Entrepreneur

Front 1

Key Concepts

Back 1

• entrepreneur
  
• entrepreneurship
  
• role of the entrepreneur
  
• motivation of entrepreneurs
  
• the small business
  
• the entrepreneurial process
  
• skills required of an entrepreneur
  
• resources needed to start a business
  
• starting a new business
  
• buying an existing business
  

Front 2

Entrepreneur

Back 2

An entrepreneur is a person or personality type that takes up a new venture and is willing to accept full responsibility for the outcome.

Entrepreneurs are those individuals in society who take the initiative and risk by harnessing the factors of production to generate products and services.

The entrepreneur's reward for taking the initiative and risk is profit. And a loss is the result of taking the wrong decision.

Entrepreneurship is also a scarce human trait since not everyone in a country has the skills or is prepared to take risks in generating products and services.

Front 3

Entrepreneurship

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Entrepreneurship is described as the process of identifying, creating or sensing an opportunity where others do not see it and of finding and combining resources (often owned by someone else) to pursue the opportunity until it becomes a successful, established business.

Front 4

The role of entrepreneurship on soceity

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Entrepreneurship is a vital ingredient in the development of any country and even moreso for a country such as South Africa that has been plagued by growing joblessness inrecent years. Different sources are available regarding the total number of unemployedpeople in South Africa.

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Entrepreneurial activity plays an essential and valuable role in society. Three broad categories of determinants of or reasons why individuals initiate business ventures are the following:

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The traits and characteristics that entrepreneurs hold. These traits and character- istics include:

• achievement motivation
  
• an internal locus of control
  
• innovation and creativity
  

risk-taking

Entrepreneurs' skills and industry experience

Opportunities arising due to outsourcing

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We can say that a business is a small business if it has at least two of the following characteristics (which are also called qualitative measures):

Back 6

• The management of the small business is independent, which means that the owner is usually also the manager of the business.
• Capital is provided by the entrepreneur or a few people who start the business together.
• The activities of the enterprise are mainly local (in South Africa).
• The enterprise is small in comparison with the largest competitors in the particular industry, for example the small supermarket down the road in comparison with the Shoprite Checkers group of retailers which is the largest retailing group in Africa.
  

Front 7

Quantitative criteria

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Measures something that can be measured or counted.

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Survivalist enterprises

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Operate in the informal sector of the economy

Mainly undertaken by unemployed personsIncome generated below the poverty line, providing minimum means to keep the unemployed and their families aliveLittle capital invested, not many assets

Not much training

Opportunities for growing the business are very limited between one and five employees, usually the owner and familyInformal ± no license, formal business premises or labour legislation

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Micro Enterprises

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Turnover below the VAT registration level of R300 000 per year

Basic business skills and training

Potential to make the transition to a viable formal small business

Part of the formal economy, use technology

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Very Small Enterprise

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Fewer than 10 paid employees

Include self-employed artisans (electricians, plumbers) andprofessionals

Fewer than 100 employees

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Small Enterprise

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More established than very small enterprises, formal and registered, fixed business premises

Owner-managed, but more complex management struc- ture

Up to 200 employees

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Medium Enterprise

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Still mainly owner-managed, but decentralised manage- ment structure with division of labour

Operates from fixed premises with all formal requirements

Front 13

Definition of a small business

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A good general definition of a small business is that it is owned and managed 22independently and in no way predominates in the industry in question.

Small businesses provide ample opportunities for personal initiative, innovation and the development of new products.

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This strategic role of small businesses revolves around the following:

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The production of goods and services

innovation

the aiding of big business

job creation

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If the person proceeds through these phases he or she will be in a better position to succeed in the business venture. The phases are the following:

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Abilities and skills. The main question here is: Do I the prospective entrepreneur have the background/knowledge to be able to succeed in the business?

Access to resources. For instance do I have enough finance to start the business?

Opportunity/idea. Is there a chance that my idea will work?

Feasibility. Is my idea feasible in terms of rands and cents?

Business plan. Compile a business plan to obtain the necessary finance.

Managing the business. Launch the business and manage it.

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A skill is simply knowledge, which is demonstrated by action.

Potential entrepreneurs therefore need the following management skills:

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strategy skills ± to position the business in the competitive environment

planning skills ± to plan for the future of the business

marketing skills ± to identify the target market and meet the wants and needs of thismarket

financial skills ± to manage the finances of the business

project management skills ± to organise the business activities

human relations skills ± to deal with the workers employed by the business

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Resources

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Without resources no entrepreneur would be successful.

So you need financialresources, human resources and operating/physical resources.

For instance, a spazashop selling groceries must at least have a proper room (part of the physical resources)where groceries can be displayed (and with secure storage against unfavourableweather conditions and theft).

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To buy an existing business

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see text