Entrepreneurship and Communication Lecture notes

relationship between entrepreneurship and communication and lecture notes on entrepreneurship, small business management. lecture notes on entrepreneurial development
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Published Date:17-07-2017
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EntrEE pr nEurship and CommuniCtiona STUDY TEXTEntrEprEnEurship and CommuniCation ii Copyright ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the copyright owner. ISBN NO: 9966-760-23-7 © 2009 Strathmore University Press First Published 2009 Strathmore University Press P.O. Box 59857, 00200, Nairobi, Kenya. Tel: +254 (0) 20 606155 Fax: +254 (0) 20 607498 stud Y t EX tiii stud Y t EX tEntrEprEnEurship and CommuniCation iv stud Y t EX tv Table of Contents ACKNOWLEDGMENT ................................................................................................................ iii TABLE OF CONTENTS ............................................................................................................... v CHAPTER ONE .......................................................................................................................... 1 introduCtion .......................................................................................................................... 3 CHAPTER TWO ......................................................................................................................... 19 BusinEss opportunitiEs ................................................................................................... 21 CHAPTER THREE ..................................................................................................................... 39 EntErprisE dEVELopmEnt and aWarEnEss ................................................................ 40 CHAPTER FOUR ....................................................................................................................... 69 BusinEss pLan dEVELopmEnt ........................................................................................... 71 PART B CHAPTER FIVE ......................................................................................................................... 97 EmErGinG trEnds in EntrEprEnEurship .................................................................... 99 CHAPTER SIX ......................................................................................................................... 123 CommuniCation sKiLLs ..................................................................................................... 125 CHAPTER SEVEN ................................................................................................................... 143 BusinEss CommuniCation ............................................................................................... 145 CHAPTER EIGHT .................................................................................................................... 177 it in BusinEss CommuniCation ....................................................................................... 179 ansWErs ............................................................................................................................... 199 REFERENCES ......................................................................................................................... 235 GLOSSARY OF TERMS .......................................................................................................... 239 INDEX....................................................................................................................................... 249 stud Y t EX tEntrEprEnEurship and CommuniCation vi Chapt Er CHAPTER ONE INTRODUCTION stud Y t EX t stud stud Y Yt EXt EX t tintroduCtion 1 Chapt Er CHAPTER ONE INTRODUCTION stud Y t EX t stud stud Y Yt EXt EX t tEntrEprEnEurship and CommuniCation 2 stud Y t EX tintroduCtion 3 CE hapt r onE INTRODUCTION OBJECTIVES • By the end of this chapter, a student is expected to; • understand the concept of entrepreneurship and its role in the economy • appreciate the aspect of self employment as a means of earning a living • understand the various types of entrepreneurs that exist in various industries • acquire a deeper understanding of what it takes to be a n entrepreneur and the challenges to expect INTRODUCTION Entrepreneurship is a term that is used in many business disciplines. it essentially has the money making connotation as commonly understood by many. however, entrepreneurship is much more than that. it entails coming up with an idea that no one else has thought of and capitalizing on it to set up an enterprise. the chapter gives a broad description of the various forms of entrepreneurship and even the challenges the entrepreneur will go through in an attempt to make his dream come true. KEY TERMS DEFINED • Entrepreneur: someone who devises a new production methodology and producing output (goods or service) based on the new concept • Entrepreneurship: the process of coming up with new processes or ways of achieving some set objectives. it is the process of devising a new process that will make production more efficient. • Self employment: this is a concept that arises when the entrepreneur relies on revenues from his business as a source of income EXAM CONTEXT a question from this chapter has not yet been tested under the new KasnEB syllabus INDUSTRY CONTEXT there are many young people fresh from colleges or simply with a business mind but lacking the practical experience of running a business. the basic concepts from this chapter will provide the required information and prepare one for the challenges that lie ahead. stud Y t EX tEntrEprEnEurship and CommuniCation 4 1.1 introduCtion to EntrEprEnEurship and CommuniCation Fast forward: There is a strong link between entrepreneurship as a concept and communication as a management tool that an entrepreneurship will find indispensable 1.1.1 The concept of entrepreneurship any given economy needs both the government and the private sector to grow. the needs of the country cannot be feasibly catered for by the state on its own. individuals also need to establish themselves as key components in any healthy economy. the role of the individual is what we are going to look at in the following sections. Definition of Entrepreneurship Entrepreneurship is the process of coming up with new processes or ways of achieving some set objectives. mostly it will involve the production of goods and services. it requires some ingenuity coupled with a lot of time and effort. there are risks involved in this process and they all have to be assumed. With the risks come rewards that are derived by the person who has come up with the new process. Who is an entrepreneur? an entrepreneur is someone who devises a new way of looking at things and producing output out of the new concept. Given an existing technology or some kind of invention, the entrepreneur will come up with a process that will utilize the available tools and technologies to produce a good or a service that will add value to the economy ad benefit both him and the society. He is one who will take the risk of the success or failure of the new venture and will also stand in to reap the rewards. an entrepreneur takes the chance that the new idea will work and he directs all his resources towards making the process a success. the fear of failing always looms but driven by ambition and the desire to succeed, the entrepreneur sees his project to completion. 1.1.2 The concept of communication Communication is the process of exchanging ideas amongst two or more persons. Communication achieves its objective when the parties involved understand each other. Communication can also be defined as giving, receiving or exchanging information, opinions or ideas by writing, speech or visual means, so that the material communicated is completely understood by everyone concerned. Communication is the process by which information is passed between individuals by means of previously agreed symbols. stud Y t EX tintroduCtion 5 What is effective communication? Effective Communication is simply the transmission of a message to another person in such a way that the recipient interprets it exactly as the sender intends and receives at the right time. this involves: • Correct timing • Logical thinking • Fluent expression • Carefully reading and listening • sensitivity to the circumstances • Choice of appropriate media, tone and style • obtaining feedback to check the message has been understood information may be the main focus of the communication. the communicator may want: • t o initiate some action • t o make his needs understood • t o share ideas, attitudes and beliefs perhaps persuading others to embrace them • t o establish and maintain links with other people, possibly to entertain them Communication will be looked at in details in further sections of this book 1.1.3 Relationship between entrepreneurship and communication Communication is a process in which information is shared and exchanged. it is a two-way interaction in which the entrepreneur, and whoever is being interacted with, is active participants in the attempt to solve a problem through the use of language as the proper channel of communication in any business enterprise, the entrepreneur will need to be confident and develop a level of expertise in the skills of speaking, listening, and at times writing to customers workmates and supervisors. the entrepreneur also needs to be good in numbers such that he/she can prepare his financial statements and present them in a legible manner. He/she may also need to devise graphs and charts, using graphic illustrations to explain information. this might involve using computer-based and telecommunication equipment such as pCs, photocopiers, scanners, telephone systems, faxing equipment, etc. the entrepreneur will thus need to arm him/herself with the skills to use these tools to communicate with all the stake holders in his business. in his/her venture the entrepreneur is likely to have employees working under him/her, as well as members working in other departments of the business. When conflicts arise, they need to be solved through conscious and effective communication. meetings are a normal feature of the workplace, and these are accomplished through communication. stud Y t EX tEntrEprEnEurship and CommuniCation 6 1.2 SELF EMPLOYMENT Fast forward: the entrepreneur can make a living from applying his hard earned skills in his business. the business, if run well can enable him meet his personal needs self employment is a concept that has arisen as a result of entrepreneurship. the process of entrepreneurship eventually brings self employment to the fore. the entrepreneur becomes self employed when he begins to derive his livelihood from his business venture. Given that the entrepreneur bears all the risks associated with the business, then it comes as given that he has the right to enjoy all the benefits that ensue from his business venture. This success can be trickled down, not just to himself, but also to the business and others who are job seekers. in this way, not only does the entrepreneur become a self employed person, he also does something positive for the community by employing others. an entrepreneur can make huge gains if his business is a success. at the same time, should the business experience difficulties, financial or otherwise, then the entrepreneur stands to lose a lot of his investments. this may even lead to bankruptcy. an entrepreneur may mitigate against the risk of failure in any of the following ways. 1. insuring his business against losses. Losses can be in the following forms • Burglary • Fire 2. Co – owning the business with a partner. this option will dilute the ownership therefore it is a step that should be taken with a lot of caution. 3. investing in extra security in the event that the business deals in valuable products. 4. securing the services of a risk assessment expert. this is a preventive measure and will highlight the areas of risk in the business that the entrepreneur needs to be aware of hence make vital decisions. the entrepreneur puts himself in a safe position both for his business and himself if he does any one of the above. the list is not exhaustive; the entrepreneur can device other risk mitigating measures that are appropriate for his kind of business. on the other hand the business venture can be a huge success if well managed. the entrepreneur can derive his livelihood from the profits of his venture. This becomes a success story especially in the current economy where many young people are losing out in the job industry even with the relevant qualifications. Self employment is so important in an economy that is still struggling to stabilize itself in a world economy that doesn’t take into account the plight of many young men with the skills required to work fruitfully in any given economy. it is important to point out that the entrepreneur needs to be prudent when appropriating the rewards of his investments, for instance some of the profits should be ploughed back into the business. this basically means that the entrepreneur needs to re-invest some of the rewards that come to the business in form of profits stud Y t EX tintroduCtion 7 the business needs to grow and capture many opportunities in its industry . through proper planning and due diligence, the entrepreneur can device several ways through which he can plough back his interests in an attempt to multiply future rewards. some of the ways of re- investing among others are: 1. opening up new branches in other locations 2. implementing a new product design 3. hiring professionals to manage various aspects of the venture 4. Investing in office automation processes Opening up new branches in other locations depending on the location of the current set up, the entrepreneur can decide to open new outlets for his products in other regions where he has assessed sales will be high. this move also creates jobs for other people and in this way, the entrepreneur also thinks about the society his business serves. Implementing new designs This should come in when the entrepreneur is sure sees that his first project is doing well and there is room for more. With the resources generated from the first project, the entrepreneur can then start working on a new brand or improve the current brand. in this way he doesn’t sit back and let the business thrive on the success of the first project only . Hiring of professionals With growth of business, the operations also become rather complex in nature. a business that is constantly growing and re-investing its interests needs to ensure that the sensitive aspects of the venture such as finance and customer needs are well managed. The entrepreneur could therefore, think of employing the services of qualified professionals to help him run the business. here, he could hire accountants, it specialists, a sales and marketing team et cetera. Investing in Office Automation processes. Addition of more capital is a sure way of expanding more so if the capital will lead to efficient ways of doing business. in the growing world of business, it has become as a necessity that a business arm itself with an iCt strategy that works. the entrepreneur can thus direct some of his expansion efforts in this area so as to keep up with the competitors. 1.3 tYpEs oF EntrEprEnEurs Fast forward: the entrepreneur, regardless of type will need to develop certain fundamental traits that will see him through the tough times that all businesses go through There are several categories in which entrepreneurs can be classified: 1. Adviser: some entrepreneurs perform an advisory role and are paid for giving such advice. This is similar to the role played by lawyers, accountants, and financial advisers. stud Y t EX tEntrEprEnEurship and CommuniCation 8 2. Administrator/Organizer: these are entrepreneurs who get involved in organizing events for their clients. a fee is charged per event or based on the attendance of the event. an example is a wedding organizer whose main business is coordinating the various activities that go towards making a successful ceremony. 3. Builders/Creators: artists, bakers, carpenters, and designers are examples of entrepreneurs driven to create something tangible where it did not exist before. 4. Caretaker: these are people entrusted to care for someone or a piece of property on behalf of the principlal. 5. Communicator/Trainer: these are people who can transmit information or communicate in different languages. They find demand in sales, marketing, writing, training or a variety of information services. 6. Entertainer/Host: these are people who thrive on being with other people. they find entrepreneurial openings in the hospitality industry or service industries such as hairdressing. they may even be entertainers, actors, musicians, or singers. an example is a talk show personality in a t .V program. 7. Investor/Owner: if one has money to invest he/she can put the capital to work for him/ her by investing in stocks, real estate or businesses. 8. Seller: this covers salespeople and brokers, from real estate to insurance to art. an example is a music promoter. 9. Technologist/Engineer: these are people who have a talent in technical disciplines such as computers, autos and engines. as an entrepreneur, one may want to explore entrepreneurial opportunities areas such as software development, engineering or technology. 1.3.1 Traits of a Good entrepreneur there are important traits that if an entrepreneur has and strives to acquire, will make him more successful in his business. these can be grouped into three categories; • personal traits • t echnical traits • Business management traits Personal Traits Being open minded. Listen to Others t rying new things whether it be a marketing strategy, a new business system, a piece of software or a new product/ service, can be good for the growth of the business. the entrepreneur should create a working atmosphere that nurtures and appreciates new ideas. if the staff feel as though their ideas are listened to, considered and possibly even implemented, the more likely the entrepreneur is to have some great ideas being generated Learning from mistakes the entrepreneur should make a concerted effort to learn from his mistakes. he should assess why his ideas didn’t work or why he lost a particular customer etc. once he has made the mistake and is aware of the reason behind the failure, he should use it to his advantage and try a different strategy or modify the initial idea. stud Y t EX tintroduCtion 9 Perseverance the entrepreneur should understand that great businesses take time to establish. he should persevere even if it appears that he is not making headways. he should persevere till he starts breaking even at least. this perseverance also translates into other aspects of business as well, whether it is a new marketing idea or a potential client or business lead. Other personal attributes that will go towards making a good entrepreneur include; • Being disciplined • Being a risk taker • Being persistent • Being a visionary Technical Traits Being Professional this entails addressing the name of people in all business correspondences, keeping a business mindset when meeting with clients or talking to them over the phone. Clients don’t need to hear the intricate details of the entrepreneur’s personal life. Being professional also means checking emails for spelling errors, following-up on enquiries, being punctual when meeting with clients, responding to telephone calls promptly, sending out quotes on a timely basis. But by far the most important factor about being professional is being consistently professional. Create systems and adapt them as necessary As the company grows, it may become more difficult to manage and keep track of things. A useful way to deal with this problem is to create systems within the business for any specific task that requires multiple steps or procedures. This will help to create a smooth workflow and allow the entrepreneur to keep track of things a little easier. a web designer, for example, might create a checklist for new websites. Other qualities that are important under this category include; • Being a team player • network building • possessing good communication skills Business Management traits: Common Courtesy. There is nothing more frustrating than when businesses advertise in community flyers or on signboards and then never answer their phone calls (or return them) and don’t bother to respond to emails. Clients should be able to at least contact the business via email and a land line number. The entrepreneur should return calls as soon as possible. If he will not be in the office, to check email for most of the day, he should set an auto-responder that lets people know when he will be checking his email and possibly include his cell phone number as well. stud Y t EX tEntrEprEnEurship and CommuniCation 10 Get an Email address, Email Signature and Website there is simply no excuse not to have an email address the entrepreneur can get free email addresses from gmail, Webmail and Yahoo. Although an email address that reflects his business domain name looks a lot more professional, any email address will do if you he is just starting out. if he doesn’t t have an email address it can seriously affect the way that people perceive him as a business person, some people just won’t take him seriously. Planning and Research the entrepreneur should do a thorough ground work before embarking on his venture. he should ensure he has done sufficient research and that this becomes a continuous process. Poorly planned businesses collapse before starting and lack of proper research kills the growth of the firm. Frequent consultations with other businessmen also help in generating ideas. Protecting the Business the entrepreneur should insure his equipment and computers as well as anything else that could be detrimental to his business if it were stolen, destroyed or lost. he should keep his warrantee slips on any new office purchases and make sure he does data back-ups regularly – to an external hard drive or a remote server. he should get trademarks and copyrights to protect any business ideas or concepts that are uniquely his. Marketing the business wisely although many businesses rely on word of mouth advertising, it is still a good idea to merge this with an actual marketing plan. if the entrepreneur’s budget allows, he should consult a professional marketing firm or start off with the basics and try to get his business as much exposure as possible through various platforms such as; a website, e-newsletter, business cards, a company brochure, vehicle branding and possibly an advert in an industry magazine. 1.3.2 Challenges of Entrepreneurship. The challenges that entrepreneurs face may be looked at from five categories; a ) External Factors some events in the economy of a country may well be beyond the control of the entrepreneur. the cycles could adversely affect his business, to the extent of forcing him to close down. the economic cycles of recession, Boom, Depression and recovery may find the business in any stage of its own cycle. other external factors include; • Fluctuating interest rates • interruptions in supplies • Labor market trends • Government regulations e.g. tax laws • natural catastrophes stud Y t EX tintroduCtion 11 b) Personal factors an entrepreneur goes through a lot of hurdles to get the business going. the going may be tough such that he may even be tempted to close the business. there are a number of risks associated with being an entrepreneur; Financial risk The entrepreneur may places his entire savings into the venture with the firm belief that he will earn something in return. if this does not happen, he risks losing a lot of money. Career risk he may have chosen to give up employment to pursue his business. he may not have a fall back plan if the business collapses, hence loss of career Psychic risk the entrepreneur may have to give up his social life for a while till the business stabilizes. this may adversely affect family and relations. the collapse of the business could lead to psychological problems such as depression and/or low self esteem. the risk here is the probability of failure in the mind of the entrepreneur. c) Lack of skills and experience a business may start off well as a result of a favorable economic climate and availability of funds. An entrepreneur may well have identified a very good business opportunity and capitalize on it to generate lots of revenue. However, if the entrepreneur does not have sufficient skills to see the business through this success in a consistent manner, he stands to lead the business towards incurring loses and not meeting its obligations on time. it is advisable that the entrepreneur enrolls for courses that will sharpen his skills and help him manage the business better d) Mismanagement The entrepreneur will often employ people to assist him manage the operations of the firm. However, if these people are not trustworthy, he stands to lose a lot of money through embezzlement or pilferage of stocks. the entrepreneur himself could also be the main culprit when he draws a lot of the business resources for personal use. e) Poor Business Ethics the lack of proper business grooming could lead to unfair business practices by the entrepreneur. This comes out of practice and peer pressure. The entrepreneur could find himself in conflict with the law and may get sued by his business associates. the risk here is the loss of business reputation and the possible closure of the business under directive from the relevant government authorities. stud Y t EX tEntrEprEnEurship and CommuniCation 12 1.4 EntrEprEnEurs’ ContriBution to EConomiC dEVELopmEnt Fast forward: as a member of the community in which the business operates, the entrepreneur has certain obligations. he needs to play an active role in society Entrepreneurs play a vital role in today’s economy. this is not withstanding the hurdles mentioned in the previous section. most of them get through the tough times and their businesses become success stories. the success or failure of a growing business depends largely on the entrepreneur himself. however, there are factors that may be beyond his control, but if he can get around these, one way or the other, he only has himself to convince that the business can actually develop. the economy can support the entrepreneur’s venture depending on the various cycles, and the stage of growth the business happens to be in any one of these cycles. it would be the entrepreneur’s hope that the period of boom finds his business just picking up so that he can be taken by the wave of growth and prosperity that will be represented by most commercial activities during these times. as the economy grows, the business grows with it. if the economy shrinks, this will have an impact as well on the business. It is suffice to say that the growth of the business depends to a large extent on the state of the economy. in both situations, whether the business is growing or not, the entrepreneur will need to identify ways the business can contribute to the economy which supports him. this may not be his main objective, since he is in the business to make a profit. Any other requirements that do not lead to this may not be in his priority list. However, the entrepreneur’s business will find itself dealing with people and other institutions. The basic role of entrepreneurs in an economy is described below; Offering employment opportunities the entrepreneur becomes a job creator if his business is growing and at the same time hiring personnel to assist in the management and running of the firm. The entrepreneur will eventually discover that he cannot run the business on his own. he will need to get assistance from other people. he will create posts that become relevant as the business grows. other posts may not be relevant during the early stages of the business’ growth. the entrepreneur needs to be careful not to overstaff his firm as he may get into difficulties when it comes to paying their salaries and wages. stud Y t EX tintroduCtion 13 Paying Taxes The entrepreneur’s firm whether registered as a company or not still has a legal requirement to pay its taxes and to furnish the tax authority with the relevant paper work. the entrepreneur running a sole business will need to submit all his income in a given fiscal year and the business income from his firm forms part of this. An entrepreneur running a public limited company has the responsibility of ensuring corporate taxes are paid each year and in compliance with the Companies act and any other legislation. other taxes that the entrepreneur should furnish the tax authorities are taxes on the sales of good to the final consumer, personal taxes on his employees and any other penalties associated with theses taxes. the various forms of taxes are a source of revenue for the government Social responsibility the entrepreneur should realize that his business will go a long way in getting public approval if it is seen to be doing something positive for the local community. regular contributions to community projects will put the business in the good books of the community. this should be clearly highlighted in the company’s policy. the good will of the business stands to improve and this ensures support not only from regular customers but also the local authorities. Formation of cartels Cartels are formed by firms with the same business objectives . theirs is to establish favorable trade terms with suppliers so that when the goods reach the final consumer, sufficient margins have been made. This helps the many small individual firms that perhaps could not have had the same bargaining power as they do when in a cartel. In a way it fortifies the relationships between the various businesses and contributes towards healthy competition. The smaller firms eventually grow and play important roles in the economy as well. stud Y t EX tEntrEprEnEurship and CommuniCation 14 ChaptEr summar Y there is a strong relationship between entrepreneurship and communication; one complements the other in a business environment. the entrepreneur needs communication facilities to facilitate his business operations. an entrepreneur becomes self employed when he derives a substantial proportion of his livelihood from his business earnings. This makes it possible for him to meet his personal financial obligations from the rewards of his firm. as a businessman, the entrepreneur needs to exhibit some traits that will go a long way in helping him build his empire successfully. he needs to be professional in his dealings with customers, persevering as the firm grows, be a good planner e.t.c there are many challenges both internal and external that an entrepreneur will need to overcome for his business to grow. Entrepreneurs play a major role in the economy. they contribute both in large and small scale to the growth of industries in the country and should therefore not be ignored by the government. ChaptEr QuiZ 1. • Define Entrepreneurship • Define communication • describe the relationship between entrepreneurship and communication 2. What attributes should an entrepreneur possess for him to run a successful business enterprise? Lists at least 5 attributes and discuss them 3. Explain some of the challenges that face an entrepreneur in his quest to establish a successful business. 4. Examine three ways through which the economy benefits from the growth of small businesses stud Y t EX t

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