources. One of the financial analysis tools is the
break-even analysis which facilitates decision making at the various stages
of the business whether preparing for it or when it actually starts.
Break-even Analysis
It uses estimates of revenue and expenditures to determine the capacity of
the business to cover its costs and expenses as a minimum at the beginning
before it starts to yield profit. Exceeding the break-even point signals that
the business is likely to make sales and generate revenues more than what is
needed to cover its costs.
The next step for an entrepreneur is to make their decision either to
dismiss the idea if not financially viable or proceed with the business plan/
the business strategic plan which will be discussed in the following chapter.
]129[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
Practical Exercises and Applications
(Explore…Discuss…Replicate…Create)
Exercise One: Search for
 Ideas banks
 Creative ideas for products in your field of specialization
Exercise two: Do it yourself
 Use creative thinking techniques to generate an entrepreneurial idea
for a sustainable development enterprise. Evaluate its probability as
an entrepreneurial idea in light of the criteria of business
opportunity.
 Identify an element of wealth (sea/sand/agricultural crop/raw
material or mineral/sun/traditional handcraft…) in your
governorate/town/village/neighborhood/street.
Use
the
brainstorming technique to generate from this element an idea for
trade, industrial, and service enterprises whose output can be in
demand in other governorates.
 Survey your friends on your Facebook page, the college page, the
sporting club page who have experience in small businesses about:
i. The business ideas they started with.
ii. How they generated these ideas.
iii. The steps they followed to evaluate their ideas.
iv. The number of ideas they generated
v. People they were inspired by to generate these ideas
Identify how their responses can help you generate an idea for your
business.
Thinking Case Study:
A creative idea came to Magdy while chopping some fruits and vegetables
and that was to transform the wastes of canned food factories into cloth
dying material.
 In your opinion, how can Magdy check the validity of his idea?
Should he implement it and turn it to a product on the market?
Imagine how you would act if you were in Magdy's situation.
Entrepreneurship
]130[
Questions
Question One: Mention which of the following statements is true and
which is false:
1. The idea alone is the foundation of a successful small business.
2. Preparing for an idea rests on search, collecting and analyzing data
to formulate whether the idea will be transformed into a
program/product/service…
3. Helping an entrepreneur to generate a creative business idea is not
always possible unfortunately.
4. Mind mapping is conducted in a session of 6-12 to discuss a
problem. None of the suggested solutions is eliminated no matter
how naïve or eccentric it is.
5. Mind mapping ensures success and more valid results and offers
better insight into the problem. It allows for generating more ideas
related to the problem under study.
Question Two: Choose the correct answer and shade it:
1. The idea that has been polished is re-sent to the conscious mind to
check its validity once more in the…phase
a. validation
b. generating ideas
c. preparation
d. incubation
e. none of these
2. …is defined as the remainder of each transaction after the direct
costs are covered
a. constant costs
b. sales revenues
c. the average of the gross profit of each sale transaction
d. the average percentage of the gross profit
e. none of these
3. A creative entrepreneur goes through…phases of creativity
a. three
b. four
c. five
d. six
e. none of these
]131[
Chapter Four:Generating the Entrepreneurial Idea and its Feasibility Study
4. Abdelfatah used…to evaluate his idea by wearing six hats in
different colors in sequence, each standing for one thinking approach
a. the six thinking hats
b. brainstorming
c. Canvas business model
d. mind mapping
e. beach hat
+
Chapter Five
Enterprise Strategic Plan
Enterprise Action Plan
Entrepreneurship
]134[
]135[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
Chapter Five)*(
Enterprise Strategic Plan /Enterprise Action Plan
Intended Learning Outcomes
This chapter introduces background information on the basics of
entrepreneurship, at the end of which the student will be able to:
1. Decide which field of entrepreneurship he/she prefers over a
clerical job.
2. Develop an enterprise action plan and provide solutions to the
problems expected to face the entrepreneur.
3. Understand each stage of the enterprise strategic plan.
Key Concepts
1. Definition of Enterprise Strategic Plan
2. Benefits of Enterprise Strategic Plan development
3. Contents of Enterprise Strategic Plan
)*(
This chapter is by Professor Abdelhamid Abou Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]136[
]137[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
A Success Story
Bill Gates: The Young Billionaire
Success usually develops its problems. This is exactly what
happened to Microsoft Corporation. With 50 percent annual growth in
software, which sees throat-cut-competition and demand-driven growth, Bill
Gates faced a fundamental problem – the need to exert double effort to
maintain the status of the company in the international market. Microsoft
owes its success to the leadership its founder and his insightful future vision.
Gates was 20 years old when he founded Microsoft in 1975 and his dream
was to make computers available at every home and office. This required
the presence of software to operate the system in each computer. This is
why Microsoft started to develop operating systems for 50 million PCs in
the USA, in addition to its expansion in Asia, Europe and all over the world.
Impressed by the founder, Microsoft’s employees started to suggest
and implement successful inventions. But good ideas alone are not enough.
Finding himself absorbed in day-to-day operational details, Gates hardly
had enough time to develop his vision and realize his dreams for the 21 st
Century. He did not have much time to coordinate among various working
groups, control quality, or plan the future operations of the company.
Another problem arose. The staff of the company reached 1,000 (the
number is now in thousands) and Gates lost direct communication with his
employees who were transforming his vision and dream into reality.
Gradually, he lost direct contact with the clients as well.
Gates used to take the important decisions of Microsoft. But the
decisions increased as the company grew, and its operations expanded in
time. Consequently, Gates was not able to run the company the same way he
used to do when it had been smaller. The following problems arose:
 How to develop long-term plans for the whole company while
managing the daily business successfully?
Entrepreneurship

]138[
How to maintain direct contact with the staff and promote his future
vision?
 How to develop quality control operations?
 How to ensure the success of the company in the 1990s and beyond?
How did Gates face the above problems?
Gates came up with a solution – to find management scientists to
help him run the company professionally, while distancing himself entirely
from the daily operation details. This helped him to devote himself to
creative work, thinking about the products needed for the 21st century, and
developing long-term plans.
The scientists took the next step: organizing the company from
inside, coordinating between various sections and departments, and hiring
managers for the key departments and sectors that reported to him. Some
only reported to the directors. This helped him to be aware of the main
activities of the company without getting into the daily details.
Although Gates managed to lead the directors, he lost direct contact
with employees whom he viewed as the cornerstone of realizing his vision
and dreams. So, he did not go far. The solution was the email through their
personal computers. This made it available for the staff to contact Gates
personally at any time and he could reply on the same day. This also helped
the staff to feel how the top management understood their importance. At
the same time, Gates could spread his ideas, concepts and vision among his
employees. He also developed a method for communicating directly with
retailers so that he could monitor the products in the market and measure the
customers’ satisfaction.
Gates was able to manage this large international corporation, which
successfully runs operations and employs thousands of employees all over
the world. Through the scientific method, he was able to manage all these
operations, overcome complexities, and run the company in a better way
that allowed him to dedicate more time to the basics and strategic matters
only.
]139[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
Chapter Five
Enterprise Strategic Plan /Enterprise Action Plan
Introduction
The choice of an enterprise is like the position of a driver who must
determine the direction before driving in order not to go astray. Likewise, an
entrepreneur should know everything about his/her enterprise and develop
its future shape, the circumstances s/he might encounter, the tools s/he
might use to overcome them, and the means that distinguish it from other
competitive enterprises, etc. Everything must be clear from the beginning.
In other words, the development of a comprehensive strategic plan for an
enterprise is inevitable.
First: Definition of Enterprise Strategic Plan
It is an official written document prepared by the entrepreneur or by
professors of management. The Enterprise Strategic Plan should clarify the
details of the proposed enterprise. The objective of preparing the Enterprise
Strategic Plan is to develop a complete conceptualization about the
enterprise. The Enterprise Strategic Plan includes all internal and external
items and variables related to the commencement, continuation and future of
a new enterprise as well as a set of functional plans such as marketing,
finance, production and human resources (Hisrich et al., 2010).
An entrepreneur should summarize the above in the form of an
Enterprise Strategic Plan /Enterprise Action Plan. To illustrate the
importance of the Enterprise Strategic Plan, it is necessary to indicate that
the plan must be presented to a bank, because the enterprise usually needs
additional funds and the bank is the only source that can lend it. However,
the bank should be assured that the entrepreneur has an Enterprise Strategic
Plan that specifies what the small enterprise will do in detail, the available
market for its products and services, what distinguishes it from other
enterprises, its competitive advantages, its expected expenses and revenues,
and its plan for repaying the borrowed funds with interest. An entrepreneur
who does not need to borrow from a bank will also benefit from the
Enterprise Strategic Plan, which requires him/her to answer difficult
questions that may arise in the future, such as:
 Where am I going as an entrepreneur? What do I want to achieve?
 How will I get what I want?
Entrepreneurship
]140[
 What challenges and opportunities I may face or have?
 How will I address these challenges and opportunities?
The Enterprise Strategic Plan is a roadmap that shows the
entrepreneur his/her way. Like other plans, the Enterprise Strategic Plan
could detect whether there is any deviation in the enterprise, or it is
appropriate as designed. In general, the Enterprise Strategic Plan forces the
entrepreneur to think about the problems s/he may encounter and the
possible solutions. The Enterprise Strategic Plan can, of course, be adjusted
as required. The entrepreneur must remember that this is the plan of his/her
own enterprise, bearing in mind that the Enterprise Strategic Plan goal is to
be implemented. In other words, plans are not developed just to look
beautiful. Rather, an entrepreneur must implement his/her plan because it
will determine the success of the enterprise.
Second: Benefits of Enterprise Strategic Plan Development
The performance of successful and unsuccessful enterprises and
organizations was examined and tracked to identify the behavior patterns
that characterize each. This has resulted in a set of differences that
distinguish high-performing from low-performing organizations. The
behavior of successful enterprises and organizations indicates the following
characteristics:
1. Clear future vision
A. A high-performing enterprise shows a clear future direction, with the
entrepreneur and the staff having a clear future vision for the enterprise
and why this direction was taken. One can only realize what they have
dreamed of and hoped for.
B. On the other hand, the management of a low-performing enterprise does
not have a clear answer to the question: Where is the enterprise going to
in the future and why? This is because the direction and visualization of
the enterprise in the future are neither clear nor identified. Rather, they
are placed at the bottom of the management priorities. Consequently, the
enterprise can take the wrong direction and may fail and exit the market.
2. Generating consumer-driven ideas
Successful organizations and enterprises are characterized by the
abundance of creative ideas that are generated from continuous trials of
communication with customers and knowing their behavior as well as
market trends and marketing opportunities.
In contrast, low-performing organizations and enterprises are
]141[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
characterized by management that is not guided by the needs of customers
or the search for new marketing opportunities. The talent in management is
confined to reacting to market trends rather than exercising control.
Generally, management is afraid of trying new ideas for fear of failure.
3. Specific strategic plan
The management of high-performing enterprises has a clear strategic
plan to achieve effective financial performance and a strong competitive
position. The management focuses on creating a competitive advantage. But
the management of low-performing enterprises is overwhelmed by internal
problems, does not boost its competitiveness, usually tries to justify
mistakes, exaggerates its potential and underestimates that of competitors.
4. Focusing on achieving predefined results
High-performing enterprises focus on achieving results and
accomplishments. The efficient performance of administrative jobs means
achieving the predefined objectives in a timely manner. These enterprises
focus on encouraging, rewarding and stimulating the individual performance
to achieve the desired results. But low-performing enterprises have lame
excuses for their low performance, which they always attribute to factors
beyond their control (such as recession, stagnant demand, intense
competition, and high costs). In such low-performing organizations, normal
performance is classified as a great achievement while personal motivation
is underestimated.
5. Careful implementation of Enterprise Strategic Plan is a key
responsibility for the management
The main concern of the high-performing enterprises is to apply the
predefined Enterprise Strategic Plan in the light of the capabilities and
potential of the enterprise. This should be done precisely and carefully.
Low-performing enterprises focus on the bureaucratic aspects of the
management, which usually wastes most of its time in reviewing studies,
reports, meetings, and preparation of notes and administrative procedures.
The above presentation shows that successful high-performing
enterprises are managed according to scientific principles and have an
Enterprise Strategic Plan as shown in Chapter One. However, the main
Enterprise Strategic Plan objective of unsuccessful, low-performing
organizations is to force the entrepreneur to think and analyze the enterprise
and prepare a clear plan to deal with the surprises that may occur in the
future.
Entrepreneurship
]142[
An entrepreneur can take advantage of his/her assistants in the
Enterprise Strategic Plan development or seek specialized consultants to
help in preparing it. But even in this case the entrepreneur remains the
driving force because s/he is the primary beneficiary of the preparation of
this integrated visualization. In general, there are advantages resulting from
the Enterprise Strategic Plan development, as follows:
A. The time, effort, and research required to prepare the Enterprise
Strategic Plan urge the entrepreneur to feel, consider and discuss the
details of the enterprise objectively and thoroughly.
B. The economic, competitive and financial analysis prepared for the
Enterprise Strategic Plan benefits the non-specialist entrepreneur and
helps him/her to ensure a successful enterprise.
C. If all the aspects of the enterprise are integrated into the Enterprise
Strategic Plan, the entrepreneur can develop the necessary plans and
strategies and anticipate the results that the enterprise can achieve.
D. The Enterprise Strategic Plan requires the entrepreneur to set
quantitative objectives that must be achieved. These objectives
motivate him/her to achieve and monitor the performance. Also, the
staff can be held accountable and be directed to achieve these
objectives by comparing them with what has been achieved.
E. The Enterprise Strategic Plan provides a communication tool with
the outside world (e.g. banks). It is also the main communication
tool with the enterprise staff.
Three: Contents of Enterprise Strategic Plan
If you are going to persuade one of your colleagues to participate in
your enterprise, or if you are going to borrow from a bank to complete the
required capital, your Enterprise Strategic Plan should include specific
contents in order to persuade these parties to agree. Thus, the Enterprise
Strategic Plan must have two characteristics: to be organized and arranged,
and to be complete and comprehensive.
Enterprise Strategic Plan includes ten key elements:
1. Enterprise summary: It is sometimes called the executive summary,
which includes a brief presentation of the enterprise. It must be written
carefully to highlight the salient features of the Enterprise Strategic
Plan, such as the basic characteristics of the enterprise, main points, and
the marketing and prospected results. The main objective of this
summary is to whet the student’s appetite for more information about
]143[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
the enterprise. All basic questions about the enterprise must be
answered: What is the enterprise? How will it work? Why this
enterprise in particular? Where is it located? Generally, this part is
written after the completion of the Enterprise Strategic Plan.
2. General description of the enterprise: This section includes a more
detailed description of the enterprise and its history, if any, and the
industry it belongs to. This part also includes the product or service
provided by the enterprise, its specifications, value, importance to the
client, and the criteria it wants to achieve.
3. Marketing: This component is divided into two parts: the first is
related to the marketing research and analysis conducted on the
enterprise. The target market, where the products of the enterprise will
be sold, must be identified together with the target consumers. This
must be coupled with the focus on who will distribute the product or
service. The market share of the enterprise should also be determined,
with a detailed description of the competition within the industry and
how the enterprise will be better than its competitors.
The second addresses the marketing plan development. It is one of the most
important pillars of the Enterprise Strategic Plan, as it deals with the
marketing strategy of the enterprise, the extent to which the product or
service meets the real needs of the market, the method of distribution
and sales, pricing, and promotion. In short, this part should convince the
investor that sales expectations will be meet and this enterprise will be
able to face competition.
4. Research and Development: This part shows the efforts exerted in the
design that led to the product – in case it is produced by the
entrepreneur – or the description of the technology used, how to
develop it in the future and the cost of research and development.
5. Manufacturing: This element shows why a particulate site has been
chosen as an ideal location for the enterprise, how far it is from the
suppliers and transportation, and whether the workforce is available and
near the enterprise. In addition, the cost of machinery, equipment,
buildings, production and manufacturing should be identified.
6. Management: It determines who will manage the enterprise and what
are his/her credentials. The presence of a professional management
team is one of the basics of success of any enterprise. The legal entity,
management team motivation, management style, consultants and how
Entrepreneurship
]144[
to choose them, management team experts, and the organizational
structure of the enterprise must also be identified.
7. Risk degrees and types: Risks, which an enterprise may face, must be
analyzed. Consultants may be hired to assess risks and determine how
they can be addressed (for example, reducing prices by competitors,
what shall be done if the enterprise fails to achieve the prospected sales,
etc.).
8. Planning and forecasting the financial position: This can be achieved
by estimating the expected income and expenses of the enterprise. In
short, the Enterprise Strategic Plan must be translated into various
financial statements, such as the cash budget, the estimated income
statement, and the estimated investment budget. These budgets are
useful in the performance control.
9. Enterprise mission: It is the main and unique purpose that
distinguishes the enterprise from other competitors in the same field. It
identifies the scope of the enterprise operations in terms of products,
services and the markets covered. The mission consists of three main
components:
A. Enterprise name should reflect the activity of the enterprise. For
example, the name of the Arab Contractors reveals what the
company does, and the same applies to Microsoft whose name
reveals that it works on software development. The name must be
well chosen because it will remain with the enterprise throughout
its life (the importance of a name is clear when we choose names
for our children). A name should be meaningful, motivational and a
reflection of the enterprise’s scope of work.
B. Enterprise slogan is a word or sentence summarizing the reason
for the existence of the enterprise. HP’s slogan is the word
“Invent”, which indicates that the goal of the company is to invent
not to make profit. Creativity will generate profit in the end, not the
opposite.
C. Written mission shows the obligations and principles that will
govern the enterprise in dealing with stakeholders. The mission
must be documented and published.
The process of drafting the mission of the enterprise can be dealt with
while thinking about a new enterprise and how to establish it. The idea of
the enterprise in the mind of the founder consists of the following:
]145[

Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
The product or service, which must be provided in an innovative
way and at a value exceeding the price to be paid by the customer.
 The product must fill a gap and meet an unfulfilled demand.
 The product delivery depends on distinctive technology.
 Determining the philosophy that will govern the enterprise
management and how to deal with the stakeholders.
 The enterprise mission to the employees must be as clear as it
appears to its owner as well as other stakeholders.
The drafting of the mission is a difficult and time-consuming process,
yet it is necessary because it provides the enterprise with the following:
 Agreement by all internal and external stakeholders on the purpose
and mission of the enterprise as well as the reason for its existence.
 Providing a good basis for the motivation and the development of
the goals and the allocation of efficient resources.
 Building and providing one language and an appropriate
environment within the enterprise.
 Determining who will continue working within the enterprise to
achieve its mission and who will feel unable to meet its standards
and values.
10. Appendices include the legal entity of the enterprise, the CVs of
managers, and other important information that is not included in any
of the above nine items to support the plan of the enterprise.
Table 5.1 shows an integrated framework for a small enterprise plan
and the entrepreneur's position on it, i.e. the plan components covered by the
framework.
Entrepreneurship
]146[
Table 5-1: Integrated Enterprise Plan Framework (step-by-step evaluation)
Plan components
1.
2.
a.
b.
c.
d.
e.
f.
3.
a.
b.
c.
d.
e.
f.
g.
h.
i.
4.
a.
b.
c.
d.
5.
a.
b.
Executive Summary
Description of activity area
What area do you plan to enter?
What products or services will you
provide to the market?
What are the investment opportunities
(new, old idea, seasonal, year-round)?
What are the prospects for successful
investment opportunities?
What are the growth prospects?
How unique is this opportunity?
Marketing
Who are the prospective customers (who
will buy the product)?
What needs will the product meet?
What is the market size (large, medium,
small) to sell your product?
Who are the main competitors? What is
the potential of their growth?
How will your products be distributed?
How will sales be promoted?
What market share do you expect?
How will the product or service be priced?
What is the proposed advertising and
promotional strategy?
Research and Development (R&D)
Has the product's design been well
described?
Have you hired any technical support from
abroad?
What research do you expect to need?
Are the R&D costs affordable?
Production and Manufacturing Process
Where will the enterprise be located?
Why has this site been chosen for the
enterprise?
Does the
plan
cover this
item?
Is answer
clear?
Is answer
complete?
(Yes - No)
(Yes - No)
]147[
c.
d.
e.
f.
g.
6.
a.
b.



c.
d.
e.
f.
g.
h.
i.
j.
7.
a.
b.
c.
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
Table 5-1 (cont.): Integrated Enterprise Plan Framework (step-by-step
evaluation)
Does the
Is answer Is answer
Plan components
plan cover
clear?
complete?
this item?
(Yes - No) (Yes - No)
Have the needs of the production processes
(machinery, facilities) been identified?
Who are the main suppliers?
Which transportation means will you need?
How available is the workforce you need?
Has the manufacturing cost been
calculated?
Management
What is your vision and ambitions for the
enterprise in the future?
What is the enterprise mission?
Enterprise name
Enterprise slogan
Enterprise written mission
Who will manage the enterprise?
What are the qualifications that justify the
nomination of a person to run the
enterprise?
How many workers will you need? What
will they do?
What are your pay and incentive plans?
Who are the consultants and specialists you
will need? Why?
What legal entity will you choose for the
enterprise? Why?
What licenses will you need?
Which legislation will affect your
enterprise?
Risks
What problems do you expect to occur?
What are the possible obstacles to the
enterprise?
Has this risk been taken into account?
What are the methods to face them?
Entrepreneurship
]148[
Table 5-1 (cont.): Integrated Enterprise Plan Framework (step-by-step
evaluation)
Plan components
Does the
plan
cover this
item?
Financing
a. What is the expected monthly and
quarterly profit for the first, second and
third year?
b. What expenses will you incur to start the
enterprise and production?
c. How much will be the monthly cash
flows during the first year?
d. How much are your personal monthly
expenses and needs?
e. What is the sales volume that makes you
gain profit during the first three years?
f. What is the size of assets, liabilities and
equity of the enterprise one day before
the inauguration?
g. What are your overall financial needs?
What sources will you resort to?
h. How will you repay the money you got
from lenders and investors?
Standards, Targets and Timing
a. When will the enterprise be opened?
b. Has specific quantitative targets been set
for the enterprise?
c. Are there dates set for the completion of
different phases of the enterprise?
Appendices
a. Have you attached any designs, reports or
documents in support of the plan?
b. Are there any names, references or
technical resources to be included in the
plan?
c. Are there any other supporting
documents?
d. How strong are the CVs of the manager
and partners?
Source: (Kuratko and R. Mortago, 1987)
Is answer
clear?
Is answer
complete?
(Yes No)
(Yes - No)
]149[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
The student may notice the difficult requirements and details included in the
strategic plan of the proposed idea or enterprise, which need knowledge and
professionalism. You may also think that there are thousands or millions of
enterprises that could start operation without delving into all these details
and efforts – right? The answer is:
a. Most of the enterprises that do not apply these measures fail, shut
down and end their activities. For example, as many as 590,000 out
of 630,000 small enterprises shut down in the United States
annually.
b. There is an urgent need for a professional entrepreneur and not for
amateur entrepreneur. This was the motivation for Cairo University
to necessarily teach this course to all university students to achieve
these urgent objectives in the future.
c. If you fail, God forbid, you will lose confidence in yourself and
think that you are a loser. But, in fact, you are not, because you did
not know the right way. Don't judge yourself until you know and
learn.
Once the integrated plan is prepared and the above questions are answered,
the enterprise will be considered to have come into a reality. So the question
now is: How to start an enterprise correctly and strongly? In other words,
how to manage an enterprise? How to plan the operation of an enterprise?
How to put the above ideas into practice? Find the answers to the above
questions in the next chapter.
Entrepreneurship
]150[
Exercises and Questions
Search – Discuss – Imitate – Innovate
First question:
1. Since the future is unknown, what is the point in preparing for the
future Enterprise Strategic Plan?
2. Is it better for the entrepreneur to devote most of his/her time to
selling his/her products rather than preparing an Enterprise Strategic
Plan for the enterprise?
3. Make a team with your colleagues and choose four Enterprise
Strategic Plans for enterprises and compare between their
components. Decide which one is best, and why.
4. Choose a creative service or enterprise that you can implement and
then: Choose a name, slogan and written mission for your enterprise
that distinguish it from other competitors.
5. Form a team with your colleagues to ask five entrepreneurs whether
they have (or have not) developed Enterprise Strategic Plans and
what was the result for each of them, i.e. those who prepared this
study and those who did not.
Second question: Check which of the following statements are true or
false:
1. A detailed analysis of the economic environment is needed to
identify the opportunities and risks that support or limit the success
of the enterprise.
2. If the surrounding circumstances support the establishment of the
enterprise, the next step is to make sure that the entrepreneur is
unable and unwilling to properly make use of these conditions while
being capable of establishing a successful enterprise.
3. Market analysis and study is limited to large organizations, so it does
not matter to conduct a market analysis of a small enterprise.
4. Market analysis is not limited to entrepreneurs who want to enter the
market for the first time, but the owners of existing enterprises need
to analyze the market constantly to identify any change in customer
wishes.
5. The Enterprise Strategic Plan is intended to ensure that the enterprise
is feasible and profitable.
]151[
Chapter Five: Enterprise Strategic Plan/Enterprise Action Plan
6. An entrepreneur benefits from the development of an Enterprise
Strategic Plan because it forces him to answer earlier the difficult
questions that will face him/her in the future.
7. The executive summary includes the marketing strategic plan of the
enterprise, the extent to which a product or service fulfils a real
market demand, the distribution and sale method, pricing, promotion
and advertising.
8. Despite the sizeable difficult requirements and details contained in
the Enterprise Strategic Plan, it does not require knowledge and
professionalism to prepare.
Third question: Choose the correct answer:
1. The Enterprise Strategic Plan includes ………. key elements.
a. 8
b. 7
c. 9
d. None of the above
2. When considering the enterprise risks in the Enterprise Strategic Plan, it
is necessary to identify:
a. Expected problems
b. Expected obstacles
c. Risks and methods of addressing them
d. All the above
3. Planning and forecasting the financial position as one of the pillars of the
Enterprise Strategic Plan includes:
a. Estimated revenues of the enterprise
b. Development of the financial statements and budgets
c. Estimated expenses of the enterprise
d. All the above
4. The marketing component of the Enterprise Strategic Plan ensures that
the enterprise is:
a. A marketing opportunity
b. An opportunity to achieve a high financial return
c. An opportunity to achieve its targets and strategies
d. All the above
5. A clear and specific future vision of an enterprise means that the owner
knows:
a. The enterprise shape in the distant future
b. The enterprise mission and what it will offer to people
c. The expected revenue
d. All the above
Entrepreneurship
]152[
6. The enterprise mission consists of main components, namely:
a. Name, slogan and written mission
b. Name, slogan and written vision
c. Name, slogan and written objectives
d. Name, slogan and written strategy
7. The marketing component includes two main parts:
a. Marketing research and marketing plan
b. Marketing research and financial plan that will cover the research
c. Marketing research and marketing plan
d. Production plan and marketing plan
Chapter Seven
Professional Management of the
Entrepreneurial Enterprise
Entrepreneurship
]182[
]183[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
Chapter Seven)*(
Professional Management of the Entrepreneurial Enterprise
Intended Learning Outcomes:
The objective of this chapter is to introduce the student to the role
professional management plays in the success and continuity of an
enterprise By the end of chapter seven, the student should be able to:
1. Acquaint the student with the concept of professional management
and its mission.
2. Explain the components of the processes involved in marketing in
an entrepreneurial enterprise.
3. Acquaint the student with the financial aspects of the enterprise and
highlight their importance.
4. Stress the importance of dangers that face the process of transition
towards growth in size and expansion.
5. Understand the importance of the transitional period and how the
attitude, skills and aptitude are paramount factors if the small
enterprise is to become a full-fledged company working efficiently.
Key Concepts:
1. Defining professional management, its mission and goals.
2. What should the owner of a small enterprise know about
Marketing.
3. What should he know about Finance management of the enterprise.
4. Managing the process of transition and moving from the role of
entrepreneur to the role of professional manager
)*( This chapter is by Professor Abdelhamid Abou Naaem, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]184[
]185[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
A Success Stor
The Nike Company
Undoubtedly, Nike is one of the best-known companies in the world
for athletic products. The one who established this company and became the
President of Nike is one of the most prominent figures in the world of
sports, although he was never a professional athlete and was never in charge
of an athletic team. In 2014, Forbes estimated his fortune to be about 22
billion dollars. He is a businessman who is a generous charity donor. His
empire started with an idea that came to him as a young man. He discussed
it in a research enterprise and graduated to apply it himself.
Philip Knight was born on 24th February 1938 in the city of Portland
in the USA. The University of Oregon, which he attended, played a crucial
role and had great influence on his life and work. It was at Oregon that he
met Bill Bowerman, the legendary athlete-coach who later became cofounder of Nike. Bill Knight was coached by this expert who spent his free
time trying to make ‘lighter’ shoes for athletes. The relation between coach
and student developed into a strong friendship which revolved around
“running” better and faster, ‘lighter’. This was Bowrman’s obsession which
he passed on to Knight.
At the time, most running shoes were predominantly manufactured
by American companies specializing in producing automobile tyres. The
athlete who wore such shoes would return from a five mile run with severe
pain and bleeding feet, the result of poor quality shoes. Matters remained
that way up to the point when German sports shoes entered the American
market and introduced better quality shoes for athletes. Bill Bowerman who
coached Phillip Knight was convinced that it was possible to manufacture
even better running shoes than those available on the market. So,
Bowerman started to personally design and hand make a few initial
prototypes.
Matters remained the same until Phillip Knight graduated from
Entrepreneurship
]186[
Oregon in 1959. He was recruited and served in the army for a year,
winning himself a bronze and silver medal for courage and gallantry. He
then went on to earn an MBA from the college of Business Administration
affiliated to the prestigious Stanford University. He was fascinated by a
course he took there, called “Small Business” with Prof. Frank
Schellinberger. The professor asked his students to come up with an
innovative idea for a totally novel business enterprise.
The professor set the goals and asked the student for a marketing
plan for the unprecedented business they were to come up with. Phillip
Knight’s marketing plan and its ramifications will be the focus of this
course. Phillip gave his plan a good deal of thought and eventually wrote his
dissertation.
Having assimilated the obsession with “lightness” that his coach,
Bill Bowerman in Oregon enthused him with, Phillip’s hypothesis was
based on the simplicity of manufacturing sports shoes that were not only
better in quality, but also more cost effective than Japanese sports shoes.
This is similar to the difference between Chinese products and those by
other countries in today’s markets.
In 1962 Phillip decided it was time to try out what started off as a
college assignment and put it to the test. In that dissertation, Phillip had
assumed that importing good cheap shoes from Japan was not a bad place
to start. He took off to Japan and went to look for a shoe factory in the city
of Kobe. There, he eventually found the shoe factory he was hoping to find,
operating under the name Onitsuka Tiger Co. Phill was able to convince the
CEO to take him on as an agent for Onistuka products in the USA and the
deal was closed that Onistuka would send Phill marketing samples to sell in
the USA after completing his tour around the world as he told them.
The Beginning: The boot of a car
Phill started by putting his samples in the boot of his green car. He
would park close to routes students took on their way back from school, as
soon as he was done with his day job as accountant. Soon his sales started to
grow, and he found he needed more time. It was then he realized it was
time to give up his day job and concentrate on selling sports shoes. Despite
the fact that the small company was struggling financially, he went on to
open new branches that sold Tiger shoes in other American cities, working
round the clock since he had not quit his day job yet at this point. He
worked by day as an accountant and worked after hours on his ‘dream’
]187[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
company.
Sales began to grow and more attention to the business required
more time. It was then, he realized that the time has come to give up his day
job and concentrate solely on selling sports shoes. During the first four years
following the setting up of the company, sales were great, but net profit
remained a mere 3%.
This meant Phill needed to borrow constantly and cut down on
expenses relentlessly. When sales came to two million dollars, his gross
profit figured sixty thousand US dollars, which all went towards buying new
stock, paying salaries and other expenses crucial to the running of the
business. Matters usually ended by Phill putting in the total sum of his own
salary back into the capital fund in order to maintain continuity for his
enterprise. He even mortgaged his house at one point and spent lengthy
hours at banks trying to convince them he deserved bigger loans.
Nothing lasts forever; not even an agency contract
In the midst of all this, the Japanese factory created a position for an
employee to work on expanding the factory’s exports. Phill had thus far
been their only importer, so the Japanese factory made him an offer,
basically asking him to sell them 51% of his company’s shares that came
with a threat. If he refused they would approach others to sell their product
to. Phill refused and his agency contract was terminated.
Birth of the Nike Trademark
Phill decided to start designing his own shoes and to manufacture
them himself. The first pair of shoes designed by the new the company was
called Cortez. Times had changed and the departure from the time honored
tradition of importing shoes from Japan came to an end.
In 1971 Phill could see that what he needed and was now possible,
was a new brand name with a new logo: something brighter and more
elegant. He suggested a name to his team, but they turned his suggestion
down. So, he left it up to them to come up with a better idea. The name
came from the very first person Phill had employed in the capacity of sales
manager and it proved a magical suggestion: Nike.
Nike in Greek mythology is the name of the goddess of victory. The
sales manager who suggested the name claimed he saw the “goddess” in his
dreams! Phill and the rest of the team approved the new name and Phill
went on to pay a student from Portland University to design and draw the
logo, which became the recognizable trademark we know today.
Entrepreneurship
]188[
The company’s sales rose exponentially year by year in accordance
with the vision that spurred Phill from the very beginning: that one day Nike
shall outdo the German made Adidas in the American market, which is
exactly what happened in 1980, the year the company offered its Initial
Public Offering (IPO). This, however, did not bring overwhelming
worldwide recognition until 1984 when Phill made a deal with a little
known basket ball player called Michael Jordan to advertise for Nike.
Jordan was 21 at the time, still far from being “the greatest basketball player
of all time.” That was a point of departure for Nike; with the company
becoming a household name and the brand for the best athletic gear, shoes
and equipment worldwide, as a result of Phillip Knight’s ingenious
marketing.
Granted we do not quit, mistakes can be valuable lessons
You may think that Phill is a gifted genius who does not err, but you
are wrong. In the early eighties, Phill was too busy to notice a new fad on
the market. Aerobics became a craze and especially attracted women, which
meant that Phill had left an open gap in the market for the competition to
fill. Reebok was more than ready to step in and did it spectacularly, to the
point that by 1987 their sale overtook and outdid those of Nike.
Phill’s reaction was rational, logical and deserves acclaim. He
realized that he had become too engrossed in what was happening in Nike to
pay attention to what was happening outside in his field to the point where
he overlooked possibilities that the future might hold. He did not make hasty
decisions and did not react immediately. He just made it clear to all that
Nike’s aim was to produce the best athletic equipment and started
immediately to take interest in female products. He started to look around
for a way to manufacture the best sports shoes in the world to be designed
for individual sports. In two years, Nike’s products jumped back to its
previous position in 1989, overtaking other companies in the market and
maintained that position for a long time.
]189[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
ChaCCCCjjjjj
Chapter Seven
Professional Management for an Entrepreneurial
Enterprise
Introduction
The enterprise was now ready to take off. Previous steps have been
carefully planned, but translating the plan into tangible operations on the
ground is more important. Any good enterprise and the preparation of a
strong general strategic plan are not in themselves aspects of the enterprise
that ensure success. The initiator must enjoy professional and scientifically
based management skills in order to be able to transform his ‘ideas’, into
executable tasks on the ground.
Despite the fact that most, if not all, entrepreneurs are familiar with
the different aspects of their enterprise, they usually know very little about
management.
This chapter aims to show what is meant by being professional and
the importance of developing and building and creating a managerial team
that would ensure the survival and continuity of the enterprise.
This chapter also addresses the ‘how’ of marketing the services and
products of the enterprise and the management of its financial assets.
The chapter will end by acquainting the readers with the necessary
steps in managing the process of transition from a small entrepreneurial
enterprise into a full-fledged company. This stage is important and loaded
with risk. It is a crucial period in the life of the entrepreneurial enterprise.
First: Definition of Professional Management
Professional management is the best use of available resources to
achieve the maximum degree of efficiency and effect planned for. Nichels
explains that it is both the science and the art of achieving goals through the
good use of resources available to the enterprise (employees, funds, data,
equipment etc.). (Nichels et al., 2008). Or it is the process of attaining
goals and achievements through employing others.
Despite the numerous definitions of ‘professional management’, this
section will concentrate on highlighting the basic problem that most, if not
all, entrepreneurial enterprises suffer from, namely the tendency of an
enterprise owner to hold all threads in his hand. In other words it seems very
difficult for the entrepreneur not to let go of some of his authority and
Entrepreneurship
]190[
responsibilities and delegate some of it to others on whom he could depend
in executing the work. There are limits to what one person can do totally by
himself.
As the enterprise grows beyond a small enterprise, the time available
to the owner of the enterprise becomes exceedingly limited, and it gradually
becomes more and more difficult for him to attend to all the details of his
enterprise and ensure personally that all is running satisfactorily. If the
owner of the small enterprise is unable to draw the line between the tasks
that he must attend to personally, and the other tasks which he ought to be
able to delegate to others, the amount of work shall overwhelm him and he
will become overloaded with work that he cannot do on his own to
maximum efficiency. In order to overcome such a situation he must
undertake the fundamental decisions and activities that he alone is qualified
to dictate, and fulfil and delegate the rest to his employees. This ability of
the entrepreneur to work through others on principal, as well as the
necessity of defining priorities, are major influences that seriously affect and
influence his administrative role. The entrepreneur’s priorities at this point
in the life of the enterprise should include first and foremost:
1. Planning the work on the Enterprise
Planning is the process of specifically laying down the goals of the
enterprise, as well as setting up the necessary detailed plan of how he will
achieve those planned goals. Planning also involves a futuristic vision.
Getting ready for the future of this moment, here, now is vital. This means
that planning the work of an enterprise (tasks, assignments, jobs etc.)
include understanding eight major steps:
A. Being Aware of the Available Chances:
The failure or success of an enterprise depends on its ability to
provide its clients with a product or service they need. Therefore, being on
the look out for new opportunities and constantly being better acquainted
with new chances is a must for continuity. Now, since the needs of a client
change, it is imperative to develop the products and services the enterprise is
providing in order to meet that feature of the client: renewed needs. The
enterprise owner, thus, has to constantly ask himself about the possible
change that may incur in clients’ demands in the next three years? The next
five years? and even next year. The only proviso is that he must come up
with services and/or products that are totally different from what others are
providing or could provide.
]191[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
B. Setting Goals:
The next step is setting up the goals in the light of both current and
expected opportunities. These goals must be the guiding light of the
enterprise as a whole. It is to be noted that goals are divided into two types:
The first is of a general nature and covers the enterprise in its totality. The
second type is of a subsidiary nature and belongs to certain jobs or certain
subsidiary activities. This does not mean they are of less importance. It just
means that the difference must be clear to the enterprise owner, because it is
this difference that will affect his performance as manager.
The ‘General’ goals of any enterprise are:
1. The provision of Service
2. Profit
3. The contribution to Society
4. Growth
These five goals are quantitative, that is they can be measured, and
they are specific, and bound to time limits. The employees who carry out the
work and are in charge of the execution of these goals in the various aspects
of the plan must approve of these goals. The plan for these goals, therefore,
must be realistic and time bound. You will note that those goals, as
mentioned above, are interdependent and complementary:
For example, it is imperative that the goals of service are achieved
for the goal of profit to be realized. Also, it is imperative that the goals of
profit be realized if the social goal is to be met.
4- Growth
2- Profit
3- Societal goals
Figure (7-1)
The Integrity of Small Enterprises
1- Service
Entrepreneurship
]192[
In accordance with that scheme, the subsidiary goals are set for each
subsidiary department of the enterprise, such as departments of production
and marketing, funding, research and human resources.
All goals set for each subsidiary department must operate against the
guidelines set in the general goals prior and before any steps are taken
towards any work in the enterprise. The vision presented in the general
goals is what guides and directs the performance of all the department.
Over and above, it is incumbent upon the enterprise owner to set the
plans and procedures and budget necessary for reaching those goals.
Without formulating and defining those goals and plans, procedures and
balances, the entrepreneur will not attain the five goals his enterprise is
aiming for in its totality.
C. Assessing the impact of the surrounding environment on the
enterprise
The owner of the enterprise now needs to analyze in depth the
changes that will occur in the surrounding space in which s/he is to set his
enterprise and the influence of that space on his enterprise. What kind of
products and services reflect these potential changes? What is the size of
sales that can be achieved under the circumstances? What changes or
modifications are needed for his product to meet the planned aspects of his
enterprise? What changes will occur in the surrounding space (buildings and
residents for example that could affect the enterprise). Who are the current
or envisaged competitors? What are current alternative products and at what
price are they selling? What costs will the enterprise carry to produce its
products?
D. Assessing the internal potential of the enterprise
The next step is to assess the internal potential of the small
enterprise with regards the availability of necessary funds, research skills,
and marketing skills to meet the market’s demands and of course the human
resources necessary to carry out the work needed. All of these features are
reflected in the changes occurring in the surrounding environment which
had previously been assessed and analyzed.
E. Choosing and assessing alternative plans
In the light of the future needs of the market as revealed by the
analysis of the environment and the capacity and availability of skills,
setting numerous possible alternatives helps the enterprise in attaining its
]193[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
goals. It is mandatory to assess the alternatives and possibilities of execution
as follows:
Alternative possibilities of potential gross sales:
1 – 10%
250,000 E.P
2 – 15%
200, 000 E.P
3 – 15%
190,000 E.P
4 – 60%
170, 000 E.P
F. Choosing the suitable alternative:
In view of the above data, the owner can choose the suitable
alternative, in the light of expected sales for each alternative, i.e:
Gross sales expected of alternative and expected profit:
1 - 250,000 E.P 10% 250,000 E.P.
2 – 200,000 E.P 15% 30,000 E.P
3 – 190,000 E.P 15% 28,500 E.P
4 – 175,5000 E.P 60% 105,000 E.P
G. Formulating the necessary plans:
As soon as the suitable alternative has been identified and chosen, it
becomes necessary to set plans for implementation. The question now
becomes how will the enterprise owner apply the alternative he has chosen?
What are the exact actions to take? The answer is that if the suitable
alternative for example, is to increase sales by 20% then the question
becomes: Do we have the sales staff capable of selling what should be sold?
In answer to similar questions, sales representatives need to be trained and
prepared for the alternative goal.
What is the situation with the inventory? What guarantees are there?
Along the same lines, we analyze all other in-house (internal) functions,
(production, research and upgrading, funding etc..). This means defining
and specifying what is needed within each department in detail to ensure
that the alternative chosen covers all operations in the enterprise in
accordance with various subsidiary plans set in the light of the General
Goals.
H. Setting a budget for the plan:
Finally, the owner must specify the amount of funds necessary for
the implementation of the plan, month by month and week by week. The
budget may be prepared in such a manner that it is concurrent with the steps
of implementation as shown here below:
Entrepreneurship
]194[
Table (7-1) Preparing the Budget
Period
of Plan
Actions
Funds
1st
month
2nd
month
3rd
month
4th
month
5th
month
6th
Month
Total
2. Organizing the relations between the in-house personnel of the
enterprise
After finalizing the plan and defining the tasks, the second
administrative position (job) needs to be identified through asking the
following question: Who will execute each task of the previously mentioned
actions?
A. Identifying job descriptions and defining them
In view of the goals to be achieved as specified during the period of
planning, the team starts to decide who will do what? This process demands
specifying the needed activities and preparing a job description for each
individual in written form to be documented and included in the enterprise’s
plan. This precaution in a must because we often meet with small business
owners who consider giving verbal orders to employees enough. As the
enterprises starts growing however, this ‘informal’ style in distributing tasks
recedes, and it becomes imperative to clearly define responsibilities in
written form.
B. Departmentalization
Departmentalization means the division of work between groups of
workers according to their jobs and activities. The division may be based on
grouping according to jobs, or else in accordance with the product.
C. Span of Control
The span of control is tantamount to specifying the number of
employees the entrepreneur supervises. One of the most important
organizational issues for a small enterprise is that the owner is used to doing
everything himself. He gives the orders, he alone supervises every detail.
The enterprise is in effect a one man show. This case is described as wide
span supervision or control.
D. Delegation of Authority
The successful owner of an enterprise is one who is capable of
delegating authority to his subordinates. The unsuccessful business man
]195[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
retains all threads, keeps all authority and decisions in his own hands. This
attitude leads employees to leave the enterprise, feeling that the owner does
not trust them or believe there is no room for them to grow and advance in
their jobs. The crux of the matter in this situation is in defining the authority
the owner is prepared to delegate.
Earlier, it became clear that there is a difference between activities
that demand intellectual skills and activities that need executive skills. The
owner ought to delegate the second (executive) position and keep to himself
the first, (the intellectual position in which he should excel).
3. Leadership and Directing
This phase begins with the process of execution. It is both more
difficult and more comprehensive a process than any other; it consumes
more time and is thus of prominent importance. Directing involves three
fundamental dimensions, namely: communication between employees and
their leadership who motivates them. Communication is important because
the owner gives directions to those who are next in command, and receives
their feedback. The importance of leadership cannot be stressed enough
since it is the owner of the enterprise alone who is capable of influencing
and motivating all his employees, and it is he who directs their efforts to
achieve the goals of the enterprise satisfactorily.
4. Control
After planning the work of the enterprise; organizing and directing
employees during work, it is necessary to compare the tasks fulfilled to
match the goals of the plan and achieve them. This is the essence of
supervision. Regardless of what is being supervised, supervision is carried
out through basic procedures not different from any other activity. These
procedures are:
1. Setting benchmarks (markers) that would indicate the amount of
work at hand against the backdrop of the work as it appears in the
plan.
2. Measuring the actual performance.
3. Comparing actual performance with previously planned measures.
4. Identifying and specifying reasons for aberration and taking
corrective measures to bridge the gaps between what was planned
and any actual results that do not match that plan.
The benchmarks or markers, are to be set by both the owner and the
employees during the planning phase; which means that supervision begins
Entrepreneurship
]196[
practically by formulating goals and targets; by comparing actual
achievement on the ground with planned goals and targets, supervision
measures may proceed by comparison of gain, costs, financial situation,
cash or any other item on the budget or list of income.
After such comparisons have been made, the following step is taking
corrective measures to set right the aberrations between what actually was
achieved and the planned targets. What the owner must pay close attention
to is that there should be no excuses and no time for laxness. Instant action
is to be taken to counter any aberration that occurs on the spot. The
dimensions of supervision can be viewed in the figure (7-3) below:
Bench Markes
Corretive
Measures
Comsprison Between
Performance and Bench
markers
Figure (7-2) Dimensions of supervision measures for the enterprise
Second: What the owner of the small entrepreneurial enterprise must
know about marketing
An entrepreneurial enterprise is based on the difference and
distinction from the competitors, which means that the entrepreneur must be
clear about where his/her enterprise stands vis a vis competitive companies
and enterprises. S/he must know the competition well and must know how
to make his products distinctive and special in order to attract clients and
win them over. In order to create competitive advantage, it is necessary to
begin marketing with a fundamental philosophy and that is a commitment to
making lives easier. This attitude itself is bound to keep a product in
demand. There are two schools by and large in that regard.
]197[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
First: the first school advocates the creation of a unique product or
social service that has not been addressed before in the market, but will be
distinctive from the very start and that will create the demand.
Second: this school is based on the theory that stems from the
philosophy that it is supply that creates the demand and not vice versa.
Cellular phones, internet applications Facebook and Youtube are such
examples. These are all innovations that created a need in the market.
Indeed, this approach is now being implemented in professional business
enterprises. The well-known entrepreneur Seth Godin said, “Do not look for
clients for your products, but search for products for you clients.” The
owner of the enterprise, hence, must familiarize himself with the following
concepts related to marketing:
1. What exactly is marketing?
2. What qualifies as a market?
3. Who is the potential client and how big a role does he play in the
success of the enterprise and its continuity?
4. What is the importance of building a marketing concept inside a
small enterprise?
1. What is marketing?
Marketing put simply without delving into the plethora of definitions
in the field, is defining the needs of the client and understanding their hopes
and desires, and thus developing the products and services that meet those
needs and desires. Matters do not end here, but the clients are asked about
the degree of satisfaction the product or service gave them and whether it
met their expectations. It is thus that the businessman can adjust his
performance in accordance with the feedback he gets from his clients.
Marketing is not just a job, but a whole philosophy which leads a
product to meet the desires of clients so that the enterprise may fulfil the
envisioned profit planned. This aspect of marketing happens through a
continuous, never ending relationship with the client.
Thus, marketing includes the ongoing connectivity between two
entities: the client and the provider of the service. They must have intimate
knowledge one of the other. In the final analysis, these two entities come
down to the Consumer and the Service Supplier, or the Entrepreneur.
The concept of marketing really revolves around satisfying the needs
and desires of the client, however, this happens through a ‘comprehensive’
mixture. This mixture constitutes variables and conditions which enable the
Entrepreneurship
]198[
small enterprise to satisfy the targeted market. The marketing ‘package’
contains four elements that start with the letter ‘P’ and are referred to as the
four P’s.
A. Product
The product is the first and foremost component in the marketing
package. It is imperative that the product is upgraded, developed or
improved to constitute a benefit to the client or meet an actual need, in other
words make for a better quality of life. As De Point (the international
chemical company) put it with regards its products: “We introduce products
to create a better life for our clients through chemistry.”
Proctor and Gamble (another very successful enterprise) promises
“We advance and develop our products to improve the life of our consumers
around the world.” In other words, the prospective client is to expect clear
benefits from using those products. The product offered by the entrepreneur
should and must actually achieve the goal of making life easier and better
and has actual value for the life of the client. The owner of the enterprise
must know that consumers do not buy products based on the show in the
window alone, but to make use of it one way or another. A consumer, does
not buy a ‘car’, but buys a vehicle that is comfortable and that can allow
him/her to enjoy a smooth ride while driving to work, or while traveling for
a holiday to a distant spot. Customers do not buy tooth brushes, but buy a
tool to help them clean their teeth. In other words, the consumer buys a
certain ‘value’ when he/she is buying a service or a product.
B. Space and Display Distribution
The product or service must be available in the place where the
client can reach it easily. Place, therefore, is the second component of a
marketing package. This constituent revolves around ‘channels’ or ‘places’
or ‘paths’ through which the product is relayed to its ultimate and final
destination, that is, the client.
There are at least three forms open to the entrepreneur through
which he can relay his product:
1. The business owner may contact the client directly and deliver the
product to the client’s home. Or else, the client will find a close
outlet nearby through which to obtain the product he desires.
2. The entrepreneur may also sell directly to the retailer and the retailer
in turn sells to the client.
]199[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
3. The owner of the enterprise (the producer) may sell whole sale. A
retailer in turn sells to the client.
C. Promotion
Promotion involves several activities which the entrepreneur
undertakes to promote his product through advertising, personal sales
through directly contacting clients himself. Generally, a small enterprise
cannot afford to spend on advertising the way bigger enterprises do. The
concept of advertising for a small enterprise then involves the freedom of
approaching the client directly and delivering services door to door. This
gives the sales person the benefit of showing off the degree of excellence of
the product and the courtesy and efficiency of delivery as expressed in the
attitude of sales personnel and the follow up manner after the product is
bought. These are all important details in transactions taken under such
conditions.
D. Pricing
The most important consideration for the enterprise owner is cost.
S/he certainly cannot sell any product at a price lower than what it cost
him/her to produce. S/he thus has to take into consideration while pricing
the products the following points:
a. The price set by the competition.
b. The marketing strategies in effect.
c. Finally, the general economic condition of the small
enterprise.
2. What is a Market?
The market is the group of consumers or clients who buy the
products of the enterprise. The owner of the enterprise needs to familiarize
him/herself with that market: how big, what is the purchasing strength of the
clients. A marketing plan has to be set, and this includes products demanded
but not yet realized in a way that will invite the client to buy these products.
Only then can the enterprise owner price his products and services in
accordance to the market’s capacities and thus ensure sales. S/he must also
identify the means to connect with the prospective market, advertising
products and adopt the best style and attitude needed for ‘selling’. The
entrepreneur must also understand the boundaries of credit granted and
consumer purchasing behavior: how do customers and competitors behave
in that market, and, lastly, how can that market be studied as a whole.
Entrepreneurship
]200[
3. Who is the Client\Customer\Consumer?
It is basic to say that without a client there is no enterprise. Based on
this understanding it becomes incumbent upon the enterprise’s owner to
fully fathom all aspects of marketing for his enterprise. After defining the
market in which s/he will work and assessing the influence that the
competition and alternative products mean to his enterprise, the next step
should be familiarizing him/herself with his prospective clients and learning
how to spot and identify them. S/he will, therefore, need to ask the
following questions:
A. Who is likely to buy the product or service offered with respect to
 Age group, that is which age group will actually use his product
(newborn, children from three to ten, young adults or adults?
 What gender is the client?
 What are the purchasing habits that the group exhibits: are they
seasonal, erratic or all year through?
B. What are their needs and how can they be kept content, satisfied and
happy enough with the product to ensure their loyalty?
C. Who are the competitors?
D. What do the competitors offer that s/he does not?
E. How do the competitors deal with the customers?
F. What are the terms of payment, and what form of payment does the
client prefer? Cash – credit or both?
G. What are their purchasing habits, and do they have needs that have
not yet been met?
H. How big is the market in which s/he works?
In answering such and similar important questions the owner acquires a
clear picture of the enterprise and his prospective clients. According to that
picture, s/he can define the shape of the product in demand, know how to
price it and the best means to advertise it using strategies and tactics.
Now, despite the importance of a priori knowledge gained and
regular follow up on the purchasing habits of clients, what is really of more
importance is the ability to predict changes in the market in the future and
attempt to envision how such changes might be manifested. In other words,
the owner of the enterprise must make the needs of the clients central and
the core of his/her concerns, be they current and/or futuristic.
]201[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
4. What is the importance of adopting a marketing ethos?
For the owner of the enterprise to succeed and avoid any negative
aspects such as those referred to earlier, he must be first himself convinced
of the importance of marketing. Adopting a marketing philosophy and
having a clear concept of a market means to guide him and his enterprise as
a whole, he must direct all his efforts and totally immerse himself in
directing all enterprise related activities towards meeting the needs and
demands of his clients if he wants to achieve the goal he set for profit. Such
an outlook depends on three fundamental components:
a. The small enterprise has to be totally directed by the dictates of the
clients’ needs and all work done has to address these needs.
b. All efforts made in the enterprise will be united to fulfil this
prerequisite.
c. If a small enterprise is to have a satisfactory revenue it should follow
closely the directives indicated above.
Third: Finances and Budgeting of the Enterprise
After ensuring an opening in the market and attaining a slot for the
products and services of the enterprise, the next step should be thinking out
the financial needs of the enterprise. Where will the funds come from? What
is the importance of the entrepreneur’s financial and accounting skills to the
enterprise? And what are the finance documents he should be keeping.
1. The importance of accounting and finance skills to the
entrepreneur:
The entrepreneur must know about accounting and funding if his
enterprise is to succeed. Knowledge of financial and accounting terminology
is not a matter of choice. It is mandatory in as far as s/he must deal with
those aspects of the work. It is impossible to manage any kind of enterprise
and understand its operational systems regardless of its size, without the
ability to read and understand and be able to analyze the budget reports and
book keeping. Reports and accounts show clearly the degree of strength and
resilience of the enterprise, just as the rate of our hearts and blood pressure
assures the health of a human body. Now, even if the entrepreneur did not
personally involve him/herself in the details of book keeping and accounts,
s/he must be able to decipher what they imply, fathom what the figures
signify, what the results mean to the enterprise and the extent to which those
Entrepreneurship
]202[
results express the health and safety of the financial aspects of the
enterprise.
2. The financial needs of the enterprise:
There is a fundamental question that faces the entrepreneur and that
is: What is the amount of money needed for the enterprise? Where will the
necessary funds come from? If an entrepreneur finds an ideal market but the
funds are not there, s/he will simply not be able to carry out the enterprise.
The enterprise owner needs two types of funding: The first sum is to start
the enterprise. The second is for purchasing fixed assets.
The first type of funding is reserved for the finances needed for the
early phase of the work, which calls for buying raw material, launching
costs, permits, legal fees, rent security, odd jobs, and salaries and
maintenance. The funds needed must include a sum to be set aside for
emergencies that would cover safe operation from four to six months at least
until the time comes when the enterprise starts to bring in profit from the
sales of products.
The owner also needs funds to spend on necessities or fixed assets
which include purchasing land or real estate (an apartment for example) for
his headquarters, not to mention the possible need for equipment, buildings,
furniture, transportation vehicles etc. To fulfil the financial needs at this
stage the owner needs short term funding in the form of short term loans
that are to be paid between 60 to 90 days. As for loans borrowed in
purchasing fixed assets, these may be funded by long term loans or else
provided by the owner.
The owner/manager of the enterprise is better off funding tradeable
assets through short term sources and funding fixed assets through long term
commitment. In this ccontext, s/he does not face fluidity issues in case the
fixed assets are funded by short term loans, or in case of a drop in profit in
the opposite case.
3. Funds available to the enterprise owner:
There are two sources of funding available to the owner of a small
enterprise: Funding through debts incurred by loans from banks and funds
that belong to the capital of the enterprise itself. These are considered
‘outside’ sources for both long and short term loans. The provider of
equipment and tools or goods may also be an outside source, if s/he agrees
to defer payment of the money owed for services and goods for a certain
period of time, which is called ‘trade credit’. Such loans are subject to
]203[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
interest rates. Funds owned by the entrepreneur are considered ‘capital’
which s/he invests in the enterprise. Acquiring funds from any of these
sources depends on the factors of cost, risk and flexibility, plus the amounts
available to these sources to begin with.
4. The needs of the enterprise in its various phases differ
What follows is an explanation of each phase, its features, needs etc
in accordance to the requirements of the phase (Qandil 1976).
Phase One: Experimentation
A small enterprise needs a period of experimentation to set it firmly
in the world of business funding. The need arises for internal resources.
This means that during this phase, the savings belonging to the individual or
those of a relative for example, may be used since banks usually refuse to
loan this phase of an enterprise, though there are countries where certain
departments will guarantee such loans.
Another form of income may be possible to attain through rent of
equipment and tools or payment by instalments. In some cases, government
funding institutions will provide such loans to help set up small enterprises.
Such enterprises may also need to deal with trade insurance for providers in
the initial stages of the work to obtain its materials and effect odd jobs.
Phase Two: Exploitation and launching
The second phase of the enterprise involves launching and achieving
the growth rate if the enterprise had initially succeeded and began to find its
way in the market. Thus sales increase so does profit due to consumption.
As sales increase so does the flow of cash, and the product becomes
recognized. Small establishments try to lengthen the duration of this phase
as long as possible. With an increase in size and expansion of the work, the
owner feels a deceptive sense of wealth, and starts to spend from his capital
on personal needs and from savings incremented from profits. Not only that,
but the owner may also spend from loans. The debts start to pile up, which
may lead to the decline of the company during a period of development, and
so it is best not to overdue out loans at all costs.
Such small enterprises may approach other specialized sources to
fund them. This, however, is known as risk funding investments. Those
companies provide funds to these small enterprises in exchange for a share
of the capital. This does not happen with the intention of owning the small
Entrepreneurship
]204[
business, but is motivated by the need for the surveillance of the operation
of the establishment and to safeguard its capital.
Phase Three: Slow Down
During this phase: growth rates start slowing down and profit
becomes stable to some extent. The need for funds, however, remains the
same in order to retain work capital, which includes financing material in
stock whether raw material or spare parts. Cash depletion is necessary due
to the need to fund long term sales and guarantee continuity to the client.
Keeping up with administrative expenses, marketing expenses and salaries,
etc. is also desirable. The enterprise might, however, need to turn to the
supplier and banks to obtain short term loans.
Phase Four: Maturity Period
A well run small establishment reaches this stage, which is marked
by maturity vis a vis stabilization in both profit and sales, as well as in
growth in the form of incoming clash flow. At this point the small company
may wish to retain a small portion of the sales, which makes it in need of
short term funding, and less long term funding to fund alternative products;
or develop current products as the case may be in order to face the
competition and what that entails.
By the end of the third phase, the entrepreneur must take into
account developing his style and getting help by using advanced financial
approaches, such as planning surveillance of accounts (professional
accounting) thus matching the financial analysis of operations, the
ownership of the enterprise, etc. Some small businesses in general, which
reach this phase, try to stay in and maintain it by avoiding at all costs the
fifth phase, known as the phase of decline and all that entails.
Phase Five: Decline Period
In this phase the enterprise can be in trouble due to the following
factors:
1. Outdated technology: not developing or upgrading the product or
service offered is a problem. Losing interest in behavioral patterns
of clients and a state of stagnation affects the products.
2. If the business does well and flourishes this might encourage the
opposition to set up a similar business in the same market, which
puts the original enterprise in danger of losing its share in the
market.
]205[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
3. Innovation through introducing a previously non-existent field,
about which there is limited information and data, to qualify it to
continue is also a risk factor during this phase.
4. An increase in extra funding especially during the shifts occurring
while moving from the second to the third phase. The danger arises
here because the enterprise shall need to replenish its active capital.
If this transition is not well managed, the enterprise faces financial
risks of major proportions that may lead to a total collapse and a
quick move out phase five. All small enterprises do their best to
spontaneously and by all means possible stay out of phase five as
expected.
5. Book keeping and accounts are mandatory for the enterprise. The
balance and income itinerary are finance pillars that the entrepreneur
cannot ignore, and s/he needs to educate him/herself in that respect
so that it would be possible to do the work if there is no professional
accounting help. It is those two prerequisites that determine the
position and future of the enterprise.
A. The General Balance Sheet
This is a list of expenditure and income that clarifies the financial
status of the enterprise at any given point in time. The balance sheet is
divided into two main kinds: the first is the claims or debit and
commitments. The second kind refers to financial resources of all kinds and
fixed assets. These are divided into two types: tangible, such as cash
reserves that the owner keeps (sets aside) and the inventory of products,
buildings and equipment. The non-tangible capital refers to intellectual
ownership rights and patents. Debits are the loans due to banks or suppliers
and payment receipts. These happen when the owner purchases products
from suppliers and does not pay for them immediately. Again, credit is
divided into two types (long term to be paid over a relatively long period
and short term loans to be paid with the year. The rights to ownership
constitutes the difference between what is owed and commitment to pay:
Rights = Capital – Commitment
If the enterprise loses, this loss is subtracted from the rights to
ownership. The more an enterprise loses the more its ownership recedes
until it is totally absconded. The owner thus must be extremely careful in
order to avoid loss so that s/he does not lose all his/her money.
Entrepreneurship
]206[
Why is that process always called Balance Sheet?
The name itself implies that it is a factor that needs to be
continuously in balance if things are going right. The question posed here
demands an answer. The question itself is derived from the word ‘balance’
and the answer is that any action occurring in one side of the sheet must be
met with an equivalent action on the other side of the sheet. So let us see
how the budget remains balanced from the following example:
Example 1: An enterprise purchased goods for 100.000 Egyptian pounds to
be paid after a month from the date of purchase. This will affect the side of
the balance sheet since that sum is going into the side of capital even though
the money has not been cashed. The bills of payment by the same amount
which is 100.000 E.P. is placed in the opposite section, that of debit. Thus,
the assets in circulation increase by the same amount and the sheets are thus
in a state of ‘balance’.
Example 2: What then happens when the enterprise pays that sum in a
month? The answer is that stock/ash shall suffer the loss of 100.000 E.P
From the above, one can explain how the budget remains constantly
balanced.
B. Income Statement
Income statement (which is a financial list) shows the income of the
enterprise through the changes that take place in the financial position of a
company as a result of the operations undertaken during the period of
setting the budget. The income statement clarifies the degree of success or
failure of the enterprise’s owner during the previous stage. In the sense that
it poses a comparison between total income to total expenditure incurred by
the enterprise owner which is larger.
So that if the enterprise attains more revenues than spends money,
the enterprise will have achieved profit and hence is successful. Whereas if
the profit is less than the expenditure, the result will be loss. The owner
must have mismanaged his enterprise.
To explain, the three fundamental components of the income
statement.
1. Revenue: This comes from the sales of products or services whether
they have been cashed or not.
2. Expenses: Are what the enterprise owner spends to achieve the
revenue planned whether he has been paid or not. Revenue is made
up of the cost of goods sold, the operational costs and financial
expenses.
3. Net Income is the difference between revenue and expenses.
]207[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
Fourth: Managing the transition process from entrepreneur to
professional manager
The small entrepreneurial enterprise will not remain small forever,
but is bound if successfully managed by adhering to the directives shown
above. Success and growth depend on the ability of the owner to
successfully manage the transition. They also depend on malleability the
owner shows in changing his management style from that of entrepreneur to
that of professional manager when the enterprise begins to grow and
expand. While the entrepreneur concentrates on innovation and creativity
and accepts risk taking as part of acquiring the necessary skills to begin his
enterprise, the professional manager concentrates his/her attention on
planning skills and organizational matters necessary for the management
and operation of the new bigger enterprise which can now be called a
‘company’.
It is noted that the fundamental change occurs during the period of
growth when the entrepreneur moves from the risk taking owner to the
position of professional manager. The transition is not as easy as some
imagine. Hofer and Charab (1984) view the transition that the entrepreneur
makes from and individual’s view point to an organization run by a
professional management team depends on specialized jobs.
A great many problems occur at the point of transition especially if
the entrepreneur is characterized by the following:
1. Preferring to have control over all decisions.
2. Relying on only one or two other individuals
3. Not being interested in developing the managerial and training skills
of his/her employees.
4. Operating in a typically routine like atmosphere.
If such features are important during the initial phase, they can later hinder
the growth of the enterprise. What is good for the early stages of an
enterprise can be devastatingly destructive during the period of growth,
development and continuity. For the period of transition to pass without
disruption, the entrepeneur must manage this operation professionally and
skilfully.
Most small business owners start off as specialists, but as the
enterprise develops they have to become leaders, more interested and
involved in important strategic issues and especially so when the enterprise
grows. An employee can start as a technician, who has enough knowledge
of the technical aspects of the enterprise and may even handle those details
in person. But when the number of clients as well as the providers of goods
Entrepreneurship
]208[
increase, it becomes incumbent upon him to stay away from technical
aspects and start to pay attention to more important things such as
motivating workers and management operations.
The fundamental problem remains one of uprooting such people
from matters they know and love to new matters with which they are not
familiar. In other words, how can you take them out of the kitchen and
interest them in running and managing the restaurant and its clientele? How
can you convince the car mechanic to come out from under a car and send
him to manage the workshops, and supervise the quality of the work?
This happens when the entrepreneur concentrates on acquiring the
skill to apply his/her intellectual abilities during this phase and focusing
his/her attention on taking part in all activities of the enterprise. This is in
addition to achieving the balance between various management skills
(technical, human and intellectual), rather than only concentrating on
technical skills which may be necessary in the first stages of the life of the
entrepreneurial enterprise. Finally, it is important to tell our students of
Cairo University, and, indeed to any student, that we have navigated
through the pages of this book initially with an innovative idea, which
turned into a useful enterprise in introducing a product or service of value to
the people. This enterprise will make lives easier, create job opportunities,
and support the economy of the nation. What is even more important is that
it achieves all your ambitions and fulfils your dreams and hopes and proves
to you that you are indeed a potentially successful person of use to your
community.
Success is an exciting and enjoyable journey. We have spent tie
roaming across the pages of this reference book. We have enjoyed the
stories of others and learnt from stories of success and struggles of those
entrepreneurs who patiently managed to overcome obstacles. They worked
hard to leave legacies and giant enterprises that have an impact on our
present and future. Be like them, become one of them. We are sure you will.
After getting to know the special nature of these enterprises and the
problems entrepreneurs face, it is first necessary before deciding to start an
enterprise of your own to answer some questions, with great accuracy and
total honesty--if you would like to succeed. The questionnaire included
below (Questionnaire 7-1) is designed to help out in making sure of your
aptitude for entrepreneurship.
]209[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
Questionnaire (7-1) The Skills and Capabilities of a Successful
Entrepreneur
Questions
Yes
No
1.Is the idea of your enterprise a leading innovative idea?
2.Do you have professional/technical experience in the
field of your choice?
3. Is there a dire need in the area to set up your enterprise
for the services or products you offer?
4. Is your vision clear with regards your enterprise? How
do you envision your enterprise in 10 – 15 years from
now?
5. Are you ready and have the will to work for long
without suitable return at least during the initial stages of
the enterprise?
6. Have you studied your abilities carefully and would
hold on to the enterprise regardless of what may appear
as threats or challenges to those abilities?
7, Do you have leadership skills that your colleagues
trust?
8. Are you in good health and capable of working more
than ten hours a day?
9. Do you have the tenacity to hold on to your dreams
and to push forward the enterprise regardless of obstacles
and problems?
10. Can you communicate well with others? Do you have
good persuasion skills?
11. Do others understand what you say and the ideas and
concepts you are presenting?
12. Do have knowledge or are familiar with the most
important styles of management and financial statements
that should be carefully kept to start the enterprise (tax
records, financial statements, wages, budget)?
13. Are competitive companies which offer services and
products within the same neighborhood in which you
plan to set up your enterprise satisfactory? Would the
clients of these companies find in your establishment
satisfactory?
Entrepreneurship
Questions
14. Do you have the necessary skills to market the
enterprise and its products? Is your product distinctly
special when compared to that of your competitors?
15. Are you achievement oriented even if your goals
conflict with proceedings?
16. Do you have enough funds to spend on the enterprise
during the first years of operation?
17. Do you have enough funds to start an enterprise or
have sources that will help you in making such funds
available?
18. Do you know the suppliers who will supply raw
materials, and are you familiar with their potential and
skills which ensure limited, thus you can assume the
success of the enterprise?
19. Do you know people whom you can convince to
work with you on the condition thay you employ only
those who have skills that you do not have?
20. Do you really want to start this enterprise and prefer
that totally to anything else at all? A safe job for
example?
21. Is growth one of your intrinsic goals for the
enterprise?
22. Do you have the conviction that your enterprise can
grow lager and quicker than any on the market?
23. Do you have more ideas than you have resources and
time for?
24. Does every change in society provide you with new
ideas for new products and services?
25. Have you suffered previously from shortage of new
ideas which can be transferred to new products?
26. Do you assess your employees and reward them in
accordance with the added value they bring to your
enterprise?
27. Is any growth or progress attained by the enterprise
reflected in the value of the rewards you offer your
employees?
]210[
Yes
No
]211[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
Questions
Yes
28. Does keeping and employing or letting an employee
go depend on the value he adds to the enterprise?
29. Do you adapt to new changes without looking behind
to the past?
30. Are you more interested in the idea than you are in
placing your funds to exploit an open opportunity?
Source: Brown et al., 2001; Hisrich et al., 2010
No
How do you interpret the results of the above analysis?
First: Read the following statements carefully and answer each question
with the honesty.
Second: Put the suitable answer on the space to the left with a simple yes or
no.
Third: When you have finished answering all the questions, do the
following:
 Add up all the (yes) answers. Give yourself one point for each yes.
 If you got more than 27 points you may consider yourself a
potentially successful entrepreneur and may start a successful
enterprise immediately.
 If the points you scored are between 20-27, this means that you need
some support and study to become a successful entrepreneur, and are
ready to bear the difficulties and problems associated with your
enterprise. Your professor in the course can help you a great deal.
 If you scored 20 points, it would then seem that it is better for you to
find another field. Countries that need entrepreneurs also need
ministers, university professors and company presidents etc. The
future is not only in entrepreneurship. You can achieve your
ambitions in numerous other fields and succeed in what suits you
best.
Entrepreneurship
]212[
Practical Exercises and Questions
(Research – Discuss – Think – Create)
The First Question:
1. What is interesting and admirable in the story of Phill who started Nike?
How can you benefit from this story in the beginning (if you are still in the
stage of thinking about an idea for your enterprise) or of making an
entrepreneurial enterprise successful if you already have your own
enterprise?
2. The life of the founder of Nike took many turns that influenced his
character and strengthened and polished his personality. In the development
phases that the founder of Nike went through, what have you learnt from of
these phases?
M
Stage
Lessons Learnt
1
2
3
4
5
3.Choose with your colleagues five entrepreneurial enterprises and define
the following:
C. The components of the management team and their qualifications.
D. The availability of professional management for the management team.
E. The issues, obstacles and problems they faced at starting the enterprise
and the problems they are facing now.
The Second Question: Determine if the following questions are true or
false?
1. It can be said that poor management is an essential factor in the
failure of most entrepreneurial enterprises.
2. Management is using available funds to achieve the goals of a
enterprise effectively and the necessary efficiency.
3. It is mandatory to make sure that the operations of the enterprise
have achieved the goals set during the planning stage. This is the
essence of guidance.
]213[
Chapter Seven: Professional Management of the Entrepreneurial Enterprise
4. The problem that most--if not all--entrepreneurial enterprises suffer
from the insistence of the entrepreneur of retaining authority and
power.
5. An entrepreneur must differentiate between work that is his to
accomplish, and jobs that must start to be delegated to others.
6. The job or position of guidance includes three fundamental
dimensions: Communication, Leadership and Motivation.
7. It is necessary to make sure that enterprise work which has been
performed has attained the goals set in the process of planning, and
that this is the job of administrative control.
8. Organization is the setting of goals for the small enterprise and at the
same time defining the necessary steps to achieve those goals. In
other words, get ready for the future now.
9. The function of planning the enterprise is to specify the assignment
of various missions.
10. The successful entrepreneur is one who is able to delegate power and
authority to his subordinates. As for the inefficient entrepreneur it is
he who retains all authority to himself and retains all power in his
hands alone. In the end he loses the ideas and efforts of his
subordinates.
The Third Question: Choose the correct statement from the following:
1. It is possible to divide the activities of management in any
entrepreneurial enterprise into the following:
a. Executive, intellectual and mental.
b. Technical and humanitarian
c. Technical and structural
d. None of the above.
2. Planning the enterprise’s work includes principals. These principals
are:
a. 7 steps
b. 8 steps
c. 9 steps
d. 10 steps
3. There is a group of general goals that any enterprise must plan for:
a. 4 goals
b. 5 goals
c. 6 goals
d. 7 goals
Entrepreneurship
]214[
4. Goal number --------- occupies the first position in the first group of
general goals for any enterprise:
a. Providing the service
b. Profit
c. Social goals
d. Growth
5. The job organization in an entrepreneurial enterprise is concerned
with:
a. Division of work and enterprise activities (departmentalization)
b. Span of administrative control.
c. Easy work
d. None of the above
6. The operation during which the entrepreneur familiarizes himself
with financial and accounting knowledge is:
a. Mandatory
b. Optional
c. Consultative
d. Non of the above.
7. The marketing package of an entrepreneurial enterprise consists of:
a. 4 components
b. 5 components
c. 6 components
d. None of the above.
8. The Market of an entrepreneurial enterprise is constituted of:
a. The group of consumers or clients who buy the product of the
enterprise.
b. The place from which the client purchases the product of the
enterprise.
c. The marketing package used to contact the clients.
d. All the above.
9. The period of transition from a small enterprise to a great company
includes:
a. The transformation in management style by the entrepreneur.
b. The transformation of the professional manager to an
entrepreneur
c. The transformation of the technician into an entrepreneur.
d. None of the above.
Chapter Six
Entrepreneurial Business
Establishment and Preparation
Entrepreneurship
]154[
]155[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
Chapter Six
Entrepreneurial Business Establishment and
*)*(Preparation
Intended Learning Outcomes:
This chapter is intended to familiarize the student with the
procedures necessary to establish an entrepreneurial business and
prepare for its startup. By the end of the chapter, the student is
expected to be able to:
1. Understand the nature of the decisions related to
implementation steps.
2. Know the essential documents due to be processed in order to
establish a business.
3. Know the steps due to be taken in order to establish the
business.
4. Learn about the facilities provided by organizations that
support startup businesses.
5. Learn about different laws that apply to the business and the
different types of relevant documents.
6. Make the right decisions on the availability of different
production resources.
7. Select from a variety of locations.
Key Concepts:
1. Establishment decisions.
2. Decisions related to the availability of production
resources.
3. Decisions on preparation for launch.
4. Promotion and organizing a launch event.
)*(
The Chipter is by Professor Hala Mohamed Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University
Entrepreneurship
]156[
]157[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
A Success Story
The World’s Youngest Business Entrepreneur
Cory Nieves is an American boy who is unlike any other boy of his
age. Being a successful business entrepreneur, he established his own
company, Mr. Cory's Cookies, before he was even 10. He runs by himself,
rather than depend on his mother or any other person. As this little boy
knows exactly what customers want or need and works to satisfy them, his
business grows bigger and makes more profit. He is also involved in
fashion and advertising not only because of his entrepreneurial success but
also because of his keen personal sense of elegance.
How Cory became the world's youngest entrepreneur
Cory's story began in 2009 when he moved with his mother from
New York to New Jersey. His mother needed a car to commute in their
new hometown. Cory, who was then under five, decided to help her. He
immediately built a small stall to sell hot cocoa and lemonade to passersby. He raised funds which encouraged him to upgrade to make and sell
delicious cookies.
A Successful Startup
Cory's home-made cookies were highly appreciated by customers. He
opened more outlets for his product, which soon began to be widely
marketed in town and across the state. His product even hit the markets in
neighboring New York.
What did Cory Succeed
Asked about the high demand on his products, Cory says that his
products are made with love, and are therefore delicious and mouthwatering. Various reports on Cory Nieves, the world's youngest
Entrepreneurship
]158[
entrepreneur, stress that his fame is not only attributed to his excellent skill
in producing cookies, but also his sense of humor and remarkable elegance.
In an interview with the Daily News, Cory said he was fond of elegant
clothes, which he bought from leading haute couturiers like Tom Ford, J.
Crew and Ralph Lauren. This was the reason why he made it into the world
of fashion and international business advertising.
Ambitions of the World’s Youngest Entrepreneur
Joining the university and developing administrative skills and
abilities are the most important aims Cory hopes to Achieve in the future.
These aims seem simple and achievable enough at this point. But as he
grows older, he will certainly develop more sophisticated aims and
ambitions.
]159[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
Chapter Six
Entrepreneurial Business Establishment and Preparation
Introduction
In a solid business plan, planning precedes execution. For example,
in electronics or international business, one has to be fully aware of the
relevant organizational laws and regulations in order to process the
necessary documents and follow the right procedures to avoid
administrative and legal problems in the future. An entrepreneur also has to
identify the potential support organizations, visit their head offices and fill
the necessary applications to receive their assistance. This is also necessary
to secure the resources needed for the establishment of the business and the
implementation of decisions related to the procurement of different
production resources. Preparations are then made for the inauguration of
the new business. This process involves making executive decisions in the
following key areas:
1. Establishment decisions: identifying the applicable laws and the
official documents and procedures due to be processed or followed
to officially establish the business.
2. Decisions related to acquiring resources: including fund-raising,
finding the right site, workforce, fixed assets, operational
requirements, etc.
3. Decisions related to preparations for the launch: preparing the right
venue in terms of interior design and decoration, installation, and
testing. This is followed by promotional activities and organizing a
launch event.
Essential for the success of this stage is the use of services provided
by professionals. Failure to do so or to pay the cost involved will cause the
business to incur even more losses and burdens since professional expertise
cannot be compensated for by personal initiative or the help of friends,
relatives and support organizations. Those professionals include lawyers,
accountants, chartered accountants (experienced in both accounting and the
law), technicians, Internet service providers, customs brokers (in cases of
international transactions) and many others depending on the nature of the
business.
Entrepreneurship
]160[
First: Establishment Decisions
1.
Regulatory Laws:
At this stage, it is important for the entrepreneur to be fully aware of
the laws related to his/her field of activity, the standard modus operandi in
this field and the relevant legal formalities, etc. A pharmaceutical business,
for example, is regulated by laws different from those which regulate food
processing or tourism. There are different laws for starting a franchise
business, an online business or an international business. There are other
specific laws that regulate products based on creativity and invention, which
need legal protection, and so on and so forth. However, there are laws which
regulate business in Egypt in general, and small businesses in particular.
The following is a list of these laws, but it must be remembered that one has
to check for any new or amended laws at the time of creating one's business:
 Investment Law No. 72/2017.1
 Corporate Law No. 159/1981.2
 Income Tax Law No. 157/1981,3 which regulates the taxation of
different kinds of revenue, including corporate revenues.
 Value-added Tax Law No. 67/2016,4 which imposes a 14% tax on
transactions, to be paid by the seller to the Tax Authority, and to be
deducted from the taxable income of the buyer.
 Industrial Safety and Environmental Laws No. 105/2015, amending
some provisions of Environment Law No. 4/1994,5 in addition to
Decision No. 134/2003.6
 Law No. 80/2017 on Pensions, and the amended provisions of the
Social Insurance Law.7
1 For the full text of the law, see: http://www.sis.gov.eg/UP/‫االستثمار‬20%‫قانون‬.pdf
2 For the full text of the law, see the website of the National Investment Bank:
http://www.nib.gov.eg/NIBWebsite/law.html.
3 For more details, see the website of the Egyptian Tax Authority:
http://www.incometax.gov.eg/low-157.asp
4 Q&A on the provisions of the Value-added Tax Law No. 67/2016 (2016), available on the
website of the Egyptian Tax Authority:
http://eta.gov.eg/images/n.pdf
5 Website of the Ministry of the Environment and the Environmental Affairs Agency:
http://www.eeaa.gov.eg/portals/0/eeaaReports/N-Law/Law_ammend_105_2015.pdf
6 Law on Professional Health and Safety, available on the Egyptian Government Portal:
https://www.egypt.gov.eg/arabic/laws/labour/Law_health/F_worklaw_in.aspx
7 Laws and regulations issued by the Ministry of Social Solidarity are listed on the
Ministry's website:
http://www.moss.gov.eg/ar-eg/Pages/laws.aspx
]161[

Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
Law No. 141/2004 on the Promotion of Small and Medium Sized
Enterprises.
 The Franchise Law (bill remains pending in Parliament).
 Law 82/2002 on the Protection of Intellectual Property Rights,1 (for
inventors).
2.
Documents for Startup a Business
The documents necessary to establish a new business are various, but may
be divided into two main types:

Required Documents: must be submitted by the applicant as a
prerequisite to process the second type.

Issued Documents: establishing the official artificial person of the
business which qualifies for the reception of aid funds.
Table (6-1)
Examples of documents necessary to officially startup a business
Documents Issued
Documents Required
Tax ID
ID(s) of individual or partners
Acknowledgement
of
registration with the Chamber of Registered corporate contract (if there are
Commerce
partners)*
Commercial register
Registered
title
deed
(rent/ownership/leasehold), or one with a
specific date shown
Import License
Electricity/gas/water bill
Bank Form 4 (in the case of Professional Practice License
importation)
Export ID
Basic requirements to obtain aid funds
National ID of the establishment Feasibility study
Final license
Business plan
Registration with the Tax Educational certificate, if applicable
Authority
Registration with the National Status of military service (for males)
Organization
for
Social
Insurance
C.V.
1 For the text of the Law, check the Patents Page on the website of the Academy of
Scientific Research and Technology:
http://www.egypo.gov.eg/PDFs/law2002a.pdf
Entrepreneurship
]162[
*Depending on the planned legal form of the business (joint-stock company,
private company limited by shares, limited liability company, one-person
company).
Providing these documents is the only way to receive funds from
support organizations as they testify the seriousness of the enterprise and
entitlement to aid funds. In spite of the fact that the nature of approvals and
permissions differs according to the nature and circumstances of each
business, there are general approvals and documents that must be secured by
all. The following procedures need to be followed by everyone in order to
officially establish an enterprise:
3. Procedures and facilities provided for enterprise establishment
To establish a business, there is a set of steps to be taken. The
authorities concerned have tried to streamline the process as much as
possible. In the following part, the procedure will be described, followed by
the measures adopted to streamline it:
A) Procedures
Following are the steps to obtain the officially recognized documents
for a business to qualify for aid funds allocated to small businesses
1. Getting a tax ID
 Provide a copy of your ID, together with an application
identifying the nature and premises of the activity, a registered
rent contract, and an electricity bill if available, so that a Tax
Authority agent may duly check the venue.
 Open a business file at the Tax Authority, and then get your tax
ID.
2. Registration with the Chamber of Commerce
 Submit your tax ID to the relevant Chamber of Commerce
pending finalization of your commercial register. Get an
acknowledgement of registration with your Chamber of
Commerce.
 Professional Practice License: apply for the license at the
organization concerned – usually a trade union – and submit it
with the application for the commercial register.
 Commercial registration procedures: submit tax ID, Chamber of
Commerce registration certificate, and Professional Practice
License to the relevant Commercial Registration office,
]163[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
indicating the exact capital of the enterprise in question. After
receiving your commercial register, you will be able to get your
tax ID from the Chamber of Commerce.
 Steps of Social Insurance Registration: Submit commercial
register and Tax ID to the relevant social insurance office to have
a file opened for your business, and insure your permanent staff.
Evasion of insuring the permanent staff, sadly not uncommon, is
said to be the result of the 40% of the insurance value paid by the
business owner, or the strict legal protection from arbitrary
dismissal granted by the law when workers are insured.
3. Getting an Import License
 Open a bank account with a minimum of $10,000 balance. Form
“4” is used to transfer the value of any imports worth more than
$2,000, or the equivalent in other foreign currencies. The Form is
filled online according to the rules and regulations issued by the
Central Bank of Egypt in 2017.
 The business must be registered with the Importers Register
against certain annual fees, if it is to import any items from
abroad. The importer also has to get the approval of certain
organizations, depending on the nature of the imports (for
example the Health Ministry in the case of imported cosmetics,
the Agriculture Ministry in the case of imported serums and
vaccines, or the General Organization for Veterinary Services in
the case of imported fish and poultry).1 2
4. Importation Procedures
International trade is based on an internationally recognized set of
importation and exportation rules of contracting, payment, and shipment –
forming the common language of importation and exportation
entrepreneurs. In both fields, the basic procedures that should be followed to
start activities are almost the same, as follows:
 Company establishment: the same procedures of establishing a new
business have to be followed and the same basic documents have to
1 Website of the General Organization for Veterinary Services:
http://www.govs.gov.eg/frontend/ar/
2 http://www.sooqmasr.net/2013/03/blog-post_17.html#more
Entrepreneurship







]164[
be processed, in addition to some additional documents specific to
importation and exportation. Professional help (of chartered
accountants and customs brokers, among others) is advisable since
this field has its own specialized rules and regulations.
Official documents are attached to any import or export consignment
in order to clear customs. These documents, which are necessary to
ensure the legality of the practice, include the tax ID, the commercial
register, the importation ID, the exportation ID, etc. The documents
can be processed, and an entire business established by a chartered
accountant.
Customs clearance: this is obligatory in importation and exportation,
with very specific steps and documents. Being a specialized kind of
procedure, customs clearance needs a customs broker to clear the
shipment, unless the importer/exporter has the necessary knowledge
and experience.
Approaching the relevant inspection organizations: these differ
depending on the nature of the products. Go to the local or
international ones which have a reliable track record globally for the
necessary checks of the quality of the product and its conformity
with Egypt's standard specifications (in the case of imports) or
specifications of other countries (in the case of exports). Countries
differ considerably in these specifications for incoming goods.
Open a bank account for the company: monetary transfers for
companies or factories can only be made through such an account.
Customs clearance procedures can only be conducted through bank
documents.
Bank account: a bank account in the name of the company/business
can be opened using the papers of the company/business. Bank
transactions are essential in importation and exportation. The bank
acts as the mediator in certain transactions, especially those that need
a documentary credit. Generally, a shipment cannot be cleared
without bank documents, such as Form 4.
Work premises: You can work and establish your business at home.
Provide a suitable place to receive clients and other like customs
brokers and officers.
Financing: try to find sources of finance if you do not have the right
capital. No merchant will pay in advance before they actually see the
]165[





Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
commodity in question. Business novices always face a problem of
lack of trust and reliability.
Capital: is a sum of money used to establish a business and purchase
goods in exportation and importation. You will probably need
capital if the goods are not your own, or if your business exports and
imports items for others.
Finding a buyer (of imports in the local market; or of exports in
foreign markets). You may rely heavily on e-trade which allows you
to access websites of customers in almost all countries around the
world for almost all kinds of goods. You can also benefit from
websites specialized in global mediation like the Chinese Alibaba
(http://www.alibaba.com) which provides super protection for the
international transactions made through it. You can also check the
websites of the Federation of the Egyptian Chambers of Commerce,
the Federation of Egyptian Industries, the General Organization of
Export and Import Control, and other relevant websites.
Estimating the actual costs of products: the costs of products must be
carefully calculated before any export or import activity. This
requires a clear knowledge of all the applicable fees and taxes, in
order to decide a realistic profit margin and avoid any surprises in
terms of hidden costs that could reduce or offset profit altogether.
For example, in the case of imports, you must not forget that part of
the sales tax is payable at the port, while the remaining part is
payable later to the Sales Tax Authority. Neglecting such details can
be largely responsible for great losses in international trade. It is
necessary to research fully everything that has to do with the nature
of your business.
Deciding on the method of payment used in international dealings:
payment is made through banks. There are several international
methods, each with its own characteristics and advantages. You must
find out the right method of payment and study its costs and
procedures carefully.
Choose carefully the goods you will deal in. Always import those
goods that are not locally produced in order to protect the national
industry, avoid fierce competition from local products, and take
advantage of easier marketing of imports that have no local
equivalent. Sometimes, the State heavily taxes certain imported
Entrepreneurship
]166[
items that are locally produced or even ban their entry in view of the
possible negative effect on the national economy – except when
necessary. Imports that have locally produced equivalents make the
trade balance tip in favor of imports and raise demand on foreign
currency at the expense of the national currency. International
business is best conducted when it is in the form of exportation,
which has several positive effects on the national economy.
 Approach the relevant inspection authorities based on the nature of
the products you will be dealing in. Go to the local or international
bodies which have a reliable track record globally, to check the
quality of the product and its conformity with standard specifications
of Egypt (in the case of imports) or those of other countries (in the
case of exports). Countries differ considerably in these specifications
for incoming goods. Your goods may need the authorization of
particular organizations in some cases. Find out about these.
B) Streamlining Measures
Many aid organizations offer various facilities to encourage small
investors to become engaged in the world of start-up business. Find out
about these to achieve maximum benefit and avoid wasting unnecessary
time and effort in the business establishment process. Facilities available in
various organizations in Egypt now include the "one window" arrangement which is provided for by the new Investment Law. Following are useful
facilities provided by some organizations in this regard:
1. The National Enterprise for Human and Community Development
is an enterprise of the Ministry of Local Development which provides
many facilities, including:1
a) Ironing out implementation problems by using the "one window"
system, which receives applications and tracks their status, and
streamlines procedures and document processing for loan
applications.
b) A total of 282 centers have been created in Egypt's governorates
covering the administrative regions. The centers act under the
auspices of the respective Governors. Loan procedures at
1 For more details on the National Enterprise and the Local Development Fund, visit the
website of the Local Development Ministry: http://mld.gov.eg/ar/enterprises
]167[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
participating banks have been standardized.
2. Small and Medium Enterprises Development Agency (formerly the
Social Development Fund)
The Agency has created a "small enterprise launch unit" at all its
offices in all the country's governorates with the aim of saving time and
effort for government agents seeking approvals for the establishment of
small enterprises, including a temporary 30-day license. The units provide
various services all at one place, charging 1% of the capital entered in the
commercial register of the business.1
3. The New Investment Law No. 72/2017, which covers the following:
The creation of investor services centers, and the provision of a
conditions-and-procedures guide, as well as outlining the role of the
accreditation offices.
These are the most important laws, documents, procedures and
facilities related to the establishment of businesses. Once completed,
together with any additional steps based on the nature of the activity, the
business is legally and officially established and becomes subject to the
supervision and of the control organizations concerned. The business owner
is required to provide a budget or a tax declaration every year after the
passage of one year of the enterprise's inauguration, unless the owner
benefits from tax exemption for a certain period of time. The business
owner also has to keep the official books required by the law.
Second: Decisions related to acquining resources
1. Fund-raising
The entrepreneur needs to start raising funds from the sources
identified in the business plan. Raising a certain amount of money before
establishment may be necessary to cover the different establishment costs,
including getting approvals, paying fees of the chartered accountants,
lawyers and other consultants that may hired at that stage. Other funds are
necessary to cover the costs of other production resources and requirements
including the premises, workers' pay and production inputs. Funds may be
sourced from one's own money, or from partners, relatives and friends. In
the case of businesses with loan-based funding structures, steps need to be
1 The Social Development Fund:
http://www.giza.gov.eg/citizens/Unemployment/Box/2.pdf
Entrepreneurship
]168[
taken to get funds from the supporting organizations based on the policies of
each respective organization. Procedures and documents needed by
entrepreneurs to get funds from sample organizations will be outlined
below.1 Once a small business has met the official requirements and
completed all the necessary documents, it may begin to deal with different
bodies to seek financial and non-financial services as envisioned in its
business plan. Here are a few examples of procedures to get financial help:
a. Procedures to get a loan from the Small and Medium Enterprises
Development Agency (formerly, the Social Development Fund):
1. Finance loans in general: with a maximum of one million Egyptian
pounds, at a simple decreasing interest rate of 6-9% for equipment,
operation cycle2 and structural buildings up to 30% of the value of
the loan. Repayment is made over 48 months maximum, with a
grace period of 12 months granted under certain conditions only.
2. Franchise loans
The entrepreneur applies to the local office of the Fund which refers
the entrepreneur to the relevant franchise-offering foundation once
all conditions have been met. The Fund studies each application in
cooperation with EFDA. If approved, the applicant proceeds to
complete the necessary funding steps at the Fund.
b. Procedures of the Co-operative Insurance Society, Egypt
To get funds in the form of loans from the Social Development Fund,
you need to get a loan repayment guarantee document (80% of the base
capital without interest).
2. Finding a Venue
How you will conduct your business will define the nature of the
appropriate venue for you. If you work at home, the establishment process
will differ from working at a specially designed property, whether rented or
owned, newly built or already existing. The choice also affects how free you
will be in designing and furnishing the premises. In franchise business, you
have to abide by certain specifications. If you join an "incubator" there will
be a totally different set of rules, and so on. Following are a few examples
1 Check websites of different organizations referred to above in this book
http://www.sfdegypt.org/web/sfd/regional-offices
2 These include funds which cover raw materials, payrolls, rent, electricity and
administrative costs.
]169[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
of what to do in some of these cases regarding the right choice of premises:
a. Working from home (Home business):
Preparing to do physical business differs from online business. The latter
requires basically a computer, a landline and a Wi-Fi, in addition to physical
preparations like a place with enough space for a workstation or more,
depending on the number of people in the business. Alternatively, various
workers may work from their respective homes, while connecting online.
Going online requires the creation of a website, which could be e-shop for
example, or signing up to other e-shops, being involved in social media and
enhancing your social media profile through search engines and other tools
of e-trade. Knowledge of methods of e-payment is also essential. You may
need to get some help from small companies specialized in the field or from
other independent contractors. Shipment and delivery services (local or
international) are also important to start this kind of business. Customs
brokers will be necessary in case of international dealings, including imports
and exports. You will also need to decide if you intend to provide your
online services yourself or whether you will hire a young staff or use an
already existing firm for this purpose. These and other matters show that it
is much more than just having a laptop connected to the Internet and other
peripherals. More important still is the fact that you must have a strategy to
infiltrate the e-market, and have a target base of customers, among other
things as explained above. Working physically from home may seem easier
since you only need to convert the place into a small office, workshop or
shop. But in both cases, you need a creative thinking to come up with
something different.
b. Working away from home:
You need to rent or buy a venue, which involves three important things.
First, the location should be appropriate to the nature of the activity
(industrial, commercial, agricultural, service-based). It should be
conveniently positioned in relation to your customers, your suppliers, public
transport, main roads, parking lots, and where your business manager lives.
It should also be harmonious with the nature of neighboring businesses and
your competitors. The cost has to be commensurate with the budget, too.
Secondly, venue specifications should serve your purpose well: these
include area, organization, infrastructure, general conditions, the need for
any modifications, the possibility and legality of carrying out such
Entrepreneurship
]170[
modifications, the approval landlord or seller, and the necessary permissions
to conduct business in the premises. There are various criteria for choosing a
business premises, most of which are usually outlined in the business plan.
The choice may involve the assistance of one or more real estate agents.
One should be careful and take one's time at this state because it has a longterm effect on the potential success (or failure) of the business. Finally, you
will need to negotiate the terms of the contract. There are different terms for
each kind of deal (renting, buying, newly built property, an already existing
property, etc.).
c.
Business incubators:
Based on the physical or online incubator of your choice, you will need to
process the necessary documents and get a place which - most probably will be equipped with the basic essentials and the relevant administrative
support. It may need a little fine-tuning, though.
3.
Hiring the necessary workforce:
The business plan contains an estimation of the number of staff and the kind
of workforce needed in view of the aims of the enterprise. The size and
nature of the expected business defines the profile of each member of staff,
in terms of qualifications, technical and administrative experience, skills,
age, and gender (whenever relevant). Salary scales are defined based on
such qualities and their relative value in the labor market. There has to be a
clearly defined budget for staff pay and incentives. Limited funds mean
hiring less skilled or less qualified persons, but this may be compensated for
by training and professional development. Finding the right skills is usually
one of the major challenges facing small businesses.
a. The organizational structure: the first step in designing the
organizational structure is to define the tasks needed to achieve the
aims of the enterprise, group the similar tasks together in specific
jobs and then group the similar jobs into administrative units
(sections/departments, units, etc.). Two of the most important human
resources jobs that need to be clearly defined and carried out at this
point is handling staff pay and incentives and recruitment.
b. Wages and incentives: defining staff salaries and incentives are
usually a challenging task, given the limited resources of the startup
business. Staff wages/salaries alone accounts for a considerable part
of the costs of the business. The labor market usually offers high
salaries for skilled labor. Generally, there are ways to design a
]171[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
payroll:
 Fixed salary: an amount of money which the worker gets in return
for working for a set period (day/week/month).
 Commission: a percentage based on the performance of the worker
(production/sales/fulfilling certain tasks, etc.).
A mixture of the two methods is commonly used to avoid the
disadvantages of each. A fixed salary is given with the aim of covering the
worker basic living needs when performance indicators drop due to out of
control factors (like market fluctuations or a shortage of production
resources), while a commission is offered as incentive if performance goes
above a certain threshold.
Regardless of the method chosen, fixed salaries should be paired with
incentives in order to attract labor. There are different kinds of incentives,
and they mainly correlated to creativity. A person may choose to work in a
small business in spite of its relative low salary because of its attractive
incentives, which may be financial, moral or in kind.
c.
Recruitment and hiring: recruiting the right staff in small
businesses usually depends on the circles of family and friends and
their recommendations. This may not yield the best choice
sometimes, unlike recruitment from outside these circles. The latter
process could be advertised by a sign outside the business venue, or
in specialized newspapers (i.e. Al-Waseet) whenever necessary, in
addition to recruitment websites which are popular with young
people who like to post their C.V. on them.
d.
The final step is to form the work team from the applicants
who have been personally suggested or who have applied through
various means of advertisement. Forming the team is a graduated
process; if the applicant passes a certain step, he/she may move to
the next and so on until he/she is finally recruited or turned down.
The process starts with an initial filtering of applications and C.V.'s
to exclude people lacking the necessary qualifications (a person with
no knowledge of Indian cuisine does not qualify as a chef in an
Indian restaurant, for example). Interviews are a useful tool to get a
better idea about the applicant's personality and general demeanor.
Finally, there will be various kinds of theoretical and practical tests
depending on the nature of the job (an applicant for a secretarial job
should be able to type a letter using a computer; an applicant for a
Entrepreneurship
]172[
programming job should be able to develop solutions using a certain
computer language, and so on).
Hiring begins with a decision to hire selected applicants, who are offered a
temporary contract (for a month/ 3 months/ 6 months) for training,
observation and evaluation. During this time, they get to know the team
members and show their talents. At the end of the given period, a report
(oral or written) evaluates their performance in the trial period, and they are
either permanently hired or released. Initial testing and training coincide
with the early phase of business preparation to identify how cooperative,
reliable and responsible the candidates are.
4.
Providing fixed assets and operation requirements:
The nature of the enterprise determines the kind of fixed assets necessary to
produce a certain product or service, as well as the necessary requirements
(oils, lubricants, power, etc.). Industrial enterprises require machinery and
various kinds of equipment to meet the planned production capacity (size of
expected input in a given period, for example, 100 suits a month). A
medical clinic requires medical equipment to serve a certain population, for
example 20 patients a day, in addition to furniture and interior design
elements. The latter is the only requirement in the case of a firm law which
processes an average of 5 cases a day. In addition to fixed assets, direct
production inputs, like raw materials, are necessary. The amount of inputs
changes according to production volume. Inputs are regularly needed as a
basic requirement in the enterprise's production process. Therefore, it is
necessary to choose carefully your suppliers in terms of quality, price,
quantity, timing, reputation and commitment. By doing so, you guarantee
the right quality of the product which satisfies the expectations and financial
abilities of your customers.
5.
Going online:
This is necessary to get information about different kinds of suppliers and
choose the right ones. You can reach your suppliers online or via other
traditional means to negotiate a deal. It is important to be able to negotiate
the terms of payment, supply, and after-sale services, such as shipping,
transportation, installation, preparation, testing, providing training, offering
warranty, maintenance, providing spare parts, replacement and renewal. Not
all fixed assets have to be purchased. You can make use of the financial
]173[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
leasing system,1 which is offered to small businesses by some aid
organizations as a viable alternative to the heavy cost of fixed assets in the
early phase of the enterprise.
Third: Decisions about preparing for launch
This set of decisions covers two important functions: preparing the
venue in terms of interior design, installation and testing, and promoting and
organizing a launch event.
1. Preparing the venue: after moving to your premises and providing
the fixed assets necessary for operation, you will have to get the
premises ready for operation. Preparations for an industrial activity
differ relatively from those of a commercial or a service activity.
However, all kinds of enterprise need the following:
a. Interior Design and decoration of the premises
b. Installation and pre-launch testing
The interior design of the premises of the enterprise (which may be a
factory, a shop, a gallery, a restaurant, a clinic, an online marketing or web
developing office, etc.) involves the arrangement of the designated sites for
production facilities within the available space, which is usually limited, to
allow a smooth workflow and limit obstacles to circulation and handing,
and avoid obstruction of production. In certain cases, this is easier if you
buy an already existing business venue and carry out a few modifications,
unlike a completely new venue which needs to be built from the ground
1 Financial Regulatory Authority
http://www.fra.gov.eg/content/efsa_en/lease_pages_en/main_lease_page_en.htm
Financial Leasing:
= In 2018, the Authority launched a draft law that combines financial leasing and
factoring activities into one law. Both the parliament and the Cabinet of Ministers
approved the draft law. The new Law will enhance financial inclusion and ensure access
to non-banking financing tools to segments of society that currently do not benefit from
a number of financial services.
The said Law allows companies, associations and NGOs licensed to practice
microfinance activities - in accordance with the provisions of Law 141 of 2014 - to
provide financial leasing services in light of the controls determined by FRA’s
BOD. The Law aims at supporting and developing entities engaged in microfinance. In
addition to expanding the range of non-banking financial services which are provided
using the available database at these entities to reach larger number of those who deal in
small craft industries, which is an additional incentive for small complementary
industries and opens up wider horizons to create new job opportunities.
Entrepreneurship
]174[
up.
In the case of franchise rights businesses, preparations are clearer and
much smoother because they literally follow the instructions of the
franchiser who provides supervision, and different materials for the event
(colors, props, etc.).
Generally, you will need to seek the
assistance of specialists in various fields,
depending on the nature of the enterprise's
activities, such as energy, industrial safety,
flooring, walls, carpentry, metals, refrigeration,
heating, electricity, Internet, water plumbing,
sanitation, gas, etc.
The following pictures show how interior design preparations may differ
from one activity to another. A poultry battery is different from a calfbreeding farm, and a library is very much unlike a factory. This means that
the technicians and specialists needed to get each place ready will be widely
different as well.
Again, it should be noted that the permission of the owner of a rented
place must be secured before introducing any modifications. Basically, the
proposed modifications must be technically safe and viable, and not against
any rules related to safety, security, environmental protection or building
styles. The more specialized the enterprise, the more it will need specialists
in its own field who are versatile with issues of security, safety and the
environment. But in more basic or domestic settings, the enterprise owner
and his private circle may rely on their own resources and knowledge to
carry out these tasks in order to cut the costs.
]175[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
Decisions about interior design are difficult to change or amend in the
short run without high incurring costs and production delays. Change in this
case does not simply mean moving equipment, but involves changing the
positioning of fixtures with all related power outlets, exhaust piping,
product residue and many other things. It also involves relocating service
and administrative departments, such as warehouses. In view of this
difficulty, change should be thought of and pre-tested carefully, since the
effects of bad organization may appear only after the
actual use. To help avoid this eventuality, interior
design computer models can be used to feed the
specifications of the venue and the needs of the
enterprise. The model should output a simulated
solution that gives a clear picture of the situation and
allows for further modifications without the negative
consequences of bad design on the ground.
There are various kinds of interior design for
production facilities in relation to the production
system in use. Of these, there are three main types
that are suitable for small businesses:
I. Designs based on production lines, which means
that production processes are organized sequentially,
and depend on handling tools to ensure a smooth
linear flow of operations.
II. Designs based on functions, which means
that facilities are grouped into similar
configurations, each of which being responsible for
a specific process/set of processes. These are then
grouped into sections (such as pattern section,
cutting section, etc., in a clothes workshop). The
positions of the sections are determined by their
interdependent relations; sections which are closely
related in terms of function are physically
positioned closer to one another.
III. Designs based on fixed production sites
where a location is designated for large-scale
production processes (such as car painting, shipbuilding or construction sites), with related facilities
Entrepreneurship
]176[
arranged around this sixed site.
2. Testing: finally, every item (of machinery, equipment, airconditioning systems, etc.) must be pre-tested. This may seem
simple enough but must not be postponed till after the launch. This is
important to avoid any problems or negative mental images that may
lead to client loss at the early life of the business.
Fourth: Promotion and organizing a launch event
Now that the business is about to be ready to work, it is time for the
tremendous efforts done to be showcased to the public. A few promotional
aesthetic touches can make the launch event spectacular and a resounding
announcement of the activity, which should attract potential customers. The
following are some aspects that can show the creativity and prolificacy of
the entrepreneur:
1. Design packaging/wrapping material and notepads, etc., with the
name and logo of the enterprise and its contact info as promotional
material that at the same time give a positive image of the enterprise.
2. Design of the promotion campaign: a good promotion campaign,
launched early enough before the inauguration of the enterprise, can
attract the attention of customers early and encourage them to
engage with the enterprise in such a way as to helps in accelerating
the generation of income. This idea is sometimes ignored by
businesses to the extent that we tend to wonder when this or that
enterprise just came to life. A promotion campaign based on a
strategy of infiltrating targeted markets has
four main components:
a)
Products: refer to samples of the
products of the enterprise as identified in its
business plan. The term includes product
names, trademarks, variety (number of
production lines), variants (within each line),
packaging, coding, labeling, guarantee, postsale services (if any) and other decisions
related to this mixture.
b) Pricing: Pricing refers to the levels of product prices, methods of
payment, discounts appropriate to customer segments in the targeted
markets and specific competition conditions.
c) Promotion refers to a mixture of advertisement, personal sales, product
]177[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
activation and publication, which will be used
to promote the product physically or online
based on the enterprise's business plan.
d) Distribution involves preparing the
chosen channels. Direct distribution requires a
shop, a shop window, or participation in
physical or online expositions. Indirect
distribution means contracting brokers (e.g.
wholesalers or retailers) who can implement
the enterprise's distribution policy, fully or
partially.
Together, these four elements make up a "promotional mix" which is
incorporated in the promotional material used in the campaign.
3. Planning a launch event: the promotion campaign involves
planning a launch night (an event, a talk, or a reception with a key
figure invited to cut the tape). The event may take place in the
business premises, or in a public place (e.g. a hotel, a society). It
may be limited to a small circle of relatives and the business team
gathering for a small tea party.
Alternatively, the event may be planned for the benefit of a wider
interested customers, and aid organizations to enterprise an image of
seriousness and reliability. Invites may be sent online; key figures should be
invited by phone. Traditional advertising channels (publications, leaflets and
invites) may be used to engage the locals. Billboards at the enterprise site
may be shown carrying slogans like "Wait for Us!" or "Coming Soon!"
Online advertising includes social media sites like Facebook, and the
enterprise's own website, which opens officially on the inauguration day
following a trial period.
Entrepreneurship
]178[
Questions and Exercises
Search…Discuss…Immitate…Innovate
Exercise 1: Search for the following:
 The documents necessary to establish a healthy food restaurant.
 The documents necessary to establish a small pharmaceuticals
factory.
 Procedures to get a loan from an aid organization in your vicinity.
 Procedures to export potatoes.
 Procedures to import a product your want to deal in.
 Procedures to join a business incubator appropriate to the nature of
the enterprise you are contemplating.
 Procedures to get a franchise from an Egyptian franchiser in the field
of fast food, or some other field you would like to be involved in.
Exercise 2: Do it Yourself
 What are the procedures necessary to establish a business idea you
have developed, and for which you have made a business plan?
Design the appropriate promotional plan to launch the business.
 As an entrepreneur, which site would you choose for your next
enterprise:
a. A children's fun park
b. A shoe mending workshop
c. A car spare parts factory
d. Draw an appropriate interior design for your proposed enterprise.
Question 1: Which of the following is true (A) or false (B)? Fill the
correct circle in your answer sheet:
1. Production is defined as every manufactured product, whether local or
imported.
2. Decisions related to preparation for launch include three main types: 1)
preparing the venue in terms of interior design and installations; 2)
testing, and 3) promotion and the launch event.
3. A commission is a set amount of money which the worker gets in return
for working for a set period of time (day/week/month).
]179[
Chapter Six: Entrepreneurial Business Establishment and Preparation
Preparation
4. Capital is a sum of money with which to establish a company
and purchase goods in the case of importation and exportation.
5. An importer is any person who regularly or casually, personally
of in affiliation with someone else, conducts a manufacturing
process.
Question 2 (MCQ):
A) Choose the correct answer and fill the right circle in your
answer sheet:
6. Which of the following documents is part of the official procedures
related to different kinds of business:
a. Getting a tax ID
b. Registration with the Chamber of Commerce
c. Professional practice license
d. All the above
7. Organization on the basis of ….. is not one of the forms of interior
design for production facilities in small businesses:
a. Production lines
b. Functional sections
c. Fixed production sites
d. Distribution sites
e. All the above
B) Fill in the spaces with the appropriate choice:
8. ….. is any person who imports taxable industrial or service products
from abroad, for trading purposes.
a. An industrial producer
b. An importer
c. A wholesaler
d. A retailer
e. None of the above
9. Elements of the ….. mix are relied on to promote the enterprise's
product, whether physically or online, according to the promotion
methods identified in the business plan.
a. Products
b. Advertising
Entrepreneurship
]180[
c. Promotional
d. Distribution
e. None of the above
10. The first step in ….. is the re-arrangement of the sites of production
facilities within the available space in such a way as to ensure a
smooth workflow and limit obstacles to circulation and handling
and avoid obstruction of production.
a. The process of interior design
b. The process of exterior design
c. The process of designing the organizational structure
d. The process of designing an enterprise
e. None of the above
Question 3: Practical situations and exercises
11. Hossam is the owner of a business who purchases large amounts of
cosmetics to resell to beauty shops. He is a ….
a. Broker
b. Wholesaler
c. Retailed
d. Producer
e. All the above.
Appendices
Entrepreneurship
]216[
]217[
Appendices
A Success Story
Nestlé
Nestlé: The Beginning and Establishment
Nestlé is regarded as the pioneer in the field of producing food for
children and toddlers in the world. The main headquarters is in Switzerland.
How did Nestlé start and how was the company established?
Briefly, the story of the beginning of Nestlé can be summed up in
accomplishing the impossible in order to make the life of human beings
easier. It was “need” that led to the establishment of Nestlé.
What is the story of the Nestlé Company?
Nestlé was established by the pharmacist Henri Nestlé (1814-1890)
in 1867 when it became vital to find a solution for the problem of babies
who do not take their mother’s milk. Every effort had to be made in order to
end this problem because these babies died, and their parents were helpless.
Henri Nestlé worked on finding a solution by resorting to drying cow milk
and mixing this with wheat and a substitute for the mother’s milk. This
signalled the launch of the Nestlé Company.
Henri Nestlé was aware that his invention was momentous, and this
is why after it became famous in Switzerland and Europe, he continued to
develop this product until 1875. During this year he decided to sell his
company because he was growing old. This company continued as the
number one Swiss company in the market and the fierce competitor of other
companies. Later the largest merge was announced between two competing
companies, namely Anglo-Swiss owned by Charles Page, the American
Counsellor in Switzerland. It continued having the name Nestlé in
appreciation of the efforts of Henri Nestlé.
The name Nestlé became quite famous all over the world, and the
Entrepreneurship
]218[
dairy products and food for children in European, Asian and Australian
markets. After World War I, the products of the Nestlé Company saturated
the American market. Although the company was about to declare
bankruptcy because of the war, it succeeded and managed.
Nestlé was keen on being creative and expanding its line of
production, which enabled it to continue securing its position. During World
War II, for example, and especially in the American market which was not
deeply affected by the war, Nestlé relied on marketing a new product,
namely Nescafe, especially that it was quite popular in the American army
because it can easily be prepared and has a sweet taste. This helped the
Nestlé Company to rise again and make a profit.
This is the full story of the establishment and launch of the Nestlé
Company from the beginning. It shows how it worked on developing its
products and managed to cope with the context of that stage, until it has now
become one of the largest international companies that owns hundreds of
factories and thousands of products that are available in the market.
]219[
Appendices
Appendix I
Sponsors of Entrepreneurial Enterprises in Egypt )*(
Introduction
When an entrepreneur has a pioneering enterprise that can lead to the
establishment of a small business, we expect him/her to succeed. What if
this enterprise receives different kinds of support? Surely, the possibility of
succeeding increases for him/her and others who do not have resources.
Helping and supporting this group of youth will lead to an increase of such
groups and their accomplishments. This will increase their contribution to
the national income. What if there is an entrepreneur who has a creative idea
and he/she received financial support and other kinds of support, this of
course will help him in achieving his purpose. Some may not have all the
characteristics of an entrepreneur which they can develop if they have the
appropriate training on the managerial and technical levels. They can also
search for those who can help them in preparing a feasibility study or action
plan. Because this support important and can have a vital role in the
development of the enterprise, it is important to make graduates aware it.
Opening the door for graduates to find the appropriate channels is the focus
of this unit.
Classifying the Different Types of Support
The different kinds of support for small enterprise that can be given by
establishments are numerous and difficult to enumerate because they are
varied and changeable and supporters can be creative and innovative in
providing this help. It is also possible to make use of the experience of
countries that succeeded in this respect.
Generally, the different types of support can be classified into two
main kinds:
1. Financial Support: this takes different forms:
a. Loans
b. Money not refundable
c. Compensation in case of bankruptcy
)*(
Appendix is by Professor Hala Mohamd Labib Enaba, Professor of Business
Administration, Faculty of Commerce, Cairo University.
Entrepreneurship
]220[
d.
e.
2.
a.
b.
c.
d.
e.
f.
Financial support to buy tools, equipment and other needs
Financing the enterprise
Support (not financial)
Facilitation of the process of starting the enterprise
Providing technical, electronic and managerial training
Marketing services and organizing electronic and actual exhibitions
Managing incubators for these enterprises
Preparing feasibility studies plans or helping in producing them
Giving every kind of consultation: technical, financial, marketing,
managerial, developmental, etc.
g. Protecting the copyright of young entrepreneurs
It is possible to classify the agents that are concerned with supporting
small enterprise in Egypt according to their nature1:
Those who support small enterprise in Egypt contribute in creating the
appropriate environment for:
 Establishing new enterprises
 Developing the available enterprises
It is important that these agents cooperate with those who give different
kinds of support to create the right kind of environment to establish small
enterprise. Government agencies should not be the only ones responsible for
providing help, since support can be provided by various agents as follows:
First: Governmental Agents
The government provides support for small enterprise through its
representatives who provide services to enterprises of different sizes. In a
previous study, the author observed that most youth are unaware of the
services that these representatives provide. This implies that these agents
have to develop their marketing efforts to make their activities known to
youth. Therefore, it is necessary to identify these agents by giving a few
points about them with the purpose of marketing their services to their real
customers, namely young graduates:
1. Development Agency for Medium and Small Enterprises: The Social
Development Fund was established in 1991 with the Presidential
Decree number 40 in order to solve the problem of unemployment
1 It is important to point out that the entrepreneur ought to conduct a search on the internet
to find out about the most recent means of support that are available in the vicinity of
the enterprise and with respect to the nature of the enterprise.
]221[
2.
3.
4.
5.
6.
Appendices
by providing job opportunities. It has now changed its name to
become the Development Agency for Medium and Small Enterprises
in order to be responsible for supporting the establishment of small
and medium enterprises or the expansion and development of the
that have already been established. This Agency provides financial
and non-financial services that will be classified and dealt with, each
in its own field.
The Ministry of Local Development: 1 Under its auspices is the
Local Development Fund. The Ministry has a national enterprise to
make jobs available for youth and to give loans for very small from
this Fund. It is also in charge of the national enterprise for human
and social development (Your Enterprise) which started on 23rd
March 2015 and is funded by five government banks.
Special Units for Small enterprise in Egyptian Banks such as the
Industrial Development Bank, Nasser Social Bank, and others. Most
of them take part in the national enterprise known as Your
Enterprise.
Ministry of Social Security2: this is responsible for supporting and
developing Egyptian families, especially the poor, through
enterprises like the Productive Family enterprise which included
university graduates.
The Credit Guarantee3 Company against Risks: this was established
in collaboration with of banks in order to have a security system
against the risks of receiving credit by developing and enhancing
small, very small and medium local and regional enterprises.
Custodians of Government Operations: previously, we became
familiar with the definition and different kinds of custodians of
operations. Some of these are
Technology Innovation and Entrepreneurial Center (TIEC) is
1 For more information on how to make use the national enterprise and the Local
Development Fund, visit this site: http://mld.gov.eg/ar/enterprises
2 For more information about the procedures to to get a service and the model that should
be presented and the regulations to apply. Go to the following site:
http://www.alexandria.gov.eg/Government/moderyat/socials/DispInformation.aspx?ID=5
3 For more information, visit the following site or the Facebook page of the company:
http://www.cgcegypt.com
https://www.facebook.com/pg/CGCEgypt/about/?ref=page_internal
Entrepreneurship
]222[
affiliated with the Ministry of Communication and Information
Technology has a unit that provides all kinds of financial support
and training, together with a temporary place for start ups in the field
of
communication
and
information
technology.
http://www.tiec.gov.eg/ arabic/Pages/default.aspx
Second: Non-Governmental Organizations Concerned with Small
Interprieses and Entrepreneurship
These organizations/associations are numerous and can be reached
through an electronic search. A few will be mentioned here, but students
ought to search for others.
A. Businessmen and Investor Association1 which offers loans.
B. Non-Profit Custodians of Operations which provides entrepreneurs
with their needs: financial support, training and a work place when
there is a good idea and work plan. One of these is GESR Program2
that is affiliated with Misr El-Kheir Foundation, which gives
comprehensive incubation services to entrepreneurs who have
creative solutions that address the needs of society for sustainable
development. Other associations are the Renaissance of AlMahrousa, Alshanek Ya Balady NGO for Sustainable Development3,
Injaz Egypt, and others.
The agencies that support small enterprise in Egypt can be classified
according to the services offered. After referring to the most important
custodians of small enterprise in Egypt, here are some of the important
means of support that they provide to university graduates, classified
according to the kind of support given n different areas.
First: Support in the field of Marketing:
 General Organization for Export and Import Control (GOEIC) 4
provides training workshops in various fields concerned with import
and export. Among these are
a. Training with respect to Exports.
1 Businessmen and Investor Association
http://www.alexcham.org/c677
http://www.140online.com/Class/91/
2 https://gesr.net
3 http://www.ayb-sd.org
4 For more information, visit: http://www.goeic.gov.eg
]223[
Appendices
b. Training in foreign languages.
 The Industrial Development Bank has been successfully taking part
in having a booth in local and international exhibitions and
conferences to display samples of the products of small factories and
businesses. This allows for the marketing of these products locally
and on an international level.
 The Social Fund for Development takes part in temporary and
permanent exhibitions that are both local and international in order
to market the products of those who have received loans. It also
contributes in serving any beneficiary of excellence, those who are
in the Franchise business or those who are interested in such
enterprises. The Social Fund for Development helps in facilitating
the procedures for new exporters, introduces them to the fixed rules
and regulations and trains them to exhibit their products in the best
way possible, sell, export and market them.
 The Credit Guarantee Company against Risks deals with economic
challenges and provides some free services for small and medium
size enterprises, one of which is to give entrepreneurs the chance to
export their products to foreign countries.
Second: Support for Personnel
The Social Development Fund has different professional
development training programs to equip owners of small enterprise,
entrepreneurs and personnel with the skills they need. It also helps them in
having social security in enterprises of different scopes and sizes in all
Egyptian governorates. It also provides them with different safety measures.
Third: Support in the Field of Production
 The General Organization for Export and Import Control organizes
training sessions in the field of industrial labs, food and public health
laboratories, commercial registration, and quality control.
 The Credit Guarantee Company against Risks provides technical
help in different areas like the transfer of technology and quality
assurance and control. It also guides those in charge of different
enterprises to international institutions that volunteer in giving
technical services for small enterprise in all the economic fields. The
appropriate training is also given to the owners of enterprises and the
areas and chances for investment are identified. Accredited experts
are consulted to prepare feasibility studies for the owners of
Entrepreneurship
]224[
enterprises for a nominal fee.
 The Social Fund for Development gives technical support and
specialized training workshops for enterprises that are ongoing at all
the stages of the enterprise, be it at the initial stage of studying the
chances of investment and working on the feasibility study or at the
stage of improving the production and the quality of the products,
and that of the service in technological support.
Fourth: Support in Management
1. The General Organization for Export and Import Control training
workshops the businessmen in the field of management and
information technology.
2. The Enterprise Development Organization (previously the Social
Development Fund) takes part in training and providing
consultations to enhance the planning skills of the owners of small
enterprise, and to develop their organizational abilities. The
Custodians of Government Operations help in technology incubators
or any other. In the case of any beneficiary of excellence, services to
bring in a Franchise are also available.
3. Consultation services are also provided by means of office
representatives that can answer questions or organize a seminar or
checking documents, in addition to addressing complaints and
explanations concerning the feasibility study.
4. The Industrial Development Bank encourages university graduates
to own and manage enterprises and help craftsmen and those who
own small workshops to develop their activities.
Fifth: Support in Finance
 The Development Agency for Medium, Small and Very Small
Enterprises give loans and provides a guarantee of 10% of the loan.
It is also interested in Franchise businesses because these have key
factors that lead to success and continuity. This is because they rely
on brand names and product that are well known in the market.
 The Egyptian Cooperative Society for Insurance facilitates the
procedure to get loans from The Enterprise Development
Organization for small enterprise to help cases that do not have the
guarantees that banks require. They also help with other means of
coverage and security. This Society also provides insurance services
]225[
Appendices
on a cooperative basis in order to have joint responsibility with the
owner of the small enterprise. The Society issues a loan guarantee
document that pledges to secure about 50-70 % of the loan,
depending on the loan amount, in return for an insurance premium to
guarantee that the loan will be paid.
 The Credit Risk Guarantee Company provides a warrant that
amounts to 50% of the bank credit that has been provided for the
small and medium size enterprises in the case of all economic
activities.
 The Industrial Development Bank attempts to achieve the following
goals:
1. Developing industrial activities and activities related to the finances
needed to establish a new enterprise or develop and improve all the
ongoing enterprise in the industrial field, especially those belonging
to the private sector in areas of craftsmanship and cooperative
business.
2. Developing and enhancing small industries and workshops by
providing them with the equipment and tools they need on favorable
terms.
3. Organizing seminars and conferences that help with finding
solutions for the problems of financing small enterprise and having a
plan to spread geographically. This can happen if new branches are
built in different parts of the country, like in South Valley and other
places.
 Some local, Arab and foreign institutions give loans to small
enterprise, like the World Bank, the International Development
Association and others. These loans are given by means of
specialized agents mentioned earlier.
 Some banks, like Bank Misr or the National Bank of Egypt, and
other specialized banks, like the Faisal Islamic Bank of Egypt, give
loans or financial support for small enterprise.
Basic Skills Needed to Persuade Sponsors
An Entrepreneur must be able to convince the stakeholders that the
idea of the enterprise is valid and can attract sponsors in order to get
support. S/he can succeed in doing this if s/he has two basic skills, namely
1. To be able to have an attractive work plan that is based on an
Entrepreneurship
]226[
accurate feasibility study and information about a creative idea. This
was discussed in detail in chapter four.
2. To prepare a short captivating oral presentation to introduce the
enterprise to representatives of sponsors (1:3 minutes), known as
Elevator Pitch. This is the simulation of a scene in which one meet a
prominent person in front of the elevator and markets an idea or a
product or presents a specific focus during the small span of time the
elevator reaches the second floor. What do you do to attract attention
in a short time and interact effectively in a few seconds? This is the
idea behind the presentation. These institutions organize many
competitions in order to receive proposals concerning enterprises
that need sponsors and to adopt the ideas of entrepreneurs. Those
who manage to fulfil the requirements of the presentation in
marketing the ideas of their enterprises well in front of those in
charge of the competition will win1.
1 To train yourself to give presentations, you can watch videos on YouTube.
]227[
Appendices
Appendix II
Electronic Sites of Agents Supporting Small enterprise
Institutions
Sites
http://www.sfdegypt.org/web/sfd/regional-offices
http://mld.gov.eg/ar/enterprises
http://www.alexandria.gov.eg/Government/moderyat/so
cials/DispInformation.aspx?ID=5
http://www.moss.gov.eg/ar-eg/Pages/default.aspx
http://www.cgcegypt.com/Board.htm
http://www.tiec.gov.eg/arabic/Pages/default.aspx
http://www.alexcham.org/c677-‫األعمال‬-‫رجال‬-‫جمعيات‬/
‫والمستثمرين‬
http://www.140online.com/Class/91/
‫اعمال‬20%‫رجال‬20%‫جمعيات‬
https://gesr.net
http://www.nahdetelmahrousa.org
http://www.ayb-sd.org
http://www.injaz-egypt.org/?lang=ar
http://www.mcsbe.net
http://www.goeic.gov.eg
http://www.idbe-egypt.com
-‫للتأمين‬-‫المصرية‬-‫الجمعية‬/https://www.facebook.com
/195227537165837-‫التعاوني‬
http://kenanaonline.com/aboutus
ayadina.kenanaonline.com
‫جهاز تنمية المشروعات المتوسطة‬
‫والصغيرة ومتناهية الصغر‬
‫و ازرة التنمية المحلية‬
‫وحدات متخصصة للمشروعات‬
:‫الصغيرة في البنوك المصرية‬
‫و ازرة التضامن االجتماعي‬
‫شركة ضمان مخاطر االئتمان‬
‫مركز اإلبداع التكنولوجي وريادة‬
TIEC ‫األعمال‬
‫جمعيات رجال األعمال والمستثمرين‬
GESR ‫جسر‬
"‫جمعية "نهضة المحروسة‬
‫جمعية "علشانك يابلدي" للتنمية‬
‫المستَدامة‬
ُ
"‫مؤسسة "إنجاز مصر‬
‫المجلس الشرق أوسطي للشركات‬
MCSBE) ‫الصغيرة وريادة األعمال‬
)‫مكسبي‬
‫الهيئة العامة للرقابة على الصادرات‬
‫والواردات‬
‫بنك التنمية الصناعية‬
‫الجمعية المصرية للتأمين التعاوني‬
‫مشروع "بوابة التنمية المجتمعية‬
"‫بوابة "أيادينا‬
Entrepreneurship
]228[
Appendix III
*Relevant Terms
Term in English
Brain storming
Twitter
Business incubator
Incubator
Facebook
Creativity
Innovation
Business strategy
Six hats
Mobile business
Family Business
C2C (Consumer to Consumer)
B2B (Business to Business)
B2C (Business to Consumer)
Digital business
E-mail
Unemployment
Optional unemployment
Financial Leasing
E- commerce
Digital Marketspace
Individual marketing
Viral marketing
Physical Marketplace
Word of mouth (WOM)
Trade-Investment Promotion
Export Promotion
Small and Medium-sized Enterprises
Sub-contracting Promotion
Term in Arabic
ِ ‫"تعصيف‬
"‫الذهن‬
"‫"تويتر‬
‫"حاضنة" أعمال‬
‫"حاضنة" أعمال‬
"‫"فيسبوك‬
‫االبتكار‬
‫اإلبداع‬
‫إستراتيجية األعمال‬
"‫أسلوب "القبعات الست‬
"‫أعمال "محمولة‬
‫األعمال العائلية‬
‫بعضا‬
ً ‫أعمال بين المستهلكين بعضهم‬
‫بعضا‬
ً ‫أعمال بين منظمات األعمال بعضها‬
‫أعمال بين منظمات األعمال والمستهلكين‬
‫أعمال رقمية‬
‫البريد اإللكتروني‬
‫البطالة‬
‫البطالة االختيارية‬
‫التأجير التمويلي‬
‫تجارة إلكترونية‬
‫التسويق الرقمى‬
‫التسويق الفردى‬
‫التسويق الفيروسى‬
‫التسويق المادى‬
‫التسويق بالكلمة المنطوقة‬
‫تشجيع التجارة واالستثمار‬
‫تشجيع التصدير‬
‫تشجيع التعاقد من الباطن مع المشروعات‬
‫الصغيرة والمتوسطة‬
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
-11
-12
-13
-14
-15
-16
-17
-18
-19
-20
-21
-22
-23
-24
-25
-26
-27
-28
]229[
Appendices
Term in English
Subcontracting
Uniqueness
Start-up cost
Information and Communication
Technology (ICT)
Seed financing
Start-up financing
Bridge finance
Crowd funding
Entrepreneurial orientation (EO)
Franchisee
Technical incubator
Franchise
Mind maps
Business plan
Feasibility study/analyses
Social entrepreneur
Potential entrepreneur
Vision
Commercial entrepreneurship
Social entrepreneurship
Scale-up companies
Start-up Business
Feeding industries
Freelance
Home (home-based) business
Opportunities, knowledge, skills
Idea
Private sector
Franchisor
Proactiveness
Innovator
Term in Arabic
‫التعاقد من الباطن‬
‫التفرد والتميز‬
‫تكلفة التأسيس‬
‫تكنولوجيا المعلومات واالتصاالت‬
-29
-30
-31
-32
‫تمويل ابتدائى‬
‫تمويل الشركات الناشئة‬
‫تمويل انتقالى‬
‫تمويل جماعى‬
‫التوجه الريادى‬
‫الحاصل على االمتياز‬
‫الحاضنة التقنية‬
‫حق امتياز‬
ِ ‫خرائط‬
‫الذهن‬
‫ُخطة األعمال‬
‫تحليل الجدوى‬/‫دراسة‬
‫رائد أعمال اجتماعى‬
‫رائد األعمال المحتمل‬
‫رؤية‬
‫ريادة أعمال تجارية‬
‫ريادة األعمال االجتماعية‬
‫نمو سريع‬
ّ ‫شركات ذات‬
‫شركة ناشئة‬
-33
-34
-35
-36
-37
-38
-39
-40
-41
-42
-43
-44
-45
-46
-47
-48
-49
-50
‫الصناعات المغذية‬
)‫العمل الحر (التعاقد المستقل‬
‫العمل من المنزل‬
‫ المهارات‬،‫ معرفة‬،‫فرص‬
‫الفكرة‬
‫القطاع الخاص‬
‫مانح االمتياز‬
‫المبادأة‬
‫ُمبتَ ِكر‬
-51
-52
-53
-54
-55
-56
-57
-58
-59
Entrepreneurship
Term in English
Creative
E-store (Online Shop)
Independent contractor (IC)
Freelancing
Total Early-stage Entrepreneurial
Activity (TEA)
Risk
Co-working spaces
Venture investors
Freelancer
Share
E-small Business
Blogs
Mission
Business Model
Prototype
Smart Phones
Social media
]230[
Term in Arabic
‫ ُم ِبدع‬-60
‫ متجر إلكتروني‬-61
‫المستقل‬
ُ ‫المتعاقد‬
ُ -62
‫ مجموع النشاط الريادي في مرحلة مبكرة‬-63
‫ المخاطرة‬-64
‫المشتركة‬
ُ ‫ مساحات العمل‬-65
‫ مستثمرون مغامرون‬-66
)‫(المتعاقد المستقل‬
ٌ -67
ُ ‫المستقل‬
‫ المشاركة‬-68
‫ مشروع صغير إلكتروني‬-69
‫المنتديات‬
‫رسالة‬/‫مهمة‬
‫نموذج األعمال‬
‫نموذج أََّولي تجريبي‬
‫الهواتف الذكية‬
‫وسائل التواصل االجتماعى‬
-70
-71
-72
-73
-74
-75
If you cannot understand any of these terms and would like to know more
information, searching the internet can help. *
References
Entrepreneurship
]232[
]233[
References
References
Foreign References
Allen, K. R. (2009). Launching New Ventures, 5th Edition. MA: Houghton
Mifflin Company Boston. Retrived June 27, 2018, from:
http://www.nmsbdc.org/uploads/FileLinks/dacfef79d5d04e2aa73b3d
15c965826a/Entrepreneur_Test.pdf.
Ashoka Social Investment Accelerator. Retrieved June 21, 2018, from:
https://vc4a.com/ashoka/ashoka-social-investment-accelerator/
Boone, S. and Aplin, L. (1997). Test Your Potential As An Entrepreneur.
Retrieved June 21, 2018, from: http://www.nmsbdc.org/uploads/
FileLinks/dacfef79d5d04e2aa73b3d15c965826a/Entrepreneur_Test.
pdf
Bornstein, D. (2007). How to change the world: Social entrepreneurs and
the power of new ideas. Oxford University Press.
Bridge, S., O'Neill, K. and Martin, F. (2012). Understanding Enterprise:
entrepreneurship and small business, 4ed edition. UK: Palgrave
Macmillan.
Burns, P. (2016). Entrepreneurship and Small Business. UK: Palgrave
Macmillan.
Business Plan Outline. Retrieved June 21, 2018, from:
http://www.nmsbdc.org/uploads/FileLinks/dacfef79d5d04e2aa73b3d15c965
826a/Entrepreneur_Test.pdf
Coface Egypt Finance, Yearbook 2010/2011 (2012). Coface Egypt, Issue
14.
De Bono, E. (2017). Six thinking hats. Penguin UK.
Dees, J. G. (2017). The Meaning of Social Entrepreneurship. In Case
Studies in Social Entrepreneurship and Sustainability (pp. 34-42).
Routledge.
Enaba, H. and Hegazy, N. (2013). E-marketing in developed and developing
countries: emerging practices text book (ch3: new applications for
internet, IGI Global.
Estimating The Cost Of A Startup. Retrieved June 21, 2018, from:
http://www.nmsbdc.org/uploads/FileLinks/dacfef79d5d04e2aa73b3d15c965
826a/Entrepreneur_Test.pdf
Entrepreneurship
]234[
Fisher, G. (2018). Business plan format guide, Entrepreneur magazine,
Retrived May 27, 2018, from:
https://www.entrepreneurmag.co.za/advice/business-plans/businessplan-format/business-plan-format-guide/
Global Entrepreneurship Monitor (GEM) 2016/2017 Global Report (2017).
Retrieved June 3, 2018, from:
https://www.gemconsortium.org/report/49812
Green, Carrie (2017). She Means Business: Turn Your Ideas into Reality
and Become a Wildly Successful. UK: Hay House.
Hisrich et al. Entrepreneurship (Ny: McGraow – Hill, 2010).
Ilmudeen, A. (2012). Sustainable youth let action plans for Sri Lankn youth
unemployment issues. Retrieved May 29, 2018, from:
https://www.ir.lib.seu.ac.lk/123456789/221.
Kompass Egypt Finance, yearbook 2013-2014 (2015). Business solution –
Kompass Egypt, Issue 16.
Kuratko D.F. and Mortago R. (1987). The Entrepreneurs Guide to Venture
Formation, (Muncie, Indiana Center for Entrepreneurial Researches
and Applied Research, Ball State University.
Levinson, J. (1998). Guerrilla marketing: Secrets for making big profits
from your small business. Houghton Mifflin Harcourt.
Longnecker, J. G., Moore, C. W., Petty, J. W., Palich, L. E. (2008).
Launching and Growing Entrepreneurial Ventures. Small Business
Management. 64-65. Retrieved June 22, 2018, from:
http://www.nmsbdc.org/uploads/FileLinks/dacfef79d5d04e2aa73b3d
15c965826a/Entrepreneur_Test.pdf
Mangold, W. and Faulds, D. (2009). Social Media: the New hybrid element
of the promotion Mix. Business Horizon, 52, 357-365.
Marketing Plan Outline. Retrieved June 21, 2018, from:
http://www.nmsbdc.org/uploads/FileLinks/dacfef79d5d04e2aa73b3d15c965
826a/Entrepreneur_Test.pdf
Massachusetts Institute of Technology (MIT). Retrieved June 5, 2018, from:
http://web.mit.edu/aboutmit/
Michaelidou, N., Siamagka, N. and Christodoulides, G. (2011). Usage,
Barriers, and measurement of social media marketing: in an
]235[
References
exploratory investigation of small and Medium B2B Brands.
Industrial Marketing Management, 1155.
Middle East Council for Small Businesses and Entrepreneurship (MCSBE).
Retrieved June 22, 2018, from: http://www.mcsbe.net
Osterwalder, A., Pigneur, Y., Oliveira, M. A. Y., and Ferreira, J. J. P.
(2011). Business Model Generation: A handbook for visionaries,
game changers and challengers. African journal of business
management, 5 (7), 8918-8932.
Prown,T. et al, “ An Operationalization of Stevensons Conceptualization of
Entrepreneurship as opportunity-based, Strategic Management
Journal, 2001.
Rivera, A. (2018). The best business plan software and services for 2018,
Retrived from https://www.business.com/categories/business-plansoftware
Schindler, E. (2017). The best business plan software of 2018.
Retrived December 1, 2017 from
https://www.pcmag.com/article2/0,2817,2492624,00.asp.
Shepherd, D. and Patzelt, H. (2011). The New Field of Sustainable
Entrepreneurship: Studying Entrepreneurial Action Linking “What
Is to Be Sustained” With “What Is to Be Developed”. Retrieved May
21,
2018,
from:
http://www.effectuation.org/wpcontent/uploads/2017/06/
Shepherd_et_al-2011Entrepreneurship_Theory_and_Practice-1.pdf.
Shih, P. C., Nguyen, D. H., Hirano, S. H., Redmiles, D. F., and Hayes, G. R.
(2009, May). GroupMind: supporting idea generation through a
collaborative mind-mapping tool. In Proceedings of the ACM 2009
international conference on Supporting group work (pp. 139-148).
ACM. Retreived June 23, 2018, from: https://dl.acm.org/
citation.cfm?id=1531696
Shukla, T. (2010). Factors affecting internet marketing cambaigns with
reference to viral and permission marketing. IUP Journal of
Management Research, 9 (1), p.26.
Simpson, M. and Nick, T. (2002). The Role and Relevance of Marketing in
SMEs: Towards a New Model, Journal of Small Business and
Enterprise Development, 9(4), 370-382.
Entrepreneurship
]236[
Stanford’s Startup Garage Teaches Entrepreneurship. Retrieved April 20,
2018,
from:
https://www.gsb.stanford.edu/stanford-gsbexperience/learning/ entrepreneurship/startup-garage.
Taylor, I. (2008). Why Social Media Should Be a Key Ingredient in Your
Marketing Mix .Small Business trends. Retrieved June 18, 2018,
from:
http://smallbiztrends.com/2008/05/social-media-key-tomarketing-mix.html
The Business Plan Format. Retrived June 18, 2018 from:
https://businessfirst.com.mt/en/planning/Pages/THE-BUSINESSPLAN-FORMAT2.aspx
The Power Of Mind Mapping, Marcus Ingemann. Retreived June 23, 2018
from:
http://webapp.ln.edu.hk/ceal/elss/
sites/default/
files/online_resources/The%20Power%20of%20Mind%20Mapping.
pdf
University Courses Related to Entrepreneurship Stanford Venture Studio.
Retrieved April 20, 2018, from: https://www.gsb. stanford.edu/
stanford-gsb-experience/learning/entrepreneurship/startup-garage.
Weinberg, G. and Mares, J. (2015, October 6). Traction: how any startup
can achieve explosive customer growth, Kindle Edition. Retrieved
May 20, 2018, from: https://www.amazon.com/Traction-StartupAchieve-Explosive-Customer-ebook/dp/B00TY3ZOMS.
Write your business plan, Retrived June 29, 2018 from:
https://www.sba.gov/business-guide/plan-your-business/write-yourbusiness-plan
Yang, D.T., Zhang, J. and Zhou, S. (2012), “Why are saving rates so high in
China?Capitalizing China.” USA: University of Chicago.
Zhao, H. Seibert, S. E. and Lumpkin G. T. (2010). The Relationship of
Personality to Entrepreneurial Intentions and Performance: A MetaAnalytic Review. Journal of Management, 36(2), 381-404.
‫[‪]237‬‬
‫‪References‬‬
‫‪Arabic References‬‬
‫أحمد أبو حديد‪ ،‬أميرة معوض‪ ،‬أميرة رمضان (‪ .)2018‬ريادة األعمال‪ .‬مسابقة جامعة القاهرة لريادة‬
‫األعمال‪ .‬القاهرة‪ :‬جامعة القاهرة‪.‬‬
‫أحمد عبد الرحمن الشميميرى‪ ،‬وفاء ناصر المبيريك (‪ )2016‬ريادة األعمال‪ .‬الرياض‪ :‬مكتبة‬
‫العبيكان‪.‬‬
‫أحمد عبد الوهاب (‪" .)2016‬تعريف حاضنات رواد األعمال ودراسة مقارنه بين مصر والتجارب‬
‫الدولية مع توضيح وشرح لدور الحاضنه‪ ".‬المركز المصرى لدراسات السياسات العامة‪،‬‬
‫القاهره‪.‬‬
‫أحمد فهمى جالل وآخرون (‪ .)2018‬ريادة األعمال لطالب جامعة القاهرة‪ .‬مسابقة جامعة القاهرة‬
‫لريادة األعمال‪ .‬القاهرة‪ :‬جامعة القاهرة‪.‬‬
‫أميرة أحمد جمال الدين (‪" .)2106‬واقع المشروعات الصغيرة في مصر خالل الفترة ‪-2009‬‬
‫‪ ."2015‬القاهرة‪ :‬الجهاز المركزي للتعبئة واالحصاء‪.‬‬
‫ومستهدفاتها في ُخطة العام األول ‪ 2019/18‬للمشروعات الصغيرة‬
‫إنفوجراف البرامج القطاعية ُ‬
‫والمتوسطة ومتناهية الصغر (‪ .)2018‬متاح على موقع وزارة التخطيط والمتابعة‬
‫واإلصالح اإلداري‪https://www.facebook.com/mpmaregyp :‬‬
‫أيمن عامر (‪ .)2003‬الحل اإلبداعى للمشكالت بين الوعى واألسلوب‪ .‬القاهرة‪ :‬مكتبة الدار العربية‬
‫للكتاب‪.‬‬
‫تقرير متابعة األداء االقتصادي واالجتماعي خالل الربع األخير من العام المالى ‪2016/17‬‬
‫(‪ .)2017‬متاح على موقع وزارة التخطيط والمتابعة واإلصالح اإلدارى‬
‫‪http://files.mpmar.gov.eg//Dynamic_Page/636516974340753139.pdf‬‬
‫تقرير موجز عن مؤشرات االتصاالت وتكنولوچيا المعلومات (‪ .)2018‬متاح على موقع وزارة‬
‫االتصاالت وتكنولوجيا المعلومات‪:‬‬
‫‪http://www.mcit.gov.eg/Upcont/Documents/Publications_362018000_ar_IC‬‬
‫‪T%20Indicators_inbrief_%20April_2018%20AR.pdf‬‬
‫الجهاز المركزي للتعبئة العامة واإلحصاء(‪ .)2017‬تعداد مصر ‪ ...2017‬أول تعداد إلكتروني في‬
‫تاريخ مصر‪ ،‬متاح على موقع الجهاز‪:‬‬
‫‪http://www.capmas.gov.eg/Pages/ShowPDF.aspx?page_id=%20/‬‬
‫‪-‬‬
‫‪Entrepreneurship‬‬
‫[‪]238‬‬
‫(تم الدخول عليه ‪ 22‬مايو ‪Admin/ Pages%20Files/2017109143840cns.pdf‬‬
‫‪)2018‬‬
‫حنان سليمان (‪ .)2016‬تقرير دولي يرصد واقع ريادة األعمال في مصر‪ .‬متاح على موقع‪:‬‬
‫‪ Entrepreneur‬العربية‪،‬‬
‫‪/‬تقرير‪-‬دولي‪-‬يرصد‪-‬واقع‪-‬ريادة‪https://entrepreneuralarabiya.com/2016/11/28-‬‬
‫‪WwmDW1aFT58.‬األعمال‪-‬مصر‪.#/‬‬
‫خالد عبد الوهاب الباجورى‪" .‬ريادة األعمال مفتاح التنمية اإلقتصادية فى العالم العربى"‪ ،‬اتحاد‬
‫الغرف العربية‪.2017 ،‬‬
‫ريادة األعمال في مواجهة البطالة (‪ .)2011‬االقتصادية السعودية‪ .‬متاح على موقع‪:‬‬
‫‪http://www.medadcenter.com/articles/2346, 20‬‬
‫أبريل ‪ 16 - 2011‬جمادى األول ‪ 1432‬هـ‪.‬‬
‫زين العابدين درويش (‪ .)1983‬تنمية اإلبداع‪ :‬منهجه وتطبيقه‪ .‬القاهرة‪ .‬دار المعارف بمصر‪.‬‬
‫سمير عالم (‪ .)1993‬إدارة المشروعات الصناعية الصغيرة‪ ،‬القاهرة ‪ :‬جامعة القاهرة‪ ،‬التعليم‬
‫المفتوح‪.‬‬
‫الجيد‪ ،‬سحر بربري‪ ،‬زكي‪ ،‬وليد رشاد‪ ،‬فاطمة الزهراء‪ ،‬سحر عبد الغني (‪ .)2017‬نحو‬
‫سهير عبد َ‬
‫صياغة ُخطة شاملة لتنمية الشباب‪ .‬القاهرة‪ :‬المنظمة العربية للعلوم اإلدارية‪.‬‬
‫عايدة رزق هللا (‪" .)1997‬دراسة استطالعية لمفاهيم الشباب الخاطئة عن المشروعات الصغيرة‬
‫ودور الجامعة في تصحيحها"‪ ,‬ندوة تنمية المشروعات الصغيرة وتوسيع قاعدة رجال‬
‫األعمال في مصر‪ .‬القاهرة ‪ :‬جامعة عين شمس‪.‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪" .)1997‬دور المشروعات الصغيرة في مواجهة تحديات القرن الواحد والعشرين‪".‬‬
‫ندوة تنمية المشروعات الصغيرة وتوسيع قاعدة رجال األعمال في مصر‪( ،‬القاهرة ‪:‬‬
‫جامعة عين شمس ‪ ,‬سبتمبر)‪.‬‬
‫عبد الحميد مصطفى أبو ناعم (‪ .)2018‬ريادة األعمال‪ .‬مسابقة جامعة القاهرة لريادة األعمال‪.‬‬
‫القاهرة‪ :‬جامعة القاهرة‪.‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ .)2000‬إدارة المشروعات الصغيرة‪ ،‬القاهرة‪ :‬دار المريخ‪.‬‬
‫‪References‬‬
‫[‪]239‬‬
‫فريد راغب النجار(‪" .)1998‬السياسات النقدية ودورها في تنمية الصناعات الصغيرة في مصر‪".‬‬
‫ندوة دور الصناعت الصغيرة في التنمية‪ ( ،‬معهد التخطيط)‪.‬‬
‫فوزى عبد الرزاق (‪" .)2014‬إشكالية حاضنات األعمال بين التطوير والتفعيل‪ :‬رؤية مستقبلية‪ .‬حالة‬
‫حاضنات االعمال في االقتصاد الجزائري‪ ".‬المؤتمر السعودي الدولي لجمعيات ومراكز‬
‫ريادة األعمال‪.‬‬
‫مركز اإلبداع التكنولوجي وريادة األعمال ‪ TIEC .)2018( TIEC‬باألرقام‪ .‬متاح على موقع مركز‬
‫االبداع‪:‬‬
‫‪http://tiec.gov.eg/arabic/about/Pages/TIECinnumbers.aspx‬‬
‫معتز عبد هللا (‪ .)2005‬التفكير اإلبداعى‪ .‬القاهرة‪ .‬منشورات مركز التعليم المفتوح بجامعة القاهرة‬
‫عبدالمقصود المالح (‪ .)2016‬قائمة "حاضنات" األعمال في مصر لتبدأ مشروعك الناشيء‪ .‬متاح‬
‫على موقع‪:‬‬
‫‪https://yallafeed.com/qaemh-hadhnat-alaamal-fy-msr-ltbda‬‬‫‪mshrwak-alnashe-1042.‬‬
‫‪-‬‬
‫موقع وزارة التجارة والصناعة‪:‬‬
‫‬‫‪http://www.mti.gov.eg/Arabic/aboutus/Sectors/Trade/Entities/SMEE‬‬
‫‪xportDevelopmentPoliciesSector/Pages/default.aspx‬‬
‫هالة عنبه (‪ .)2017‬المشروعات الصغيرة للشباب‪ :‬ما بعد عصر ريادة األعمال‪ -‬الحائز على‬
‫جائزة المسابقة العالمية لمؤسسة األمير محمد بن فهد ألفضل كتاب للشباب‪ .‬القاهرة‪:‬‬
‫المنظمة العربية للعلوم اإلدارية‪.‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ .)2018‬ريادة األعمال‪ .‬مسابقة جامعة القاهرة لريادة األعمال‪ .‬القاهرة‪ :‬جامعة‬
‫القاهرة‪.‬‬
‫هالة عنبه‪ ،‬وأخرون (‪ .)1995‬نموذج لقياس نجاح المشروعات الصغيرة في جمهورية مصر‬
‫العربية‪ .‬دراسة مقارنة‪ .‬رسالة دكتوراة‪ ،‬كلية التجارة جامعة القاهرة‪.‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ )2009‬المشروعات الصغيرة اإللكترونية كوسيلة لخلق فرص عمل اقتصادية‬
‫لمواجهة مشكلة البطالة‪ .‬ورشة عمل تنمية روح المبادرة ودعم المشروعات الصغيرة‬
‫القاهرة‪ :‬قاعة المؤتمرات – جامعة القاهرة ‪ 20‬مايو ‪.2009‬‬
‫‪Entrepreneurship‬‬
‫[‪]240‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ )2009‬تطبيقات الحاسوب واإلنترنت والهاتف الجوال في اإلدارة والتسويق‪.‬‬
‫القاهرة‪ :‬المنظمة العربية للعلوم اإلدارية‪.‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ .) 2014‬تصميم وعاء للفكر يطبق مفهوم اإلبداع المفتوح لتوليد وتسويق أفكار‬
‫ريادية ُمستَدامة لالستثمار والعمل‪ .‬مجلة إدارة األعمال المصرية‪ ،)4(6 ،‬ص ص ‪-543‬‬
‫‪.625‬‬
‫ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ (‪ .)2017‬إدارة التسويق ‪ -‬المبادئ واالتجاهات الحديثة‪ .‬القاهرة‪ :‬كلية التجارة‬
‫جامعة القاهرة‪.‬‬
‫هبة حسام (‪ .)2018‬تعرف على تطور أعداد المشتغلين والمتعطلين ومعدل البطالة خالل ‪.2017‬‬
‫متاح على موقع‪:‬‬
‫‪/‬تعرف‪-‬على‪-‬تطور‪-‬أعداد‪-‬المشتغلين‪https://www.youm7.com/story/2018/4/15-‬‬
‫والمتعطلين‪-‬ومعدل‪-‬البطالة‪-‬خالل‪.3743912/2017-‬‬
‫هدير عبد المنصف شحاته (‪" .)2017‬حاضنات األعمال‪ ..‬ما هي وكيف تسرع من وتيرة‬
‫األعمال؟" القاهرة‪ :‬مركز البديل للتخطيط والدراسات االستراتيجية‪.‬‬
‫واقع المشروعات الصغيرة والمتوسطة في مصر (‪ )1‬حقائق وأرقام (‪ .)2016‬متاح على موقع الهيئة‬
‫نقال عن‪ :‬واقع المشروعات الصغيرة والمتوسطة‬
‫العامة لالستعالمات‪ ،‬بوابتك إلى مصر‪ :‬ا‬
‫فى مصر خالل الفترة من (‪ ،)2015/2014-2010/2009‬الجهاز المركزي للتعبئة‬
‫العامة واإلحصاء‪ ،‬أغسطس ‪:2016‬‬
‫‪http://sis.gov.eg/Story/130471?lang=ar.‬‬
‫يوسف َمنيع (‪ .)2016‬تعرف على أبرز ‪ 3‬مؤسسات تدعم رواد األعمال في مصر‪ .‬متاح على‬
‫موقع‪21/11/2016))/https://www.ida2at.com/social-entrepreneurship :‬‬
‫‪Electronic Sources about Entrepreneurship‬‬
‫‪https://www.entrepreneur.com‬‬
‫‪Entrepreneur Magazine. https://www.entrepreneurmag.co.za‬‬
‫‪Entrepreneurial Personality Profile. https://testyourself.psychtests.com/‬‬
‫‪testid/3011‬‬
‫‬‫‪ .https://entrepreneuralarabiya.com‬العربية ‪ Entrepreneur‬مجلة‬
]241[
References
،‫مصر‬-‫رواد‬-‫لخدمة‬-‫متكاملة‬-‫إعالمية‬-‫منصة‬-‫أعمال‬-‫رائد‬
https://www.raedaamal.com/2018/05/07/
-‫ناجحة‬-‫مربحة‬-‫صغيرة‬-‫مشاريع‬-‫ أفكار‬http://www.myprojectideasguide.com/
/‫مصر‬-‫في‬
http://preneur-masr.com/quiz-preneur-masr/
‫بوابة "أيادينا" للمشروعات واألعمال‬
http://ayadina.kenanaonline.com/posts/6332
- Entrepreneurial potential self-assessment,
https://www.bdc.ca/en/
articles-tools/entrepreneur-toolkit/businessassessments/pages/entrepreneurial-potential-self-assessment.aspx.
- Psychometric Test (2013). https://www.psychometrictest. org.uk/
entrepreneur-test/.
Table of Contents
Focus
Preface by Professor Mohamed Othman Elkhosht President
of Cairo University
Introductio.
Chapter One: Main Concepts of Entrepreneurship
Introduction
First: A Definition of Entrepreneurship, and its Topics of
Research
Second: The Entrepreneurship Process
Third: The importance of entrepreneurship
Fourth: The Entrepreneur
Fifth: The Difference between Entrepreneurship and Small
Enterprises
Sixth: Types of Pilot Enterprises
Seventh: Misconceptions about Small Enterprises among
Egyptian Youth
Eighth: Entrepreneurship is an indispensable discipline for those
with entrepreneurial qualities
Exercises and Questions
Chapter Two: Characteristics and Capabilities of the
Entrepreneur
Introductio.
First: Characteristics and Special Traits of the Entrepreneur
Second: Why have an Entrepreneurial Enterprise?
Third: How far do you have the characteristics and capabilities
of an Entrepreneur?
Questionnaire, Exercises and Questions
Chapter Three: Types of Small Entrepreneurial Businesses
and Startup Methods
Introduction
First: Types of Businesses
Second: The Concept of Small-Sized Enterprises
Third: Selection of the Proper Method of Starting Small-Sized
Enterprises
Exercises and Questions
1
9
15
21
21
22
24
25
26
28
29
37
39
43
51
52
58
62
63
69
77
77
79
81
103
Entrepreneurship
First:
]244[
Chapter Four: Generating the Entrepreneurial Idea and
its Feasibility Study
Introduction
First: The Criteria that Make a New Idea a Business Opportunity
Second: Sources for Generating New Business Ideas
Third: Mechanism for Crystallizing Ideas in the Entrepreneur’s
Mind
Fourth: Techniques to Develop the Entrepreneur’s Ability to
Generate Creative Ideas
Fifth: Studying the feasibility of the Idea
Exercises and Questions
Chapter Five: Enterprise Strategic Plan (ESP)/ Enterprise
Action Plan (EAP)
107
Introduction
First: Definition of Enterprise Strategic Plan (ESP)
Second: Benefits of ESP Development
Third: Contents of ESP
Exercises and Questions
Chapter Six: Entrepreneurial Business Establishment and
Preparation
Introduction
First: Establishment Decisions
Second: Decisions related to procuring elements of success
Three: Decisions about preparing for launch
Fourth: Promotion and organizing a launch event
Exercises and Questions
Chapter Seven: Professional Management of the
Entrepreneurial Enterprise
Introduction
First: Definition of Professional Management
1. Planning the work on the Enterprise
2. Organizing the relations between the in-house personnel
of the enterprise
3. Leadership and Directing
4. Superintending
Second: What the owner of the small entrepreneurial enterprise
must know about marketing
Third: Finances and Budgeting of the Enterprise
139
139
140
142
150
153
Fourth:
206
Managing the transition
professional manager
from
entrepreneur
to
113
113
114
119
120
128
129
133
159
160
167
173
175
178
181
189
189
190
194
195
195
196
201
]245[
Exercises and Questions
Appendices
Appendix I: Sponsors of Entrepreneurial Enterprises in Egypt
Appendix II: Electronic Sites of Agents Supporting Small
Enterprises
Appendix III: Relevant Terms
References
Foreign Sources
Arabic Sources
Contents
212
215
219
227
228
231
233
237
Entrepreneurship
]246[
Copyright
Cairo University
Dar Al-kutub Deposit No. 19071/2019
ISBN 978/9778071542 :‫الترقيم الدولى‬