MADUKA UNIVERSITY

INTRODUCTION TO ENTREPRENEURSHIP
AND WEALTH CREATION- EWC 111
PRINCIPLES, PRACTICE OF
ENTREPRENEURSHIP

MADUKA UNIVERSITY, EKWEGBE, IGBO-ETITI LGA,

ENUGU STATE

By

Daniel Ochi, Ph.D

08037006559

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 We are entering a new age, an age of knowledge in which
the key strategic resources necessary for prosperity has
become knowledge itself, educated people, their ideas,
innovation and their entrepreneurial spirit (Bloch, 1988)

“There are only two ways to make our youths and women
activist in their own world- Education and
Entrepreneurship” – Bill Cosby

"We must create economic opportunity, build a culture of

entrepreneurship for improving their lives, rather than
putting them in a position where they sit back in their
poverty and blame other for it."
Paul Kagame, Rwanda President

Decision in connection with the choice of career or job in one’s life is one of
the two most important decisions which young people must have to make.

The other is the decision in connection with the selection/choice of a mate in

marriage. These two important decisions will determine largely whether
one’s life shall be blessed with happiness and fortune or cursed with misery
and poverty

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Unknown Authors

CHAPTER 1
INTRODUCTION TO ENTREPRENEURSHIP
WHO IS AN ENTREPRENEUR AND WHAT IS ENTREPRENEURSHIP?

An entrepreneur can be defined as one who is responsible for

creating new products, services and markets and the means
through which these products are made, services produced, and
target markets reached.

They are often responsible for creating new forms of business

organization and new ways of managing people. The entrepreneur
operates by introducing such changes directly and by having the ability
and desire to organize physical, financial, material, information and
human resources to bring about innovation and creativity.

Entrepreneurship is all about getting ideas, executing those ideas, and

converting those ideas into a business.
While the definition of entrepreneurship is so easy to say and
understand, the process to become an entrepreneur isn’t so. Getting
ideas can be easy, but the real game starts when the execution process
begins.

To start a new business, you have to take risks, sacrifice so many things
you love to do. You have to be super aggressive towards your goal to
accomplish it

Research has shown that entrepreneurs are hard workers, risk takers, it
has also been discovered that entrepreneurs have a high need for
achievement and a moderate need for power.

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The entrepreneur is the fourth factor of production. He combines the
other factors (land, labour and capital) into production processes. He
organizes them in such a way as to achieve maximum output and profit.

Entrepreneurship is all about innovating something or solving people’s

problems and generating profit from that. It’s an act to create a business and
scale it to generate the maximum profit.

To come up with a new idea and accomplish that in reality needs great
skill, passion, consistency, and patience, and financial risk to achieve it.
Starting a business is easy but scaling and generating a profit by helping
people is where most people fail. But an aspiring entrepreneur with a
great passion will never give up and will accomplish it. Those are real
heroes or entrepreneurs.

Entrepreneurship is the process of setting up a business. The business

can be based on new ideas, services, goods, etc. If you are thinking of
starting a business venture, research which services are lacking, and you
can provide the best. If you are going to make a new product, create a
product that people are willing to pay for. You are solving someone’s
problem, and they are spending the money for the solution.

ENTREPRENEURS ARE DECISION MAKER

He makes decision regarding:

What to produce;
When to produce;
How to produce;
Where to produce
Price to fix.

THE ENTREPRENEUR IS REGARDED AS A SEPARATE FACTOR OF

PRODUCTION BECAUSE:

He initiates production ideas;

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He is a decision maker;
He is an organizer;
He is a risk bearer;
He is the overall controller.
Whom to employ;

The planned budget;

Production output and sales volume per period;
Prices for various products and services;
Distribution network;
Market strategy;
Advertisement and sales promotion

He combines other factors together in such a way as to obtain optimal

Output and other desired objectives.
.

The world have move from manpower to mind power, to be enterprising is to keep your
eyes open and your mind active. It is to be skilled enough, confident enough, and creative
enough and disciplined enough to seize opportunities that present themselves.

Enterprising people are always visionaries’ people; they also find a way and see the future
in the present. Enterprising people always find a way to take advantage of a situation,
native burdened by it and they enterprising people aren’t lazy. They don’t wait for
opportunities to come to them, they go after the opportunities

A successful entrepreneur is not an unthinking gambler, but an astute planner, a

calculated risk-taker, a highly-motivated, action-oriented hard-working, result-oriented
and hardworking achiever.

One of the most known genuine ways to make money and become rich is through
entrepreneurship. Every human being who reaches the age of understanding of the
purposes of money wishes and prays to have it. Wishing will not bring riches nor create
the wealth your desire. But desiring riches with a state of mind that becomes an
obsession, then planning definite ways and means to acquire it genuinely and backing

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those plans with persistence which does not recognize failure, will bring to you the riches
you desire.

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EARLY ENTREPRENEURSHIP THEORIES
Entrepreneurship as viewed from many perspectives by the early scholars, who described
it from the perspective of functions of an entrepreneur, whether as an inventor, imitator
or more appropriately as a calculated risk taker, below are some of the opinions of early
scholar about who an entrepreneur is.

KIRZNER

An entrepreneur is someone who is alert to profitable opportunities for exchange. The

entrepreneur according to Kirzner operates on opportunities that arise out of new
technology. Recognizing the possibilities for exchange enable the entrepreneur to benefit
by acting as a middleman who facilitates the exchange

The Kirznerian ideas about entrepreneurs are that they are alert to opportunities for trade.
He or she is able to identify suppliers of a particular product and the customers that will
require such products and quickly acts as the intermediary. It is important to note that
there is no necessarily to own resources and that profit arises out of the intermediary
function.

These possibilities for exchange exist because of imperfect knowledge according to

Kirzer.The entrepreneur has some additional knowledge which is not possessed by others
and this permit the entrepreneur to take advantage of profitable opportunities.

Joseph Schumpeter
Schumpter was the one who introduced the concept of innovation and power. He
believes that entrepreneurs bring about change through the introduction of new
technological processes or products, unlike Kirnzer who believes that anybody has the
potential to be an entrepreneur and they operate within set production constraints .For
Schumpeter , only certain extraordinary people have the ability to be entrepreneurs and
they bring about extraordinary event. He disagrees with Weber and other theorist of
entrepreneurship that entrepreneurship is a function of social, cultural or religious factors,
rather he believes that individuals are motivated by” Atavistic” will to achieve power.

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Knight

Knight’s view of an entrepreneur is one of a “calculated risk taker” For knight, the
entrepreneur is an individual who is prepared to undertake risk and reward. Profit is the
return for bearing uncertainty, and is an uninsurable risk.

The opportunity for profit arises out of uncertainty surrounding change. If change is
perfectly predictable then no opportunities for profit exist. The entrepreneur is someone
who is prepared to undertake risk in an uncertain world.

David McClelland

Psychologist McClelland introduced the concept of need for achievement and goal setting.
He maintains in his book “The Achieving society” that the drive towards achievement is
the basis of activity for most entrepreneurs.

He used the Jew in his in his illustration. According to him, the Jewish child is shown from
the beginning that he has to maintain and remain on top in order to counteract the
attitude of the society to him. McClelland concludes that because of this method of
rearing, which the Jewish operates, they are always on top and strive for excellence
anywhere they live

Everett Hagen-“Creative Personality”

Hagan in his book, “The theory of social change” argues that creative personality in an
individual is characterized by high need for achievement, law ,order, autonomy and
problem solving.

Economic development to him is basically a process of ecological change brought about by

the technological activity concerned. He sees the entrepreneur as a reactive problem
solver, interested in solving practical problems in most cases through the application of
creative technologies. At times, entrepreneurs are motivated by some internal forces as a
duty to do something unique before they die.

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Max Weber

Max Weber, a German published his work on “Protestant Ethics and Spirit of Capitalism
"in 1958.This is the concept that encourages hard work and sizzles work on daily existence,
accumulation of capital and investments.

He argues that business leader and owners of capital, as well as the higher grades of
skilled labour, and even more, the higher technically and commercially trained personnel
of modern enterprise are overwhelmingly Protestants, especially in Western Europe.
Before coming to this conclusion, Weber surveyed the main participants of different
religions, Protestants, Catholics and Muslims, in order to find out their attitudes and
behavior towards profits. Consequently he concludes that the protestant ethics tends to
go well with high profit generation and accumulation of capital.

Shackle

Shackle introduced the concept of “Creative and Imaginative Thought” uncertainty gives
rise to opportunities for certain individual to imagine opportunities for profit. Shackle’s
entrepreneur is creative and original

Casson

Casson recognizes that the entrepreneur will have different skill from others. He attempts
to synthesize some of these entrepreneurial attributes and concept that have been
discussed with major writers above. These skills according to him enable the entrepreneur
to make judgments.

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 CHAPTER 2
FUNCTIONS OF AN ENTREPRENEUR
Entrepreneurs play great roles in any economy. They are the engine room of all economic
development and improvement activities. Some of their major functions include;

1. Identification of business/ Investment opportunities.

He does this by
(A) Identifying human want
(B) Identifying problem confronting the society, country or individuals
(C) Creatively thinking on how to solve these problems
(D) Working out best strategies to turn the above into money making ventures.

(2) Creative thinking and Decision Making

Greater part of entrepreneur functions involves creative thinking and decision

making. They do these by wearing or putting on six different types of thinking hart
(caps)

(3). Risk Taking:

One of the major functions of an entrepreneur is risk bearing. He Invest his money
in a business/ enterprise even when there is no guarantee of success. He knows that
only way to succeed is to get started, however an entrepreneur can minimize the
amount of risk associated with business by carrying out proper or adequate
feasibility studies and a written down business plan, proper training/experience in
business you want to establish.

(4). Establishment of Business Enterprise:

Establishment of business entity is another function of an entrepreneur. Having

indentified opportunity, taking the decision on the type of business to establish,
sources the financial and material resources required for the establish such venture,
the entrepreneur goes ahead to establish the said business and properly manage it
to produce result.

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(5) Creation of Jobs and wealth:

The whole idea about entrepreneurship is centered on self employment, job and
wealth creation. A well managed and flourishing enterprise will not only generate
wealth for the owners, but will create job opportunities for the teaming youths

(6) Marketing and Innovation:

As Peter F. Drucker put it, the major function of management in 21 st century is

marketing and innovation. As an entrepreneur one of your major functions is
innovation and marketing. The whole concept of marketing is about customer
satisfaction. The main objectives of 21st century business organizations should be
the provision of goods and services through innovation and ideas.

(7) Management, planning and control:

This three of element of entrepreneurial functions are very vital because they are
the anchor point in the success or failure of the enterprise. The ability of
entrepreneur to plan, manage, and control the three factors of production will
determines how far the business will go in fulfilling its cooperate
mission/objectives .

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 Chapter 3
7 Steps to Becoming an Entrepreneur
1. Build Your Skill Set and Knowledge Base

No matter what, you want to start and stay curious. There’s a lot out there to learn, more than
you’ll ever have time to master and any entrepreneur needs to be adaptable and open to new
information. That can seem daunting, but there are a few things you can do to simplify the
process of continual learning.

 Take a “first principles” approach to problems – as Elon Musk has said, first principles
is a “good framework for thinking… boil things down to their fundamental truths and
reason up from there, as opposed to reasoning by analogy.”
 Get comfortable with research – subscribe to trade publications to see what’s trending
within an industry. Research the market you’re interested in exploring. Get out and meet
people who are doing the things you want to do; not only can they provide good advice,
they’ll be an invaluable part of your network.
 Focus your attention on what matters – while some serial entrepreneurs have a
reputation of being jacks-of-all-trades as they jump around from industry to industry,
you can likely find more success by focusing on an area of interest and specialization.
Pursue a degree or program that teaches entrepreneurial skills and knowledge specific to
the industry that you want to get into.

2. Build Your Network

No one ever succeeded alone. Every successful entrepreneur has benefited from their own
network of mentors, partners, employees and investors. Once you’ve found a mentor or advisor
who can assist you, it’s important to reach out and find other systems of support.

 Unsure of how to go it alone? Partner with a cofounder or small team that will offer
complementary skills to your own. Being part of a larger whole provides additional
skills and expertise, plus it can make it easier to secure funding.
 Talk to friends and family about your venture. Not only are they the surest way to
secure additional support, some might be sources of possible “seed” funds or low/no
interest loans.
 Get professional help! Research and vet professionals like financial advisors and lawyers
that you feel comfortable trusting and relying on – you’re going to need them.

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3. State Your Idea, Claim Your Niche

If you don’t already have a solid idea, then it’s time to consider what type of product or service
you’re able to offer and – more importantly – what’s going to set you apart from everyone else.

 Start exploring solutions for every-day problems or frustrations experienced by friends

and family and your target markets. As Entrepreneur magazine explains, the most
innovative startups are often simple solutions to common problems.
 Determine if you’re going to meet an underserved demand or improve on an existing
service. The former is a way to claim a space within a market and differentiate yourself
from competitors. The latter is more disruptive, where you can position your business as
a new way of doing things.
 As always, you’ll want to do your research on the categories and fields you’re thinking
of entering and start asking questions about how a new product/service can exist within
that space. If you’re unsure of how to do the legwork, or need to dedicate time to other
aspects of your startup, consider hiring a marketing researcher for assistance.

4. Find and Understand a Market

The best product in the world isn’t going to succeed if there isn’t a market interested in buying
it. Starting broad may seem like a good idea, after all that’s the highest possible number of
buyers, but trying to sell to everyone means that you’re really selling to no one. To get a better
idea of what your market is going to be, you’ll need to develop an understanding of what
people are looking for.

 Who are the people most likely to buy from you or would be most interested in your
service?
 Develop profiles of your potential buyers – what jobs do they have? What lifestyles do
they lead? What needs do they have? What pain points do they experience?
 Narrow your list down to the best opportunities and select the one that you want to start
with first.
 Set up interviews or surveys with people who fit that profile to continue refining that
initial understanding. Which pain points are most urgent for them? Would they prioritize
convenience over price? What benefits of your product/service might excite them the
most?

5. Design Your Business and Idea

Once you’ve settled on what you want to do, then you’re going to have to outline your
business structure and develop your product to show that it’s viable. That’s the only way you’re
going to be able to win over investors.

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  It’s time to start laying out exactly how your business will be moving forward. You’ll
want to create a business model, aka a business plan, that details how your business will
be organized, a prospective budget for the future, details on how your business will
make money.
 Plan out the sales process that you’ll use to acquire new customers. What’s your
marketing strategy – are you using certain social media accounts? Are you attempting a
viral marketing campaign? What sales materials will you need? Most importantly,
what’s the process by which you’ll convert those who express interest into actual sales?
 It’s time to truly show what your business is about and build out a proof of concept, or
what’s also known as a minimum viable product (MVP). The MVP, whether it’s
software, a service or a physical product, should be capable of executing the basic and
most important functions of your idea.

6. Secure Funding

You have a plan and you have a product, now it’s time to secure the funding that you’ll
actually need to start up your business and get it running. Depending on your product and
market, you have several options available.

 You can attempt to start with securing initial funding or loans from friends and family.
Trust levels are high and you might even be able to receive the funds without having to
pay interest or offer too much of a share in your company. Of course, this entirely
depends on the level of wealth and assets of the people you know.
 A far more likely scenario is that you’ll have to make a pitch to secure funding from
venture capital (VC) firms or angel investors. Both are able to provide large amounts of
initial funding for startups with the promise of even larger returns through owning stakes
in the company. Start by looking at organizations that connect entrepreneurs with
funders, such as the National Venture Capital Association and Angel Investment
Network.
 There’s also the opportunity to secure small business grants and loans. These
investments differ from VCs and angel investors by offering (generally) smaller amounts
of initial capital and having specific requirements: loans will need to be repaid with
interest over time, while grants are reserved for meeting certain conditions – such as
assisting minority or underprivileged communities.
 Rather than trying to secure a few large amounts of funding, you could attempt to crowd
fund your business through hundreds, or thousands, of smaller donations. With modern
digital technology, there are several options for running a crowd funding campaign,
through platforms like Fundable or We Funder.

7. Build Your Business

Once you’ve gotten this far, now the real work begins. Time to put that funding into place,
build out your first real product, and get it out to your target market.

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  You will need to establish a location for your business, whether you’re renting out an
office space for your team to work in or you’re leasing a building in a downtown
location. Or, perhaps your business is entirely online and all your employees are
expected to work from home. At the very least you’ll need to claim a website to both
promote your business and allow customers to learn about your product and contact your
business.
 You’ll need to consider the actual structure of your organization and what your plans are
for incorporating your business. At the very least you should consider the option of
registering as a limited liability company (LLC) to both build the credibility of your
business and protect your personal finances.
 Keep working on promoting and marketing your business! After the initial buzz dies off
you’ll still need to find ways to reach out to new, prospective customers and announce
the latest updates and developments of your product. Review the metrics of your
campaigns and social media channels to determine what’s working, and what’s not, and
what you should be doing to effectively advertise.


What Are Some Common Entrepreneurship Pitfalls?

Not every business succeeds, in fact roughly 50% of businesses fail within the first few years.
Around just 15% of startups actually manage to achieve large venture returns for their
investors. The others, if they don’t go out of business, just manage to sustain themselves
without generating any real returns for their owners or investors. There are dozens, if not
hundreds, of specific reasons why a business won’t succeed. In general terms, here’s what
aspiring entrepreneurs need to be most mindful of:

 Running out of money

This is THE #1 killer of small businesses and startups – all businesses really – and is
almost impossible to plan around, as there are no guarantees that a product or service
will take off. The best you can do is to get a solid plan into place and then be open to
shifting your direction or focus as needed. Changing markets and environments require
businesses to be agile and no amount of initial success will guarantee continued growth
or sustainability.

 Too much debt

This is related to running out of money, as high levels of debt can cripple businesses,
choking off additional sources of income as lenders or investors are scared off. The
challenge of securing initial funding means that some businesses will settle for high-

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 interest loans in order to get started, but that sort of devil’s bargain can hinder a
company before it ever gets to establish itself.

 Not keeping the personal and business separate –

As an entrepreneur, it can be all too easy to overleverage yourself in a new startup.

However, using your own credit as a means for funding could ruin you financially. Not
incorporating or registering as an LLC can make you personally liable for actions your
company takes. That restriction goes both ways, as entrepreneurs who treat their
business’ assets as their personal piggy bank are undercutting their own success.

 Internal conflict

– Disagreements with a co-founder or disgruntled employees can hold up production,

disrupt communication, or even dissolve the business. Try to resolve conflicts as
amicably as possible, and don’t let hurt egos sabotage your working relationships. As the
owner or CEO of your business, you will need to absorb a lot of the uncertainty, even
when things aren’t looking great, as too much uncertainty will disrupt productivity.

 Incompatible culture –

Everyone brings their own backgrounds with them, employing different workstyles,
possessing different value systems and having different expectations. When people are
committed to “what has worked before,” it can make it difficult to pivot when change is
needed. Entrepreneurs will need to effectively manage the culture of their business,
keeping everything moving forward in a disciplined manner while being as flexible as
possible.

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 Chapter 4
Top 10 Entrepreneurship Skills Every Entrepreneur
Should Have

Introduction.
Entrepreneurs don’t just start a business from scratch and generate profits for
themselves. They also significantly impact society and the economy by creating
employment and products or services that can improve the quality of life for many. But
not everyone can take on the risk of their venture or the magnitude of such a
responsibility. In this article, let’s look at the top ten entrepreneurship skills and how to
improve them to scale your business, take challenges head-on, and succeed.

Importance of Entrepreneurship Skills

Entrepreneurship skills are essential in positioning entrepreneurs to identify
opportunities, make effective decisions, turn their ideas into reality, overcome
challenges, and properly allocate resources to achieve goals and succeed. The
importance of entrepreneurship skills lies in:

 Encouraging social change and improving lives

 Creating employment opportunities for others
 Driving economic growth and opening new markets and industries
 Improving the quality of life with new ideas and building functional products or
services
 Providing opportunities for personal and professional growth, as well as financial
rewards
 Enhancing one’s capacity to work efficiently alone, as well as in collaboration
 Reaching the desired goals and achieving excellent results


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What are the Top 10 Entrepreneurial Skills?
1. Business Management Skills
Business management skills are essential for entrepreneurs to effectively plan,
organize, direct, and control the resources of an organization. These skills can build
credibility, improve efficiency, manage risks, implement effective strategies, create a
positive company culture, and grow a business.

Business management skills include:

 Leadership
 Strategic thinking
 Budget management
 Business acumen
 Communication

2. Communication and Listening

Communication skills allow individuals to express thoughts, ideas, and feelings clearly
through speaking, writing, and other forms of expression. Listening skills provide the
ability to understand and retain information and respond appropriately. Both
communication and listening are essential entrepreneurship skills that can make a
difference in how you run your business as they help you to build trust, maintain
relationships, resolve conflicts, understand needs and perspectives, and make
informed decisions.

Communication and listening skills include:

 Written communication
 Non-verbal communication
 Stress management
 Active listening
 Emotion control

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3. Critical and Creative Thinking Skills
Strong critical and creative thinking skills are essential for entrepreneurs to build and
expand their businesses. Critical thinking allows you to objectively analyze information
using the evidence to make informed decisions and solve problems. Creative thinking
provides a way to look at issues from various angles, consider alternative
perspectives, and come up with original ideas.

Critical and creative thinking skills include:

 Analysis
 Brainstorming
 Visualization
 Evaluation
 Research

4. Strategic Thinking and Planning Skills

Strategic thinking and planning skills allow entrepreneurs to analyze information,
adapt, manage projects, solve problems, and make informed decisions.
These entrepreneurship skills are vital in helping leaders overcome challenges and
ensure efficient allotment of resources and achievement of goals.

Strategic thinking and planning skills include:

 Analysis
 Implementation
 Flexibility
 Attention to detail
 Assertiveness

5. Branding, Marketing, and Networking Skills

In today’s competitive business environment, branding, marketing, and networking
skills are essential for scaling the business and boosting opportunities. These skills
enable entrepreneurs to promote and sell products or services. Branding creates a
unique and memorable image of a product, service, or organization, and marketing
promotes them to target consumers. Networking builds relationships and allows
individuals to connect with potential customers, partners, suppliers, or colleagues.

Branding, marketing, and networking skills include:

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  Collaboration
 Communication
 Interpersonal skills
 Creativity
 Collaboration

6. Entrepreneurial Skills in the Workplace

The skills in the workplace refer to qualities that enable individuals to effectively create
and manage their businesses, as well as drive innovation and growth within
organizations.

Entrepreneurial skills in the workplace include:

 Time management
 Finance skills
 Sales
 Adaptability
 Problem-solving

7. Teamwork and Leadership Skills

Teamwork and leadership are highly critical entrepreneurship skills that foster a
positive and collaborative organizational culture, leading to increased employee
satisfaction and improved performance. These qualities can enable leaders to
effectively inspire, motivate, work in teams, and lead the company toward success.

Teamwork and leadership skills include:

 Communication
 Emotional intelligence
 Empathy
 Delegation
 Conflict resolution

8. Time Management and Organizational Skills

Great leaders should know how to delegate and prioritize tasks, manage their time
and resources, and maintain a well-structured and efficient work environment.

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Effective time management and organization skills can enable you to achieve goals,
manage stress, maintain a healthy work-life balance, and improve well-being and
satisfaction.

Time management and organizational skills include:

 Prioritizing
 Goal setting
 Multi-tasking
 Decision making
 Collaboration

9. Sales Skills
Sales skills are vital for salespeople and valuable for entrepreneurs, as they need to
know how to sell their businesses to potential customers and investors. Developing
sales skills can help entrepreneurs make sales, pitch ideas, negotiate, and create
great relationships with their customers, investors, and stakeholders to build a strong
business.

Sales skills include:

 Business acumen
 Negotiation
 Relationship-building
 Data analysis
 Social selling

10. Stress Management Skills

Leading a business can take a toll on an entrepreneur’s well-being. They need to
know how to efficiently manage and cope with stress for themselves, their employees,
and their business. Stress management skills allow leaders to maintain good physical
and mental health, enhance personal and professional relationships, and improve the
overall quality of life.

Stress management skills include:

 Meditation
 Positive thinking
 Mindfulness
 Sleep hygiene
 Exercise
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How to Develop Entrepreneurial Skills
Here are some ways to develop your entrepreneurship skills:

 Define goals: Establish your business objectives, strengths, weaknesses, and

what you want to achieve

 Learn: Podcasts, books, and seminars can be great sources of information to

enhance your skills

 Take online courses: Online courses are an excellent way to boost the skills
you want to develop

 Look for a mentor: Mentorship can make a significant impact on your life and
career; seek mentorship from successful leaders to enhance your skills

 Work hard: Develop a strong work ethic and be consistent in your efforts to
grow

 Be adaptable: Stay open to change and embrace new ideas and opportunities
as they arise

 Foster a growth mindset: Focus on continuous learning and seek out new
opportunities to develop your skills

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 Chapter 5

10 most common types of entrepreneurship:

1. Small businesses entrepreneurship
2. Scalable startup entrepreneurship
3. Intrapreneurship
4. Large company entrepreneurship
5. Imitative entrepreneurship
6. Innovative entrepreneurship
7. Buyer entrepreneurship
8. Researcher entrepreneurship
9. Hustler entrepreneurship
10. Social entrepreneurship

1. Small business entrepreneurship

This type of entrepreneurship refers to any kind of small business that has
been created by one person, without the goal to expand or franchise. For
example, if you were planning to open a nail salon, a general store or a taco
truck your goal would be to launch a single store. You’d likely plan on hiring
local employees or even family members to get your business off the ground
and would need to invest your resources directly into the business.

In this type of business, you only make a profit if your company does, meaning
you need to be very driven, responsible and committed to your vision. In 2020,
there were 33.7 million small businesses in the United States, accounting for
99.9% of companies, proving that small business entrepreneurship is on the
rise.

2. Scalable startup entrepreneurship

Rooted in the idea of changing the world, scalable startups focus on how to
create a business model that is both repeatable and scalable (more sales with
more resources). From the get go, this style of entrepreneurship begins with
the hope of rapid expansion and big profit returns. Many startups have a
similar ‘garage to riches’ narrative, beginning with a simple idea that is
brought to life by the tenacity of entrepreneurs with the support of investors.

23
Amazon, Google and Apple are all examples of trailblazing startups that have
changed the world.

In order to establish a successful startup, you need to pay attention to the

amount of money you have (which is often supported by venture capital
investors) and the human resources behind your business. The key to starting
this type of business model is knowing the long-term plans for profitability and
the ways in which your company will grow, both for the sake of your investors,
and your own.

3. Intrapreneurship

Unlike an entrepreneur, who is also the founder, designer and manager of a

business, an intrapreneur is a self-motivated, and action-oriented employee
who thinks out of the box and works as an entrepreneur within a company.
Intrapreneurship is a way that companies can support and encourage
employees that have entrepreneurial spirit.

Shutterstock, for example, hosts an annual 24-hour hackathon which lets

employees pursue innovative ideas that will benefit the company. Another
example of an intrapreneurial innovation is Facebook’s ‘Like’ button which was
also created in a similar hackathon event, which is now an integral part of the
brand.

04. Large company entrepreneurship

Large company entrepreneurship refers to companies like Disney, Google,

Toyota, and Microsoft who have finite life cycles, as in, they keep innovating
and offering consumers new products that are variants around their core
product-line.

A distinguishing feature of this type of entrepreneurship is that it is not

starting a new business, rather creating new products or subsidiaries within an
existing company, or acquiring smaller businesses (like when Facebook bought
Instagram and WhatsApp). More specifically, these divisions are focused on
reaching new markets, expanding the customer base and growing the
business - sometimes via new company sites.

24
Another component of large company entrepreneurship is a commitment to
building company culture, ensuring that as a company expands all employees
are a part of the growth.

5. Imitative entrepreneurship

Imitation is the best form of flattery, and an imitative entrepreneur (also

referred to as an adoptive entrepreneur) is one who copies what successful
innovative entrepreneurs have previously done, most often with lower
financial risks and limited resources.

If you are using an imitative entrepreneurship style, in essence you are

copying an idea but finding ways to improve it. By taking note of others'
mistakes and finding creative ways to make a business better, you can
become a lucrative entrepreneur.

6. Innovative entrepreneurship

Innovative entrepreneurs, as the name suggests, are constantly trying to

come up with the next big thing. If you have groundbreaking ideas of how to
start a business or specific services and products that can become business
ventures, you might be an innovative entrepreneur.

As an innovator, you know you must always be aware of the current market
conditions to find original and creative ways to disrupt them. Innovation refers
not only to product ideas but also the ways in which business is conducted.
Innovative entrepreneurship is all changing the status quo and pushing
boundaries.

07. Buyer entrepreneurship

You’ve probably heard the saying “money makes money”, and for a buyer
entrepreneur this definitely rings true. Instead of figuring out how to raise
money for a business, a buyer entrepreneur purchases either a developing or
well-established company and helps them thrive.

Unlike investors, a buyer entrepreneur is involved both financially and

personally in the business, remaining active and directly helping the
investment to grow. It is not uncommon for buyer entrepreneurs to hand off

25
their leadership to someone else at some point, but they always maintain an
active part in the businesses they purchase.

8. Researcher entrepreneurship

Researcher entrepreneurs rely on facts, data and the belief that with the right
preparation and knowledge will be more likely to succeed. If this sounds like
you, this is exactly what research entrepreneurship is all about—a great
business idea paired with academic research, and an understanding of how to
stretch limited resources to the max.

Take a look at Nobel Prize winner and physicist, Theodor Hänsch, a researcher
entrepreneur who co-founded MenloSystems, taking his winning optical
frequency comb technology and using it to make products for the market.

9. Hustler entrepreneurship

Don’t let the name throw you off, a hustler in business refers to a self-starter,
a highly motivated person who is driven to succeed. This type of
entrepreneurship style grows directly from the entrepreneur, who must be
confident, fearless and have rigorous work ethic.

If you are the type of person who can sell anything to anyone, is always aware
of the next big thing and is able to recognize opportunities, you might just be
a hustler after all.

10. Social Entrepreneurship

Social entrepreneurs are innovators whose main goal is to create products and
services that both benefit the world, and make money. Social
entrepreneurship relates to nonprofit, for-profit, or hybrid companies that are
committed to social or environmental change. Some examples include
educational programs, microfinance institutions, and companies that provide
banking services in undeveloped countries.

Toms shoes was a pioneer of social entrepreneurship, starting in 2006 offering

a one-for-one sales model that gave a pair of shoes to a child in need for every
pair of shoes sold. What separates social entrepreneurship from other types is

26
the measure of success, in that the goal is not focused solely on financial gain
but also on the social impact.

Section 2

PRINCIPLES AND
PRACTICE OF
27
ENTREPRENEURS
HIP

Chapter 6
TYPES OF BUSINESS ENTERPRISE

• Sole proprietorship /One man Business

• Partnership
• Limited liability Companies (LLC)
• Public limited liability Companies(PLC)
• Companies Limited by Guarantee e.g NGO
• Cooperative Society

There are various forms of business ownership recognized by the law but we will
concern ourselves with the basic three which are relevant to our discussions here.
28
The Six types of business ownership of our discussions are sole proprietorship,
partnership and private limited liability companies. We have other types
business entities such as companies limited by guarantee, Nonprofit Making
organization. None Governmental organization (NGO) .Majority of NGOs in Nigeria
operates like non profits making organizations.

1. Sole Proprietorship

This is a business owned and controlled by a single individual. It is popularly

called “one-man business”. This type of business is easy to set up and it is
free from the problems associated with partnerships.

Income from sole proprietorship business is taxed on the owner of the

‘business and not on the business staff. In other words, both the business
and the owner are legally regarded by the law as one and the same.

Advantages of sole proprietorship

One major advantage of a sole proprietorship is that the owner has complete
freedom to run your business the way you like. There will be no interference
from anybody. You will either float or sink with your business. You will also
enjoy all your profits without anybody sharing them with you.

One major advantage of a sole proprietorship is that the owner has complete
freedom to run your business the way you like. Where you are using your
personal name for the business without any additional word at all, you do not

29
 even need to register the business name. For example, where your true
name is Isaac John, you can decide to print on your letter head Isaac John
without any additional word and you are legally protected. However, where
you add say”& co.” or” & Sons” such a name must be registered.

Disadvantages of sole proprietorship

One of the major disadvantages of a sole proprietorship business is that it is
often difficult to raise capital for such a business from banks and other
financial institutions. Again most, sole proprietorship (one man business)
usually dies with the owner especially when the children, wife or close
relations are not willing to continue with such business.

Another major disadvantage of sole proprietorship is that liability of the owner

in case of business failure is unlimited. What this means is that if the
business fails and you are not able to pay your creditors, all your personal
properties will be sold until all your debts are fully paid - - - even if it means
selling your house, if any, and other things belonging to you.

2. PARTNERSHIP

Partnership is the relationship which subsists between persons carrying on a

business in common with a view to making profit. Here in Nigeria, the number
of people forming an ordinary partnership must not exceed twenty. However,
partnership of qualified Legal Practitioners and Accountants are exempted
from this numerical limit.

30
 Partnership may be formed when you want to share responsibilities for
running your business or when you want to introduce another person into the
business may be for raising more capital or supply of expertise or a person
who has strong business contracts which may be of great advantage to your
business. It must be determined however whether or not the relationship
constitutes a partnership from the onset because each partner is an implied
agent of the firm and is held responsible for debts incurred by the firm
through any of its partners.

Partnerships are usually based on trust. Without trust and confidence, the
relationship between partners will break down and the business will
consequently fail.

Partners must agree on how much capital each of them is to contribute and
how profits are to be shared. There is usually a partnership agreement drawn
by a lawyer to guide the partnership relationship. Where none is drawn up,
there is one implied by statue. The partnership should be managed by one or
more of the partners. Any partner who is not involved in the day-to-day
running of the business is called under the law, a ‘sleeping partner’ but this
does not affect the sharing of profits as laid down in the partnership
agreement. As in sole proprietorship business, the incomes of partnerships
are taxed on the owners as part of their personal incomes, and not taxed
separately on the partnership account.

Advantages of partnership business

31
 One great advantage of a partnership business is that you will have an
expanded capital base. Moreover, financial institutions will be more disposed
to a partnership in terms of granting loans than to a single individual. Two
heads, people say, are better than one. A pool of experience derived from
partnership will guarantee more efficiency in terms of skills, knowledge and
creativity. More business contacts may also result from a partnership

Disadvantages of partnership business

A major disadvantage of partnership is that suitable partners are often difficult

to find. Incompatibility of partnership often leads to disagreements which may
eventually rock the boat of partnership. Another disadvantage is that death of
a partner will automatically terminate a partnership. Moreover, shared profits
may not be favorable to all the partners. Again, like a sole proprietorship
business, liabilities of partners in ordinary partnership are unlimited if the
partnership goes bankrupt.

Partnership Agreement

Your partnership agreement should cover the following terms:-

a) Date of formation of the partnership

b) Names and addresses of all partners
c) Statement of fact of partnership
d) The address where the partnership business shall be carried on
e) Duration of the partnership
f) The firm’s name, to be registered in accordance with provisions of the law
g) The bankers of the partnership
h) Power of each partner to draw cheques in the name of the firm
i) The capital of the partnership and proportion in which it shall be contributed.

32
j) The proportion in which profits arising from the business are to be shared,
(otherwise partners will take in equal shares)
k) Where proper and usual books of account shall be kept
l) The accounting period of the partnership
m) The amount that may be drawn out of the partnership profit every month with a
provision that if any of the partners should draw any amount in excess of his
share of profit such partner shall repay the excess to the partnership account.
n) Express provision for salaries if need be. Unless otherwise agreed, no partner
is entitled to remuneration for acting in the partnership business
o) Powers, rights and duties of partners
p) A clause allowing a partner to retire leaving the other to continue with the
business
q) Determination of the partnership
r) Purchase of shares by the surviving member(s) in case of dissolution by the
death of a partner or by notice ot determine the partnership
s) Settlement of disputes
t) Restraint of competition by outgoing partners

3.Limited Liability Company

There are three types of limited liability companies. They are:

a. Private Limited Companies

b. Public Limited Liability Companies
c. Companies Limited by Guarantee

The major differences between the first two forms of companies are:

33
 i. A private company’s total membership must not exceed 50 while that of a
public company has no limit
ii. Transfer of shares of a private company must be restricted by its Articles
of Association while that of public company need not be restricted
iii. A private company cannot invite the public to subscribe for its shares or
debentures while a public company can
iv. A private limited company is prefixed as “Ltd” “while a public limited
company is prefixed as “Plc”.
However for our purpose, we shall limit our discussions to a private liability
company since it is more relevant to a small or medium scale company.

A limited liability company is regarded under the law as a legal person or legal
entity. This means that it has a separate existence from its owners. It can sue and it
can be sued. It may own properties in its own right and its properties are separate
from those of its owners.

A limited company has perpetual succession. What this means is that the death of
a member does not affect the continuity of the company members of a limited
company to his unpaid share capital. The company is therefore liable for its own
debts. Another major advantage of a limited company is that it is easier to raise
money from the financial market.

On the contrary side, a limited liability company costs more to set up. It has several
legal requirements to fulfill as well as more government regulations to follow.

If your plan is to form a partnership or a limited liability company after due

consideration, you will need to see a lawyer for assistance and advice.

34
Again, where you have been trading as a sole proprietorship with others, expansion
of your business will bring with it greater risks to your personal fortune and to avoid
such risks it is better for you to acquire a private limited status which flows from
registration as a limited company.

The Memorandum of Association:

The Memorandum of Association is the document that states the name of the
company, it is a registered office, the objects of the company i.e. the business for
which the company is established as well as the restrictions if any, on the powers of
the company.

The memorandum must also state, in case of a private limited liability company,
that the company is a private company. It must state that liability of members is
limited by shares. The share capital of the company as well as the classes of
shares must be stated in the memorandum. Also details of all the subscribers must
be stated in this important document.

The Articles of Association

The Articles of Association of a company provides for the internal regulations and
management of the company. Statutory provisions in the Articles of Association
must include the following:-

- Interpretation of the terms used in the body of the Articles of Association

- Classes of shares to be issued by the company
- Restriction of transfer of shares in case of a private limited company
- Pre-emptive rights of shareholders of the company
- Payment of Commission and Brokerage by the company
- Alteration of capital of the company is accordance with the provisions of the
law

35
- Rules guiding the Annual General Meeting of the company
- Rules guiding the number and appointment of Directors
- Appointment of a Secretary of the company, his remuneration and his removal
- The seal of the company; where to be kept and how it may be used
- Rules guiding payment of dividends and capitalization of unshared profits and
company’s reserves
- Preparation and keeping of all accounting records
- Rules guiding the winding up of the company
- Indemnity clause covering members, officers or employees of the company
working in execution of their official duties
- Rules guiding the giving of Notice to members of the company
- Names and addresses of subscribers, description of subscribers and their
signatures.
The Memorandum and Articles of Association when duly prepared will only form
part of the documents to be submitted to the Corporate Affairs Commission (CAC)
to form a private limited liability company. In practice, it is this type of company that
is formed initially while conversion to public status may be done subsequently if
necessary as the company continues to grow.

For a genuine and proper registration of your company, you are advised to contact
a lawyer who is competent in that field.

The Certificate of Incorporation

A Certificate of incorporation when issued by the Registrar of Companies at the

Corporate Affairs Commission is the birth certificate of your company. It is normally
issued after your lawyer or professional advised must have satisfied all the
36
requirements of company registration by submitting of C.A.C. the necessary
documents which will include the following:-

a. The Memorandum and Articles of Association, duly stamped as a deed

b. Notice of the address of the registered office of the company

c. A statement of the list and particulars of first Directors of the company with
their consents to become Directors

d. A statement of the authorized share capital, signed by at least one Director

e. A statutory declaration by a legal practitioner that requirements of the

Companies and Allied Matters provisions have been complied with

f Availability and reservation of Name form which must have been previously
completed and approved by the commission together with the computer print-
out

g. And any other document specified by the commission.

The certificate of incorporation shall be prima facie evidence of compliance with the
Act, that the Association is a company authorized to be registered and is duly
registered

37
 CHAPTER 7
PROBLEMS AND PROSPECTS OF SMEs IN NIGERIA
PROBLEMS/CHALLENGES FACING SMEs
1. Lack of experience/expertise
2. Lack of fund
3. Business Location
4. Poor financial/inventory Management
a. credit sales
b. Too much capital in fixed assets
5. Drawing much from business
6. Poor attitude to work
7. Low sales or lack of sales
PROSPECT/ADVANTAGES OF SMEs
1. Helps to create wealth and income for the owner and his families
2. Offers employment opportunity for others

38
3. Provide goods and services to meet market demands
4. Contribute positively to the country's GDP
5. Opportunity to grow into bigger organization
6. Expose the owner and staff to both local and international opportunities
7. Offers the owner the opportunity to grow widely and empower others
8. Exposures for international and local connections
9. Gives you freedom to use your time wisely
10. Takes you away from 8-5 work syndrome and gives you the opportunity to use your
skill and initiatives
FACTORS THAT MAY AFFECT YOUR CHOICE OF BUSINESS
In order to ensure you start, grows and build a viable business in Nigeria, Prudence requires that
some factors should be considered before choosing a particular line of business. This is necessary
to avoid the failure of such business in the future. These factors include the following:

1. Available capital/ Capital required

2. Nature and size of market
3. Raw material availability
4. Technology
5. Skills and abilities
6. Infrastructures
7. Personal Attributes of the owner
8. Level of risks and profit

CHAPTER 8
17 MAJOR STEPS YOU MUST TAKE TO ENSURE YOU SUCCEED IN YOUR BUSINESS

1. Decide exactly what you want in life, why you want to start your own business

2. Select the business you think best for you. The one you are best suited for. Nothing
succeeds without enthusiasm and right choice of business.
[

3. Identify who are your customers clearly, who are the people that will buy the
products. Describe them clearly; what is their income level, etc.

39
 4. Conduct a market research on the business you wish to start to determine its
profitability before making any serious financial commitment.

5. Develop a complete business plan before starting. When you develop your business
plan show it to a more experienced person for advice.

6. Do everything possible to ensure your business succeed. Focus on sale.

7. Where applicable ensure you recruit experience and honesty staff only to help you
run the business. People are the greatest asset of modern organization.

8. Avoid major mistakes that lead to business failure for example;

 Lack of direction (No business plan)
 Impatience, trying to do much in small time.
 Greed, get rich quick selling without doing
 Poor quality of products.
 Insufficient working capital.
 Insufficient sales.

9. Remember the purpose of any business is to create and keep customers. Profit will
come after you have created and kept customers coming to buy from you.

10. Focus on five P’s of marketing

I. Products or services - Is it okay?
II. Price How much are you asking people to pay? Is it profitable?
III. Place - Where do you sell your product (Location)
IV. Promotion - How do you advertise and promote your
products.
V. Positioning - How is your product’s position in the mind of
your customers. Determine what will be your unique selling
proposition (USP)?

11. Keep and maintain a proper financial and sales transaction records. Focus single
mindedly on sales. Most business failures are caused by lack of sales or very low sales
and poor financial/inventory management and control.
40
 12.Advertise your company continuously. Remember Great advertising sales (GAS) it
must pass the 7 yrs old test. This means that your advert message would be well
understood by a seven year old child with.

13.Use the internet to boost your business(Facebook, Twitter, Instrgram WhatsApp

LinkedIn . It does not cost a fortune to have your business on the world wild web.
Make use of Technology. Surround yourself with modern business support
tools/equipments

14.Practice the corridors principle. Starting your business when you are not guaranteed
for success. There is no best time to start business.

15.Get the money you need. The second major cause of business failures is lack of
enough start-up and working capital .Ensue your business is hampered by lack of
fund.

16 Apply Pareto Principle - 80- 20 Rule. It states that 20% of your daily activities contribute
80% your results .Your duty is to find out the 20% of your role that will give the highest
contribution to the success of your business and concentrate on them. Learn how to
manage your time well. Have a day to -do-list and ensure you diarize you daily program.

17.Pay more attention to your health. The greatest wealth you have now is your health .

41
CHAPTER 8

NANO, MICRO, SMALL AND MEDIUM ENTERPRISESIN NIGERIA

Experts are of the believes that one of the major solution to unemployment in Nigeria is to
encourage our Youths to explore the options of going into self employment. Government
should develop the will power to provide the enabling environment to enable prospective
entrepreneurs’ access start-up fund which has been a major setback for Nigerian desiring
to venture into Small and Medium enterprises (SME) sectors.

42
All over the world Small and Medium Enterprises (SMEs) have been fully recognized by
government and development experts as the main engine of economic growth and a major
factor in promoting private sector development and partnership.

The development of SMEs is an essential element in the growth strategy of most economies
and holds particular significance for Nigeria

SMEs contribute to improved living standards, bring about substantial local capital
formation and achieve high level of productivity and capability. SMEs are recognized as the
principal means of achieving equitable and sustainable industrial diversification and
dispersal

.SMEs represent the sub sector of special focus in any meaningful economic restructuring
program that targets employment generation, poverty alleviation, food security, rapid
industrialization and reversing rural urban migration.

In Africa and Asia, most of the jobs, especially those in non-urban areas are provided by
small and medium scale enterprises and in most cases they account for the vast majority of
industrial units operating in respective continents.

In Nigeria and other developing nation, for economic growth to be inclusive, expert have
agreed that particular attention must be paid to the country’s industries, in addition to
aggressive investment drive in key sectors of the economy and that small and medium
enterprises SME should be given the necessary impetus to make them gain their rightful
position as the drivers of economic growth and employment generation.

Recently Federal ministry of trade and investment ,has developed a national Micro, small
and medium enterprises (MSME) policy and established a national database in
collaboration with the National Bureau of Statistics to provide a sound foundation for SME-
driven job creation and poverty reduction.

The new data shows that there are 17.2 Million SMEs in Nigeria: the sector employs about
32.4 Million Nigerians and contributes 46.54 percent of the nation’s Gross Domestic
Products (GDP) in nominal terms.

This simply means that the more new entrepreneurs we train and empower to establish more
SMEs, the more jobs opportunities we shall create in Nigeria. The simple arithmetic shows
that every SME in Nigeria employs at least two persons. The establishment of the data base
according to stakeholder is the first step towards ensuring that Nigeria’s abundant human
and natural resources works for its growth.

43
 Consequently, there are as many definitions of SME as there are
scholars and institutions defining it. Scholars are to use parameters such
as number of employees’ sales volume or turnover, capital small,
medium and/or big scale At one point some people, rightly contended
that these parameters do not provide uniform benchmark for all
industries and for all time. For

instance, what could pass for a big capital in food and beverage industry
will certainly be small when compared to that in steel or aviation
industry. Further, what is a big capital today may become small in five
years to come.

The above discrepancies, not withstanding, we are constrained to use

these measure, mainly for want of any other parameter to define SME.

For the purpose of this study, we shall adopt the definition by the
National Council on Industry (NCI). The reason for this is its currency and
simplicity

. NCI at its thirteen meeting in July 2001 adopted the following as the
reclassification of industrial enterprises in Nigeria.

MSMES IN NIGERIA

a. Nano Business - it is a form of business without a fancy business

plan or a five-year projection to expand and all. Most times Nano businesses
are with no employees, lack structure, or even the least a business

44
registration and frequently they lack bank accounts. The total capital
employed is less than N1M

b. Micro Business An industry with a total capital employed

of more than N1 million, including working capital but excluding cost of
land, and/ or, a workforce of not more than 1-9 workers/staff .

c. Small-Scale Business : An industry with a total capital employed

of over N1.50 million, but not more than N50 million including working
capital but excluding cost of land and/or a workforce of 11-100 workers

d. Medium-Scale Business : An industry with a total capital

employed

over N50 million of, but not more than N200 million, including cost of
land, and/or, a workforce of 101-300 workers.

Following the above classification, SME consist of all business

organizations whose total capital employed is above N1.5 million, but not
more than N200 million including the cost of land and workforce capacity
of between 11-250.

e. Large Scale Business ; Large scale business enterprises can be defined

as those that have massive infrastructure capabilities, employ a significant number
of workers (usually 250 above ) and produce a large amount of output. Most often
the business has many branches and many sales outlets or distributors across the
country.

Chapter 9

45
 10 INDISPENSABLE FACTORS TO CONSIDER
BEFORE STARTING A BUSINESS
Almost every individual or groups like cooperatives dreams
about starting his/their own business. Yet only 4% of the newly
started businesses manage to reach the 10 year mark.

In fact over 50% of the small businesses don’t even make it to

the fifth year. Most people have no idea about the various things
to consider when starting a new business.

It is just a desire to be on top of things that motivates many to

start businesses. They have no idea about the money that is
required, the hard work that they have to put in, the knowledge
and the experience that they have to gain, and the kind of
patience they need to have, until their business reaches up to a
certain level for them to break even or make profits.

‘Well begun is half done’

is what they say. So if you want to start your business, you have
to get all the things needed to start a business.

Here is a checklist that will give you a list of factors to consider

before starting a business:

1. A Business Idea
2. Knowledge or Expertise
3. Market or Demand and profitability of the business idea,
4. Start-up Costs
5. Capital and Finance
6. Competition
7. Location
8. Staff

46
9. Technology
10. Scalability and sustainability of the business

1. A Business Idea
Every business starts with an idea – a super duper idea that
actually works. If you want your business to stand out, you will
need to offer something that no one else has offered till date

That said not everyone can come up with a unique business

idea . There might be hundreds of businesses just like the one
you are going to start. Yet you can make it better by answering
the following questions:

 What do I need to do to make this better?

 What is it that I can do better than what the other guys are doing?
 Will I be able to grab some market share in this category?
You may have a great business idea; but unless it solves
someone’s problem it is not going to work. So start by listening
to frustrations – both of yours as well as others (your family
members, your neighbors, your friends, and your associates).
Once you have understood these, here is what you can do:

 See what best you can do to address these frustrations.

 Identify the skills in you that will help you offer the right solution.
 Find out if you are actually passionate about offering that solution.
And Voila! You have your business idea.

2. Knowledge or Expertise
Once you know what business you want to start, you will have to
start gaining the required knowledge and expertise to start that
business.

47
 This might take a lot of research and planning; but at the end all
these efforts will ensure that you have everything in place to
get your business idea off the ground.

Having a business plan can be highly advantageous at this

stage. It will tell you whether your business has a place in the
market and if the idea is worth or profitable enough to go ahead
with.

If you have the knowledge you can construct one, all by

yourself. If not, you can always hire a professional business
consultant to do it for you.

Meanwhile you will have to continue with your research to keep

your knowledge up-to-date.

3. Market or Demand
Once you are sure of starting your business, your next step
would be to explore the market or the demand for your product
or service.

Start by answering the question, who are your customers. If you

are selling your product or service locally, you may have to
assess the demand for it. In case you are taking up on an
international level, you may have to understand the rules and
regulations of dealing internationally.

A market survey should reveal all the details that you may need
about the market for your product or service. Basically you are
looking for:

 The current size of the market (the approximate number of potential

buyers)
 Its growth potential (whether it is likely to grow in size or contract)
 The market share that you can expect to take
 The buying habits of the target audience (and how to exploit them)

48
 The different segments of the market
 The kind of margins that you can expect from the market
Thankfully social media has made it possible to reach out to
target audience, anywhere in the world, without having to put in
too much of efforts.

4. Start-up Costs
Estimating your start-up costs is one of the very important
things to consider when starting a new business. You will have
to assess the total cost that is required to set up and run your
business successfully.

If you are thinking of starting a manufacturing plant, your start-

up costs could be very high. You may have to think about the
cost of the land or building, setting up the plant, buying the
equipment and machinery, investing in furniture and office
equipment, and various other things.

In case of a retail business, you may still need to think of the

cost of the store as well as the furniture required to decorate it.
An office can be started with relatively lower cost since all you
may have to invest would be in furniture and office equipment.

Once your business is set up, you will have to think about the
working capital needed to run your business.

You will have to take into account the inventory that you need
to maintain, the credit that you can extend to your customers
and the supplier’s credit that you can get.

In not all cases can you expect credit to be given by the

suppliers, especially if you are a new name in the market.

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5. Capital and Finance
No business in this world can run without money. Depending on
the type of business you are starting and the initial costs that
you will have to pay up for, you will know what kind of capital
you would need to start your business.

Whatever steps you take, to finance your business, you will have
to make sure you have the required funds to take you through
the startup phase.

The financing pattern is one of the most important factors to

consider before starting a business. This generally includes the
capital that you can introduce from your savings as well as the
funds that you can borrow.

Personal savings are what 77 percent of the small

businesses rely upon while gathering their initial funds. But you
can’t really go over the board if you cannot fund your entire
business.

Funds can be borrowed for business , either through short-term

or long-term loans. Nevertheless, you may have to keep in mind
the terms and conditions of borrowing such funds including the
cost of borrowing, the rate of interest, the repayment terms,
and the security that is required. Approach a few banks and
private lenders, get a few quotes, and compare them to identify
the most beneficial type of funding.

It would be ideal to go for long-term funds only if you have to

purchase any fixed assets. For working capital requirement
short-term funds would be sufficient. This way you can make
sure they are paid back once your business starts progressing.

6. Competition
Unless you know who your competitors are and what they are
doing, you will not be able to survive in the market for long.

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 If your product is a monopoly competition will not matter. Else,
you will have to come up with an excellent strategy to fill in the
demand and supply gap.

Gaining a market share should be on top of your mind if you are

about to start a business. If there is a huge demand for your
product, this shouldn’t be too difficult. If not you may have to
strengthen the position of your business to gain an entry into
the competitive market.

Analyzing competition includes getting to know your

competitors, figuring out how they have positioned themselves,
identifying their pricing and marketing strategies, and
evaluating their strengths and weaknesses.

Once you have all the information it is all about conveying your
unique selling point to your target audience. If you can do this
well you will survive no matter how tough the competition is.

7. Location
One of the most important things needed to start a business is a
good location.

If yours is a retail business you will have to look for a well-

populated area that is easily accessible.

If it is a manufacturing unit you can choose a location that can

let you save money on electricity, water, taxes, and
transportation. Look for a place where manpower is easily
available and raw materials can be sourced easily. You can even
look for a location that can get you rebates and subsidies from
the government.

If yours is a niche product or a service, you may have to look for

a single location where all your competitors are. For instance, if
it is a software company you want to start, you may have to look
for a software belt where all other software companies have set

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 their shops. Similarly, the ideal location for a gold vendor /
jeweler would be a gold mart that has housed many such shops.

Offices can be set up in any place that is accessible and offers

good facilities such as parking spaces, refreshments,
transportation, and so on.

Make sure the location fits well within your budget and offers
scope for expansion. An ideal location would be one that
complements your business in the best possible way.

8. Staff
Your staff members are the ones that can make or break your
business.

Without efficient manpower no business can ever succeed. That

said an efficient staffing strategy needs to be in place if you
want to reduce your staff replacement expenses.

You can hire a recruitment agency or use various recruitment

tools to fill in your positions with the right talent.

There are also a number of websites that make it easy to find

the exact kind of people you are looking for. Signing up for a
couple of these can make your job, both easy and cost-effective.

Apart from hiring the right staff there is also the training that
you need to think of. This will ensure your staff members will be
in a better position to handle their responsibilities and meet the
expectations you have set for them.

Finally you will also need to think about paying their salaries
and perks to keep them motivated enough at work.

9. Technology

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 Technology is one thing you can never compromise on when it
comes to starting a new business in today’s world.

Whether it is office equipment, plant and machinery, or the

software required to monitor your business, you will have to
make sure it helps your business to perform well in the long-run.

Here are a few steps you can follow, while choosing the right
technology for your business:

 Assess the requirements of your business

 Make sure the technology you choose helps in making things run
smoothly
 Consider leasing technological equipment if you want to stay up-to-date
 Always have a backup plan
 Make sure you have the required support for installing, upgrading, and
troubleshooting the technology that you choose
 Invest in training so that you can make maximum use of the technology
Bonus Factor: A ‘Can-Do’ Attitude
When trying to start a new business you may see a lot of doors
getting slammed in your face, a lot of people trying to shut you
down, and a zillion cant’s and don’ts from all over; but with a
‘Can Do Attitude’ you can rise above all of it.

Dreaming big is not the only thing needed to start a business.

You will also need to believe in that dream and work towards
achieving it with an excellent business strategy.

Apart from the above factors to consider before starting a

business, there is another one that seems to be very important –
web presence.

In fact every business can benefit from web presence , whether it

is a website, a social media page, or an online brochure.

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 Today there are many websites that offer all the tools and
templates that you would need to create your own site within
minutes.

But if you have the funds, it can be extremely beneficial to get a

professional web designing company to do up your website for
you. For all you know they may also have an SEO expert who
can help you save a lot of money on marketing your business

 10.Scalaibility and sustainability of the Business.

A truly scalable business is one that keeps low marginal costs while increasing
revenue and works efficiently with less involvement from the business owner..
What is business scalability? It’s the flexibility of all aspects of your operation
that grow with the business — this includes things like accounting and marketing
provisions, as well as production and even your telephone system, customers
base, revune and prodit growth .
 Me dium

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