MOI UNIVERSITY SCHOOL OF INFORMATION SCIENCES 3RD YEAR 1ST SEMESTER ASSIGNMENT ONE IRD 305: ENTREPRENEURSHIP FOR

SMALL BUSINESS

QUESTION: USING THE INTERNET AS A MINIMUM SOURCE, CRITICALLY ANALYZE ANY FIVE OF THE MYTHS ASSOCIATED WITH ENTREPRENEURSHIP.

PRESENTED TO: MR. CHEROTWO. BY: NAME Munya Isaac Kibaru Willy Mbeda Odhiambo Fatma Mwarome Valentine Kigen Masinde Angela ADMISSION NO. IS/1218/10 IS/1225/10 IS/1211/10 IS/1229/10 1S/190/10 IS/1228/10 SIGNATURE

DATE: 22ND AUGUST 2011.

1

ENTREPRENEURS ARE BORN People think that entrepreneurs such as Manu Chandaria, Chris Kirubi, Bill Gates, Richard Branson e.t.c. are of a super human class and are somehow different from us. Up to this moment, researchers have not yet come to an agreement to whether entrepreneurs are born or not. Some say this myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs. They went further and said that no one is born as an entrepreneur, instead everyone has a potential to become one depending on the functions of ones environment, life experiences and personal choices. This implies that entrepreneurs are not born, instead they have common personality traits and characteristics which if an individual posses them, can become a successful entrepreneur. These characteristics include:a. Aggressiveness b. Initiative c. Drive d. Risk Taker e. Analytical ability. Entrepreneurs are made by learning and experience. It depends on the accumulation of activities, skills and knowledge over time and includes large doses of self development. It has less to do with the family, environment, school in which an individual is exposed. An entrepreneurial mindset can be nurtured in business-friendly and risk-rewarding climates and entrepreneurial skills can be taught. You can hardly become an entrepreneur if you dont have an idea for a new product or service, or if you lack an initiative to go on your own. But if you have both, you can acquire necessary skills. Just go out, start a company, fail and learn from your mistakes. You can take an easier route by taking entrepreneurship courses offered in some countries by an increasing number of universities and some secondary schools. You also can seek expert advice from local and national entrepreneurship organizations on how to develop and implement business ideas. Finally, you can approach an experienced entrepreneur or plug into a network of entrepreneurship mentors on the Web to discuss your startup project. If despite all, you fail, you always can claim that entrepreneurs are born, not made.

ENTREPRENEURSHIP REQUIRES A LOT OF MONEY This is not necessarily true. By Definition, Entrepreneurship is an art of realizing opportunity, focusing on the opportunity at hand and looking at ways into which you can change or improve on what you have and turn it into a money generating activity. An entrepreneur is someone who can turn a desert into a money minting business. Although money is one of the most important ingredients of a new venture success, it does not follow that if an entrepreneur has enough money, he/ she will succeed. Most studies on entrepreneurial failure suggest that problem is due to managerial incompetence, lack of financial understanding, poor investments and poor planning. If the other pieces and talents are there, the money will follow. Entrepreneur individuals do not limit the scope of their vision by how much money, time, staff or related resources they have. They go after their dream by leveraging resources i.e. by partnering, borrowing, leasing e.t.c. Successful entrepreneurs treat money as a resource rather than an end in itself. Most experienced entrepreneurs are convinced that too much money is a bigger risk than too little money. Good entrepreneurs can often find a substitute for money, but there is no substitute for time and determination. Its thus important to keep your eyes and your heart focused on the business vision and you wont need a big budget to achieve your biggest dreams. Example of Low start up ventures in Kenya are Naivas Supermarket which started with 100,000 thousand shillings and now boasts of close to 10 branches spread across the country. Another good example is Google which is a household name today that was started in a garage. This means that if you have a solid idea and a clear direction of how to run your business, you might not even have to fork out a single cent, an entrepreneur should be resourceful. NOTE: In summary its evident that most successful entrepreneurs venture into business not for the profits but to satisfy a communal need or a demand in the society.

ENTREPRENEURS START WITH NEW PRODUCT/SERVICE It does mean that a successful entrepreneur start with new a new product or service. Although it is allowed to start with a new product or service to show how creative and innovative are for as far as entrepreneurship is concerned. In most cases, individuals tend to start business with the same product or service which are already available in the market whereby they come up with better techniques and skills to overcome their competitors in providing quality and sufficient services and sufficient services and products to their customers. To support this myth, lets look at the example below:The first Mobile Phone provider in Kenya was Airtel by then it was called Kencell .Their services targeted a certain group of people i.e. high income earners as all people could not afford a handset. The cheapest airtime was Kshs. 300.00 which was not affordable to many. Many customers were unable to make phone calls. After some time, Safaricom entered the market and they were able to cater for all groups of people in the society as their airtime denomination was as low as Kshs. 5/= and their handsets cheaper. The above example proves that one does not necessarily have to start with a new product/ service to be successful. Instead it will depend on how creative one is, strategically you are to grab and make use of cited opportunities in order to succeed or attain your goals. Other examples:1. When Modern Coast Bus started operating from Nairobi to Mombasa, they introduced Buses with more features than those already in the business e.g. their buses are air conditioned, they have first class and business class services which other companies do not. This has made them more successful and competitive compared others in the market.

ENTREPRENEURSHIP IS ABOUT INDIVIDUALS Entrepreneurial events have a driving force behind them in form of a visionary individual who assume risks and who by their persistent search for opportunities and keen negotiation skills can bring about changes and add value to other people's lives. Most Entrepreneurs often potential rely on a partner or partners to start a venture. Entrepreneurship does not happen without teams. A partner; be it a family member or a friend can bring in skills or experience an entrepreneur may lack and also provide moral support during crunch time. Building a company is more of a social activity as it entails:1. hiring employees with unique skills and resources who will provide functional expertise and to perform specific tasks, 2. Pursuing investors who will provide capital. They can be institutional Investors e.g banks, pension funds, mutual funds e.t.c. And Individual Investors. 3. Pursuing the customers who will buy from you. All these factors makes up the team which the entrepreneur needs to start and run the company. The team members can be formal or adhoc and their membership is likely to be fluid as people join and depart depending on the companys requirements. This team will also modify and

adapt the innovation as new and unanticipated obstacles arise, all while being kept on track and spurred on by the entrepreneurial champion. They bring to the task a spirit of camaraderie and a sense of being part of something important. The challenge is to balance the need for individual initiative with the spirit of co-operation and group ownership of innovation at the various stages of the entrepreneurial process. Individuals are required to provide the vision, unwavering commitment and internal salesmanship without which nothing will be accomplished. At the end of it all it is important that this team takes ownership and credit for the end product.

ENTREPRENEURSHIP IS ABOUT TAKING WILD RISK The concept of risk is the most important element in the entrepreneurship process. Starting any type of venture places tremendous strain on the Entrepreneurs personal lives. The cost of the uncertainty that comes with a new venture can be staggering in terms of stress on family relationships, self image, and personal bank accounts. However the public perception entrepreneurs are gamblers on a wild chance is distorted. The truth is that entrepreneurs assume calculated risks and most entrepreneurs work hard to minimize the risks involved by analyzing and evaluating a situation. They identify the key financial, technical, market and other risk factors then they go about identifying ways of managing and minimizing the likelihood of any of the underlying risk factors occurring. Successful entrepreneurs are surprisingly effective at spreading the risk around to others. They do this by involving partners, leveraging resources and leasing instead of owning e.g. they can target a resource providers who have limited alternatives, short-term needs, and a personal or psychological preference for working with new company. They attempt to mimic the appearance of established companies. Entrepreneurs offer extra services and special deals to prospective customers though rarely offer to cut prices to where they cant make a profit. Nothing is safe and nothing is guaranteed, meaning that before one ventures into a business he/she must be ready to encounter risks and should never give up. A good example is that of the Nakumat Supermarket Chain: When their branch along Kimathi Street was burnt down in January 2009 and the Thika Road Branch was demolished, they did not give up .Instead they worked hard and expanded their branches in the Kenya and other East African Countries. On the other hand, there is a restaurant that is along Tom Mboya Street in Nairobi called Highlands. Their premises have burnt down twice but the owners did not give up instead they opted to take that risk of putting their business back to its feet. that

References:1. Entrepreneurial Intensity: Sustainable Advantages for Individuals- Michael H. Morris(1998) 2. Entrepreneurship : Theory, Process and Practice- Donald F. Kuratko & Richard M. Hodgers 3. New Venture Creations- Timmons,Jefffy A