Introduction to Entrepreneurship

Module 1: What is Entrepreneurship?

Introduction
Welcome to Introduction to Entrepreneurship.

This unit is designed to give you a high-level overview of all things

entrepreneurship.

Throughout the unit, we will introduce you to concepts including:

• The history and evolution of entrepreneurship;

• The various types of entrepreneurship;
• Opportunity identification, and validation;
• What it takes to fund and grow new ventures;
• What it takes to be a successful entrepreneur; and
• How to exit from new ventures.
Introduction Continued
• In this module, we want to introduce you to the world of entrepreneurship.

• After completing this module, you should have an understanding of the

following:
• The definition of entrepreneurship;
• Common myths associated with entrepreneurship;
• Drivers for entrepreneurship; and
• The difference between entrepreneurship and small business.
The Definition of Entrepreneurship
• The word entrepreneurship originates from the French word, “entreprendre”, which
means "to undertake”. As you’ll see from the following though, trying to get a
consistent definition for entrepreneurship these days, isn’t that easy:

• The Merriam-Webster Dictionary presents the definition of an entrepreneur as

one who organizes, manages, and assumes the risks of a business or enterprise.
• The famous 20th century Austrian economist Joseph Schumpeter’s definition of
entrepreneurship placed an emphasis on innovation, and the creation of new
products, new production methods, new markets, and new forms of organization.
• According to the renowned French economist, J. B. Say, an entrepreneur is a
person who shifts economic resources out of an area of lower productivity into an
area of higher productivity and greater yield.
The Definition of Entrepreneurship
• Clearly, the definition of entrepreneurship varies depending on who you ask.
However, what is clear, is there are definitely some key concepts that make up
entrepreneurship:
• Opportunity – there must be opportunities to respond to;
• Resource use – resources are required to respond to opportunities,
though entrepreneurs have the capacity to do much more than what their
resources would suggest possible;
• Creation of something new – entrepreneurs always strive to create
something new, in order to capitalise on their opportunities;
• The presence of risk – there will always be risk involved with
entrepreneurship, though smart entrepreneurs manage it.
• The desire to create value – entrepreneurs always strive to create
genuine value for their customers.
Definition of Entrepreneurship
For our purposes in this unit, we’re going to use the definition from Harvard
Business School professor Howard Stevenson:

“Entrepreneurship is the pursuit of opportunity without regards to resources

currently controlled”

What this means is, entrepreneurs strive to capitalise on opportunities as best

as they can, regardless of what they have available to them at the time. What it
doesn’t mean, is that entrepreneurs aren’t striving to get more resources down
the track!
Key Myths in Entrepreneurship
There are many myths associated with Entrepreneurship that discourage individuals from
pursuing opportunities.

Myth 1: Successful entrepreneurs have to be born, not made.

o Whilst many are born with the personality traits of successful entrepreneurs, wildly
successful entrepreneurs can indeed be made. In a project by TechCrunch, researchers
found that over half of the 500 successful entrepreneurs they studied, were the first in their
families to start businesses, and almost 75% of them were not interested in
entrepreneurship until after they finished university.

Myth 2: Entrepreneurs are wild gamblers

o Of course, becoming a successful entrepreneur requires taking risks. However, successful
entrepreneurs certainly aren’t wild gamblers. Instead, they take a rational approach to risk
identification, acceptance and mitigation, to ensure that chance is taken out of the equation
as much as possible.
Key Myths in Entrepreneurship
Myth 3: Entrepreneurs are motivated primarily by money
o Entrepreneurs do seek financial rewards yes. However, money is very
rarely the primary reason the most successful started out in a venture.
Consider this famous quote by Richard Branson
o "I don't go into ventures to make a fortune. I do it because I'm not satisfied
with the way others are doing business.”

It’s important to understand these myths so you understand that indeed,

entrepreneurship is available to everybody.
Drivers for Entrepreneurship
The idea of entrepreneurship is a romantic one for many. However, some of the
most successful entrepreneurs in history have come from circumstances that
were anything but romantic.

The drivers for entrepreneurship can essentially be categorised into two

categories:
- Need Entrepreneurship; and
- Opportunity Entrepreneurship
Drivers for Entrepreneurship
Need entrepreneurship considers those who have no option other than to go
into business for themselves.
They need to become entrepreneurs to look after themselves and/or their
families. This is often the case in many developing nations in which
employment opportunities are scarce, but also occurs in situations where
individuals lose their jobs and can’t find others, or, unsuccessfully attempt to
reenter the workforce after an extended time away.
Drivers for Entrepreneurship
Opportunity entrepreneurship on the other hand, considers those that chase
a dream, a passion or an opportunity. Not because they have to, but because
they want to.

With this in mind, it is easy to understand that opportunity entrepreneurship

takes place in those nations that have greater income levels, greater logistical
development and greater access to education. In summary, the developed
nations.
Small Business VS Entrepreneurship
Entrepreneurship and small business is often considered to be the same thing and, in many ways, it is. After all, they
are both about creating organisations to respond to opportunities.

However. There are some key differences that set the two apart:

The amount of wealth creation – While small businesses focus on simply generating an income stream that replaces
traditional employment, entrepreneurial ventures have a strong focus on large wealth creation.

The speed of wealth creation - While a successful small business can generate several million dollars of profit over a
lifetime, entrepreneurial ventures typically aim for the same result far more rapidly.

The risk involved - The risk of an entrepreneurial venture is often much higher, as it is this risk that often facilitates the
rapid rewards.

The innovation involved - Entrepreneurs will typically pursue substantially more innovation than other small
businesses, as a way to create unprecedented value to support the speed and size of growth they require.