UNIT 1: INITIATION TO ENTREPRENEURSHIP
Key unit competence: To be able to exhibit desirable qualities of
an entrepreneur
Introductory Activity
After completing S.3 national exams, Bikorimana thought of starting a
small project that will help him get money for school fees at advanced
level, using the knowledge of entrepreneurship he learnt in the three
years and his great appetite for mandazi. He asked himself what
project he could start!, He talked to a nearby small business owner who
inspired him to start a small bakery project because it required limited
capital, Bikorimana was happy and liked the idea, he also knows how
to make bread from his mother, he decided to start that small project
with personal savings accumulated from pocket money while at school.
Before starting this project, he first researched about the most marketable
bakery product and found out that cakes and chapatti are marketable
than bread. He also discovered that the whole village had one supplier
of these items and in many shops, such items were lacking. Because he
had little money, he prepared a budget focusing on sources of revenue
and projected expenditure.Amidst all these challenges, Bikorimana wasable to start and operate his bakery project within the trading centre.
He named his business “Biko Bakery Supplies”. He is now able to borrow
money from the village co-operative bank, pay school fees, support his
family and offer jobs to his friends using the profits generated. He has a
plan of extending his project to Kigali by opening up a branch.
Questions;
a. What skills do you think Bikorimana acquired from O’level
entrepreneurship that motivated him to start his bakery project?
b. What inspired Bikorimana to start his own business?
c. What did it take Bikorimana to start a bakery project?
d. Is Bikorimana an entrepreneur?, explain.
e. How will the above project solve community problems?
From the above passage, we can conclude that being an entrepreneur takes
an extra effort and all the activities undertaken by entrepreneurs such asBikorimana to start production is called ‘entrepreneurship’.
1.1. Meaning of entrepreneurship, an entrepreneur,
Intrapreneur and manager
Activity 1.1
Using your knowledge of entrepreneurship obtained in O’level and
research, distinguish between the following terms, entrepreneur,
Intrapreneur and manager.
1.1.1. Meaning of an entrepreneur
The word entrepreneur is derived from a French word “Entreprendre”
meaning to undertake. It is used to mean a person who takes the risk of
starting a new organization or introducing a new idea, product or service to
the society.
According to J.B. Say, “An entrepreneur is an economic agent who unites
all means of production; land, labour and capital which are used to produce
goods and services.
By selling commodities in a goods market, he/she pays rent to land, wages/salary to labour and interest to capital and remains with a profit.
According to Richard Schumpeter, “An entrepreneur is an individual who
introduces something new in the economy; a method of production not yet
tested by experience in the branch of manufacturing, a product which is new
in the market from a new or old source of raw materials using new or existing
methods of production.”
The entire definitions highlight: bearing of risks, combining factors of
production, innovation and introduction of new methods and products and
bringing about economic change as a function of entrepreneur.
Therefore an entrepreneur is a person who has the ability to see and evaluate
business opportunities, gathers necessary resources and uses them to
initiate and manage the identified business; takes risks in the business with
the aim of making profits.
NB: Any person w h o assumes risks of any business and owns that
business enterprise with an aim of making profits is an entrepreneur
irrespective of the size and mode of operation of the business.
1.1.2 How does a person become an entrepreneur?
A person can become an entrepreneur in the following ways:
• Initiating or starting up his or her own business/enterprise.
• Inheriting an already existing business and assuming or taking risks
• Buying an already existing business and assuming its risks.
• Buying shares in an already existing business and assuming ownership
and risks in that business. This is common in joint stock companieswhere shares are sold to the public.
1.1.3. Meaning of Intrapreneurship
Different scholars have defined entrepreneurship as below:
Arthur H. Cole in his book, Business Enterprise in its social setting; defines
entrepreneurship as “the purposeful activity of an individual or a group of
associated individuals undertaking to initiate, maintain and increase profits
by production or distribution of economic goods and services”.
Higgins in his book, The Economic Development defines entrepreneurship
as “the function of foreseeing investment and production opportunities,
organising an enterprise to undertake new production process, rising
capital, hiring labour, arranging the supply of raw materials, finding sites,
introducing new techniques, discovering new resources or raw materials
and selecting top managers for the day to day operations of the enterprise.
Grey Watson; defines entrepreneurship as “the process through which
individuals identify opportunities, allocate resource and create value”.
From the above definitions, it can be observed that entrepreneurship;
• Involves the ability of a person to identify business opportunities.
• It involves mental attitude of risk taking, resource organisation and
exploitation.
• It involves one or more individuals.
• It involves creativity, being innovative, initiative
Therefore, entrepreneurship is the process of identifying business
opportunities from a locality, organising necessary resources, and using
them to start an enterprise to produce goods and services, market them
while covering risks with the aim of making profits.
Entrepreneurship is also a way of thinking and acting that focuses on
identifying opportunities, apply action with analysis, and is driven by apassionate individual or team.
1.1.4. Meaning of Intrapreneur
An Intrapreneur is a person within a large corporation/enterprise who takes
direct responsibility for turning an idea into a profitable finished product
or service through assertive risk taking and innovation. Great ideas and
products can result from letting your employees think, experiment, and try
using new technology and production techniques.
Intrapreneurs are usually employees within a company who are assigned
a special idea or project, and are instructed to develop the project like
an entrepreneur would. Intrapreneurs usually have the resources and
capabilities of the firm at their disposal. The intrapreneur’s main job is to turn
that special idea or project into a profitable venture for the company.
Example: If an employee working in Airtel-Tigo telecommunication company
Rwanda suggests and introduces the use of airtel money for Airtel-Tigo
customers to access funds on their bank accounts i.e. can withdraw and
deposit money using tigo cash then such an employee is an Intrapreneur
and has to be paid for such inventions by Airtel-Tigo Company Rwanda1.1.5 Difference between an entrepreneur and intrapreneur
1.1.6. Meaning of Manager
A manager is a person who organizes resources, allocates tasks, oversees
and controls business operations so as to achieve the organizational goals,
mission and vision.
1.1.7. The difference between an entrepreneur and a manager
The term entrepreneur is often used synonymously with Manager yet these
are conceptually different. It is true that an entrepreneur is a manager of his
own enterprise but not all managers are entrepreneurs.Difference between an entrepreneur and a manager
Application activity 1.1
Kharim is a graduate who recently graduated from University of Rwanda
with a degree in Computer Programming. He has developed an
application that he believes will make him earn a living. He performed
very well and was called by prominent telecommunication company for a
job, he accepted and worked for one month and after he thought to leave
that Company so as to start his own project of designing new software.
He wants to challenge himself and work the way he wants without
answering to a boss. He is using a small inheritance to fund the startup
alongside contributions from his grandparents. As an entrepreneur,
Kharim is not only starting a business, but is risking his personal wealth
to establish it.
Kharim is also trying to convince some friends from school to form an
entrepreneurial team with him. Kharim has a friend who majored in Web
designing and another in marketing. He is hoping they may come along
with him and bring their skills. He is building the right team so that they
can co-operate, and achieve more together than they would individually.
Kharim hopes that his entrepreneurial gamble will pay off as well as the
gambles of other well-known entrepreneurs.
Questions:
1. What lesson can be learnt from Kharim’s experience?
2. Explain briefly the relationship between an entrepreneur andentrepreneurship
1.2. Qualities/characteristics of an entrepreneur
Activity 1.2
1. Do you have a role model in entrepreneurship who inspires you to
join business? YES/NO?
2. If yes state and describe true characteristics that your role model
mentioned above possesses.
Qualities or characteristics of a successful Entrepreneur
Hard working: This involves using extra effort to do whatever one is doing. A
hard-working person commits more time, more energy and more resources
to achieve the desired objective. Commitment and hardworking are essential
to success in business.
Creativity and Innovation: Creativity involves using ideas to come up with
new products. For a person to be successful in life, he/she has to be creative
by doing new things or doing old things differently. Being innovative helps
a person find new business ideas, improve existing business activities,
and find solutions to difficult problems. All of these help an entrepreneur tobecome successful.
Recycling: Recycling is the process of converting waste materials into
similar new materials / objects.
Upcycling: Creative / re-use is the process of transforming by products,
waste materials, useless or unwanted products into new materials or
products of better quality or for better environmental value.
The relationship between Creativity and Innovation is like relationship
between recycling and upcycling. One brings new idea, new product while
others improve what is existing.
Risk taking: Entrepreneurs are risk takers. They risk starting a business.
This is not to mean that they are reckless people. Good entrepreneurs
assess the risks related to their business before they take them. They do
not take every risk; they only take moderate risks that they will be able to
manage.
Decision making skills: A successful entrepreneur makes intelligent, right
and informed decisions on various issues, follows the decisions made, and
accepts their results.
Persistence and Perseverance: Starting and growing a business requires
a lot of determination and a “never-give-up” attitude. It is said that winners
never quit and quitters never win. Entrepreneurs never give up, irrespective
of all problems and setbacks met in the business. They put in as much efforts
as possible to ensure business success.
Opportunity seeking: A good entrepreneur is able to spot opportunities
even where other people are not able to see any. Ability to see opportunities
also helps the entrepreneur to take advantage of other opportunities like
identifying the best employees, taking advantage of cheap loans from
commercial banks, raw materials, etc… he/she sees society’s challenges or
problems as basis for business creation or expansion.
Seek information: Good entrepreneurs are always on the lookout for
information related to their businesses so as to make good decisions. Good
decisions are based on right and updated information. For example, for a
manufacturing business, the entrepreneur seeks information about suppliers
of new machinery, new industries entering into competition, potential
customers, new government policies, etc… All this information is helpful in
making informed and profitable decisions.
Self-confidence: An entrepreneur should have a strong belief in his/her
abilities. He/she should be confident that he/she will achieve what he/she
sets himself to achieve. If a person is not confident of himself/herself, he/she
cannot be a good entrepreneur.
Financial Discipline: A good entrepreneur has excellent money management
skills. He/she does not spend business money on unplanned activities or
things.
Goal setting and planning: Good entrepreneurs set goals and strive for
achieving them. The goals set should be SMART that is to say Specific, Measurable, Achievable, Realistic and Time frame/ bound.
Commitment: An entrepreneur will succeed in business if he/she is
committed to the business and to fulfilling obligations; for example, he/she
should spend a lot of time in the business and make sure that customers are
served properly, they are given very good services and when he/she makes
a promise, he/she has to fulfill it.
Persuasive and good at networking: Persuasiveness is the ability to
convince others and change their thinking. Networking involves meeting
other people involved in the same kind of work, to share information and
support each other. A good entrepreneur will always get time to meet and
share ideas with people who matter to the business such as suppliers,
competitors who can give him/her good advices, etc… A good entrepreneur
will not be an ‘island’ but will always be networking.
Controlling/monitoring: An entrepreneur ensures that results match with
plans. Monitoring business activities helps him/her to know whether the
business is succeeding or failing. By doing this he/she decides on what to
do if the business is not achieving desired results.
Application activity 1.2
1. a. Discuss the various qualities an entrepreneur should possess.
b. Choose two best entrepreneurs in the world today that act as
your role models; one male and one female.
i. …………………………………………………………..
ii. …………………………………………………………
2. Explain briefly how the above entrepreneurs have demonstrated
the following characteristics basing on your knowledge aboutthem.
1.3. Stages of entrepreneurship process
Activity 1.3
Looking at fully developed businesses with tangible products in your
home area.
e.g. Inyange industries (Inyange water). What stages do you think the
above business went through to get to where it is today?The stages of entrepreneurship development
Discovery: At this stage an entrepreneur generates ideas, recognizes
opportunities, determines the feasibility of ideas, markets, and ventures and
other prior information.
Concept development: here an entrepreneur plans the businesses,
identifies needed resources through developing a business plan.
Resourcing: An entrepreneur acquires needed resources for the venture
startup including financial, material, human and technology.
Actualization: Here an entrepreneur starts and operates business and
utilizes resources to achieve its goals and objectives.
Harvesting: Here an entrepreneur decides on the venture’s future (growth,
development or demise).
Application activity 1.3
Gap-filling questions
…………...an entrepreneur decides on the venture’s future (growth,
development or demise).
…………… here an entrepreneur plans the business, identifies needed
resources through developing a business plan.
……… an entrepreneur starts and operates business and utilizes
resources to achieve its goals and objectives.
……….acquires needed resources for the venture startup includingfinancial, material, and human and technology.
1.4. Types of entrepreneurs
Activity 1.4
Entrepreneurs can be classified into different types. Identify and explain
the different types of entrepreneurs and give an example for each type
in your community.
Types of entrepreneurs include the following.
Innovative entrepreneurs: These are creative entrepreneurs who introduce
new products and new production techniques of the market through gathering
available information and experimenting new combination of factors of
production. Such entrepreneurs always see and exploit opportunities for
introducing new products, production methods or new markets. These are
common in developed countries.
Example: The Sina Gerard is innovative entrepreneur
Imitative entrepreneurs/ adoptive entrepreneurs. These entrepreneurs
do not innovate new products and services.
They imitate or adopt existing commodities and start their enterprises exactly
in the same manner. These are common in developing countries. E.g A
person who start exactly the same shop like he/ she has seen in other area.
Drone entrepreneurs/conservative entrepreneurs, they do not accept
or imitate changes and they decline to utilise available resources to make
changes in production processes even when their businesses are making
losses and consequently are out competed and their businesses collapse.
E.g. Refusing to use new technology for example whats app, facebook or
twitter until your business is outcompeted and declines.
Fabian entrepreneurs: These entrepreneurs tend to be very conscious
in adopting and accepting changes and innovations. They do not adopt
environmental methods of production and business. Fabian entrepreneurs
only adopt new methods if they realise that their businesses will fail if they
do not adopt new ideas. E.g. If a bank first resists using ATM services and
come to use them later after realising that failure to use them may lead to its
decline.
Business entrepreneurs/trading entrepreneurs. They undertake buying
and selling as their core business activity. E.g wholesalers and retailers
without modifying them.
Industrial entrepreneurs. These are entrepreneurs engaged in converting
raw materials into usable finished products.
E.g. Kabuye sugar works, Ruliba clays, etc.
Agricultural entrepreneurs: These are engaged in agricultural activities.
For instance, they deal in activities such as growing of cash and food crops,
rearing animals, dairy farming, poultry etc. They use modern methods of
production and use of exotic breeds and non- exotic. E.g. Rearing chicken
layers in order to get eggs for sale.
Induced entrepreneurs: These entrepreneurs are attracted into
entrepreneurs’ activities by policies and incentives provided by the
governments, NGO’s etc. Incentives like: loans, tax holidays, and land tenure
system. E.g. If a person decides to sturdy ICT because the government hasput incentives for the persons who works as ICT employees.
Application activity 1.4
1. Discuss the various types of entrepreneurs that you know and
give examples from your community.
2. Explain any four attributes of each of the following types of
entrepreneurs
i. Innovative entrepreneurs
ii. Imitative entrepreneurs
iii. Drone entrepreneurs
iv. Fabian entrepreneurs
1.5. Types, benefits, challenges of creativity, innovation and
invention
Activity 1.4
Make research and discuss the following
1. The various types of creativity
2. Benefits of creativity and obstacles to creativity
1.5.1. Meaning of creativity
Creativity is an act of thinking new things, coming up with ideas, new ways
of looking at opportunities and new approaches to solving problems.
There are two kinds of creativity: innovation and invention.
Innovation is doing new things or implementing the newly created ideas. It
is the development of new products, ideas, markets, devices; processes for
something that already exist.Invention refers to creating something for the first time.
1.5.2. Types of creativity
Divergent creativity: Rather than finding a single correct answer, the divergent
thinker discovers multiple options for addressing problems. Brainstorming,
predicting, and imagination activities are all examples of divergent thinking.
It is possible to increase divergent thinking by implementing open-ended
questions when addressing problems rather than closed questions.
Convergent creativity: This involves focusing on only one idea or single
solution.
Lateral creativity: This involves generating new ideas and problem solving
as it leaves the already used behind and looks for completely new options.
Aesthetic creativity: This is about producing and discovering things which
are pleasant, harmonious and beautiful to our senses.
Systems creativity: The ability to see how things are interrelated and form
a larger whole.
Inspirational creativity: Inspiration and imagination are essential for
creativity. It is concerned with the perception of receiving insights from
others. It often happens in dreams or other states. Inspiration can be an idea
that comes suddenly. Inspiration is different for different people.
1.5.3. Characteristics of creative people
They tend to be more original than others
They are more flexible conceptually and easily accept change since they
normally have more ideas than non-creative people.
They normally prefer complexity to simplicity.
They do not want simple solutions.
1.5.4. Types of Innovation
Incremental innovation: This seeks to improve systems that already exist,
making them better, faster and cheaper.
Process innovation: This is about implementing new and significant
improved process or production or delivery method.
Service innovation: improving services by changing service idea, client
interaction channel, service delivery system or technological idea that leads
to one or more renewed service functions that are new to the firm.
Business modal innovation: This refers to creation or reinvention of
business itself
Radical innovation: This provides something new to the world we live in
by removing industry conventions and by significantly changing customers’
expectations in appositive way. Ultimately, they end up replacing existing
methods and technologies. It is an intellectually jump, which changes the
whole area.
Frugal innovation: This is about doing more with less. Entrepreneurs devise
low cost strategies to either tap or avoid resource limitations to innovate,
develop and deliver products to low income users.
User led innovations: This is based on customers’ needs since the customer
is the king.
Sustainable innovation: This involves products and processes that lead to
sustainable development.
Supply chain innovation: This is about applying best practices and
technological innovations to your own supply chain so as to withstand
extreme financial stresses.
Experience innovation: The companies try to create holistic experience by
emotionally engaging their consumers.
1.5.5. Characteristics of a good innovator
Educated both formally and informally
• Receptive to change
• Emphatic-ability to place him/herself in the situation at hand
• Moderate risk taker
• High need for achievement
• Information seeker
• Communication skills
1.5.6. Benefits of creativity or creative thinking
• Become better problem solver
• Connect with your community
• Save more money: the more we become creative the more we save
• Expended sense of time
• Self-awareness and expression
• Freedom through taking up risks, try new things and remove limitations
as a result.
• Stress relief: reducing stress level and improving quality of things
1.5.7. Challenges of creative thinking
• Lack of direction; goals, objectives or plans
• Fear of failure
• Fear of criticism
• Striving for consistency; fear of doing new things
• Passive thinking: Thinking without putting into actions
• Negative attitudes: Focusing on negative sides
• Excessive stress: unwanted stress reduces quality of mental processes
• Rationalizing and justifying: Failure to improve business success due
to justifying your decisions
1.5.8. Relationship between creativity, innovation and invention
Creativity is the ability to think and act in ways that are new and fresh.
In our minds, there are two kinds of creativity: innovation and invention.
Innovation is thinking creatively about something that already exists (e.g.,
the tape recorder, Walkman, and CD player are all innovations on the
phonograph). Invention is creating something that did not exist before (e.g.
the phonograph). A phonograph is a device that records or plays sound from
cylinder records.
Innovation is the process of turning a new concept into commercial success
or widespread use, Invention is the creation of a new idea or concept and
Creativity is the act of turning new and imaginative ideas into reality.
Creativity, invention, and innovation are all interrelated and necessary
for growth to occur.
Therefore, the three terms are related in a way that both innovation andinvention originate from creativity
Application activity 1.5
1. Describe briefly the relationship that exists between creativity
and innovation and give an example in each.
2. Identify the role played by the three aspects (creativity, innovation,
and invention) in the development of the business
Skills lab
1. Using the knowledge of entrepreneurship you have acquired so far,
form a school business club for your college, identify leadership
positions to manage the club and vote for the leaders. Discuss
Problems affecting the community and come up with a clear vision
and mission that will guide the Business club to start projects that will
address those problems and needs.
2. Draw a new product design that uses recycled materials and solves
a customer need. Explain what problem it solves and what makesthis product innovative.
End unit 1 assessment
1. Think of at least 4 different entrepreneurs in your home community.
Explain what types of entrepreneurs these people represent and
provide reasons why.
2. Joana is a year 1 TTC student and wants to start a small business
project in her holidays. Imagine a situation where she comes to
you for advice. How would you advise her to apply the five stages
of the entrepreneurship process to start a successful business?
3. Analyse the needs in your community, relate them to your skills
and, passion and available resources. Come up with a viablebusiness opportunity.