2.0 CHARACTERISTICS, RISKS AND REWARDS OF ENTREPRENEURS
2.1 What are the common characteristics of successful entrepreneurs?
Not all successful entrepreneurs have the same characteristics or abilities; however, we would expect an entrepreneur to have some of the attributes listed below:
a. Are hard workers: driven by the desire to excel (do extremely well). They can work for long hours and days without normal sleep.
b. Have self-confidence: they believe in themselves and their ability to achieve the goal they have set.
c. Long-term commitment: they believe in long term involvement in activities. They are builders, not get rich quick dreams.
d. Are money oriented: they view money as a means to an end. Money, profits, capital gains are viewed as means or measures of their development and success and not as ends.
e. Have problem solving attitude and ability: successful entrepreneurs strive to overcome barrier and solve problems.
f. Have goal oriented attitudes: they set new, meaningful goals and plan how to reach them. They tend to set high and challenging goals which are clear and realistic.
g. Take moderate risk: they are risk takers, but they are not careless. In deed entrepreneurs are not habitual fortune seekers.
h. Deal positively with problems and failure: they believe failure as an opportunity to learn, to better understand a situation and to avoid similar problem in the future.
i. Use feedback: they have a skilled use of reports and general feedback from personnel. Seek out information and clues about their work. They use feedback to improve their performance.
j. Take initiative and seek personal responsibility: they are self motivated and self-reliant. They want to get things done.
k. Use resources effectively: they have ability to use internal and external resources highly effective. They are not ashamed to ask for assistance and experts’ advice.
l. Compete against themselves: they express willingness to compete against self-imposed standards. They are also compete two or more businesses they have.
m. Accept responsibility for their own fortune: successful entrepreneurs are masters of their own destiny and they do not believe that success or failure depends on fortune, luck or chance. They believe that they have internal locus of control their life business.
n. To relate ambiguity and uncertainty: unlike professional managers, entrepreneurs are able to live with unassuming to high levels of uncertainty concerning to job and career decision.
o. Have independence and individuality: they want to be their own boss, to do their own thing in their own way and at their own pace. They enjoy they freedom and the right to be different and unique.
p. Are realistic: entrepreneurs prefer to see something tangible rather than inaccurately. They optimize arises from self confidence rather than unjustified hopes.
q. Are innovative and creative: they seek new ways to do things or solve problems. While managers prefer competence and efficiency, entrepreneurs place priority on creative and innovative paths or opportunities.
r. Are profits oriented: entrepreneurs believe in and accept profits. They understand that profits are essential for business success; they consider profit as a measurement of performance.
s. Seek achievement: they are over-achievers and pursue excellence. Often they desire to achieve something that is outstanding and first class.
t. Possess integrity: honest is the best policy of entrepreneurs. If they make mistakes they deal with them openly.
u. Are rewards oriented: they want to be rewarded for their efforts. Being hard workers and over-achievers they strive for positive results for their contribution to attain a sense of personal accomplishment in form of money, respect, recognition and so forth. etc ...........................
2.2 Risks and rewards of entrepreneurs
2.2.1 Rewards of entrepreneurship
People who make decisions for entrepreneurship instead of taking salaried employment typically do so for the following reasons:
a) Desire for economic independence: Independence provides a source for satisfaction. Entrepreneurs have strong desire to make their own decisions, bear risks of the business and obtain the rewards for them.
b) Profit expectations: Successful entrepreneurs realize business profits that exceed earnings from salaried employment.
c) Desire to be own boss: Entrepreneurs want to gain control of their own fortune. They want to lead rather than be led.
d) Seeking security: Entrepreneurs seek to possess a secure occupation and reliable source of income. One a business flourishes, its owner is both occupationally and financial secure. Salaried employment is susceptible and vulnerable to retrenchment or retirement.
e) Protection of property: The owner of idle or excess business premise such as vacant business building may opt to open a small retail business rather than let it in order to protect the investment in the building.
f) Protection of business: The only viable option open to successors of a business is to manage the business themselves.
2.2.2 Risks of entrepreneurship
Risks which prospective entrepreneurs are likely to face are as follows:
a) Risk of losing invested capital: Starting a new business always carries some risk or failure, the personal capital invested in business may therefore be lost. Risks beyond the control of the entrepreneur may rise from price fluctuations, changes in consumers tastes, labour disputes and so on.
b) Uncertainty and irregularity of income: Business income is usually less regular than the paychecks of a salaried employee. Businesses face financial hardships at their initial stages.
c) Responsibility of mismatched career: Dealing with suppliers, customers, regulatory government agencies, competitors, venture capitalists and own employees may be a cause of stress.
d) Missing advantages of salaried employment: Entrepreneurs lack opportunities given to salaried employees such as future security, pensions, earning regular and stable income, working shorter hours and drawing overtime pay. Also paid vacations, medical and insurance benefits, training and promotion opportunities.
2.2 Importance of entrepreneurship to local, social and national development
Entrepreneurship is important in mobilizing and coordinating capital, and in controlling and integrating production. It helps especially in those aspects of organization where innovation and risk taking are needed. Generally, entrepreneurship helps to promote individual, social as well as national economic development.
2.3.1 Motive to become an entrepreneur (personal benefits)
· It’s very exciting to start a business of your own.
· Owning your own business gives you a sense of freedom and power, which makes you feel you are in charge of your own destiny (future).
· It presents the opportunity to determine your own income.
· It’s important, to go into the business venture with your eyes wide open, as starting and running a business is not for everyone and you need to be sure that you have what it takes otherwise you could be in for a lot of problems and possible financial ruin.
· In addition, it’s very stressful moving into strange territory on your own and you have to be able to handle pressure and uncertainty without allowing them to affect you negatively.
· Go through the checklist of questions to help you determine whether it would be advisable to start your own business or not.
2.3.2 Government point of view on importance of entrepreneurship
· Employment creation and generation
· Entrepreneurs increase the national income
· Dispersal of economic power amongst the population
· Balanced regional development
· Nursery for entrepreneurship talent
· Reduce the harmful effect of monopoly
· Reduce dependency
· Effective and potential use of available resources
· Management of high prices of most commodities and services
Additional importance of trainings of entrepreneurship
Training is offered in different ways in universities and colleges. In some universities it is provided as a complete course including financial marketing, business development, etc. Entrepreneurship training has become popular and more important for the following five reasons:
i. The development of business plans allows the students to acquire an integrated set of financial, marketing, economic, accounting etc. skills.
ii. Entrepreneurship training can lead to the promotion or founding of businesses by the graduates or make them more successful in the labor market.
iii. Entrepreneurship training can promote technology transfer from the university to the market by means of developing technology-based business plans.
iv.Entrepreneurship training establishes a strong link between the academic and business communities. Business leaders regard the entrepreneurship training as a useful and applied approach to the study of the economy and business and are keen on financing entrepreneurship plans.
v. As there is not a single approach to entrepreneurship training and entrepreneurship is not restricted by common traditional boundaries, some experiments can be carried out through the training courses to enhance other business courses (Charney and Libecap, 2000).
Charney and Libecap (2000) conducted some research on the impacts of entrepreneurship training on the establishment of companies in the University of Arizaona. The results of the research on the graduates of entrepreneurship and those of other majors in the University of Arizona were as follows:
i. Training entrepreneurship and business skills causes individuals to develop a tendency towards getting involved in the creation of new business ventures. On average, the number of entrepreneurship graduates who start a new business venture is three times that of non-entrepreneurship graduates.
ii. Thanks to entrepreneurship training, entrepreneurship graduates were more inclined to be self-employed. In fact, they were not as willing as other graduates to be employed in governmental or non-governmental companies.
iii. Entrepreneurship training greatly influences the entrepreneur’s income. On average, entrepreneurship graduates’ income is 27% as high as non-entrepreneurship graduates’.
iv. There is no meaningful relation between entrepreneurship training and job satisfaction. In other words, it doesn’t raise the graduate’s job satisfaction.
v. Entrepreneurship training impacts the development of companies, particularly smaller ones. In general, the companies that employ entrepreneurship graduates tend to have higher sales figures. By contrast, the companies owned by entrepreneurship graduates are, generally, larger and sell more than those possessed by non-entrepreneurship graduates.
Training of entrepreneurship enhances technology transfer from the university to the private sector and leads to the development of technology-based companies and products. Entrepreneurship graduates, generally technology transfer offices can, to some extent, help to overcome these barriers
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