Understanding Entrepreneurship

Common Myths about Entrepreneurs

Perhaps, one way to make the students appreciate the nature and essence of entrepreneurs is to correct certain wrong notions commonly held about entrepreneurs. Barringer and Ireland (2012) identified five most common myths and the realities about entrepreneurs.

Myth 1: Entrepreneurs are born, not made. This myth is based on the wrong notion that some people are genetically predisposed to be entrepreneurs. Similar studies carried out on the psychological and sociological make up of entrepreneurs confirmed that entrepreneurs are not genetically different from other people. This means that entrepreneurs are not born and that many individuals have latent potential to fit into the role of entrepreneurs. Such potentials can be actualized through training programmes.

Myth 2: Entrepreneurs are gamblers. Another wrong notion about entrepreneurs is that they take big risks and are gamblers. The fact is, entrepreneurs usually take moderate and calculated risks. Entrepreneurs are often referred to as gamblers because of two main reasons. First, many entrepreneurs have a strong need to achieve and often set challenging goals, a behaviour that is occasionally equated with risk taking. Second, most entrepreneurs jobs are less structured, and so they face a more uncertain set of possibilities than managers or non-managerial personnel. In a nutshell, entrepreneurs are not gamblers but rather take calculated and moderate risks.

Myth 3: Entrepreneurs are motivated primary by money. Entrepreneurs go into business as a result of freedom to work for oneself and to pursue personal innovation. It makes sense to say that entrepreneurs go into business in order to seek financial and social rewards of entrepreneurship. It must be emphasized that entrepreneurs have reason for the existence of their businesses (mission statement) which in turn translate into the primary objective of any business (profitability). In a nutshell, money is not often the primary reason entrepreneurs start new businesses and persevere. Some entrepreneurs warn that the pursuit of money can be distracting.

Myth 4: Entrepreneurs should be young and energetic. Entrepreneurial activity is fairly evenly spread out over age ranges. Barringer and Ireland (2012) believed that the increasing number of older aged entrepreneurs is a big change in the entrepreneurial landscape in developed societies like the United States. Most venture capitalists are ready to fund a strong entrepreneur with a mediocre business idea than fund a strong business idea and a mediocre entrepreneur. The word ―strong‖ in the eyes of an investor is based on a number of factors such as experience in the proposed business, a track record of success, and passion about the business idea. The above four qualities favour aged rather than younger entrepreneurs.

Myth 5: Entrepreneurs love the spotlight. Majority of entrepreneurs do not like to attract public attention except some that are flamboyant. Many entrepreneurs who are working on proprietary products or services avoid public notice. This go against the myth that entrepreneurs more so than other groups in our society, love the spotlight.

The Entrepreneurial Process

The entrepreneurial process indicates that the decision to become an entrepreneur and the development of successful business ideas indicates that sometimes the opportunity to develop an idea may prompt a person to become an entrepreneur. Barringer and Ireland (2012) identified four steps involved in the entrepreneurial process.

Step 1: Decision to become an Entrepreneur: To pursue one‘s own idea and to realize financial rewards may prompt people to become entrepreneurs in order to be their own bosses. For example, as a result of loss of job or unemployment, one may decide that the time is ripe to start one‘s own business. Or one may have the money to start one‘s own business as a result of an inheritance. Lifestyle issues may also trigger entrepreneurial careers. For example, a woman may wait until her youngest child is in school before she decides to launch her own business venture.

Step 2: Developing Successful Business Ideas: The failure of many new businesses is not due to the fact that the entrepreneur is not hardworking but that there was no real opportunity to begin with. Developing a successful business idea includes opportunity recognition, feasibility analysis, writing a business plan, industry analysis, and the development of an effective business model.

Step 3: Moving from an idea to an Entrepreneurial Firm: The first thing an entrepreneur does in order to turn an idea into reality is to prepare a proper ethical and legal framework for the firm, including selecting an appropriate form of business ownership.

Step 4: Managing and Growing an Entrepreneurial Firm All firms must be managed and grown properly to guarantee their continuous success in today‘s competitive and dynamic environment. This is the last step of the entrepreneurial process.

Similarities between Corporate and Start Up Entrepreneurship

Morris, Kuratko and Covin (2011) made the following differences between corporate and start-up entrepreneurship:

1. They both involve opportunity recognition and definition

2. They both require a unique business concept that takes the form of a product, service or process

3. They are both driven by an individual champion who works with a team to bring the concept to fruition.

4. They both require that the entrepreneur be able to balance vision with managerial skill, passion with pragmatism, and proactiveness with patience.

5. They both involve concepts that are most vulnerable in the formative stage, and that require adaptation overtime.

6. They both entail a window of opportunity within which the concept can be successful capitalized upon.

7. They are both predicated on value creation and accountability to a customer.

8. They both find the entrepreneur encountering resistance and obstacles, necessitating both perseverance and an ability to formulate innovative solutions.

9. They both entail risk and require risk management strategies.

10. They both find the entrepreneur needing to develop creative strategies for leveraging resources.

11. They both involve significant ambiguity.

12. They both require harvesting strategies.

Benefits of Entrepreneurship

According to Scarborough (2014), the following are the benefits of entrepreneurship

(i) Opportunity to Create Your Own Destiny

Entrepreneurship provides the business owners the independence and the opportunity to achieve what is of immense benefit to them. They want to ―call the shots‖ in their lives, and they use their business to make this a reality come true.

(ii) Opportunity to Make a Difference

Entrepreneurs start businesses due to the fact that they want to make a difference in a cause that is important to them. Social entrepreneurs, for example, are business builders who seek innovative solutions to some of society‘s most vexing problems. They use their skills not only to create profitable business enterprises but also to achieve social and environmental goals for society as a whole. Their businesses are often characterized to have a triple bottom line which include economic, social, and environmental objectives.

(iii) Opportunity to Reach Your Full Potential

Entrepreneurs do not find their work boring, unchallenging and unexciting. This is because there is no much difference between work and play; to them the two are the same. Their businesses become their weapons for self-expression and selfactualization. To them, the only boundaries on their path to success are those imposed by their own enthusiasm, vision and creativity. They are empowered as a result of their own businesses.

(iv) Opportunity to Reap Impressive Profits

Entrepreneurs are not driven primarily by money, the profits their businesses can make are an important motivating factor in their decisions to launch and build their businesses. A recent research shows that a high percentage of small business owners agree that they are in a better financial position running their own businesses than working for someone else. Most entrepreneurs are wealthy but may not be superrich.

(v) Opportunity to Do What You Enjoy and Have Fun at it

Many entrepreneurs decide to enter their particular business lines because they have an interest in them and enjoy those lines of work. They have made their hobbies(avocations) their work (vocations) and are happy they did!

The Potential Drawbacks of Entrepreneurship

Anyone who decides to enter the world of business should be aware of its potential drawbacks, despite the fact that owning a business has many benefits and provide a lot of opportunities. Individuals who prefer a steady salary, a comprehensive compensation benefit, a two-week paid holiday, etc. should not go into business for themselves. Scarborough (2014) identified the following as the disadvantages of entrepreneurship:

(i) Uncertainty of Income

Entrepreneurship does not guarantee that the business owners will earn enough money to survive when he or she opens and runs the business. Some small businesses hardly earn enough to provide the owner-manager with an adequate income. In the early days of a business start-up, the business most times cannot provide an attractive income for its owner and meet all its financial obligations, meaning that the business owner may have to live on savings. The steady income that comes with working for someone else is missing because the owner is always the last person to be paid.

(ii) Risk of Losing Your Entire Investment

Financial ruin can be the outcome of a business failure for an entrepreneur, and the rate of failure for the small business is relatively high. Before going into any business, the entrepreneurs should ask themselves if they can cope psychologically with the consequences associated with a business failure:

  • What is the worst that could happen if my business fails?
  • How likely is the worst to happen? (Am I truly prepared to launch my business?)
  • What can I do to lower the risk of my business failing?
  • If my business were to fail, what is my contingency plan for coping?

(iii) Long Hours and Hard Work

Business start-ups often demand long hours from their owners. Entrepreneurs do not go for holiday because they are ―Too busy‖. The demands of owning a business make achieving a balance between work and life hard for entrepreneurs. This is because the nature of your business demands a full-time attention/commitment especially at the early stage of the business life.

(iv) High Levels of Stress

Starting and managing a business can be an incredibly rewarding experience, but it also can be a highly stressful one. Entrepreneurs often have made huge investments in their businesses, have left behind the safety and security of a steady salary, and have mortgaged everything they own to get into business. Business failure implies that the business is ruin financially and this creates intense levels of stress and anxiety.

(v) Complete Responsibility

It‘s good to be in charge of the business, but many entrepreneurs find that they must make decisions on issues about which they are not really knowledgeable. Many business owners have difficulty looking for advisers as well as consultants. When none is available, the pressure can build quickly. They take absolute responsibility for the success or failure of their decisions.

The Entrepreneur and society’s needs

The society is alive. To live many persons in society have needs to be met. Entrepreneurs watch over society‘s needs and how they are met. When there is a need and the means of satisfying, the need is either not available or unaffordable, then it is problem. Such problems create opportunities for employment generation and wealth creation for Entrepreneurs.

The role of ICT in Entrepreneurship

Information and Communication Technology is a tool of communication that have far reaching impact on the performance of economic activities and success of individual firms. ICT carries with it a great potential for transforming the lives of the citizens by connecting markets, improving access to government services, education and entertainment.

ICT can bring about innovation and establishment of new businesses even in challenging environments in rural settings.

Although ICT has opened new entrepreneurial opportunities in Nigeria, access to and use of it is at the minimal.

There is a gap to bridge between the knowledge and skills the entrepreneurs possess and what is needed in ICT.

We should note that most ICT devices and programmes are based on the ability to read and write and so it is necessary to organize literacy classes for those who lack it and for more sophisticated ICT equipment it would be necessary to get requisite ICT training on how such devices work.