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Chapter 1_Entrepreneurship and small, medium and micro enterprises.ppt

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Chapter 1_Entrepreneurship and small, medium and micro enterprises.ppt

  1. 1. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Entrepreneurship and how to establish your own business 6th Edition Tersia Botha (Editor)
  2. 2. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Chapter 1: Entrepreneurship and small, medium and micro enterprises • Defining entrepreneurship • The relationship between entrepreneurship, a SME and small business management • Types of entrepreneurial businesses • Corporate entrepreneurship or intrapreneurship • Key success factors of entrepreneurs • Dealing with external factors
  3. 3. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Learning outcomes After you have studied this chapter, you should be able to: • Define the terms ‘entrepreneur’ and ‘entrepreneurship’ • Indicate the relationship between entrepreneurship, a small business enterprise and small business management • Explain the various types of entrepreneurial businesses • Explain corporate entrepreneurship/intrapreneurship • Explain the key success factors of entrepreneurs • Explain how entrepreneurs should deal with external factors that affect their businesses
  4. 4. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Introduction • Employment opportunities abound in private and public sector organisations • Entrepreneurial activity has a crucial influence on the national economy • Direct correlation between job creation and the level of entrepreneurial activity in an economy
  5. 5. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Defining entrepreneur and entrepreneurship • Entrepreneurs - ability to identify and seize an opportunity, and create and develop a business by adding value to the business • Entrepreneurship is the process of establishing a business, from the identification of a business opportunity and innovation through to planning, start-up, managing and growing the business
  6. 6. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Relationship between entrepreneurship, SME and small business management • Starts as a small/micro enterprise and is manages by one person and they aim to grow the business • Once satisfied with the growth of the business, they become a small business manager • Danger at this stage is that the entrepreneur has good ideas but insufficient expertise to implement ideas
  7. 7. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Relationship between entrepreneurship, SME and small business management (cont.) • Successful business manager must be able to: - Plan, organise, lead and control business functions - Organise efficient operation of tasks - Ensure interpersonal and inter-group competence - Facilitate formal communication during scheduled meetings - Compile and implement necessary policies and procedures
  8. 8. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Types of entrepreneurial business • Can be classified: - Informal - Micro - Very small - Small - Medium - Large
  9. 9. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Types of entrepreneurial business (cont.) • The formal small business: - Small and micro business sector: 1. Micro business has 5 or less employees and a turnover of less than R100000 2. Very small business has between 1 and 10 employees 3. Small business had between 11 and 50 employees
  10. 10. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e
  11. 11. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Corporate entrepreneurship or intrapreneurship • Corporate entrepreneurship (or intrapreneurship) is the creation of a business or businesses within an existing large business, using new ideas and exploiting opportunities • Makes it possible for large businesses to: – adapt to changes in the market entrepreneurially; – experiment in the market; – Diversify from the core business; establish new distribution channels; – make profits from new businesses
  12. 12. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Franchisors and franchisees • Franchising - arrangement in which an individual or business (the franchisor) grants an independent party (the franchisee) the right to sell the products or services of the business according to guidelines set down by the franchisor
  13. 13. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Franchisors and franchisees (cont.) • Franchisor is an entrepreneur • Franchisee is a corporate entrepreneur • Franchisee’s do not have the freedom to experiment and operate their business according to their own vision • Franchisors usually fall into the medium to large business category
  14. 14. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Key success factors of entrepreneurs • Entrepreneurs have distinctive characteristics • Each entrepreneur achieves success because of a unique combination of factors • There is no typical entrepreneur – entrepreneurs possess various characteristics or skills
  15. 15. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Key success factors of entrepreneurs (cont.) • As an entrepreneur it is important to know your strengths and your weaknesses • Strengths can be positively applied • Weaknesses can be addressed by one of the following: - Personal development - Attending courses - Appointing staff and/or experts to compensate where needed
  16. 16. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e
  17. 17. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The skills, expertise and aptitudes of an entrepreneur • Successful entrepreneurs have skills/expertise/aptitudes that can be applied profitably in any business • Skills - manual work that can be learned • Expertise - based on knowledge you acquire by studying or experience • A person is born with aptitude and talent
  18. 18. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The important personal characteristics of entrepreneurs • Perseverance: confidence in themselves and their business • Commitment to the business: dedicate all their skills, expertise and resources to establishing and building the business • Involvement in the business: perform tasks themselves and communicate well with staff and others • Willingness to take risks: take calculated risks
  19. 19. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The important personal characteristics of entrepreneurs (cont.) • Sound human relations: work closely with other people and realise the importance of good business relationships • Creativity and innovative ability: creativity refers to a persons imagination and innovative ability refers to the use of creative abilities • Positive attitude and approach: learn from failures and they are realistic and able to identify opportunities in adverse situations
  20. 20. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The important functional management skills of entrepreneurs • The management skills of an entrepreneur are an indication of how well he or she can perform important tasks in a business
  21. 21. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e
  22. 22. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The important functional management skills of entrepreneurs (cont.) • Important aspects of management skills: • Planning a business before it is established • General management skills and the use of advisors • Customer service • Knowledge of competitors • Market orientation
  23. 23. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e The important functional management skills of entrepreneurs (cont.) • Important aspects of management skills (cont.): • The importance of quality products or services • Accounting for your own purposes • Insight to expenditure, income, profit and loss • Ability to use income wisely
  24. 24. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Dealing with external factors that affects entrepreneurship • External factors will influence the ability of the entrepreneur to exploit his or her potential • External factors: - Economic conditions: interest rate - Technological changes: keep up with technological development
  25. 25. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Dealing with external factors that affects entrepreneurship (cont.) – Social and cultural forces: identify opportunities for growth in market share among large sections of the population – Political and legislative variables: realise opportunities that arise after political adjustments – Physical variables: Keep abreast of the availability and price of resources – International forces: By using technologically advanced communication channels, an entrepreneur can expand and establish a business in another country.
  26. 26. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Summary • The importance of entrepreneurial business at all levels is essential to a country’s economic development, wealth and employment creation • The entrepreneur who applies certain talents, skills and expertise in the start-up, development and growth of a business was introduced as a person who continuously creates and innovates to build and develop a business of recognisable value.
  27. 27. ©2019 Juta and Company (Pty) Ltd Entrepreneurship and how to establish your own business 6e Summary (cont.) • Many entrepreneurs start small businesses, but then prefer to remain small due to lifestyle preferences • Entrepreneurs are found in a variety of types of businesses • All the success factors including the skills, expertise, aptitude; personal qualities; management skills and external factors

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