INTRODUCTION Entrepreneurship and enterprising behaviour are important learning objectives in Uganda today.

Worldwide, entrepreneurship is becoming a hot topic in many educational institutions not only as an avenue for improving competitiveness of nations and communities in the globalised markets, but also as a means of increasing creativity and fle ibility re!uired in todays fast changing environment. "lthough entrepreneurship is commonly associated with starting and running ones own businesses, it can also be considered as a way of life that is dominated by, and thrives on challenges. Entrepreneurial training therefore comes down to a lot of lessons in how to live, and be more effective human being # a winner. $t is about appreciating and thriving in challenges, being happy and successful in whatever you attempt, by always thinking out new innovative ideas and being able to communicate the idea to other people logically and with passion. Entrepreneurship trains us to think e tremely clearly, communicate well and position our idea as a winner. $t trains us to sell the idea to various stakeholders by demonstrating how and why it is better than the other ideas out there competing for resources. Entrepreneurship trains us to plan, set up goals and measure progress toward those goals. %his means learning to make hard choices, set priorities and stick with them. Entrepreneurship is about always looking into the future and deciding whats important. $t is therefore important to promote entrepreneurship education in Uganda as a stimulus to enterprising behavior among not only those aspiring to start and run business enterprises, but also those wishing to develop the necessary survival skills in todays fast changing world.

The Entrepreneurship Course "lthough entrepreneurship and entrepreneurial behavior are as old as humanity, entrepreneurship as a field of study is relatively young. &ournals, professional meetings and societies that make up the infrastructure for the discipline, the conceptual frameworks and research findings that constitute the intellectual core of the field are relatively recent. 'edrisa()gmail.com *

" course in entrepreneurship was first offered at the +arvard ,usiness 'chool in *-./ and as an 0," major at the University of 'outhern 1alifornia in *-/2. "n $nterest 3roup on Entrepreneurship was formed in *-/. as a part of the 4ivision of ,usiness 5olicy and 5lanning of the "cademy of 0anagement, and achieved full status as the Entrepreneurship 4ivision of the "cademy of 0anagement in *-6/. "lthough more than 27 different journals on entrepreneurship or small business are published today, the first such journal 8%he &ournal of 'mall ,usiness 0anagement9 was only started in *-:;. "s a field of study therefore, Entrepreneurship is very young. 0ost of the subject matter has been developed in the past 2( years, which implies that much of the material is still ambiguous and under research, with very few empirically tested hypotheses and even fewer generali<ations. 0oreover, Entrepreneurship is largely a multidisciplinary field, having originated from a number of disciplines mainly economics, sociology, and psychology. "lthough many e perts critici<e the ambiguity associated with lack of agreed definitions and generali<ations, it is important to note that this is characteristic of a young and fast growing field that breeds dynamism and progress.

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Chapter 1 DEFINITIONS
1.1

Defining an Entrepreneur

" universal definition of an entrepreneur is still elusive. $ndeed, it is sometimes argued that a single universally accepted definition of an entrepreneur is not important because entrepreneurs by nature strive for change, thus creating a large diversity of characters that end up being referred to as entrepreneurs. What is re!uired, they argue, is clear awareness of the phenomenon being discussed when people talk about entrepreneurs. +owever, to obtain a deeper insight into the subject matter, it is important to at least come up with a working definition. "nd in this attempt, a historical perspective comes in handy. The Middleman - Richard Cantillon (1751) %he very first recorded use of the word entrepreneur in the form it is used today is attributed to =ichard 1antillon. +e was borrowing from the >rench word 8entreprendre9, which literally means 8to undertake9 but also has a deeper interpretation that means 8an in between taker # someone who gets between a supplier and the market and takes a profit by facilitating the e change process.9 4uring these early times, people still lived in closed communities that were isolated from, and hostile to, one another. %rade between communities was very limited and in many cases non? e istent. 5eople who ventured to e plore life in other communities were able to discover that there were commodities badly needed by one community@ that could be availed by another. ,y facilitating this necessary e change, they were able to make large profits. %hese were the early entrepreneurs as observed by 1antillon. Aery close to brokers and middlemen in todays world. +owever, todays open, liberalised and information rich environment makes it hard to make entrepreneurial profits in this way. The merchant - ! "! Sa# (1$%%) +e defined an entrepreneur as one who shifts economic resources from an area of lower yield to an area of higher economic yield. %his definition can also be seen in a historic perspective. 4uring this time, adventurers were busy moving around the world. 4uring these voyages, they could get precious goods at close to no cost from the new found lands, and bring them back to Europe to sell at e orbitant prices to make abnormal profits. 'edrisa()gmail.com ;

%his entrepreneur is very close to todays trader or merchant. "gain todays open and liberalised markets and ease of transport, makes it hard for todays merchant to make entrepreneurial profits from moving resources. The Ri&' Ta'er - (ni)ht* (1+,1) Bnight introduced the element of uncertainty in the definition of entrepreneurs. +e defined Entrepreneurs as the organi<ers of uncertainty, that is, they recogni<e and sei<e opportunities that result from uncertainties. "s communities became more integrated, and transport more readily available it was no longer enough to shift resources in order to make entrepreneurial profits. %he element of uncertainty, which inevitably results in higher risks, was needed to reap the entrepreneurial profits. The Inno-ator . o&e/h Sch0m/eter (1+12) %he nearest definition to todays entrepreneur is based on 'chumpeter, who defines an entrepreneur as one who destroys the e isting economic order by introducing new products and services, by creating new forms of organi<ation, or by e ploiting new raw materials. +e describes an entrepreneur as an innovator who seeks to reform or revolutioni<e the pattern of production by e ploiting an invention or an untried technological possibility and essentially doing things outside the normal business routine. $n this regard, an entrepreneur is normally viewed as a deviant who goes against or beyond the norm, social custom, and tries out the unfamiliar products, methods or services. Entrepreneurs are characterised by dealing with uncertainty, determination and persistence, as they create the new and render the old obsolete. 'chumpeters work was tremendously influenced by a critical review on e!uilibrium theory. +e stated that e!uilibrium theory contributed as much as it can@ but further insights cannot be e pected. %o reach e!uilibrium, 'chumpeter suggests that economic actors decisions and actions have to be repeated over and over again in the same way, so that eventually all actors plans coincide to end up in e!uilibrium ? a static situation that does not allow for change. 'chumpeter helps us to understand the dynamics behind economic change, which he e plains with an element he called innovations (or new combinations), the economic agent to bring along innovations he called the entrepreneur. 'chumpeters entrepreneur was and still is the most renowned concept. The 3r4itra)e0r . I&rael (ir5ner (1+71) 'edrisa()gmail.com .

$n the 2*st 1entury, information has become a basis for competitive advantage. "s a result Bir<hner C*-/;D defined an entrepreneur as one who e ploits information imperfections in order to bring an inherently dise!uilibrium market into eventual e!uilibrium in order to make a profit. +e observes that if all plans of economic actors match, then, there is no need for markets, and therefore markets are always in a state of dise!uilibrium. Entrepreneurs are alert to opportunities, have superior information, and have to change their minds continuously and thus generate a dynamic market process. Ence an entrepreneur recogni<es a market opportunity, and opportunities are abundant in a situation of dise!uilibrium, he acts on it to improve his position. $n so doing, he helps to move an inherently dise!uilibrium market closer to e!uilibrium. %his is the basis of the definition of an entrepreneur, as an arbitrageur that e!uilibrates markets.

Other De6inition& Entrepreneurs are people who always search for change, respond to it and e ploit it as an opportunity. C4rucker, *-6:D Entrepreneurs are especially motivated and talented individuals who see potentially profitable opportunities and organi<e resources in order to e ploit them C'aha, *-6-D. "n Entrepreneur is one who speciali<es in taking judgemental decisions about the coordination of scarce resources C1arson, *-62D +olt C*--2D proposed that FEntrepreneurs are those who incubate new ideas, start enterprises based on those ideas...have vision for growth, commitment to constructive change, persistence to gather necessary resources, and energy to achieve unusual results.F "n entrepreneur is one who sees a need and brings together resources to meet that need. %his definition can suffice as a simple but practical classroom definition of entrepreneurship. Concl0&ion $t should be noted that these definitions are a conse!uence of the situations that e isted in different stages of human and economic development. +owever, it should be noted that the common thread in all these definitions is that entrepreneurs are individuals who generate and accumulate wealth for themselves, their organi<ations or their communities by e ploiting opportunities in ways that appear uncharacteristic of the particular time and place.

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1.2

DEFINING ENTRPRENEURSHIP

%he definitions of an entrepreneur are varied and not very useful in their diversity. %o attempt to overcome these limitations, some scholars have moved from trying to define entrepreneurs to describing what entrepreneurs do. What entrepreneurs do is called entrepreneurship and people who engage in entrepreneurship are called entrepreneurs. %his argument moves us from viewing entrepreneurship as is not a personality but a process. 'chumpeter C*-;.D defined entrepreneurship as a process of creative destruction that involves restructuring a hitherto stable market in order to create new and better systems. %his process, which is associated with both chaos and order, inevitably generates new followers and results in new and better institutions. 1ontemporary scholars have defined Entrepreneurship as the process by which individuals pursue opportunities without regard to alienable resources they currently contro l. " recent conference on Entrepreneurship defined it as the attempt to create value through recognition of business opportunities, the management of risk appropriate to the opportunity, and through the communicative and managerial skills to mobili<e human, financial, and material resources necessary to bring the project to fruition. >rom this viewpoint, one of the best definitions of entrepreneurship is by =onstadt C*-6.D, who argues thatG 8Entrepreneurship is the dynamic process of creating incremental wealth.9 %he wealth is created by individuals who assume the major risks in terms of e!uity, time andHor career commitment or provide value for some product or service. %he product or service may or may not be new or uni!ue but value must somehow be infused by the entrepreneur by receiving and allocating the necessary skills and resources. $n general, Entrepreneurship is a process that defines what entrepreneurs do and how they go about doing their act that eventually leads to them being referred to as entrepreneurs. $n reality, what entrepreneurs do vary widely in detail, however, there is a common pattern in all these activities that ultimately entrepreneurial activity and entrepreneurship. %hese patterns include I 3cc0m0latin) and U&in) E7/erience which involves e ploring, discovering and assessing ones surroundings@ being geographically, physically and mentally mobile in order to learn with an aim of knowing and e panding knowledge. $t is this knowledge that is developed into familiar patterns that manifest itself in know?how, know?who, 'edrisa()gmail.com :

know?where, know?what, know?when and know?why that enables entrepreneurs to easily spot and e ploit opportunities almost instinctively. Bnowledge breeds e perience which makes the strange more familiar as factors keep repeating themselves in ever increasing clarity. E perience enables entrepreneurs to master the fundamentals, which allows them to effectively react to situations and improvise with intuition. I Thin'in) and 3ctin) S#&tematicall# involves understanding how variables impact on each other@ continually adjusting ends, means, values, and circumstance with an awareness that all four of these decision dimensions are variables and partial determiners of each other. $tJs this fluid view of the variables that allows entrepreneurs the fle ibility to determine the ends, forge the means, shape circumstance, and understand their value limits. %his calls for complete understanding of the policies, procedures, and rules of the system@ including how and when to stretch them beyond the limits and when to strictly adhere to them. %his allows entrepreneurs to open up the hori<on into an opportunity filled environment that provides abundant choices rather than restriction I Contin0all# Te&tin) the 8imit& means continually analysing all limits and elements of the situation, ones abilities and willingness to act, and the ability and willingness to act of allies and adversaries. $t involves appreciating that the world has no defined rules of fairness, and that the playing field is never level. 'o testing limits involves determining which way the field slants and how to slant the field in ones favour in order to keep winning. I Committin) to a 9orth# :Ca0&e: means having a strong sense of mission, and pursuing it with an obsession. $t is this obsession that drives entrepreneurs to ignore negative signals, social or cultural norms, and possibly law in the pursuit of their objectives. %hey have a clear understanding of cultural norms and the law, which they embrace. %hey are !uick to hold their competitors to them whenever it suits them, but find a way around them without loosing credibility when they threaten or block their 81ause9

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I Em4racin) Com/etence involves recognising ones competence and limits, and those of others@ recognising and always being attracted to talented people. %his involves attracting, recruiting, managing, developing and rewarding talents. I I Sha/in) and 3da/tin) to Sit0ation& involves reading situations and shaping both oneself and the situations to their advantage@ having the fle ibility to adjust their ethics to fit the situation by emphasi<ing purpose over principle. ,y allowing situations to dictate actions contradictions sometimes result calling for the entrepreneurs creativity to maintain credibility. I Ta'in) Fa&t 3ction means recognising the importance of being first, fast and right, striving to sei<e and take full advantage of opportunities. Entrepreneurs recogni<e that action skills that get results are more important than perfections that result from immaculate planning. I Ma'in) Si)ni6icant and End0rin) Chan)e entrepreneurs actions have significant impact on the economic, social, cultural, and political scene. ,y detecting similarities where everyone sees difference and differences where all see similarities, they are able to create new and uni!ue solutions that result in a significant and enduring difference.

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S&er0n;o)i Edri&a Cha/ter , 11

2

T<E RO8E OF DIFFERENT T<EORIES IN E=>83ININ? ENTRE>RENEURS<I>

"s a further attempt at e plaining entrepreneurs and entrepreneurship, various theories have been advanced to e plain I How entrepreneurs act Ci.e. what it is they doD@ I What happens when entrepreneurs act Ci.e. what are the outcomes of their actionsD@ and I Why people choose to act as entrepreneurs Ci.e., what motivates them to be entrepreneursD. %he main theories are the economic, social, and psychological theories.
2.1

Econo ic Theories!

%he importance of entrepreneurship for economic development has always been stressed in economics but the e istence of entrepreneurship in economic theory has been very limited. %he reason apparently is that with the introduction of entrepreneurship in traditional economic theory most models run the risk of loosing their consistency. >or this reason, the entrepreneur still remains unnoticeable in traditional economic theory. %here are diverse opinions in economics about the nature of entrepreneurship and whether it e ists in a dynamic, static or turbulent economic system@ and the role it plays in such a system. %he majority of economic approaches attempt to e plain how entrepreneurship works and the function it serves in the economic system. +owever, there is still little agreement about what the 8entrepreneurial9 function actually entailed. %here are, however, some clear differences in study and these have been categorised into three groupsG e!uilibrium, dise!uilibrium and revolution? e!uilibrium approaches. Economic %heories %his approach seeks to identify fundamental 8laws9 to e plain the economic system, and assume that there are general principles e plaining society, as is evident in general e!uilibrium theory. $n these approaches, individual human action does not play a significant role and even at the collective level human behaviour is e plained by general principles. 1hange within economic systems also tends to be modeled according to stable state or e!uilibrium philosophies. ,ecause of the e cessive obsession with 8e!uilibrium9 in the economy, economists have traditionally considered entrepreneurs to be an e ternal factor in the economic analyses. %heir contribution to understanding entrepreneurship in modern theory has further been complicated 'edrisa()gmail.com -

by the growing intra?disciplinary conflict between macro? and microeconomics, and the growing dominance of the theory of the firm in the microeconomic theory. ,oth macroeconomic theory and the theory of the firm de?emphasi<e the role of individually initiated behaviour@ proposing that entrepreneurs just like buyers and sellers are 8non?decision makers9 who follow set rules in carrying out their day?to?day functions. %he assumption is that even selfish consumers and selfish producers@ each with their own self interests, could always strike acceptable bargains that could always move the market to e!uilibrium. %his implying that entrepreneurs were just players responding to, but never creating, consumer needs. %his is an assumption that cannot coe ist with entrepreneurship, which re!uires rule?violating behaviour.K %hese approaches neglect the entrepreneurial function because they tend to disregard the power of human action, and limit the capacity for entrepreneurial behaviour. %his e plains why the 8entrepreneurial9 concept is not addressed directly by microeconomic theory. $n this approach the 8firm9 represents its own 8reality9, which is independent of the motivations, rationality and fallibility, associated with individuals. %he assumptions of rational choice and perfect informhhation create further abstractions in the theory by assuming that everything is known. Di&e@0ili4ri0m 3//roach %hese approaches incorporate concepts of entrepreneurship into variations of mainstream economics. %hese have included two forms of transaction cost economics. %he first introduced a theory of regularity in e change processes based on the cognitive limits of human actors, which moved away from assumptions based on human rationality and perfect choice. %he second sought to directly link concepts based on theories of information, information e change and information markets to the process of entrepreneurship. 4ise!uilibrium theorists do not attempt to construct e!uilibrium models of the economic system based on general principles but sought e planations based on observations of e perience. %he models created tend to be descriptive rather than prescriptive and tend to observe that e!uilibrium did not occur in the 8real9 economy. 0odels based on dise!uilibrium suggest that there are opportunities for profit within economic systems because of ine!ualities between supply and demand and 8entrepreneurial9 actions are designed to e ploit these opportunities, driving economic systems toward e!uilibrium. Bir<ner C*-/;D also argued that markets by nature are in a state of dise!uilibrium, and that the role of entrepreneurs is to e ploit information asymmetries in the markets in order to bring the markets to eventual e!uilibrium. %he dise!uilibrium theorists assume a more comple human action and greater uncertainty in social systems@ moving away from the assumption of perfect knowledge, while retaining elements of bounded rationality. %his therefore, provides a comple disagreement between 'edrisa()gmail.com *7

humans as positive actors and negative abusers of opportunity. "t once being the guiding force behind e!uilibrium and being the e ploiters of dise!uilibrium. %hese approaches provide an assumption about human behaviour that is !uite different from that applied in e!uilibrium theories. %hey assume more voluntarism and less determinism than e!uilibrium theories@ showing greater evidence of human action, bounded rationality and concepts of information e change. %he nature of society within the dise!uilibrium group is viewed to be more unstable and open to unpredictable changes, the future is already implied in the very notion of action. %hey allow for human influence over economic structures, recognising the limits of knowledge, information and e pecting greater unknown dise!uilibrating forces to impact on economic systems in une pected ways. Re-ol0tion-e@0ili4ri0m 3//roach %he principal philosophies of this approach originate from the work of 'chumpeter, and are based on three assumptions ? a greater emphasis on human action and choice, radical rather than incremental changes in economic and social systems, and a greater linkage between historical 8facts9 and abstract models. &oseph 'chumpeter C*-;.D developed a rule?breaking theory of economics in which he described a Fcreative destructionF of industrial cycles. +e argued that a normal healthy economy was not one in e!uilibrium, but one that was constantly being disrupted by technological innovation. 4isruption is the normal state of a healthy, vibrant economy. "lthough, such a state can cause losses in its path and can sometimes be painful, it simultaneously creates new opportunities for growth. F1reative destructionF, initiates and sustains the process of development, and is what entrepreneurship does. Entrepreneurship, he added, is a process of creative destruction that initiates and sustains the process of development and helping to move the economy from one state of e!uilibrium to another. %his takes the concepts of human action further by arguing that the key function of the 8entrepreneur9 is to innovate@ conceptuali<ing human action at the individual rather than the collective level. %hese concepts broaden the meaning of entrepreneurs to include not only those business owners, but all who actually fulfil the innovation function even if they are employees of a company. En the other hand, the concept narrows down the interpretation of entrepreneurs in that it does not include all heads of firms or managers or business owners who merely operate an established business without actually performing the innovation function. %he difference for the individual is related to behaviour, in the sense that in a static system the individual can become accustomed to hisHher own abilities and e perience and their usefulness. 'edrisa()gmail.com **

$n a dynamic system, however, the individual must become accustomed to uncertainties and must interact with them. Eperating a business in conditions of uncertainty is !uite different from operating one where certain knowledge e ists. "ssumptions about human action, therefore, differ from those applied by theorists in the dise!uilibrium group because individuals create new opportunities rather than respond to e isting ones. %his conception may derive from focusing on the nature of social systems, which holds that economic systems go through radical discontinuous changes. 'chumpeter moves away from e!uilibrium theories by arguing that creative destruction involves periods of stability in economic systems followed by periods of transformation, within which he places the entrepreneurial function. %his perspective of the 8entrepreneurial9 function involves the destruction of the current social order not its maintenance. Moti-ation to Entre/rene0r&hi/ 1ontemporary theories tend to concentrate on the motivations that create entrepreneurs. +ow the entrepreneur acts at a given time and place depends heavily on the reward structure in the economy or the prevailing rules of the game that govern the payoff9 to entrepreneurship. Entrepreneurs are ingenious and creative people who strive add to their own wealth, power, and prestige@ and choose to be entrepreneurs when or because their utility Cfrom wealth, power, and prestigeD is ma imi<ed by so doing. $ndividual chooses to be entrepreneurs if the e pected net present value of profit from entrepreneurship is positive, otherwise they will opt to supply wage labour. $ndividuals attitude toward risk and the monetary value of the psychic costs and benefits of entrepreneurship have to be incorporated as a monetary e!uivalent in the L5A calculation. Economists argue that the decision to be an entrepreneur is a utility?ma imi<ing career choice made by an individualMpeople choose to be self?employed if the total utility they e pect to derive Cvia income, independence, risk bearing, work effort, and per!uisitesD, is greater than from their best employment option.

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2.2

Socio"ogica" Theories

'ociological theories try to e plain entrepreneurial behaviour as a function of the person and environmental conditions or the reality individuals live in. %he environment and the ideological values shape peoples attitudes and beliefs, which in turn influence the potential entrepreneurs view, behaviour and perspective. %he nature of populations influences the distribution of resources and indirectly shapes entrepreneurial processes. %his implies that Entrepreneurship is situational and varies among nations and regions, over time, and among individuals. 'ociologist view environmental factors Cthat include culture, networks, access to capital, mobility, and government policiesD as key in fostering entrepreneurship. 4ifferent sociological models have been developed to try and e plain entrepreneurship, and they include@ The &ocial de-elo/ment model %he model attempts to e plain and understand entrepreneurial start?up decisions in terms of the situations encountered, and the social groups to which individuals relate. %his can also be used to distinguish between various entrepreneurs and would?be entrepreneurs. %he factors researched in sociological research are the environmental institutional forces that affect the founding rate of organi<ations. $nstitutional factors are thought to have their largest impact when a new form of organi<ation is being founded. $nstitutional environmental forces are responsible for the shape of organi<ational forms. %he shape organi<ations take has important social conse!uences. %he new forms contribute to the diversity of organi<ations in society. 'everal features of the local environment may affect founding rates. "vailability of low?cost facilities or land is important to new company formations. "ccessibility to transportation is also often important. Lew organi<ations are usually founded where the entrepreneur resides@ therefore the !uality of life and local educational institutions are often mentioned as important local variables. Economic environments with high rates of business establishment are conducive to entrepreneurship through creation of new markets and activity. The Demo)ra/hic a//roach, %his approach uses demographic information and variables such as family background, birth order, role model, marital status, age, educational level of parents and self, socio?economic status, previous work e perience and work habits to profile entrepreneurs and potential entrepreneurs. $t assumes that people with similar background possess similar underlying 'edrisa()gmail.com *;

characteristics, and that by identifying demographic characteristics of known entrepreneurs, it is possible to predict entrepreneurship in unknown populations. Family responsibilities play an important role in the decision whether to start a company. $t is, relatively speaking, an easy career decision to start a business when a person is 2( years old, single, and without many personal assets and dependents. $t is a much harder decision when a person is .( and married, has teenage children preparing to go to University. "nother factor that determines the age at which entrepreneurs start businesses is the trade?off between the experience that comes with age and the optimism and energy of youth. "s you grow older, you gain e perience, but sometimes when you have been in an industry a long time, you know so many pitfalls that you are pessimistic about the chance of succeeding if you decide to go out on your own. 'omeone who has just enough e perience to feel confident as a manager is more likely to feel optimistic about an entrepreneurial career. 5erhaps the ideal combination is a beginners mind with the e perience of an industry veteran. " beginners mind looks at situations from a new perspective, with a can?do spirit. The &ocio.c0lt0ral dimen&ion& %hese e plain entrepreneurship in terms of the social and cultural values attitudes and practices including the value attached to innovation, risk taking, entrepreneurship, hard work and independence, the scorn associated with failure and error, and reactions to change in a society is of primary importance in encouraging people to venture into entrepreneurship. %he cultural climate in different areas may lead to higher rates of organi<ational founding. %his may be viewed through the formation of individual value systems. " society with a social system that places a high value on entrepreneurship will have a high founding rate. $n these societies, individuals in times of transition will be more likely to choose an entrepreneurial venture. =esearch on family, peers, previous work e perience, ethnic groups, classmates, colleagues, and mentors@ have shown them to have significant effects on the value systems of entrepreneurs. "vailability of venture capital is also important in the cultural environment. "vailability of capital creates favourable conditions for the entrepreneur. %he more capital available, the less it will cost. %he capital is needed to purchase inputs for the organi<ation. %he availability of capital will also depend on the culture of the society. %his culture will influence whether e cess capital is made available to entrepreneurs or if established firms are favoured. %here will be more company formations when financial resources are available. 1apital from personal savings and from relatives is most often used to start companies. Le t, private individuals in the local community are used. Eften ethnic groups have developed financial institutions to support new businesses. 'edrisa()gmail.com *.

Social learnin) theor# %he theory proposes that learning can occur not only through formal education, but also and more importantly through the observation of behaviour in others, often referred to as models. Role models are very important because knowing successful entrepreneurs make the act of becoming one yourself seem much more credible. Would?be entrepreneurs come into contact with role models primarily in the home and at work. $f you have a close relative who is an entrepreneur, it is more likely that you will have a desire to become an entrepreneur yourself, especially if that relative is your mother or father. %his transmits social norms, language, and aspirations and shapes career preferences through observational learning and modeling. %his is associated with increased education and training aspirations, task self?efficacy, and e pectancy of an entrepreneurial career. Social learnin) theor# Entrepreneurs have to figure out how to get access to re!uired resources and whether the necessary competence to combine these resources is available. 'ome of the resources and competencies can be inherent to the entrepreneur, others have to be ac!uired on the market or otherwise. $t is important to stress the importance of an entrepreneurs social network as a main source of help to obtain resources and competencies to start a business. =esearchers recognise that establishing a business is embedded in social and emotional conte ts, where social networks become important. Letworks may facilitate or constrain linkages between aspiring entrepreneurs, resources and opportunities. Entrepreneurs use the social relationships to access information and resources needed to launch and operate their businesses. %he presence or absence of networks plays a role in influencing the development of entrepreneurship since access to information and resources often depends on Fknow?whoF. ,eing in contact with a diverse set of individuals is important for entrepreneurs because it gives them access to information and other resources. +owever, not all networks are entirely useful. Letworks cost time, money and other resources to develop and maintain. %he structure of the network determines its usefulness to the entrepreneur. 'ocial networks are beneficial if they provide complementary information and resources that can help the entrepreneur to start and run his business. $n this case, diversity of the network is re!uired to achieve the re!uired mi of resources@ and is defined by the entrepreneurs background, education, occupation, e perience, and ability to provide alternative resources to the network. %he functioning of the network will depend onG 'edrisa()gmail.com *(

C*D %he si<e and e tension of the network C2D Lumber of strong ties and number of weak ties in the network C;D >re!uency of contact C.D Lumber and 0ultiplicity of relationships C(D %ime used to develop and maintain the network C:D =ange of intensity C/D Lumber of indirect ties C6D Lumber of bridges in the network C-D 4egree of redundancy # the level of overlap between the entrepreneurs contacts. 5eople closely connected to each other tend to possess the same information resulting in redundancy. 'ome 'cholars have argued that entrepreneurs value their independence too much to be interested in networks that could lead to dependency. +owever, research shows a positive correlation between entrepreneurship and networks, and many believe that networking does not create dependency but a generic dependencyH independence parado that entrepreneurs are bound to enjoy. $n contrast to the transaction cost approach, social network theories emphasi<e trust, not opportunism, as an integral part of the relationship. 'ocial control and economic e change factors interact closely in long term relationships. %he life course conte t involves analy<ing the life situations and characteristics of individuals who have decided to become entrepreneurs. The h0man ca/ital /er&/ecti-e %his focuses on the influence of human resources, in particular the level of education, and managerial, technical and business skills Cfor the entrepreneur and the environment in which he operatesD in fostering entrepreneurship. A 'everal studies have shown that years of formal education of the entrepreneur before founding a new firm were related to the eventual performance of the firm. %he chances of staying in and reentering business increased with increasing education. Ness?educated entrepreneurs may face financial or human capital constraints which limit their business pursuits. " social sciences andHor arts educational background can restrict or discourage an entrepreneur from turning to start?up ventures in manufacturing, finance or technology. >re-io0& E7/erienceA %he influence of previous entrepreneurial e perience upon the success of small businesses has been tested in several studies. Nonger, more successful entrepreneurial 'edrisa()gmail.com *:

careers are a function of earlier career starts and involvement in multiple ventures. 5rior start? ups, years of formal education, years of entrepreneurial e perience and years of industrial e perience correlate significantly with increase in employment. 'tudies have found that entrepreneur who had previous e perience in the field of their venture had a better chance of successfully e panding than those who did not have e perience. $t can be concluded that the antecedent influences of the entrepreneur do in fact affect business survival and growth. E66ect& o6 Mana)ement S'ill& on >er6ormanceA ,usiness skills and particularly strengths in generating ideas and dealing with people were important in establishing a business. =elatedly, there is a growing body of research e amining the effects of planning on performance, finding that strategic planning has a significant, positive association with performance in small firms. En-ironmental Dimen&ion& %hese focus on the differential structure of opportunity, location, and activities, as well as socio? political variables Ci.e., availability of government assistanceD, market structure and the regional opportunities, the investment climate, availability of skilled manpower, the regional labour market and other features that influence economic development in general, availability of resources such as venture capital, the technical labour force, and incubator organi<ations, as well as the pro imity of universities, the regional loans policy, supporting services and the entrepreneurial subculture are also important dimensions that may affect entrepreneurial activity. "vailability of sufficient start?up capital is reported to be one of the most important factors influencing the future success and profitability level of the new business venture. 'tudies of Ugandan entrepreneurs access to bank loans show that they face perpetual barriers that they are less capable of overcoming. %he political climate is an important environmental variable for the founding of organi<ations. 5olitical and religious refugees have been highly identified with entrepreneurship. %his level of e treme displacement often precedes the formation of a company. ,ecause of e ternal forces these individuals must make a major change in their life. %here are less e treme levels of displacement which also lead to individuals making changes in their life. Legative displacements resulting from job losses, wars, and closing of firms have been documented to be related to increased organi<ational founding rates. $ndividuals faced with displacement in their lives must make a change and this change is often to form an organi<ation. %his decision to form an organi<ation will be greatly influenced by the culture and value system of the individual. 5olitical unrest is believed to lead to an increase in organi<ational founding. 3overnmental policies may have a negative or positive effect on the founding of organi<ations. 5olicies which increase legitimacy, stimulate demand, or grant subsidies to entrepreneurs, will increase the 'edrisa()gmail.com */

organi<ational founding rate. %a ation levels will also influence the founding rate. =esearch on governmental policies has found that locations with favourable ta ation and licensing policies will be more attractive to entrepreneurs than other locations. >o/0lation ecolo)# theor# %he theory of population ecology focuses on populations of organi<ations and sheds light to organi<ation environment relations. %his is inspired by the need to establish why there so many kinds of organi<ations. %he populations of organi<ations are very important when studying the relationship between organi<ations and environment. Ene of the central themes in population ecology is the process of selection. 0uch of the management literature approaches the issue of organi<ation?environment interaction from adaptation perspective. >irms or usually the managers of the firms scan the relevant environment for opportunities and threats, formulate strategic responses, and adjust organi<ational structures appropriately. ,ecause of the various different inertial pressures that hamper firms ability to adapt, it becomes essential that the adaptation perspective must be supplemented with a selection orientation. %he population ecology model involves a notion that available resources at any moment for each form of organi<ation are finite and fi ed, and that the rate at which units are added to populations of organi<ations depends on how much of the fi ed capacity has already been e hausted. Even though the organi<ational population ecology concept was not originally concerned about entrepreneurship or new venture creation many of its contributions are relevant in this regard. %his implies that entrepreneurial behaviour or business start?ups should@ C*D C2D C;D C.D 3ive more attention to the environments carrying capacity for organi<ations@ Emphasi<e other organi<ations as part of the environment that affects new firms@ 1onsider the interdependence of organi<ations in the host society@ and "ttend to the se!uence of events associated with business start?ups, particularly at different stages of the population life course.

$t is also suggested that researchers on entrepreneurship should@ C(D 3ive more attention to the uni!ue strategies developed by firms speciali<ing in different industries Cor populationsD during the early years of the population life course@ C:D Work together in teams to build longitudinal community?based samples of organi<ational populations@ and C/D 4evelop more comprehensive panel studies Cmultiple measures over timeD of entrepreneurial behaviour. 'edrisa()gmail.com *6

,irth fre!uencies of new firms, are related to the abundance of socio?economic resources. Ergani<ational as well as occupational and industrial differentiation, the percentage of immigrants, the si<e of relevant industry, the si<e of the urban area, and the availability of financial resources are most critical for predicting the creation of new organi<ations. Re&o0rce de/endence theor# "nother theoretical approach concerning the relationship between environment and the firm is the resource dependence concept. $t views organi<ations as resource?dependent on their e ternal environment. Ergani<ations need resources and in order to obtain resources that they dont possess yet they have to interact with other organi<ations, which control those resources. +ence they become dependent on their environment. %his environment can be characteri<ed in terms of si constructsG C*D 1oncentration # the e tent to which power and authority in the environment are widely dispersed@ C2D 0unificence # the availability or scarcity of critical resources@ C;D $nterconnectedness # the number and pattern of linkages among organi<ations@ C.D 1onflict #disagreement about the goals of the social system, C(D $nterdependence # the degree to which one organi<ation influences the others@ and C:D Environmental uncertainty # the degree to which the future can be accurately predicted. =esource dependence approach has often been adopted when studying the relationship between the environment and new venture creation. $t is assumed that given sufficient availability of resources, founders will emerge. %he resources available within an environment influence the survival and growth of firms sharing that environment@ they also affect the abilities of new firms to enter this environment. =esearchers have established a positive relationship between environmental munificence and carrying capacity, and when munificence together with carrying capacity increases, the formation rate increases. >urthermore, when resources become used, the carrying capacity decreases and, subse!uently, the formation will decrease as well. %he more munificent an environment, the greater the access a new firm will have to its resources. %he concepts of resource dependence and population ecology actually come !uite close together. +owever, in the resource dependence concept organi<ations can be seen as adaptive to their environments whereas the population ecology framework treats organi<ations as passive and reactive agents that get selected by the environment and subse!uently survive or die.

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Re&o0rce-e7chan)e "cts of the entrepreneur are primarily volitional. %he entrepreneur makes strategic choices to secure the best transactions with the environment. %he environment is a pool of resources which the entrepreneur selects and ac!uires to establish his venture. %he entrepreneur masters fate and makes strategic choices to minimi<e threats and e ploit opportunities.

5opulation?ecology "cts of the entrepreneur are predominantly deterministic. %he entrepreneurs choice are predicated and moulded by the industry. %he environment is a set of influences which selectively permit some ventures to survive. %he entrepreneur is an e ponent of environment and an instrument of economic development.

%able *G %wo frameworks for entrepreneurial environments 5opulation ecology and resource dependence theories offer a useful approach for studying the environment?organi<ation interaction coherently with 3artners C*-6(D conceptual framework for new venture creation. 5opulation ecology concept views organi<ations as reactive and passive agents, which will survive environment permitting, i.e. survival is based on environmental selection rather than environmental adaptation. =esource dependence concept for its part sees organi<ations as active, resource?optimi<ing agents in their environments, which adjust their posture whenever environmental conditions change. ,oth concepts are significant from entrepreneurship research point of view. %hey establish the basic relationship between environment and organi<ation.

Entre/rene0rial en-ironment %he concept of entrepreneurial environment is central in studying the impact of the environment on entrepreneurship and entrepreneurial behaviour of an individual. Entrepreneurial environment refers to those environmental attributes that have an impact on entrepreneurial behaviour and that interact with the entrepreneurial process Ci.e the regional, physical, psychological, and social environment of the entrepreneurD. %he aspects that characteri<e the entrepreneurs environment include venture capital availability, presence of e perienced entrepreneurs, technically skilled labour force, accessibility of suppliers, accessibility to customers andHor new markets, etc. $t is important to consider the crucial role of the entrepreneurs subjective interpretation when considering the environmental characteristics, i.e. subjective versus objective characteristics of environments. 'edrisa()gmail.com 27

366ecti-e and rational en-ironmental 6actor& %he entrepreneurial environment can be categori<ed into two different categoriesG *. "ffective factors ? are attributes of the social environment that include social identification, role models, and social norm. I 'ocial identification considers how individuals relate themselves to social environment, when they perceive themselves as being entrepreneurs e.g. is one appreciated as an entrepreneur. I =ole models refer to the amount of successful entrepreneurs in the environment that the person knows, and impact on entrepreneurial behaviour and intentions. %hey may occur within the family Centrepreneur parentsD or other social conte ts. I 'ocial norm represents the attitude of fellow?men, like members of the family, colleagues, friends, etc. towards entrepreneurship and entrepreneurial occupation. 2. =ational factors ? refer to rational and calculating thinking of individuals, and include financial e pectations, perceived opportunity, and perceived availability of five types of resourcesG technology?related, financial, social capital, access to market, and human resources. %hese factors are linked to the environmental variables and perceptions are important here when the impact of these factors on entrepreneurial process is concerned. I >inancial e pectations, i.e. e pectations and beliefs concerning the return on investment in entrepreneurial activity, constitute one of the most relevant issues of the rational factors. $t is important to notice that the concepts of financial resources and financial e pectations are not connected. >inancial e pectations refer to wealth creation, which is commonly held as a powerful motivation for all kinds of different individual behaviors. %his factor is assumed to be dependent on the given environment. E.g. the ta ation of entrepreneurial income, capital gains and dividend. 'ince these vary across different environments, states and countries, financial e pectations can also be linked to environmental attributes. I Epportunity emergence and recognition is a central phenomenon in the field of entrepreneurship. %his can be linked to environment and differs from one environment to another. %he perception of opportunity is assumed to affect entrepreneurial intentions. I 5erceived resource availability is also of central interest. %he interpretations of the entrepreneur are of importance when resource availability is considered. %he 'edrisa()gmail.com 2*

perceived resource availability is more important than actual resource availability. %he concept of resource availability is related to the concept of resource munificence. =esource availability can be broken down in to availability of different types of resources that include technology and respective know?how, financing, social capital Ccontact networksD, market access, and human resources and skills. ,oth the affective factors and the rational factors are assumed to affect entrepreneurial intentions through attitudes towards entrepreneurship. "ffective factors are e pected to affect entrepreneurial intentions through perceived desirability and respectively rational factors through perceived feasibility.

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2.#

Ps$cho"ogica" Theories

5sychology e amines how primary motivations or needs may vary across individuals and how these differences may influence entrepreneurial activity. $t also considers various aspects of the psychological makeup and problem?solving style of entrepreneurs. Unlike the sociological theories that relate the development of entrepreneurship to the environment and the situation that an individual encounters, psychological theories ascribe entrepreneurial tendencies to the individuals personality, mental and physical make?up. 5sychological theories include I The Trait& a//roach which suggests that $ndividuals with certain characteristics always find the path to entrepreneurship regardless of the environmental conditions. $t observes that personality patterns Cor characteristicsD in individuals e ert a dominant influence on the subse!uent success of their ventures, and that possessing a greater number of the right personality patterns contributes to a greater likelihood of success. $t is therefore, used to e plain both entrepreneurial intentions and entrepreneurial success. =esearch has found various linkages between personal characteristics and entrepreneurship. "lthough these relationships are usually !uite weak, they do attempt to e plain entrepreneurship to a limited degree. I The co)niti-e Theor# suggests that entrepreneurial success is closely related to the way entrepreneurs perceive information, think and process knowledge, and that this can be used as a basis for distinguishing between entrepreneurs and other persons. %his perspective advises that different people think and process information differently and that such variations may help differentiate people. %heorists have tried to identify certain cognitive mechanisms and information management styles that can be associated with entrepreneurs. "n e ample is given in the table below.
1 Di66erence& in /er&/ecti-e

4riven by 1ommitment to Epportunity 0anagement of =esources 'edrisa()gmail.com

Entre/rene0r >er&/ecti-e 5erception of opportunity Evolutionary, long term 'taged allocation, minimal e posure

Mana)er >er&/ecti-e =esource currently controlled >ast reaction, short term 'ingle?staged, with complete commitment 2;

'tructure and =ewards

>lat, organi<ation, use of networks, individual rewards

>ormali<ed hierarchy 'hareholder rewards

=eading the workings of an entrepreneurs mind presents a tremendous challenge, and certainly above the scope of this course. +owever, the benefits for so doing are recognised as entrepreneurs tend to think in certain ways about certain kinds of things and what entrepreneurs think about and how they go on thinking about what they think about is critical to understanding what occurs during an entrepreneurs activities. Evidence suggests that entrepreneurial success is closely related to the way entrepreneurs perceive information and process knowledge. E amples of cognitive mechanisms relevant to entrepreneurship include@ C*D Alertness ? a bias to collect and process e tensive information. "dditional information improves market understanding and decision?making, allowing individuals to correctly differentiate between high? and low?potential opportunities, perceive hidden benefits that outweigh risks, and thus correctly decide to venture into the unknown. C2D %he planning fallacy ? a tendency to assume that one can accomplish more in a given period of time than is actually justified. =esearch indicates that entrepreneurs often underestimate risks and overestimate success probabilities. %hey tend to overestimate how much they can accomplish in a given period of time and underestimate the amount of resources it takes to complete certain projects. C;D Everconfidence a failure to know the limits of our knowledge. Everconfidence is

the tendency to underestimate our lack of knowledge or to think that we know more than we really do. Everconfidence occurs when decision?makers form overly optimistic assessments@ they fail to e amine their information, assume that they know more than they really do, and fall short of thinking critically while making decisions. Entrepreneurs will be more aware of the boundaries of their knowledge and therefore will be less overconfident than non?entrepreneurs. C.D 'elf efficacy ? cognitive conviction in ones capabilities to perform. 'edrisa()gmail.com 2.

I The neo-Dar9inian perspective contends that the entrepreneurial process includes distinctive features that select individuals with certain characteristics for participation and success. %hese individuals are attracted to entrepreneurial situations and their compatible traits enable them to navigate the challenges of entrepreneurial conte ts. >urthermore, entrepreneurial environments may reinforce these traits in entrepreneurs, which develop over time in response to the re!uirements of entrepreneurial activity.

ENTREPRENEURI%& CH%R%CTERISTICS %he psychological theory, discussed earlier, stresses the importance of the 8right stuff9, meaning that individual having 8entrepreneurial characteristics9 always finds the path to entrepreneurship regardless of the environmental conditions. %he theory adds that, it is these characteristics that will e plain an individuals tendency towards entrepreneurship and the level of success one achieves from entrepreneurship. $n attempting to e plain the entrepreneurial characteristics, it is important to look at three main themes of the person referred to as an entrepreneur. *. %he entrepreneur as a personality # the individual entrepreneurs way of life. 2. %he entrepreneur as a founder and owner of an enterprise ;. %he entrepreneur as a business manager.

2.#.1 Persona" Characteristics

Entrepreneurship is increasingly being seen as a way of life, and entrepreneurial !ualities are now considered important tools for personal survival and employability in todays fast changing environment. "lthough these characteristics can be in born, it is widely believed that they can also be learned and developed especially when actively e posed to situations that re!uire these characteristics. 4istinction should be made between the personal characteristics, which can be possessed by anybody, and business start up competences that are re!uired for self employment. %he most important personal characteristics re!uired for entrepreneurship include@ *. stigma attached to failure: Entrepreneurs are always creative and innovative as they try to impose order and provide solutions to uncertain situations in which they normally operate. 'edrisa()gmail.com 2(

,ecause they lack the benefits of established procedures and well tested standard operating routines and responses to situations, entrepreneurs need creativity to deal with their everyday situations that involve creating new products, services and processes. Even when they imitate others, creativity is needed to adapt the imitations to the markets. 2. Need for achievement: Entrepreneurs manifest a need for achievement that drives the pursuit of opportunity and the creation of tangible, measurable targets and outcomes. %he Leed for achievement can be inculcated through e posure, education and child rearing practices that emphasi<e achievement, training in self?reliance, rewarding hard work and persistence in goal achievement, and creating interest in e cellence. ;. Tolerance for ambiguity: Entrepreneurs demonstrate an ability to accommodate uncertain situations. %his allows them to act without having full information and clarity about situations. ,y tolerating uncertainty, entrepreneurs perception of risk that might otherwise impede action is reduced. %his allows entrepreneurs to e plore and pioneer in uncertain environments. .. Risk propensity: Entrepreneurs are commonly described as risk?takers, but research shows that entrepreneurs are moderate risk takers that only take calculated risks. =isk implies the possibility of loss due to uncertain future events. %hey borrow money, risk their reputation, mortgage their homes and commit all other actions that imply risk. +owever, these are not mindless actions but well calculated actions that carefully weigh the benefits against the threats and carefully reduce the associated risks. =esearch therefore suggests that careful and prudent management of risk more accurately that characteri<e successful entrepreneurs may be vital for the success of established firms in todays rapidly changing markets. (. Action-orientation (pro-active): Entrepreneurs take !uick and decisive action, normally without resorting to e tensive research or planning before deciding a course of action. ,eing proactive means scanning the environment for opportunities, showing initiative, taking action, and persevering until the re!uired result is achieved. Entrepreneurs recogni<e that the opportunity window may not remain open long, and use their action orientation to pursue them e hibiting decisiveness and rapid reaction time is the desire for independence and autonomy. %hey want to be their own boss or the boss of others and not to work for someone else. %hey do not re!uire e ternal structure, controls, or instructions to do their job. 'ome 'edrisa()gmail.com 2:

writers stress the entrepreneurs obsession with power and a strong need to keep control. %hey hate rule and authority which they regard as stifling and inconveniencing. 6 nternal !ocus of "ontrol# %hey are convinced that success or failure lies in their hands and not in the resources at their disposition, the might of their organi<ation, luck, or other e ternal forces beyond their control. "n internal locus of control detests e ternal direction and ascribes outcomes to ones own behavior, reinforcing a sense of self?belief.. :. $ersistence% determination: Entrepreneurs have the salient !uality of endurance ? dogged persistence and determination. "s they try out new ideas, 8$t cant be done9 is a phrase entrepreneurs commonly encounter. 'carce resources, une pected problems are all part of the entrepreneurial process and re!uire persistence in the face of obstacles. /. &le'ibility and e'perimentation: Entrepreneurs do not insist on one best solution, but adopt successive appro imations to solve immediate problems as they occur. %his calls for constant improvisation in response to challenges in an ever changing entrepreneurial environment. 6. (pportunity (rientation: Entrepreneurs have a well defined sense of searching for opportunities. %hey are always looking ahead and are less concerned about what they achieved yesterday. %hey search for andHor create opportunities all the time, placing themselves in an opportunity # rich stream and shaping themselves to sei<e and !uickly take advantage of the opportunities before they are lost.

-. )igh level of energy and capacity for hard *ork: Entrepreneurs, more than average employees, e tend more physical and mental effort in operationalising ideas that may be strange and therefore lack the support of other stakeholders. +igh levels of energy and hard work compensate for the scarcity of resources normally associated with new firms and new business ideas.

2.#.2 Characteristics of an Entrepreneur as a 'usiness foun(er )features*

%here are !ualities that an entrepreneur needs to have and develop in order to successfully start? up, nurture and grow an enterprise. " competent entrepreneur should be able to use knowledge, attitudes and skills in such a way as to be able to deal effectively with the tasks, problems, dilemmas and contradictions resulting from business ownership. %hese !ualities include@ 'edrisa()gmail.com 2/

*. Niche-craft: $s the ability to economi<e by focusing on small market segments CnichesD that dominant firms leave untouched because of their limited profit potential. 'uccessful entrepreneurs have the ability to recogni<e and profitably e ploit niches. %hese narrow markets do not re!uire the large capital investments re!uired for broad markets and suit the limited resources of entrepreneurs. %hey also allow entrepreneurs to sidestep frontal competition with entrenched rivals. 1onse!uently, entrepreneurs often focus on local markets, customers with speciali<ed needs, or new and emerging markets that are too uncertain for large competitors. 2. Net*orking% coalition building: $s the ability to establish fruitful linkages with other business persons and other stakeholders for mutual learning, collaborative undertakings and other joint activities aimed at achieving common good. Entrepreneurs need friends and allies to compensate for their limited resources. 'uccessful entrepreneurs cultivate the art of networking and coalition?building to augment their own scarce resources. >ree advice, referrals, and inside information offset the intrinsic lack of organi<ational resources. $n effect, the network becomes the entrepreneurs organi<ation. ;. Team*ork: %he energy and talent of the team is one of the few resources an entrepreneur can draw upon. 'kills in team building and recognition of individual and team performance ma imi<e the performance of team members. ,uilding a team takes into account the new configurations of specialist skills and services, and is so important for a starting entrepreneur. 4elegating responsibilities to a team of employees or even e ternal consultants enables the entrepreneur to focus on his own core competencies but it also opens up ways to improve eff-iciency and generation of creative ideas. .. "ustomer (rientation: $s the ability to communicate, identify mentally, persuade and discuss with customers and clients in order to better comprehend their needs, e pectations, app rehensions and re!uirements. Entrepreneurs have this !uality of customer orientation that helps them to always keep in step with their clients. %hey also recogni<e that their clients do not only include buying customers, but also suppliers, competitors, employees, service providers and the wider public that may have a direct or indirect input on the business. "n entrepreneur needs to act responsibly with regard to the social environment and community. =esponsible entrepreneurial governance is a precondition and basis for a society in which self?regulation of entrepreneurial activities can take place. 'edrisa()gmail.com 26

(. (rgani+ation building: $nvolves the development of entrepreneurial and learning organi<ations, management of business development processes and building networks of stakeholders, and a fle ible strategic orientation. ,uilding a company is a comple process that re!uires putting the right people and resources together to accomplish a task. $t is the ability to create an effective organi<ation that enables entrepreneurs to bring their visions to reality. "t the level of the organi<ation, entrepreneurs have to deal more often with more responsibilities and insecurities in an effort to organi<e a varied, compensating and synergetic competence base. %he greatest challenge is managing stakeholders at a national and international level, in combination with a large degree of insecurity and unpredictability. :. (pportunity (rientation: $s the ability to recogni<e and analy<e market opportunities. $t consists of a specific combination of handling risk, content and market. Entrepreneurs have the capacity to redefine risk as an opportunity to use their e pertise, rather than as a possible reason for failure. %hey can find opportunities looking for better ways to accomplish a task through inventions, new services, and new approaches # or through e ploring a segment of the population, which could respond to a new Cor new version of aD product targeted to lifestyle or needs, delivering a cheaper product or service than that which is currently available, applying a new technology to solve customer problems in a different way or finding a business location which is more convenient for customers.

2.#.# The Entrepreneur as a +anager

"n entrepreneur will also be re!uired to play the management roles of the entrepreneurG planning, organi<ation, financial management, human resource management, leadership and control. $n many cases, skills analysis focuses on managing an enterprise, rather than managing ones own enterprise. %he most common educational approach for entrepreneurship distinguishes si types of skillsG operational management, personnel and organi<ation, financial administration, mar Biting, financial management, and making a business plan. "longside these traditional functions, the entrepreneurs managerial functions e tend to the roles of enabler, facilitator and coordinator, communicator and negotiator, change manager and internal consultant. %he modern entrepreneur?manager needs also to develop new competencies, such as having an international perspective and an eye for implications, opportunities and threats 'edrisa()gmail.com 2-

of a global business environment, understanding the surrounding chain of production and network of enterprises, or constant alertness to market change and technical trends. %hese competencies are outside the scope of this course, but will be sufficiently covered in the relevant management courses.

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TB>ES OF ENTRE>RENEURS

Niterature on entrepreneurship is paying greater attention to the diversity of Entrepreneurs. 1ertain characteristics of the firms and the entrepreneurs who own them can be more easily and clearly understood if we group and classify certain types of entrepreneurs differently. %he following are some of the distinctions that can be used to classify entrepreneurs.
#.1

+oti,ation to engage in entrepreneuria" acti,it$!

C>0&hD (Forced) and C>0llD entre/rene0r&! 5ush entrepreneurs are those whose dissatisfaction with their current position for reasons unrelated to their entrepreneurial characteristics, pushes them to start a venture. 4issatisfaction may be as a result of dissatisfaction with current job, unemployment, lack of marketable job skills, loss of a bread earner, forced migration, premature retirement etcO E>0ll: entre/rene0r& are those who are lured by their new venture idea and initiate venture activity because of the attractiveness of the business idea and its personal implications. "ttraction of entrepreneurship that could attract an individual include a promise of high profits, prestige, conforming to group pressures, a need for independence, and a chance to put their ideas in practice.
#.2

&e,e"s of Creati,it$ an( Inno,ation

Inno-ati-e entre/rene0r& assemble a large variety of information and combine a range of factors e perimentally to produce new possibilities in terms of markets, techni!ues, or products. 1ountries with a very underdeveloped industrial base hardly produce this type of entrepreneur, because of lack of the necessary infrastructure. Imitati-e (3do/ti-e) entre/rene0r they imitate and adopt the technology and techni!ues innovated by others. %hey are particularly important in underdeveloped countries although not highly regarded in more developed economies. +owever, imitative entrepreneurs also need to be creative in order to modify innovations to suit their special conditions. *CcD $nnovative entrepreneurs, A %hey constantly look for and e ploit serial opportunities because of their wide skills and knowledge accumulated from a wider educational background, e perience or e posure. %hey start by e ploiting small opportunities seeking and e ploiting a series of, often varied, 'edrisa()gmail.com ;*

opportunities as they grow. %heir ambitions involve building large organi<ations and are not afraid of borrowing to achieve this growth. %hey usually find it easy to delegate and hire competence. Fi&ionar# Entre/rene0r&A %hey have almost similar characteristics to the opportunistic entrepreneurs however, while 8opportunistic9 entrepreneurs pursue, serial business opportunities, the 8visionary9 entrepreneurs concentrate on the unwavering pursuit of a single, powerful opportunity. $n practice, this fi ation may represent a 8false opportunity9 that is ahead of its time or fails to consider significant obstacles to implementation.

Cra6t&man Entre/rene0r&A %hey own the businesses in which they operate, but tend to restrict their business to their individual skills and e periences usually accumulated from limited education and e posure. %hey have minimal growth ambitions, keeping their enterprises small as a means of maintaining control. 1ontrol is normally autocratic, with little delegation and strong paternalistic attitudes towards their workers. %hey avoid risk and the use of loan money. Lormally, they are not marketing oriented, preferring to build very strong with their e isting customer. *. Drone Entre/rene0r&A "t some instant in their business, craftsman?entrepreneurs are so comfortable with their achievements that they decide not to tamper with what they consider a winning formula. %hose entrepreneurs that will not change under any circumstances are referred to as drone entrepreneurs. 'lowly but surely, this entrepreneur will be forced to close. 2. Fa4ian Entre/rene0r& are also reluctant to change, but are sometimes forced by circumstances to change. %hey respond very slowly to changes in the market, and this affects their growth and competitiveness. +owever, by following a proven path, these entrepreneurs are protected from the uncertainty of new innovations@ they are therefore likely to survive for a long?time. %hey however grow very slowly or do not grow at all because they fail to e ploit new innovations that are normally more profitable.
1.1

&e,e" of organi-ation

4ifferences between entrepreneurs who developed their business ideas on their own C &olo entre/rene0r&D vs. those who got their ideas from their social networks, and develop them using 'edrisa()gmail.com ;2

the networks Cnet9or' entre/rene0r&D are found. %he solo entrepreneur is limited to his means and capabilities while the network entrepreneur can draw from the means and capabilities within the network to supplement his individual means and capabilities. %he network entrepreneur is therefore more likely to grow better and faster. Co/rene0r&A are entrepreneurial couples who work together as co?owners of an enterprise. "lthough some scholars consider business co?ownership a recipe for divorce, some researchers have described it as an e citing proposition that involves nurturing and growing a business with someone you love # much like raising a child. $t is important, however, to first build a successful relationship before launching the enterprise. Indi-id0al and In&tit0tional entre/rene0r& most start?up firms are dominated by entrepreneurs acting individually, or coming together individually. +owever, as the business grows and becomes more comple , it becomes imperative to develop the entrepreneurial skills through a corporate body.
1.2

.ther t$pes

>art-time entre/rene0r&A starting business on a part?time basis is a popular gateway to entrepreneurship that allows one to get the best of both worlds by getting the benefits of entrepreneurship and the security of a regular salary. $t also allows part?timers to hedge against the risks of a venture flop, and test the waters before making the final commitment. 5art?time entrepreneurs are normally suited for young enterprises because as enterprises grow, they tend to take up more time until the entrepreneur decides to become full time. 1orporate cast offs and drop outsG "re produced by retrenched and retiring employees and have become an important source of entrepreneurial activity. "rmed with ade!uate e perience, severance packages, knowledge of the industry, and a network of connections@ these former employees will normally have better start?up options and a higher chance of entrepreneurial success. >or more detailed study of entrepreneurship, entrepreneurs have also been classified according toG I 0ale or female entrepreneurs I =ural or urban entrepreneurs I 'mall and large?scale entrepreneurs 'edrisa()gmail.com ;;

I >irst, second and third generation entrepreneurs

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INTR3>RENEURS<I>
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Defining Intrapreneurship

%odays dynamic corporations are simultaneously trying alternative ways of doing things in competition within themselves. %his trend has already resulted in confederations of $ntrapreneurs, who would initially have to risk something of value to them in order to develop something of value to future projects. $ntrapreneurship is now cited as a way for established businesses to find new markets and new products. "nd, in *--2, intrapreneur was incorporated in the English dictionary, to mean Fa person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk?taking and innovationF. %he intrapreneurial employee needs to be courageous, moderate risk takers, frugal, fle ible, and creative about their pathway. %heir task is to put together a team of enthusiastic volunteers, build a network of sponsors, and ask for advice before asking for resources. $ntrapreneurship re!uires the employee toG *. 4o any job needed to make your project work regardless of your job description. 2. 'hare credit wisely. ;. =emember that it is always easier to ask for forgiveness than permission. .. 1ome to work each day willing to be fired. (. "lways ask for advice before asking for resources. :. >ollow hisHher intuition about people@ and build a team of the best. /. Beep hisHher ideas fairly secret@ knowing that early publicity triggers resistance to change. 6. ,e true and committed to their goals, but realistic about ways to achieve them. -. +onour and respect their sponsors.
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I+P.RT%NCE .F INTR%PRENEURSHIP

"t some point an entrepreneurial venture reaches the point of being an established business. What that point is arguable. 'ome definitions specify a certain sales volume for a certain length of time@ others say that once the growth rate has levelled off, a business is no longer in its entrepreneurial stage. " real concern for most businesses is that somehow becoming an established business means that the entrepreneurial spirit has been lost. +ence, the need for intrapreneurship ? fostering entrepreneurship within established organi<ations. 'edrisa()gmail.com ;(

%eaching $ntrapreneurship has the goal of showing how companies create and compete, highlighting the new practices shaping how work gets done, showcasing teams who are inventing the future and reinventing business, and e!uipping the people e ploring this uncharted territory with the tools, techni!ues, models, and mind?sets they need. $t also involves discussing a variety of specific intrapreneurship issues such as what the best businesses are for intrapreneurship and government agency intrapreneuring. "nother direction in which intrapreneurship is growing is in developing scenarios to anticipate future trends and responses. 'cenarios are stories about possible futures which enable organi<ations to learn, adapt and develop better strategies. 'cenario planning begins by identifying the focal issue or decision. %here are an infinite number of stories that could be told about the future@ the purpose is to tell those that matter, that lead to better decisions. While scenarios to?date have primarily been used for large scale planning efforts for such projects as education in the United 'tates, it is very applicable to the business environment today. $ntrapreneurs have been credited with increasing the speed and cost?effectiveness of technology transfer from research and development to the marketplace. $ntrapreneurs are sometimes considered inventors because they are creative and are risk?takers in the sense that they are stepping out of their traditional role within the business. +owever, their risk?taking behaviour is personal. $n terms of the business, they actually work towards minimi<ing the risk through the innovative approaches they use to more efficient and effective product production and sales. IM>ORT3NCES OF INTR3>RENEURS<I>A *. !iversification" %his eliminates the dangers and risks associated with putting all your eggs in one basket. 2. #ncreased income" 4ue to diversification, there is increased income and this money can be reinvested in the business to strengthen its competitive advantage. ;. $ompetitive advantage" %his is an advantage a firm may have over its competitors. %hus survive longer and e ploit the various opportunities that may e ist. .. $mproved moral mong workers because their ideas are taken into positive consideration. 'edrisa()gmail.com ;:

(. #ncreased productivity" With the increased moral, productivity is bound to increase with advantages like increased employment opportunity, increased sales, and good company reputations. :. #ncreased productivity" %his refers to the average number of workers who leave and join the organisation. With the reduced labour turnover, a company is able to save money that would have spent on training new employees that come in fre!uently. /. %ood company #mage&reputation" a good reputation is an indirect market share and reduced cost that the company would have spent on promotion. 6. 'restige" among the employees because they work for a creative organisation that help in increased moral hence employees market to the company. -. 'restige" among the employees %o arrive in a dynamic business environment, a company needs to be fle ible and open new ideas. *7. Encourages leaders to lead by e ample. H<EN 3N OR?3NIS3TION F3I8 TO ?IFESC<3NCE TO INTR3>RENEURS<I>* T<E FO88OHIN? M3B <3> >ENA aD Frustration" %his may lead to loss of moral and reduced productivity, which may have a cost to be meet by the company. bD High labour turnover" and the company will have to cover the cost of restraining recruitment etc. cD (ad talk about the company" this leads to loss of good will and damages reputation. %his will eventually reduce sales and profits. COMMON C<3R3CTERISTICS OF INTR3>RENEURS *. %eamwork is encouraged to enable success in their business venture. 2. Evercoming common frustrations and obstacles. ;. >le ibility and ability to easily adopt the changing circumstances. 'edrisa()gmail.com ;/

.. %hey believe in rewarding efforts and new ideas. (. %hey encourage open decision as part of the learning process. :. 1reativityG they have big dreams and ability to sale these dreams to others@ they build team of supporters that are called cheer workers or social professional workers. F3FOUR38E ENFIRONMENT FOR INTR3>RENEURS<I> OR F3CTORS

F3FOURIN? INTR3>RENEURS<I>! $ntrapreneurship flourishes in an organisation that provides the following environmentG *. Encourages entrepreneurial culture throughG Epenly encouraging and supporting new ideas. 5ermits some degree of e perimentation. 1onduct entrepreneurial meeting. "llows time off for staffs to think Encourages leaders to lead by e ample. 2. 5roviding clear measurement for entrepreneurial effort as a means of e!uitably rewarding this effort. *. Aiews change as an opportunity rather than a threat and therefore actively scan the environment looking for a change. 2. 1reates a culture of free creative thinking and creative problem solving. ;. 1reates a supportive structure to encourage and support new thinking and innovation. .. Emphasis team work. (. +as clear mission and objectives to guide a free thinking of individuals within an organisation. :. "dmits failures when, and if it occurs and uses it as learning process rather than unnecessarily blaming e ternal forces. /. innovation. 'edrisa()gmail.com ;6 "ccepts individual and group mistake as a necessary part of e perimentation and

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=esources should be available and easily to access.

*7. %here should be no a year an organisation that are sheltered from change and new ideas. <INDER3NCES TO INTR3>RENEURS<I> *. Lew ideas not being encouraged and supported. 2. >ailure of a new idea being punishing and not accepted as part of the learning process. ;. Nack of top management support. .. Nack of teamwork with in an organisation. (. Nack of resources and inability to access the available resources. :. Nack of e perimentation. /. Nack of reward for the new ideas and accomplishment of the set objective. 6. Lo area in an organisation should be sheltered from change and new ideas. -. Nack of encouragement in employees creative ways in doing things *7. Nack of network sponsorship to support intrapreneurship. **. +ijacking ones idea before completion. T<E INTR3>RENEURI38 OR?3NIS3TION Entrepreneurs in business has evolved to encompass a variety of conceptsG identifying and fostering employees who have what is considered to be intrapreneurial traits, developing an entrepreneurial process for part or all of a business, and developing innovation through rewarding entrepreneurial behaviour. What has entrepreneurship meant in the reality of the business environmentP %he area of greatest impact has been, of course, in human resources. $ntrapreneurship has not just become a method for revitali<ing business processes, but of also revitali<ing jobs, which works towards developing self?directed employees.

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Ene of the most e citing concepts in intrapreneurism is developing intrapreneurial competing teams within a company. %he organi<ation can be organi<ed around teams that function as small businesses nested and networked together. %hese teams can be focused on a product such as a new car, a process, such as public relation or a service, such as the secretarial services of the organi<ation. What evolves is a free market system with work coordinated more effectively and responsibility distributed more widely. 'ome methods that have been used by businesses to foster intrapreneurship areG I Users of internal services are allowed to make their own choice of which internal vendor they wish to use. I $ntrapreneurial employees are granted something akin to ownership rights in the internal intraprises they create. I 1ompany wide involvement is encouraged by insisting on truth and honesty in marketing and marketplace feedback. I $ntrapreneurial teams are treated as a profit centre rather than a cost centre Ci.e., they are responsible for their own bottom lineD. Ene way some companies handle this is for the team to have their own internal bank account. I %eam members are allowed a variety of options in jobs, in innovation efforts, alliances, and e changes. I Employees are encouraged to develop through training programs. I $nternal enterprises have official standing in the organi<ation. I " system of contractual agreements between internal enterprises is defined and supported by the organi<ation. I " system for settling disputes between internal enterprises and between employees and enterprises is part of the intrapreneurship plan.
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T#/e& o6 intra/rene0r&hi/

4ifferent organi<ations approach intrapreneurship in different ways. ,elow are some of the common approachesG

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 3dmini&trati-e intra/rene0r&hi/A %he company forms an administrative arm

Cnormally called the research and development # =Q4 %eamD to spearhead and encourage greater creativity and innovation I O//ort0ni&tic Intra/rene0r&hi/A %he 1ompany opens up its structures to allow individuals to pursue opportunities both internal and e ternal to the organi<ation, with the company using its resources to e ploit the new innovations it finds attractive. I 3c@0i&iti-e Intra/rene0r&hi/A %he organi<ation looks out for other firms and entrepreneurial start?ups that have developed, tested and perfected new innovations that could be beneficial to their operations. %hey then ac!uire the innovative firms or their innovations through mergers, takeovers, joint ventures, licensing agreements, buy outs etcO I Imitati-e Intra/rene0r&hi/A >irms copy and take advantage of other firms innovations, and employee their corporate muscle and superior resources to control the market for the new product or service. I Inc04ati-e Intra/rene0r&hi/G %he 1ompany creates new teams as semi?autonomous new venture development units, provides them with seed capital and allows them independent action to develop an idea from inception to commercialisation. %he company can then reintegrate the innovation into its mainstream operations once market viability has been proven.

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"3RRIERS TO ENTRE>RENEURS<I>

,arriers to entrepreneurship are factors that hinder the development of entrepreneurship. %hey hinder people from ac!uiring and practicing entrepreneurial skills, but also prevent practicing entrepreneurs from achieving the full benefits that entrepreneurship has to offer. 0any of these barriers are mainly perceptual obstacles, rather than any concrete, objective obstructions in the way of making the entrepreneurial decision. ,arriers can arise from the social, economic and political environment with which the individual interacts. %hey can also be caused by the adverse conditions within the organisation with which the individual works. +owever, most barriers are a direct result of an individuals failures and weaknesses.
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'arriers at the In(i,i(ua" &e,e"

$ndividual weaknesses pose the biggest threat to entrepreneurship in Uganda. 'uch barriers are ignoured, as focus is normally on the environmental factors. 'ince one can easily act to remedy these weaknesses they usually form the main focus of entrepreneurship training programmes. ,arriers at the individual level would includeG

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 >oor entre/rene0rial &'ill&G 0ost entrepreneurs and potential entrepreneurs are short on

entrepreneurial skills. %hey are risk averse, lack creativity, innovation, endurance, fle ibility, and other entrepreneurial characteristics. %his means that many people will start business that are images of e isting businesses resulting in very intense competition in very narrow fields that provide little returns for the investors. Entrepreneurial characteristics can help business people to look for and e ploit new opportunities.
8 a c' o6 "0&ine&& and technical &'ill G ,usiness skills in marketing, accounting,

management, etcO are re!uired by all practicing entrepreneurs to effectively manage their entrepreneurial ventures. 0any ventures also re!uire specialised technical know how to set up, operate and manage. Nack of such skills many times limits the capacity of entrepreneurs to effectively e ploit the full potential of their ventures. 0oreover, owing to the high rate of illiteracy, many enterprising individuals even lack the capacity to appreciate and ac!uire these skills.
8o9 mo4ilit# and E7/o&0reA 0obility and e posure normally offers the biggest revelation

for new ideas that shape creativity and innovations that shape entrepreneurship. +owever, Ugandans generally do n ot travel widely, do not read widely and do not e plore, ask or investigate. "s a result, even highly educated people remain largely narrow minded. %his limits the creativeness and innovativeness of Ugandas potential and practising entrepreneurs.
8o9 mo4ilit# and E7/o&0reA Uganda is seriously short of role models in the field of

entrepreneurship, which limits the number of people who willingly aspire for a career in entrepreneurship. 0any people have a very low opinion of struggling entrepreneurial upstarts, while they consider the few successful entrepreneurs to be super lucky individuals who can only be admired but not be emulated. "s a result, very few people are attracted to entrepreneurship as a career of choice. 0ost are forced into entrepreneurship as a last resort, without enough interest and commitment. $nspiration is a key characteristic of entrepreneurship. Lew entrepreneurs need to be inspired entrepreneurs that they admire.

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8ac' o6 "0&ine&& ethic&A 0any entrepreneurs have failed, or been compromised, because of unethical behaviour. Unpaid loans, unpaid or highly e ploited employees, unpaid suppliers, substandard goods, ta evasion, corruptionKn, smuggling etcO characterise many business ventures in Uganda today. While such tendencies may sometimes result in a !uick profit, many times these ills come back to haunt the entrepreneur, many times crippling them completely.

Com/ lacenc# . 8ac' o6 Mo

ti-ationA ,ecause of lack of role models and limited

e posure, entrepreneurs in Uganda tend to be satisfied with relatively small and modest a chievements. %hey tend to have little motivation for higher or e traordinary achievements. %he tendency to prematurely celebrate success limits the growth of many entrepreneurial ven tures.
8ac' o6 Contin0it#A Aery few firms in Uganda are known to survive the death of their

founders. Aery few entrepreneurs have the opportunity to pass on their enterprises to new generations and watch from the side as the enterprises continue to prosper. 0oreover, many firms are known to change business or diversify very fast before gaining he re!uired e perience. Nack of continuity affects the learning cycle of the firm and the entrepreneur and therefore the long?term competitiveness of the enterprise.
C areer De/endenc#A Ugandans especially the educated have long been dependent on their

careers to provide for their livelihookds. Entrepreneurship has for long been regarded as a last resort effort mainly reserved for the under?educated. "lthough this mindset is rapidly changing, its effect is still a big barrier to entrepreneurship in Uganda.
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'arriers arising fro

the En,iron ent

%he environment also presents numerous barriers to practicing and prospective entrepreneurs in Uganda. 'ome of these barriers are discussed belowG

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/.2.1 The po"itico2&ega" En,iron ent >olitical In&ta4ilit#A 5olitical instability has dogged different regions of Uganda for the past
.7 years. %his state of affairs has robbed Uganda of many entrepreneurs, and many more entrepreneurs have lost lifetime savings and business assets, while others have been forced by instability to close. %his affects continuity and e perience and resource accumulation that are essential in todays competitive environment.

"0&ine&& 3dmini&trati-e >roced0re&A $n many cases, the business environment is

dominated by comple and burdensome regulations, fabvouritism, corruption, and weak enforcement mechanisms. "s a result, businesses are forced into the informal economy, countries are unable to attract investment, and participation of the private sector in the decision?making process is limited. "s a result, businesses are forced into the informal sector, and the country is unable to attract investment, and the participation of the private sector in decision making is limited.

?o-ernment economic /olic#A %he formulation and delivery of business policy is based on
a narrow conception of conventional big businesses and a conse!uent lack of specific attention to the circumstances and needs of entrepreneurs. 0oreover, the bulk of governments monetary and fiscal policies are aimed at appeasing the donor agencies and multilateral financial institutions, many times at the e pense of business in general and entrepreneurs in particular.

In&en&iti-e ?o-ernment In&tit0tion& and de/artment&A Entrepreneurs blame government

institutions and departments for having little !ualification and a minimal appreciation and understanding of the importance of business and business formation among entrepreneurs. %his limits entrepreneurs access to these institute ions as support mechanisms or potential clients. "rbitrary interpretation of regulations by officials has cost many entrepreneurs much time and money.

E7ce&&i-e* Com/le7* and 3r4itrar# Ta7ationA %he ta system in Uganda is complicated,

voluminous, confusing, changes rapidly and in most cases beyond the comprehension of the entrepreneur. %he ta administration is arbitrary and many times misunderstood, resulting in "d hoc ta administrative solutions which foster rampant corruption. Aery high ta es also serve to discourage potential entrepreneurs. 'edrisa()gmail.com .(

/.2.2 Econo ic en,iron ent! 8ac' o6 acce&& to FinanceA ,anking 'ystem and 5ractices in Uganda impose impossible
demands on entrepreneurs. ,anks have little incentive to e tend credit. %he terms of credit are unreasonable, re!uiring difficult collateral and guarantee to secure the loan. ,orrowers default on their loans, resulting in high interest rates which are a very heavy burden to could be entrepreneurs. "dditional burdens include unreasonable demands for audits, inspections, and documentation@ and the incompetence and insensitivity of most banking staff.

8o9 >0rcha&in) >o9erA Now incomes and a high rate of unemployment limit the
purchasing power of a relatively small Ugandan population. %his makes it hard for businesses in general and entrepreneurs in particular to ac!uire the necessary economies of scale.

>oor In6ra&tr0ct0reA Uganda is still plagued with a very poor physical and social
infrastructure in terms of roads, electricity, water, bridges, schools and hospitals. %hese hinder business development in many parts

of the country, and act as barriers to entrepreneurship. Economic In&ta4ilit#A 4ue to over reliance on donor assistance, borrowing, the import bill
that fa r outweighs the e port earnings, and over reliance on imports, the Ugandan economy is very fragile and easily destabilised by any small shocks in the international environment

/.2.# Socia" 'arriers to entrepreneurship

%he social environment may also have certain aspects that act as hindrances to entrepreneurship. 'uch hindrances include the followingG I Nack of ade!uate social support groups to support entrepreneurs and innovators who are out to challenge the status !uo. I 0any socio?cultural settings get stuck in the traditional ways and norms # they are not willing to change these norms. %his situation discourages people from trying anything new and acts as a barrier to creativity innovation and entrepreneurship. I $n many of our communities, there is a stigma attached to failure. 5eople look down upon failed attempts, preferring those that do not try at all. %his works to discourage e perimentation and entrepreneurship. 'edrisa()gmail.com .:

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'arriers arising fro

the e p"o$ing Fir

%here are also issues internal to the organi<ations that serve to block entrepreneurial tendencies wit hin the firms. When entrepreneurship within the firms is obstructed, it has a negative on the general level of entrepreneurship within the community. ,arriers within the firms includeG I %oo much bureaucracy I $nade!uate communication and consulting within the organi<ation I I 'low decision making resulting from bureaucracy and lack of effective communication are familiar to many who work in large organi<ation I Nittle readiness to change within the organi<ations I 'trong and rigid punishments for those who make mistakes and those who divert from the accepted norms create an aversion to risk and failure. 5eople become to timid to make bold decisions and stand out from the crowd. Employees fear that they will be blamed if things go wrong and that it is better to keep their heads down. I Nack of resources I 5oor and ine!uitable reward for entrepreneurial effort tends to kill the enterprising spirit.

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ENTRE>RENEURS<I> DEFE8O>MENT

Entrepreneurship 4evelopment is a deliberate endeavour in human resource development, which is usually undertaken by the state or a community with the major aims ofG 4eveloping competence among participants to start, manage and develop enterprises@ and developing greater understanding of entrepreneurship, as a means of providing an enabling environment for entrepreneurs to thrive.
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The nee( for entrepreneurship (e,e"op ent

Ever the past few decades, entrepreneurship, has gained ama<ing popularity not only in Uganda but also in the wider world. %his is as a result of the significant changes in the workplace and the social and political environments that are funning the growth of entrepreneurship worldwide. %hese factors includeG *. %echnological advancements that have compressed technological processes and enabled many things to be made and services to be delivered at a fraction of the original cost. 2. Entrepreneurial EducationG since the *-67s, the countries that have invested in teaching entrepreneurship have harvested a rich crop of high calibre entrepreneurs. ;. 4ownsi<ing # as big corporation reengineer their operations and retrench unwanted staff, they have ended up releasing a number of !ualified and well connected individual who have joined the entrepreneurial class. 4ownsi<ing has also removed the myth of life long employment and awakened people to the promise of entrepreneurship # sometimes as a fall back position. 4own si<ing has also made corporations to outsource non?core activities providing opportunities for entrepreneurs. .. 0ore sophisticated customers demanding higher !uality and more personalised goods and services have opened up interesting and profitable niches for entrepreneurs to tap. (. Easier access to information through vast communication networks like the world wide web, have enabled entrepreneurs to access a large number of potential suppliers and customers !uickly and at minimal cost. :. Niberali<ation and globalisation has enabled small entrepreneurial firms to access international markets without the threats of protectionism and other trade barriers.

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/. " shift to the service sectorG "s economies shift to the service sector that re!uire personali<ed attention smaller companies are able to create profitable niches to compete with larger established firms.

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'enefits of entrepreneurship

=esearch shows that people who seek a career in entrepreneurship work harder and take higher risks than people employed in the regular salaried jobs. +owever, more and more people are joining entrepreneurship, and more still are starting to serious consider it as a viable and interesting career option. %his is mainly because of the following reasonsG *. "n opportunity to gain control over ones destiny # entrepreneurship provides an entrepreneur the opportunity to achieve what they consider to be important. Entrepreneurs are noted for wanting to always be in full control of their lives, and entrepreneurship enables them to achieve the full control they desire. 2. "n opportunity to make a difference # Entrepreneurship enables participating individuals to make a difference in any matter that is of importance to the individual. ;. "n opportunity to reach ones full potentialG Working for or under other people will normally create barriers to ones development in terms of rules, policies, precedence and acceptable procedures. Entrepreneurship is an instrument that allows entrepreneurs to challenge all their skills, abilities and endurance without any e ternal limitations. .. "n opportunity to make lots of moneyG "lthough money may not be the primary motivator of entrepreneurs, it is still recognised as an important motivation. Ewning their own businesses gives entrepreneurs the opportunity to earn salaries, dividends and profits@ making so much cash in the process. (. "n opportunity to contribute to society and to be recognised for itG "n entrepreneur is always associated with his or her businesses, its products and its services. $n an effort to generate profits, they contribute to the development of society and in the process become recognised for their efforts. :. "n opportunity to enjoy ones workG entrepreneurship is about doing what one enjoys.

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%n( the threats of Entrepreneurship

Entrepreneurship, as a career, also possess many serious challenges, which anyone hoping to take up a career in entrepreneurship should be aware of in order to plan for them. %he challenges includeG *. Uncertainty of incomeG $n most cases the initial stages of the entrepreneurial career are filled with uncertainty, and many entrepreneurs will not have enough money even for their basic survival. %here is no regular income, and many entrepreneurs are forced to draw from their savings. %his is the most trying stage of any entrepreneur. 2. =isk of loosing the entire investmentG ,usiness failure is a reality that threatens entrepreneurs at all level, but most especially the new enterprises. ,usiness failure will result not only in the loss of a job, but also the entire investment and sometimes the entire livelihood. %his threat becomes even greater for entrepreneurs who mortgage all their life savings and assets to finance their enterprises. ;. Nong hours of hard and challenging workG Without ade!uate support structures and resources, entrepreneurs have no option but to engage their own mental and physical energies to move their investments especially during the early stages. +ard work and long hours is therefore a reality of many an entrepreneurship career. .. +igh levels of stressG %he pressure of hard?long hours of work and the uncertainties associated with entrepreneurship result in highly stressful life styles for entrepreneurs. 0ost entrepreneurs put significant investments in their enterprises, have no steady incomes, have mortgaged everything to finance their businesses, and the line between their success and their failure is very thin@ causing enormous an iety and stress to the entrepreneur. (. +igh levels of responsibilityG Entrepreneurship brings the thrill of being the boss, but also the responsibility for decisions that not only affect the entrepreneurs and their families, but also the livelihoods of employees, suppliers and other stakeholders who somehow depend on the firm for their own survival.

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The process of Entrepreneurship De,e"op ent

Entrepreneurship 4evelopment presupposes that although certain characteristics are in born, the bulk of entrepreneurial characteristics can be developed throughG I "c!uired factors ? $ndividual personal effort through formal education, work e periences, ac!uired technical skills and e posure. I 'ocietal influences Cor sociological factorsD including imitating role models, peer influence, 1ultural and religious beliefs and norms, %Ro achieve successful Entrepreneurship 4evelopment, three elements stand out, namely@ %he $ndividual, %he Environment, and %he firm.

0./.1 The ndividual

%he 0"$= model suggests four factors that have to come together in order to create an entrepreneur. %hese are Motivation, 3bility, Ideas and Resources. %hese factors form the acronym 0"$= by which the model is known. I MOTIF3TIONA =efers to the force that induces an individual to opt and take up Entrepreneurship as a career. %hese may be 5UNN or 5U'+ factors. $ndividuals react differently to these stimuli, therefore are motivated by different factors. =ecognising and rewarding innovation is a key motivating factor. I IDE3SA $deas are a starting point for any entrepreneurial venture, however not all ideas will be viable or marketable. %he ideas of interest to E4 are the ones that are both viable and marketable. %he challenge of E4 is to support and encourage innovations through actively e posing people to new ways, products, methods and information I 3"I8ITBA >or any enterprise to survive, it re!uires a constant sup ply of relevant skills from both the owners and the employs. "lthough some of the skills are naturally endowed to certain individuals, the majority are ac!uired through training, observation, e perience, e perimentation O $ndividuals need entrepreneurial and business skills as well as technical skills relevant to the industry to start and grow enterprises. %he challenge of E4 is to propagate these skills widely and effectively in order to support entrepreneurship

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 RESOURCESA "ny enterprise will re!uire resources to survive and thrive. While some

resources are naturally endowed to an individual, a firm or a nation CcommunityD, the majority of resources must be sourced, and entrepreneurs will need to have the ability to ac!uire resources. %he challenge of E4 is to enable the individual to obtain the necessary resources to operationali<e their ideas and to create easy and affordable means of access to resources.K

0./.2 The ,nvironment

Entrepreneurship and E4 will be successful only where there is a conducive environment for them to flourish. %he following environmental factors are critical to the growth of entrepreneurship@ Economic environment, 1hallenging circumstances, E ternal rewards for entrepreneurship, %raining facilities and learning opportunities, E ternal leadership I The economic climateA $n general, an environment that is ideal for business growth is conducive to entrepreneurship. >our areas are particularly pertinentG aD 3overnment economic policy C0onetary, >iscal Q =egulatoryD E pansionary monetary policy is more conducive to entrepreneurship development than 1ontractionary. >iscal policy refers to government revenue and e penditure and the e pansionary fiscal policy is more conducive to E4. 'ituations where government leaves the forces of demand and 'upply to control the distribution of resources allows Entrepreneurship to flourish, since it has more rewards for the innovators. bD $nfrastructure should be well developed and maintained to ease communication. ,ut also, govrernment institutional policies and practices should open up their services to entrepreneurs. cD %he financial systems including banks and non bank intermediaries, securities markets, a nd financial instruments like treasury bills, bills of e change, credit cards, che!ues etcO must e ist and operate efficiently to aid business transaction dD Negal frameworkG should not be too stringent to inhibit Entrepreneurship, but should be clear and effective enough to provide ade!uate protection to entrepreneurs against fraud. 'edrisa()gmail.com (2

I Challen)in) circ0m&tance&A 1hallenging circumstances tend to bring out latent creativity in people, and lack of challenge breeds complacency. 1ompetition for jobs and resources are good e amples of challenging circumstances. E4 involves giving room for creativity and innovation and eliminating the fear of making mistakes as a way of tackling these challenging situations. I E7ternal re9ard& 6or entre/rene0r&hi/A +ow the society recognises and rewards entrepreneurs is important for Entrepreneurship development. Entrepreneurs should be the first beneficiaries of their innovations. 'ituations where pirates and copycats take the profits from other peoples innovations is not good for Entrepreneurship 4evelopment. ,enefits should not only come in form of profits, but recognitions in form of awa modelling, special considerations etcO I Trainin) 6acilitie& and learnin) o//ort0nitie&A "vailability and !uality of training facilities and Entrepreneurship 4evelopment programmes and supply of role models for the young generations to emulate. 'timulate the teaching of entrepreneurship within educational institutions to enable students read patterns and trends so as to envision the future, and integrate knowledge ac!uired in responding to society needs. I E7ternal leader&hi/A ,usiness leaders, 5olitical and cultural leaders, and technological leadership can play a big role in Entrepreneurship 4evelopment. ,usiness leaders can encourage an environment that allows generation and growth of new ideas. 5olitical leaders can set policies that support the development of Entrepreneurship, but can also participate directly by setting up business, mobili<ing and supporting people into entrepreneurship, and generating new ideas and passing them to the public. Entrepreneur support groups khcould be developed rds, role

0./.# The &irm

$nternal and e ternal interrelationships have a strong influence on entrepreneurship. % hese will include factors such asG aD Ergani<ational cultureG %hese are acceptable norms and behaviours within the organi<ation. $f these permit new idea generation and implementation, then the culture is supportive of E4. %his re!uires fle ibility in operations and openness to change. $t 'edrisa()gmail.com (;

should support e perimentation and tolerate some degree of failure as a natural conse!uence of innovation.

0././ The &irm

bD $nternal and e ternal interrelationships have a strong influence on entrepreneurship. %hese will include factors such asG 4efines the reporting relationships and interdepartmental communication. $f the structure allows a smooth flow of ideas and permits even lower level technical staff to e ercise their creativity. %o support E4, the organi<ation needs to open up channels of communication, encourage frank e change of ideas and freedom of interaction at all levels. cD NeadershipG " strong leadership is re!uired to direct change, which is the driver of innovation. Neadership should actively participate and support constructive change. dD =eward structureG Erganisations should be able to recognise innovation and reward it appropriately. %his re!uires formulating means of measuring entrepreneurial effort so that reward is dispensed in a fair and e!uitable manner. =eward can be in form of recognition, material, or promotion.

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I+P.RT%NCE .F ENTREPRENEURS I %hey bring technology intensive, often risky, innovations to the commercial market ? and in the process, even help to develop whole new industries. Entrepreneurs are driving a revolution that is transforming and renewing economies worldwide. While in Uganda we still depend on the same commercial products introduced almost a century ago for our economic growth, the U'" gets more than half of its economic growth from industries that barely e isted a decade ago. I Entrepreneurship through innovation is the heart of economic progress. $t is the very basis of any nations economy and well being. I Entrepreneurs are the source of innovation, which is believed to be, the heart of economic progress. $nnovation is the very basis of any nation and communitys economic progress. I Entrepreneurship is the catalyst that enables a country to compete more favourably in the global marketplace. $t enables nations to compete in the global marketplace as respectable stakeholders and not beggars at the mercy of others. I Entrepreneurial innovation raises the prospects for more productive and satisfying lives by supplying new effective tools and methods, and solutions to problems and inconveniences. Entrepreneurship is the essence of free enterprise because the birth of new businesses gives a market economy its vitality. I Lew ideas alter the fabric of society and keep the world fresh and moving forward. New and emerging businesses create a very large proportion of innovative products and services that transform the way we work and live, such as personal computers, software, the Internet, and drugs. I Entrepreneurs are creators of jobs. $t is a fact that entrepreneurship and employment go hand in hand. "s new products and services are introduced, more staff will be re!uired to produce, sell, and deliver them. I "n important aspect of entrepreneurship is social entrepreneurship. $n this case, the objective is not to make profits per se, but to achieve social good through the similar process of identifying opportunities, e ercising creativity, and building new structures. $t is no accident that business entrepreneurs are also well e!uipped to play a role to champion social causes. 'edrisa()gmail.com ((

I Entrepreneurs, in an effort to market and promote their enterprises support churches, schools, and communities, produce goods, feed a hungry world, and keep their homes and families, while they invest in the future to build a better community. I Entrepreneurial success comes when they can anticipate and deliver what the consumers want and do it in a way that satisfies them. Entrepreneurs understand that making money begins with giving. Entrepreneurship works best and creates the greatest wealth and human progress for all when it aims at satisfying customers. I Entrepreneurs turn worthless waste, weeds, rocks and other undesirables into coveted riches. Eil was worthless until entrepreneurs with ideas and the freedom and faith to take risks managed to locate it, e tract it, and put it to work for humanity. I 3overnments balance their budgets by stimulating new wealth, wealth from investments attributed to entrepreneurs.

I Entrepreneurs are and have always been leaders in communities and nations. I Entrepreneurs help to keep industries relevant by creating the necessary timely innovations. %hey help the industry to evolve slowly, maintaining stability and measured change at the same time. %hey help to maintain the industry at Fthe edge of chaos,F where the components of a system never !uite lock into place, and yet never !uite dissolve into turbulence either.

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The Entre/rene0rial >roce&&

%he entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities and creating organi<ations to pursue them. %he birth of a new enterprise and its subse!uent success or failure is not a hapha<ard process, but the art and science of entrepreneurship that can be taught and learnt. "nd it is because of this fact that entrepreneurship is the fastest growing new field of study in many higher education institutions worldwide. %he process of starting a new venture is embodied in the entrepreneurial process, which involves more than just problem solving in a typical management position. "n entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of something new. %he process has five distinct phasesG C*D $dentification of an opportunity # $dea generation C2D Evaluation of the opportunity, C;D 4evelopment of the business plan, C.D 4etermination of the re!uired resources, and C(D 0anagement of the resulting enterprise. "lthough these phases proceed progressively, no one stage is dealt with in isolation or is totally completed before work on other phases occurs. Identi6# the O//ort0nit# " person gets an idea for a new business either through a deliberate search or a chance encounter. Where do would?be entrepreneurs get their ideasP 0ore often than not it is through their present line of employment or e perience. 0ost good business opportunities do not suddenly appear, but rather result from an entrepreneurs alertness to possibilities, or in some case, the establishment of mechanisms that identify potential opportunities. %he most common sources includeG consumers and business associates, members of the distribution system, and technical people.

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Eften, consumers are the best source of ideas for a new venture. +ow many times have you heard someone comment, 8$f only there was a product that wouldO9 %his comment can result in the creation of new business. 4ue to their close contact with the end user, channel members in the distribution system also see product needs. 0any other entrepreneurs have identified business opportunities through a discussion with a retailer, wholesaler, or manufacturers representative. >inally, technically oriented individuals often conceptualise business opportunities when working on other projects. IDE3S* INFENTIONS I INNOF3TIONS Everybody has ideas. $deas are relatively easier to come by compared to inventions. $t takes knowledge, time, money and effort to refine an idea into a workable invention. %urning an invention into an innovation ?? a new product launched into, and accepted by, the marketplace ?? takes even more effort and a little luck. In-entor& are individuals who conceive a new product, process or service. %ypical inventors have neither the interest nor the resources to commercialise their inventions. $nnovators are people seek to commercialise inventions. $nnovation may be defined as a comple series of activities, beginning with an idea and followed by a succession of interwoven steps ?? research and development, financing, marketing and production. $nnovation is only completed when the market accepts a product, process, or service. Entrepreneurship is identified with innovation. $nnovation does not always mean inventing something physical C%echnological $nnovationD, but could involve redefining the way something is done C'ocial $nnovationD. $nnovation is the specific instrument of entrepreneurship. $t is the act that gives resources the capacity to create wealth. $nnovation creates resources. %here are no resources until entrepreneurs find a use for it through innovation. $nnovation is organised, systematic, rational work and not just intuition. $t is based on the analysis of the perception of change, of opportunity, of new realities, and of the incongruities between what most people are sure is the reality and what has actually become the reality. "lthough some innovations occur instantaneously in a flash of genius or luck, being innovative can be learned and developed in a systematic manner. 4rucker C*-6:D looks at seven major sources of innovation that includeG 'edrisa()gmail.com (6

*. The Une7/ected S0cce&&* Fail0re or Une7/ected E-ent! Beeping truck of the goings on in the firm, the industry, the economy, and the environment can monitor these. %hese are a high indicator of change that has occurred or is waiting to happen, that many people ignore. >ailure is normally frowned upon without e amining the root causes of failure that could highlight new opportunity. 2. Incon)r0itie& are discrepancies or dissonances between 8what is9 and 8what was e pected.9 $ncongruities are a sign of change that has occurred, and therefore a sign of opportunity. ;. >roce&& Need&A Lecessity is the mother of invention. Ence a need is felt the innovator identifies what is needed, and how it can be produced. %his involves understanding the problem, accumulating knowledge of how to satisfy the need, and fitting the solution within peoples e pectations. .. Ind0&tr# I Mar'et Str0ct0re many times last a long time, and are sometimes considered part of the order of nature destined to endure forever. $n reality however, these structures are !uite fluid and can be dismantled # sometimes with little effort. When such a change occurs, everyone in the industry has to act, giving an opportunity for innovation. $ndustry and market changes are likely to change if the industry grows very fast, convergence of technologies or development of new technologies. Eutsiders usually see the opportunities, while insiders see them as threats. (. Demo)ra/hic&A define changes in population si<e, age structure, composition, employment, educational status, and income. %he conse!uences of these changes can be predicted and are a good driver of innovation. +owever, it is common for established firms to ignore these changes if they do not conform to their e pectations giving an opportunity to innovators. :. Chan)e& in >erce/tion&A %he way people perceive situations is constantly changing. Understanding these perceptions will help people innovate Chealth Q fitness, healthy foods, securityD. " change in perception does not necessarily change facts@ it changes the meaning of already e isting facts. %iming is a critical factor in innovations based on perceptions because perceptions change very fast and some of them are fads that disappear within a short time. /. Ne9 (no9led)eA Bnowledge based innovation is the most publicised and recognised innovations. %he knowledge may not necessarily be scientific or technical. $t can be social. $t 'edrisa()gmail.com (-

is characterised by a long time frame, large casualty rate, unpredictability, and the big challenges it poses to the entrepreneur. %hese innovations are normally a convergence of several different kinds of knowledge from a variety of disciplines. Whether or not he decides to pursue that idea depends on factors such as his alternative career prospects, family, friends, role models, the state of the economy, and the availability of resources.

E-al0atin) the o//ort0nit# . Fea&i4ilit# St0d# Whether the opportunity is identified by using input from consumers, business associates, channel members, or technical people, each opportunity must be carefully screened and evaluated. %his evaluation of the opportunity is perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed compared to the resources re!uired. %his evaluation process involves looking at the length of the opportunity, its real and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uni!ueness or differential advantage in its competitive environment. %he market si<e and the length of the window of opportunity are the primary basis for determining the risks and rewards. %hese risks reflect the market, competition, technology, and amount of capital involved. %he amount of capital needed provides the basis for the return and rewards. %he methodology for evaluating risks and rewards fre!uently indicates that an opportunity offers neither a financial nor a personal reward commensurate with the risks involved. >inally, the opportunity must fit the personal skills and goals of the entrepreneur. $t is particularly important that the entrepreneur be able to put forth the necessary time and effort re!uired to make the venture succeed. "lthough many entrepreneurs feel that the desire can be developed along the venture, typically it does not materiali<e. "n entrepreneur must believe in the opportunity so much that he or she will make the necessary sacrifices to develop the opportunity and manage the resulting organi<ation. Epportunity analysis, or what is fre!uently called a feasibility study, is one method for evaluating an opportunity. $t is not a business plan. 1ompared to a business plan, it should be 'edrisa()gmail.com :7

shorter@ focus on the opportunity, not the entire venture@ and provide the basis for making the decision of whether or not to act on the opportunity. " feasibility study includes the followingG a description of the product or service, an assessment of the opportunity, an assessment of the entrepreneur and the team, specifications of all the activities and resources needed to translate the opportunity into a viable business venture, and the source of capital to finance the initial venture as well as its growth. De-elo/in) a "0&ine&& >lan " good business plan must be developed in order to e ploit the defined opportunity. %his is a very time?consuming phase of the entrepreneurial process. " good business plan is essential to developing the opportunity and determining the resources re!uired, obtaining those resources, and successfully managing the resulting venture. Determine the Re&o0rce& Re@0ired %he resources needed for addressing the opportunity must also be determined. %his process starts with an appraisal of the entrepreneurs present resources. "ny resources that are critical need to be differentiated from those that are just helpful. 1are must be taken not to underestimate the amount of variety of resources needed. %he downside risks associated with insufficient or inappropriate resources should also be assessed. "c!uiring the needed resources in a timely manner is the ne t step in the entrepreneurial process. "n entrepreneur should strive to maintain as large an ownership position as possible, particularly in the start?up stage. "s the business develops, more funds will probably be needed to finance the growth of the venture, re!uiring more ownership to be relin!uished. "lternative suppliers of these resources, along with their needs and desires, need to be identified. ,y understanding resource supplier needs, the entrepreneur can structure a deal that enables the recourses to be ac!uired at the lowest possible cost and the least loss of control. Mana)e the Enter/ri&e "fter resources are ac!uired, the entrepreneur must use them to implement the business plan. %he operational problems of the growing enterprise must also be e amined. %his involves implementing a management style and structure, as well as determining the key variables for success. " control system must be established, so that any problem areas can be !uickly 'edrisa()gmail.com :*

identified and resolved. 'ome entrepreneurs have difficulty managing and growing the venture they created. T<E TB>ES OF >EO>8E H<O "ECOME ENTRE>RENEURSA %hey vary a lot in e perience in education and in reasons for being entrepreneurial. 5eople in their lives go through different period some are natural entrepreneurs others just come across an opportunity that they cannot resist. %here is belief that an individual personality can cause them to be entrepreneurial for e ampleG *. " person born to be great 2. 'ocial misfits Csome body coming from unhappy back groundD ;. 5ersonality type Cintrovert or e trovertD .. 'ocial development and their personality traits, which make them behave or act. "scertain way. A number of factors are seen as significant to the social development of the entrepreneurs 1! Innate 6actorA such as intelligent creativity, personality motivation, personal ability etc. ,! 3@0ired 6actor&A such as learning training, and e perience in incubator organi<ation, e istence of motivating role model etc. ;! Social 6actor&G %hese may includeG birth order, e perience in family life, society and culture, economic condition etc. %herefore from these factors the entrepreneur gains competencies some or all are use by himHher and this is what makes the entrepreneur different from other individuals) T<E T3S( OF ENTRE>RENEURS *. Identi6ication o6 the mar'et o//ort0nit# G opportunity e ists all the times and its up to the entrepreneur to find them and act on them that is to say technological change, economic change, social and culture change. 2. Creati-it#G %he entrepreneur need to have the ability to create some thing new into being in order to cut compete his competitors. ;. "rin)in) into inno-ation to the mar'et G $nnovation is the central task of an entrepreneur, they includeG 'edrisa()gmail.com :2

a)

De-elo/in) a ne9 /rod0ct or introducing a new !uality of an e isting product e amples

include coca cola products i.e. fanta. 1oco cola, sprite, krest in one little. bD De-elo/in) a ne9 9a# o6 deli-erin) a ne9 or e7i&tin) /rod0ct e.g. the packing of coca

cola products, packing of Emo from bo es to polythen bags distance learning is a new !uality education, selling hand outs, !uestion papers direct to student in their respective classes by Baggwa =ogers is also a new way of delivering a new or e isting productHservice. cD De-elo/in) a ne9 9a# o6 in6ormin) a con&0mer about a new product e.g. adverting, marketing and sale through the internet, sending or receiving of te t messages from 0ango, 0%L, 1eltel, to its customers as a new way of delivering the information. cD De-elo/in) a ne9 9a# o6 or)ani5in) a com/an# e.g. U%N broke to form 0ango, UE,

broke into UE31N, U0E0E. .. >ro-idin) internal /er&onal relation&hi/G $t is also important that other people Ccustomers, employees, supplies and investorsD are guided and they have same vision installed on them as entrepreneurs. 5! >ro-i&ion o6 leader&hi/ to mana)ementA %he entrepreneur has the task of leadership. +e can allocate scarce resources in situation where inflation and resources are limited. T<E ETRE>RENEURDS SOCIO-ECONOMIC "3C( ?ROUND IS SEEN 3S 3N IM>ORT3NT F3CTOR IN T<E ENTRE>RENEURDS SUCCESS a! Famil# 40&ine&& and /arent& who were employedG %heir parents have at some owned family business or a born into family business, which they inherit CEvans and Neighton *-6-D. b. ?ained e7/erience in the &ame 40&ine&& G %hey have worked in the same sector in the

business as apprentices and have gained enough e perience to set up their own business. "s they believe that for the same work, they can have direction ever their own affairs. c. Unem/lo#edG Evans and Neighton C*-6-D found out that poorer, unemployed and those who change jobs often are more likely to enter onto self?employment because their option for employment is limited.

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d.

RetrenchedG =obert +oward C*--7D research on small business found out that people that

become self?employed come from larger companies that are down si<ing. %hese people normally use their e pertise to companies on sub contract bases. e. RetiredG Evans and Neighton C*-6-D finds that the rate of men entering into self employment keeps increasing till .7 then levels out till :7, there is a large increase to :( which prove that retired people enter into self?employment f! Mi)rator# character&G 5eople that migrate to foreign lands are more inclined to become

self?employed. g! Mana)erial and /ro6e&&ional& G %hese workers are more likely to set up business than

natural workers, because these managers previous e perience e poses them to what is necessary to set up and run a small business and be entrepreneurial in their business.

INNOF3TION 3ND CRE3TIFITB %he term creativity and innovation are often used to mean the same thing but each has a uni!ue meaning. Creati-it# is the ability to bring something new into e istence. %his definition emphasi<es the ability not the activity of bringing some thing new into e istence. Inno-ationJ is the process of doing new things therefore innovation is the transformation of creative ideas into useful application but creativity is a re!uire condition or a must to innovation. 1reative process@ there are a number of stages that an individual goes through@ *D Ne9 idea reco)nition. 0ost creative ideas can be traced on an individuals interest or curiosity about specific problem. 2) >re/aration! Ence interest and curiosity has taken place as a focused idea, creative people embark on a search for answers. >or e ample if a problem at this stage, entrepreneur are trying to solve it. $t involves seeking for information about the problem and how others have tried to solve it. $f it is a new idea for a new product or a service, the entrepreneur or a business will carry out market research. 'edrisa()gmail.com :.

1) Inc04ation! $ndividuals sometimes concentrate intensively on the idea more often. %hey simply allow ideas time to grow. $ncubation is a stage of thinking it over awhile the entrepreneur assumes control of the creative process. 2) Ill0mination &o0rce& o6 li)ht! %his occur when the idea resurface as a reali<e reaction. %here will be a moment in time when entrepreneur can say 8E+ $ 'EE9. 5) Feri6ication! Ence an idea is eliminated in the minds of an entrepreneur, still, it has little meaning until verification has a realistic and useful. Entrepreneurial effort is essential at this stage translate an eliminated idea into refined into application at this stage. "t this stage many ideas may be proved to impossible. INNOF3TION When people pass through the creativity stage they become inventors and not innovators. $nvention is the creation of something new while innovation is the transformation of an idea into useful application. +owever for an idea to have value it must be proved, useful, marketable and to achieve either status the idea must be developed. %he innovation process is as followsG *! 3nal#tical /lannin)A +ere the entrepreneur identifies product, service design, marketing

strategies and the financial means for e ample if an entrepreneur is going to manufacture a product the process will include obtaining material, technical capabilities and staff operation. 2. Or)ani5in) re&o0rce&A %he entrepreneur obtains the resources needed, e.g. manpower

CemployeesD to work with the organi<ation machinery and material, money, technology, buildings etc, once organi<ed the resources will help the entrepreneur act upon his new idea. ;! Im/lementation! %he entrepreneur implements his idea. +ere the entrepreneur

accomplishes the product or a service design. .. Commerciali5ation! "t this stage the product or a service is ready to provide a value to

a customer, reward for employees, Csalaries, incentives, benefitsD revenue for investors and satisfaction for the providers CproductHservice successD studies reveal that for an innovation to succeed, there are three important people involved and seven important conditions to satisfy. %he three important people includeG a) or Creati-e &o0rceA this is the inventor or organi<er of the idea that lead to the knowledge vision of some thing new. :(

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Cham/ionA is the entrepreneur or manager, who pursues the idea, ac!uiring the

resources, establishing market through persistent planning, organi<ing and leadership. c) S/on&orA is the personHorgani<ation that makes possible the activities and the inventors dreams through support including advice, finance and contacts. %he &e-en conditions re!uired for an innovationG 1! 3n o0t&tandin)A Neadership position CE ecutive personD to support strategic decision that encourages creativity and innovative development. ,! 8eader or man)erA to carry out the essential task of converting knowledge CproductHserviceD into a commercial application. 1! " clear need for productHservice use by sufficient potential consumers to warranty the commitment of resources to innovation. .. %he acceptance of a productHservice as useful innovation providing value to society. 5! 3ood co?operation among the employees in the different function or department, management, finance, marketing, research and production engineering in an organi<ation all of whom together must bring the idea to success. K! 7! "vailability of resources and supporting technology to drive the success of the venture. 1o?operation Q support from e ternal sources that can influence the success of an

innovation for e ample government agencies, investors, vendors, suppliers, creditors, environmentalists and others. SM388 "USINESS IN ENTRE>RENEURS<I> DEFE8O>MENT 4efinition of small businessG small business has no precise definition as each country, scholar and association use different yardsticks to define what they believe is a small business. 4ifferent approaches are used to measure the si<e of the firm e.g. number of employees, capital out lay, the turn over and the profit. >or the purpose of this study its important to define as a much as possible. 0icro enterprises are often related to self?employment and income generation while small enterprise are basically profit and growth oriented C=EU*---D. " micro enterprise is an enterprise, which has less than si workers including the owner and an annual turn over of less 'edrisa()gmail.com ::

than S*7.777 with capital including land and building and working capital of less than S2(77, this is also the threshold for the business related ta C=.E.U *---D %his research divides micro and small business into different components. ,usiness can be either informal or formal. %he formal business has a trade certificate and work official agreement policies, whereas informal business may not have registered there. ,usiness in any way, its common that small business remain informal till they grow in si<e. 0icro and small business contribute to the economic growth, but each group contribute in different ways. $ts difficult to distinguish e actly between the different groups. 'ome people move from one group to another and some contribution can fall under both sectors. %he policy paper on micro and small business enterprise development is used to distinguish between micro and small enterprise Crepublic of Uganda *---D. %he following table is the criteria that the paper uses differentiate between the particular types of business. %+E L"%U=E E> %+E '0"NN ,U'$LE'' $L U3"L4" 1haracteristics of informal and formal, micro enterprises in Uganda. %yp e 'i<e 1apital Hworki ng ment Epen under termin able * or more 0ake depending on activity =oadside =oof Up 0icr 2.(HT to shelters. only Now skills, educatio :/ in the !uarters. shift >amily members Q invest Employment Nocation %ypes of 5roducti Nabor force on $nputs

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or S2.(77 Ness than ( Lo people fi ed

n ment

and

manage

more station

"pprenti ces paid in wages

%urn over less *7 million ,oth ,ot h ,oth Up to 'hs *77m or U'S *77,777

>i ed place or kind of work 1ontact workers +ouse rented paid on Nocal or owned completi on of markets occupied work on sales item basis =egional

Use simple

of

technolo gy Nabour intensive

,oth 'mall >ro m

%urn between

over *7

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+owever small business can be distinguished from medium or large by considering one or combination of factors such as. *D " small number of employees 2D " small sale volume or turnover ;D 'mall asset si<e .D " small market share (D " small degree of formali<ation :D " large e tent of owner management %he small lness or largeness of these factors is a subjective judgment. %he judgment will depend on the industry in which the firm operates ,state of growth of the economy ,the people involved and the purpose for which the definition is thought ." *--6 policy paper defines small business in Uganda as employing less than (7 people and annual turnover of less than S(7,777.*7U business ta and annual turnover and $ts informal T<E RO8E 3ND IM>ORT3NCE OF SM388 "USINESS IN U?3ND3! o4 creation G "s small business are created and grow ,they will re!uire staff to produce ,sell and deliver their products or services thus creating jobs they use less advanced technology that uses more labour per unit of capital . <0man Re&o0rce De-elo/ment. small business facilities the mobili<ation of human resource which could not have been absorbed in agriculture or large?scale enterprese for productive or remunerative activities. %hey employ people with little or no skills and help to develop them into a pull of skilled or semi #skilled workers that contributes to the economic development. Entre/rene0rial de-elo/ment@ 'mall businesses provide a productive outlet for energies and talents of enterprising individuals providing an affordable entry point into business. %his allows entrepreneurs not only to e ploit and test their entrepreneurial skills but also to develop them as they keep them in practices. >o-ert# alle-iation and im/ro-ed @0alit# o6 li6e .'mall business is important sources of income to the lowest income household, providing unsophisticated jobs and affordable entry point into business. %his helps to fight poverty .0oreover in their drive to provide better ,cheaper and fast products and services to a population in all corners of the nation giving greater choice and a better !uality of life 'edrisa()gmail.com :-

Economic ?ro9th@ 'mall business stimulates the creation of new wealth by investing in a small but steady and predictable manner. %heir incomes are ta ed to generate government revenue and their services and products contribute to 345 growth. With the demise of larger parastatals, and the low response of big multinational investors, small business will carry their responsibil ity for economic development in Uganda. Re&o0rce Mo4ili&ationG With a very poor saving culture in Uganda, small business is an important avenue for mobili<ing and utili<ing investing capital that could not have been mobili<ed by formal financial institutions. %he source of funds is normally self?closed friends and relatives. /. Stren)then& economic lin'a)e&G small business operates in socially, economically and geographically diverse sectors of the economy helping to create and strengthen forward and backward linkages that result in improved efficiency. Narger firms depend on small business to distribute their products and supply critical inputs and services. %his is because small businesses are economical to run and can survive in difficult economic and political situation where big business ca nnot venture. %hey engage in a very wide variety of activities reaching and serving more people in the process. 'mall businesses are responsible for a strong, healthy and competition that prevents monopolistic control of big business. 6! 3da/ta4ilit# and &0&taina4ilit#G " uni!ue future of small businesses is their ability to adapt their produc ts, services and methods to the market and their client. %hey are less bureaucratic and able to coup with the comple ity and changes of todays liberalised economies more over, in an environment of scarce capital, poor technical entrepreneurial and managerial skills, small business provide the logical step to business entry and survival in Uganda. $n industries characteri<ed by wide variation in demand and supply only small business are suited survive. -! International com/etiti-ene&&G With the reduction in trade barriers and restrictions in cross boarder movements, small business provides opportunity for a diversified and more effective access to the international market. %hey are fle ible and can respect easily to change in international environment. *7! Small 40&ine&&e& do 9ell in 0nited or &/eciali5ed mar'et& in doin), they add greatly to variety of products and services. $n conclusion therefore, Uganda is not short of craft?men entrepreneurs that can start and manage small business. $n fact Uganda has a very high small business ownership per capital compared to other countries in the region. +owever we are seriously short of visionary and opportunistic entrepreneurs that can start and grow entrepreneurial ventures as described above. %he challenge of entrepreneurship development in Uganda involves increasing the stock of entrepreneurs thabt can start and grow entrepreneurial ventures. DIFFERENCES "ETHEEN T<E ENTRE>RENEURI38 FENTURE 3ND SM388 "USINESSA " small business is independently owned and operated is not dominant in its field, and doesnt engage in new or innovative practice. Whereas in an entrepreneurial venture the principal objective of the owner are profitability and growth. 1! INNOF3TIONA %he entrepreneurial venture is based on an innovation. %his innovation is normally a significant new way of doing some thing. Whereas a small business is usually doing some kind of business that has been done before. $t is classified as 80e too9 business. $t is just copying. %he entrepreneur venture is considered significant because it will change the lives of people. 'edrisa()gmail.com /7

2. >otential 6or )ro9thA the entrepreneurial venture has a greater potential for growth than the small business. ,ecause small business operate with in a given market whereas the entrepreneurial venture is the one that crates the market in the first place. $t may even create a new industry. %he entrepreneurial venture is rarely competing for position in the market. ;! Strate)ic /o&itionA %he entrepreneur sets up very specific strategic objectives whereas small business set up objectives but may lack the information due to lack of research. SM388 "USINESS ST3RT-U> STR3TE?B ,"t the beginning of every small business venture, there is a belief that either re?organise an opportunity analysis by others or doing something better. " business idea can be born and e ploited in the follojwing ways. C*D 'tarting from scratch C2D ,uying an e isting business ,oth these approaches have advantages and disadvantages. ST3RTIN? FROM SCR3TC< %his is the most common type. %he most common reasons for wanting to start?up from a scratch umsually rely in the direct personal e periences of the business founders. %he common e amples of starting from the scratch are. 1! S/ortin) a )a/ in the mar'et %his involves taking a business concept that works well in the other places and finding a new and under supplied market in which to setup. %he chances of success when starting up in this are greatly improved because the founders knows and understands the markets and products involved. 2. Ne9 40&ine&& o//ort0nitie& 'ometimes completely new business opportunities are created. %hese can be brought about by economic factors, technological development, changes in the ways that people work or combination of many factors. %he skill of the small business founder relies in both recognising that the opportunity is about to occur and when and how it should be e ploited. 1! Other /eo/le 6ail0re 'edrisa()gmail.com /*

Aery often the small business founders imaginations would have been disappointed by the frustration and receiving inferior or inade!uate satisfaction from an e isting product or service out of these opportunities a new business is created. "UBIN? 3N E=ISTIN? "USINESS ,uying an e isting business has a number of advantages over starting up a small business from a scratch. +owever its not necessarily true that when you buy an e isting business it will be successful. Rea&on& 6or 40#in) 3N E=ISTIN? "USINESS 1! %o increase market share and eliminate a trouble some competitors ,! %o broaden product range or give access to new markets. 1! %o diversify into markets by ac!uiring the necessary mgt marketing and technological skills. %his will enable the small business person to capture a reasonable sliceHshare of market. 2! %o protect a n important source of supply which could be under threat from a competitors. 5! %o ac!uire additional stuff, space, warehousing distribution channels or to get access to major customers !uickly. 3DF3NT3?ES OF "UBINN? 3N E=ISTIN? "USINESS 1! " going concern with a good history increases the likely hood or successful operation of the new owner. ,! %he time, cost and energy re!uired to do a thorough planning job from a new business are eliminated. 5rofits can be earned sooner since it has already a proven customer?base. 1! $t has an established relationship with suppliers, the business community and perhaps banks. 2! $ts e!uipment is already available and its resources and capabilities are known in advance. %hese advantages appear at just sight to be very significant however each must be studied carefully. DIS3DF3NT3?ES -'ources of supplies are already established and may not conform to the buyers best judgment. ?Employees may be inherited which are not up to standards. 'edrisa()gmail.com /2

?%he inherited customer base may not be most desirable and changing the firms image may be difficult. Ways of doing things set by the former owner are well established and may be difficult to change. ?%he building itself and the layout inside the firm may not conform to modern standards and may be e pensive to moderni<e. ?%he purchase price may not be justified and may therefore deplete future profits. ?%he landlords may be unhelpful and uncooperative to the new owner. M3N3?EMENT ISSUES IN SM388 "USINESS %he management process in small businesses includes the following. ?5lanning ?Erganising ?'taffing ?4irecting ?1ontrolling ?communication 1! >lannin)A %his involves determining what appropriate objectives for the business are and how those objectives are going to be accomplished. %his is one of the most commonly skipped steps in running a small business, yet it is also one thing that can keep you on track. 0ake space for this in your work it involves financial planning, human resources planning, marketing planning operations planning. ,! Or)ani&in)A %his structures the resources and activities of the business so that the objectives are accomplished. %here are a wide variety of organi<ational models available. Erganising as a management function in small business involves three levels of analysis. *. "naly<ing the activities necessary to put out a product C"ctivity "nalysisD 2. 3rouping activities into specailised units or departments and deciding the most idea form of organi<ational structure C4ecision "nalysisD ;. Establishing the chain of communication and finding specific lines of authority and responsibility C=elation "nalysisD "ctivity "nalysisG $t contains establishment of four things. CiD " major function of the organi<ation i.e. what it takes the organi<ation to achieve its objectives e.g. production, marketing, financing, human resource selection. CiiD 'ub?division of major function into final activities. %he major function include production, marketing, financing ".= 5=E4U1%$EL 'edrisa()gmail.com 0arketing /;

?5urchasing ?'elling ?=esearch and development ?"dvertising and promotion ?Vuality "ssurance ? 5hysical distribution ?+uman =esource ?=ecruitment ?%raining ?'taff payment CiiiD 3enerate a work?schedule for each of these sub units. CivD Establish job positions re!uired to accomplish the work tasks. %he end result of the job analysis is the 8"ctivity 1hart9 1! Sta66in)A $nvolves hiring the right people to do the activities of the business training them to do the job, and rewarding them appropriately. 2! Directin)A %his involves leadership and motivation of employees by definition is the process of influencing people towards the attainment of established objectives. %o achieve these goals, the leader promotes, team effort, molars and maintains displine. %here are several types of leadership styles that a small business manager may adopt, and may include the following@ "utocratic mgt style, 5articipatory, ,enevolent and Naisse< faire. I "utocratic leader #4oesnt need delegating authority he or she e erases close supervision, he will give orders and directions at all stages and he will fre!uently use pressure tactics to get work done. I 5articipatory # $s democratic leadership in which the leader allows the subordinates to participate in decision making but retains the ultimate responsibility for decisions I ,enevolent leader #is kind and generious and soft on his or her subordinates. I Nassies faire leadership? the leader permits employees to perform their tasks as and how they wish .%he mode of style of leadership a small business manager should adopt should be governed by the type of employees is using. Niterature identifies two types of employees that 4.0cgreger termed as theory Wand X .Employees classified under theory W naturally dislike work and will avoid it if they can. %herefore they need to be pushed and directed and punished to get them work towards the organsition objectives. %heory X states that people naturally responsible, growth oriented and self?motivated and are interested in being productive. %herefore managers who believe that their workers tend towards theory W.Use autocratic leadership styles while these with theory use X use participatory leadership style. 1ontrolling $s the management process involving evaluation and correction when needed to make certain that the business stays on track towards its goals. 5lanning and controlling are closely linked 'edrisa()gmail.com /.

since planning sets the goals and standards for performance while controlling essentially checks to make certain the plan is being followed. $t also provides feedback so that the plan can be revised, if needed. 'et stardards =evenues E penses Eutput "sses performance in =elation to set standards Xes? 4oes performance measure Lo?Ever achieved or under achieved Up to standardP =evise targets or performance 1ontinue with current "ctivities >eatures of a good control system ?$t should be goal oriented ?$t should be futuristic Yforward lookingZ ?$t should be fle ible ?$t should be cost effective ?$t should be simple to implement ?$t should be objective 0"=BE%$L3 $L '0"NN ,U'$LE'' 0arketing is one of the management function that is being neglected by small businesses.0any small businesses operate under wrong impression that they will produce and automatically sell.$t is also common that these small bussineses that engage in marketing look at it in a traditional way that is to say ?'tressing only selling ?5roduct oriented rather than customer oriented %+E 0"=BE%$L3 1EL1E5% 'tartonY*--6Z"ccording to him modern marketing is a system of business activity designed to earn price,promotion and distribute customer demanded goods or services to current as well as to future customers. %his definition recogni<es that fact that the principal objectives of marketing function is to create utility in terms of time,price and possession so that customers obtain product when they want them,where they want them and use them as they want. %he main features of marketing concept include the following *.$nformation based %here is regular and systematic ac!uisition of information that enables the business to remain current adout the needs and desires of the customerYmarket researchZ 2.1ustomer orientation "ll business activities are conducted with the interest of the customer as forefront. ;$ntergrated approach "ll marketing activities are designed to work towards a common goal ie satisfaction of the needs and desires of the customer. 0"=BE%$L3 1EL1E5% 5=E1E'' $t has four steps and they include the following. 'edrisa()gmail.com /(

*,%he identification of the targeted market including the though understanding of the specific needs and demands of the market. 2>ormulatoin of appropriate strategy to meet the marketing demands of the customers including potential customers. ;.1ordination or integration of activities to direct all of them towards achieving the desired goal. .0onitoring and evaluation of performance vise avi marketingannstitution of current measures to ensure the desired need of customer satisfaction on consumer needs and the consumer is the important variable while selling is product oriented. $ts focus product which is the most important variable. 2. 0arketing begins before production and continues even after e change while in selling the activities begin after goods have been produced and ends with transfer of ownership. 1oncepts ;. 0arketing concepts targets mutual satisfaction of both the buyer and the seller well as the seller concept targets the sellers interest i.e. ma imi<ation of sales volume. .. %he marketing concept uses an integrated approach and focuses on long term goals while selling concept the emphasis is on selling and promotion and the focus is on immediate gain. (. %he principle objective of a marketing concept is ma imi<ation of profit through customer satisfaction well as the principle objectives of selling is to ma imi<e profit through ma imi<ing sale volume. :. %he marketing concept is outward working well as selling is inward looking. %+E ELA$=EL0EL% E> 0"=BE%$L3 $L '0"NN ,U'$LE'' Ystrength, weakness opportunities and threatsZ ?%hreats ?1ompetition from the large scale producers on cost, !uality, availability and product or service range. ?1ompetition from other small business enterprises to sell similar and undiffereciated products. "nd in many cases they are large in number. E55E=%UL$%$E' ?Narge potential market waiting to be e ploited. ?%he closeness of the small business person to the final consumer provides a better marketing opportunity compared to larger establishment. WE"BLE''

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?'mall businesses have little appreciation of the marketing function therefore they hardly use the marketing strategy. ?'mall business lack systematic accumulation of marketing information ie lack of information about tests and preferences. '%=EL3%+ >le ibility and si<e with effort the business has the ability to serve customers more !uickly and more satisfactory than the large business. %+E 4$0EL'$EL E> 0"=BE%$L3 " '0"NN ,U'$LE'' ?0arket research ?0arket segmentation ?5ricing ?1onsideration a customer gives in e change for product resources ?5romotion and packaging?communication used by marketers to reach customers ie advertising, personal selling ?4istribution ?5roduct?rangy?tangible after that a market gives to the customers to satisfy a need. %his can be a service or a good or an idea. M3N3?IN? SURFIF38 3ND ?ROHT< IN SM388 "USINESS 'urvival is a stage in the development of a business in which the business neither grows nor declines. %he business e hibits the following features *. $t generates sufficient revenues to meet both personal and business e penses. 2. $t employs measures to prevent decline Ymaintain control of the business in terms of supervision and management. ;?%here are simple structures, systems and control procedures. .. %here is little or no investment in product and market development. Rea&on& 9h# "0&ine&& ma# choo&e a &0r-i-al &trate)# *?%he business operator may be satisfied simply to earn enough to meet essential needsYcomfort <one type of <oneZ 2.?%here may be limitation of resources usually finance, but also including managerial ability to run the bigger business concerns. ;.?%he owner may have limited visions may be because of limited imagination in lack of role models. .?,usiness may choose remaining small for fear of attracting the attention of ta . (.?%he business may feel that it has reached the optimal si<e beyond which the cost per unit starts to decline. :?%he business may use survival as a temporary shop to accumulate e perience and skill in preparation for a take off.

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