This document summarizes the first lecture of an entrepreneurship course. The lecture covered key definitions related to entrepreneurship, motivations for becoming an entrepreneur, important entrepreneurial attributes, types of risks entrepreneurs face, sources and effects of stress for entrepreneurs, and defining ethical issues entrepreneurs may encounter. Assessment requirements for the course included a business plan, individual and group assignments, and class participation. Recommended reading from entrepreneurship textbooks was also provided.
ECD Lecture 2 - generation of business opportunities
ECD Lecture 1 - challenges of entrepreneurship
1. Enterprise Creation & Development
Lecture 1:
Challenges of
Entrepreneurship
Mr Khoo Chen En
(6460 8016; kce3@np.edu.sg)
ECD Oct 14/Lecture 1/kce 1
2. Enterprise Creation & Development
Challenges of Entrepreneurship
Generation of Business Opportunities
Scanning the Business Environment
Importance of the Business Plan
Starting the Business
Financing the Business I
Financing the Business II
Developing the Business
ECD Oct 13/Lecture 1/ttl2
3. Assessment System
3
Weightage Bazaar
Business
plan
Mid semester
test
30%
14 Jan 2015 (Wed)
(Time and Venue to be confirmed)
Individual
Assignment 1
(Week 5)
(3-5 page
report)
20%
What you intend to sell
during the First Step!
bazaar -
26 Nov 2014, Wed 3pm
Your business
idea -
26 Nov 2014,
Wed 3pm
Group
Assignment 2 30%
1) Bazaar – 17 Jan 2015
(Sat)
2) Post mortem & next
step report – 28 Jan
2015, Wed 3pm
Comprehensive
business plan
– 28 Jan 2015,
Wed 3pm
Tutorial
participation
20%
10% class participation
10% presentation for assignment 2
ECD Oct 14/Lecture 1/kce
4. Recommended Text
• Donald F. Kuratko ENTREPRENEURSHIP –
THEORY, PROCESS AND PRACTICE, 9th
Edition, CENGAGE, Chp 1,2 & 4
• Justin G. Longenecker, Carlos W. Moore, J.
William Petty and Leslie E. Patch, SMALL
BUSINESS MANAGEMENT – AN
ENTREPRENEURIAL EMPHASIS,
International Edition, Thomson South-
Western, Chp 1
4ECD Oct 14/Lecture 1/kce
5. Lecture Objectives
• Definitions
• Why be an Entrepreneur?
• Entrepreneurial Attributes
• Different Types of Risk
• Stress and the Entrepreneur
• Entrepreneurial Ethics
5ECD Oct 14/Lecture 1/kce
6. 6
Successful Entrepreneurs
• Larry Page, CEO of Google
• Age : 41 (born 1973)
• Net Worth US$20.3B (2012)
• Son of a computer science professor
ECD Oct 14/Lecture 1/kce
7. 7
Successful Entrepreneurs
• Olivia Lum, Chairman &
Group CEO, Hyflux
• Age 52 (born 1962)
• Net Worth:US$460M (2011)
• Adopted at birth by a poor elderly woman,
never knew her biological parents
• Started company at age 28, with $20,000
savings
• Ernst & Young World Entrepreneur Of The Year
2011
ECD Oct 14/Lecture 1/kce
8. 8
Successful Entrepreneurs
• Michael Masterson, Serial
Entrepreneur
• Age : 64 (born 1950)
• Co-started/turned-around dozens
of multi-million dollar businesses
across diverse industries (several
above US$350M)
• Born in poor New York neighbourhood in family
of 7 children
• Started first business at age 11
• Author of several New York Times and Wall
Street Journal bestsellers
ECD Oct 14/Lecture 1/kce
9. Key Definitions
Entrepreneur:
• Derived from French word “entreprendre”, which
means “to undertake”
• Innovator/Developer who recognizes & seizes
opportunities; converts those opportunities into
workable/marketable ideas; adds value through
time, effort, money, skills; takes calculated risks
of starting a business to implement these ideas &
realizes rewards from these efforts
• Entrepreneurs are born AND made
9ECD Oct 14/Lecture 1/kce
10. Key Definitions
10
Difference between “Inventor”, “Innovator” &
“Entrepreneur”:
• Inventor: Creates new technology or product
... often not yet ready for market
• Innovator: Transforms new or existing
technology, product, service, business model,
customer experience into something ready for
market
• Entrepreneur: Recognizes & seizes
opportunity, assumes risks, TAKES ACTION to
create & develop business to pursue
opportunity
ECD Oct 14/Lecture 1/kce
11. Key Definitions
11
Difference b/w “Small Business Owner” &
“Entrepreneur”:
• Small Business Owner: Create business that
provides oneself & perhaps a few others with
a job, at satisfactory profits
• Entrepreneur: Create & develop a fast-
growing, highly profitable, eventually self-
sustaining business, that is dominant in its
area/industry, often with focus on
continuous innovation
ECD Oct 14/Lecture 1/kce
12. Key Definitions
12
5 Levels of Entrepreneurs (based on actual
real-life role instead of fictitious title):
• Level 0: Employee
• Level 1: Self-Employed / Technician
• Level 2: Manager
• Level 3: Leader / Owner Entrepreneur
• Level 4: Investor Entrepreneur
• Level 5: Highest-Level Entrepreneur
[Source: Bradley J. Sugars, ‘’Billionaire in Training’, MacGraw Hill 2006]
ECD Oct 14/Lecture 1/kce
13. Why be an Entrepreneur?
Profit
Personal satisfaction
Independence
Freedom
Personal fulfillment
13ECD Oct 14/Lecture 1/kce
14. Model of Entrepreneurial Motivation
14
[Source: Douglas W. Naffziger, Jeffrey S. Hornsby and Donald F. Kuratko, ‘A Proposed Research Model of Entrepreneurial
Motivation’, Entrepreneurship Theory and Practice, Spring 1994:33]
Intrinsic/
extrinsic
rewards
Firm
outcomes
Decision to
behave
entrepreneurially
Entrepreneurial
strategy
Entrepreneurial
management
Implementation / Outcome perception
Personal Expectation / Outcome comparison
PC PE PG
BE IDEA
•PC= personal characteristics
•PE= personal environment
•PG= personal goals
•BE= business environment
ECD Oct 14/Lecture 1/kce
15. Key Elements in
Entrepreneur’s Background
Supportive childhood family
environment.
Having a father who is self-
employed helps.
Education is important.
Aged 22-45 when starting
venture.
Work history: dissatisfied with
company job but has technical
knowledge.
15ECD Oct 14/Lecture 1/kce
16. Entrepreneurial Attributes
16
Internal locus of
control
Self-confidence
& Optimism
Need/drive to
achieve
Independence
Opportunity
orientation
Creativity &
Innovativeness
Calculated risk
taking
Tolerance for
Failure
ECD Oct 14/Lecture 1/kce
18. The Entrepreneurial Journey
• Entrepreneurs emerge as a function of value-
creation process.
• emergence of the opportunity
• emergence of the venture and
• emergence of the entrepreneur.
• Socially situated process that involves
numerous actors and events.
• Processes include emotions, impulses, and
physiological responses as individuals react to
a diverse, multifaceted, and imposing array of
activities, events and developments.
18ECD Oct 14/Lecture 1/kce
19. Different Types of Risk
19
THEDARKSIDEOF
ENTREPRENEURSHIP
Financial
Risk
Psychic
Risk
Career
RiskFamily&
SocialRisk
ECD Oct 14/Lecture 1/kce
20. Stress and the Entrepreneur
What is entrepreneurial stress?
• Discrepancies between a person’s expectations and
ability to meet demands need to be looked up to by your staff,
need to build up the company fast, need to put systems in place, market to
difficult markets do you have the ability to do it? the bigger the gap, the
higher the stress becomes
• Discrepancies between the individual’s expectations
and personality
20ECD Oct 14/Lecture 1/kce
21. Stress and the Entrepreneur
• Engage in constant communication activities interacting with
customers, suppliers, regulators, lawyers & accountants
(stakeholders) people in your company, outside your company, behind the scenes
• Entrepreneurs must bear the cost of their mistakes while
playing a multitude of roles – salesperson, recruiter,
spokesperson & negotiator need to wear a lot of different hats
21ECD Oct 14/Lecture 1/kce
22. Stress and the Entrepreneur
• Lack of support from colleagues that
may be available to managers in a large
corporation
• Require a large commitment of time &
energy, often at the expense of family &
social activities.
22ECD Oct 14/Lecture 1/kce
25. Sources of Stress
• People problems
Successful entrepreneurs are to
some extent perfectionists and know
or insist how they want things done
(need to have vs good to have!)
• Need to achieve
Achievement brings satisfaction
25ECD Oct 14/Lecture 1/kce
26. Stress and the Entrepreneur
• What kind of behaviour does an
entrepreneur exhibit when stressed?
26ECD Oct 14/Lecture 1/kce
27. Stress and the Entrepreneur
• Stress can result from personality
• ‘Type A’ behaviour
• Impatient, demanding & over strung
• Chronic & severe sense of urgency want to be better
than competitors
• Constant involvement in multiple projects
subject to deadlines
• Neglect all aspects of life except work
• Tendency to take on excessive responsibility
• Tendency to speak faster than most people
27ECD Oct 14/Lecture 1/kce
28. Dealing With Stress
Networking
Getting
away from it
all
Communicating
with employees
Finding
satisfaction
outside the
company
Delegating
Mental health
check-up (or
counselling)
Knowing self
and
business/life
partners
28ECD Oct 14/Lecture 1/kce
29. Defining Entrepreneurial Ethics
• Provide the rules for how society conducts any
activity in an ‘acceptable’ manner.
• Entrepreneurs are confronted by shareholders,
customers, managers, the community,
government, employees, unions, peers and so
on.
• Values, mores and societal norms all constantly
fluctuate.
• ‘Deciding what is good or right or bad and
wrong in such a dynamic environment is
necessarily ‘situational’.
29ECD Oct 14/Lecture 1/kce
30. 30
Chinese milk powder contaminated
with melamine sickens 1,253 babies
Sanlu, China's biggest milk powder
manufacturer, sold contaminated milk after
farmers laced their produce with industrial
chemicals to increase its protein content
ECD Oct 14/Lecture 1/kce
31. 31
India turning into hub for
fake medicines
The global fake-drug
industry, worth about
US$90 billion, causes
the deaths of almost 1M
people a year.
Tricks of the trade include
sticking fraudulent labels
on expired products,
filling vials with water,
putting chalk powder in
medicine packets.
http://www.washingtonpost.com/wp-
dyn/content/article/2010/09/10/AR20100910067
00.html
ECD Oct 14/Lecture 1/kce
32. Types of Morally Questionable Acts
TYPE DIRECT EFFECT EXAMPLES
Non-role Against the firm - Expense account cheating
-- Embezzlement
Role failure Against the firm -Superficial performance
appraisal
-- Not confronting expense
account cheating
Role
distortion
For the firm - Bribery
-- Manipulating suppliers
Role
assertion
For the firm - Not withdrawing product
line in face of initial
allegations of inadequate
safety
32
Source: James A. Water and Frederick Bird, ‘Attending to Ethics in Management’, Journal of
Business Ethics, 5, 1989:494
ECD Oct 14/Lecture 1/kce
33. 33
Corruption Perceptions Index
• Globally oriented
entrepreneurs are
going to face a
myriad of business
environments in
the Asia–Pacific
ECD Oct 14/Lecture 1/kce
34. Social Entrepreneurship
• Social Entrepreneurs innovate & act according
to the desire to create & sustain social value
for others.
• Their assets & wealth are used to create
community benefit.
• Profits & surpluses are reinvested in the
business & community rather than distributed
to shareholders.
• There is either a double or triple bottom-line
paradigm that balances economic, social and
possibly environmental returns.
34ECD Oct 14/Lecture 1/kce
35. 35
Conclusion
The more you know, the
more prepared you will be
when opportunity knocks.
If you are lazy and wile
your time away, you would
not know how to take
advantage of opportunities
even if they stared you in
the face.
Li Ka Shing
ECD Oct 14/Lecture 1/kce
36. Recall Lecture Objectives
• Definitions
• Why be an Entrepreneur?
• Entrepreneurial Attributes
• Different Types of Risk
• Stress and the Entrepreneur
• Entrepreneurial Ethics
36ECD Oct 14/Lecture 1/kce
Hinweis der Redaktion
Manager: only manage people
Leader: still manage people but manage managers as well
Independence: to make your own decisions, doesn’t mean all decisions are thought of and done, many good entrepreneurs listen to others and the experts in the field before making decisions
Freedom: want to be free from oppressive situations e.g. lousy boss, lousy pay, not have colleagues talking about them behind their backs
Fulfillment: satisfaction doesn’t mean fulfillment ability to do something that is beyond yourself e.g. prevent the end of something good, putting the end to something that is bad
Intrinsic: everything besides money
Super super important!
Ability to control your own success or failure e.g. those who do really well in exams, have extremely high internal locus of control will say, I studied very hard and that’s why I do very well (vs external locus of control will say, the paper was easy, I was lucky)
Even when faced with major obstacles, see the optimistic side of the situation (the optimism will pass on to your workers as well)
Strong drive to compete, to attain challenging self-imposed goals e.g. Bill Gates wanted to win in everything and set himself unattainable targets. Even though he didn’t achieve all, he went very close to meeting them (always set the bar higher to achieve high growth)
Desire to make own decisions (but not all of them)
When others see a chaotic situation, entrepreneurs see an opportunity (no matter what circumstance)
(next lecture)
Not taking risks plainly, taking CALCULATED risks e.g. Bill Gates did not just quit Harvard and start Microsoft. He applied to take an approved leave of absence from Harvard before going out to start his business. in case he failed in starting his business, he can go back to Harvard and continue his studies (KIASU AH)
View failures as an outcome and use it for learning (!!!) they do not get disappointed if they fail successful entrepreneurs know when to stop and cut losses
Having clear picture of where the company is heading and communicate it to the employees e.g. clear idea of what the company is to be in the future, be able to paint the picture clearly
(!!!) about honesty, absolutely necessary to be successful (when you lie about something, people will not trust you anymore) e.g. hire courier services to ship large quantities of items even though you make losses relationships v important!
Even when things look bad, need commitment, determination and perseverance
Need to be able to present with high energy to your customers, employees e.g. building a routine, strict eating diets, sleep well
Able to build a good team
Take responsibility for your team employees look up to you. Take initiative, do more than what your competitors are doing
Not concerned (too much) about their job security and lack of information (doesn’t hinder them from making a decision) need to make decisions even in ambiguous situations with lack of information
A lot of problems that will appear everyday, need to be able to tackle the problems and handle them fast, put an end to the problems (grows with experience)
Don’t think that they know it all (even though they are independent in making decisions), get feedback from people they respect and value
Career risk: can get a job if they lose their job?
Financial risk: what if they become a bankrupt?
Psychic risk: in your mind (two levels) one, if the business fails, people don’t want to be known as failures, very shameful! Two, they might have had high flying jobs before becoming an entrepreneur, but when they start a company, nobody knows about it, can you take it?
Family and social risk: need to put in a lot of time into the company = less time with family and friends
At the workplace, cant share with people
At home, cant share with family cos they may not understand
Fits of anger or break down!
Networking with other business people e.g. people who have just started out companies, people who are experienced and have been through what you have been through
Taking a holiday take relaxing holidays to come back recharged and not more tired than when you left
(!!!) never underestimate employees, they may be able to give you advice
Need to have hobbies other than just work
Don’t try to do everything yourself
Especially when you feel that its too much get a health check up!
Need to know yourself, map out what are the things that drive yourself? Strengths and weaknesses? Preferences? Know that of your spouse, children etc. can work things out
Existential overheads
List them all down and prioritize them!
