PRINCIPLES OF ENTREPRENEURSHIP: ENT131.

1. ENTREPRENEURSHIP AND SMALL BUSINESS IN THE ECONOMY

Definitions

 Entrepreneurship is a dynamic process of creating incremental wealth. This wealth is

created by individuals who assume major risks in terms of equity, time, and/or career
commitment of providing value of some product or service, (Ronstadt 1984)
 According to Schumpeter entrepreneurship essentially consist of doing things that are
generally done in the ordinary course of business routine.
 Entrepreneurship can be described as a process of vision change and creation of new
ideas and creative solutions.
 Entrepreneurship is the process of identifying opportunities in the marketplace
marshalling the resources required to pursue these opportunities and investing the
resources to exploit the opportunities of long-term gain.

Essential ingredients of Entrepreneurship

 Recognition of opportunities
 Willingness to take calculated risks
 Creativity and innovativeness
 Developing a vision
 Attracting an effective venture team

Entrepreneurship vs Small businesses

These two are usually used synonymously and confused to mean the same!

The term entrepreneur may be properly applied to those who incubate new ideas, start enterprises
based on those ideas and provide added value to society based on their independent initiative,
(Holt 1992)
However individuals who simply substitute income by leaving their jobs to operate local stores
or independent service businesses are described as small business persons.

What is a Small business

What constitute a small business varies across the globe. Small businesses have been defined in a
number of ways and most definitions have focused on :

Quantitative definitions–Size Criteria: of SSEs are definitions which rely on clearly defined
parameters (or a combination of paramenters), which include some or all of the following:

 Capital and asset base

 Number of employees
 Sales/Revenue
 Contribution to net worth (Gross domestic product)

A small business is a venture that is managed by owners in a personalised way, and not through
the medium of formalised management structure.

Small businesses are normally privately owned corporations, partnerships or sole proprietorships.

Small businesses are common in many countries depending on the economic system in place,
e.g. the Empowerment and Indigenisation initiatives in Zimbabwe have paved way for small
business ventures.

Small businesses are a seedbed for entrepreneurship, most successful entrepreneurs started as
small business owners. They had a vision for growth and energy to achieve unusual results.
 2. ENTREPRENEURSHIP THEORY

Who are entrepreneurs?

The major distinguishing factors between small business owners and entrepreneurs is that
entrepreneurs have a vision for growth, commitment to constructive change, persistence to gather
necessary resources and energy to achieve unusual results. Small business owners may exhibit
these characteristics, but only coincidentally, not as a prerequisite to establishing an enterprise.

Characteristics of Entrepreneurs

 Recognition of opportunities and taking advantage of the same

 Resourcefulness `
 Creativity – artistic
 Visionary
 Independent and inspired thinkers
 Hard working
 Optimistic and self confident – they see a glass as half full not as half empty
 Innovative
 Risk taking
 Good and dynamic leader
 Respond positively to challenges
 Able to take calculated risks
 Flexible and able to adapt
 Energetic and diligent
 Responsive to suggestions
 Take initiatives
 Responsive to criticism
TYPES OF ENTREPRENEURS

 Nascent - a person who is now trying to start a new business, who expects to be the
owner or part owner of the new firm, who has been active in trying to start the new firm
in the past 12 months and whose start-up did not yet have a positive monthly cash flow
that covers expenses and the owner-manager salaries for more than three month.
 Novice - A novice entrepreneur is someone who has just started to run his or her own
business or venture and is still learning new things to make it work successfully. Novice
entrepreneurs are individuals with no prior minority or majority business ownership
experience either as a business founder, an inheritor or a purchaser of an independent
business but who currently own a minority or majority equity stake in an independent
business that is either new or purchased
 Habitual - Habitual entrepreneurs are individuals with prior business ownership
experience
 Serial – westhead and Wright (1998) these are those entreprenuers who have closed or
sold their original business but at later date have inherited or established or purchases
other businesses. They own one business after the other.
 Portfolio - A portfolio entrepreneur owns multiple businesses at the same time. Portfolio
entrepreneurs are individuals who currently have minority and/or majority ownership
stakes in two or more independent businesses that are either new, purchased and/or
inherited.

Mistakes and pitfalls entrepreneurship

Human Resource HR/Management failures: lack of leadership, judgement and knowledge,

lack of experience.

Operation failures: poor inventory management; poor planning.

Marketing failures: weak marketing strategy; uncontrolled growth; poor location; incorrect
pricing.

Financial Failures: poor financial control; inadequate record keeping.

Failure as a natural part of the entrepreneurial process.

Factors that Contribute to the Success of Entrepreneurs

 Know your business in depth.

 Develop a solid business plan.
 Manage financial resources.
 Understand financial statements.
 Manage people effectively.
 Know your strengths and weaknesses.

IMPORTANCE OF ENTREPRENEURSHIP TO THE ECONOMY (Presentation)

BARRIERS OF ENTREPRENEURSHIP (Presentation)

3. ENTREPRENEURSHIP PRACTICE

SETTING UP AN ENTREPRENEURIAL VENTURE

The fact that small businesses are born each day is no guarantee that all will grow and be
successful in business. Some are still born, they never see the light of the day. Others die after a
few months or within the first year of operation. The majority die before their 5th anniversary.

Small business are prone to failure due to a number of reasons some of which are

Stiff competition from already established ventures. Financial problems such as misuse of
finances, lack of adequate finances or inability to secure finances

The ability to capitalise on opportunities and creativity make small busineses outstanding and
thrive in face of setbacks.

THE ENVIRONMENT FOR NEW VENTURES

THE BUSINESS ENVIRONMENT

Businesses do not operate in a vacuum but rather in a dynamic environment. The business
environment is composed of internal and external factors which influence a company’s operating
system. The business environment is composed of three-layered environments;

INTERNAL

EXTERNAL
TASK

 INTERNAL

 TASK/INDUSTRY

 EXTERNAL

Environmental scanning

Refers to the efforts by which owner entrepreneurs examine the internal and external
environments before making a decision. The business environment is composed of the layered
environments which are:

 The internal environment

  The task/industry environment

 The External environment

Internal environment

This describes the internal state of a venture which constitute of the structure, culture and
resources of a venture . the owner entrepreneur has to assess the internal capabilities of the
venture such as the resources: financial, assets, etc. These determine the strengths and
weaknesses of the venture.

Task/ Industry environment

This environment is characterised by certain forces that may have serious negative and positive
effects to the new venture, i.e opportunities and threats

The Five Forces Model by M Porter

Rivalry in industry

An entrepreneur has to determine the level of direct and indirect competition in the industry
before establishing a venture.

Bargaining power of buyers

The customers can have high bargaining power which can then affect the level of
competitiveness of a newly established venture. This has an impact the revenue against the costs
being incurred. Newly established ventures are more likely to be less competitive in their pricing
strategies as compared to already established ventures.

Bargaining power of suppliers

The suppliers can also have high bargaining power which has a direct bearing on the cost of raw
materials/supplies. This can have serious negative implications to a newly established venture
that does not enjoy trade discounts always/ buy in bulk!
Threat of substitute products

These will pose serious competition to the newly established venture. If a new venture is
supplying products that are easy to substitute then there is indirect competition.

Threat of new entrants

Just like the newly established venture, new other ventures will come and increase the rivalry in
the industry.

External environment

Economic factors

Factors such as interest rates, inflation rate, balance of payments, economic growth have serious
implications on newly established ventures. Economic melt down and the general commercial
health of a nation can have adverse effects on the establishment of new ventures.

Legal and political factors

 Policies that are established that can encourage or discourage new venture creation e.g

 Price controls

 Competitive restrictions

 Indigenisation policy

 SMEs policies

 Import and duty policies

Technological factors

The technological advancements have given more opportunities to new ventures, e.g. the growth
of the internet usage has made it easy to conduct Research and Development and even buying
supplies from abroad online.
Socio-cultural factors

Demographic changes such as cultural integration, improvement in income levels, more affluent
demographics have created more opportunities for venture creation.

An effective analysis of the environment will enable the entrepreneur to know:

 When to set up

 Where to set up

When to set up

 When the economic environment is conducive e.g low interest rates, low inflation rates,
structural changes favour new venture start-up

 When one has accumulated adequate personal savings

 When its profitable to start a venture i.e low competition

 When consumer expenditure is high

Where to set up

 In areas of high population growth

 In business centres , where there are more business establishments more customers are
always attracted to such places

 The right market segment is located

Importance of business environment knowledge

Each business firm has to exist, survive and grow in relation to the various forces of the business
environment. Since business firms have no control on these forces, it has to adapt itself
according to these forces. Points that would help us to understand the importance of business
environment are:

1. Enabling the identification of opportunities and getting the first mover advantage:

Business environment provides many opportunities to the firms to improve their performance.
The firms which are able to scan these opportunities at an early stage get maximum benefit and
can leave their competitors behind.

For example, scientific research has come out with an energy efficient light bulb which lasts at
least 20 times more than a normal bulb. General Electric and Phillips had identified this
discovery and are coming up with their new bulbs.

2. Helping in the identification of threats and early warning signals or Radar effect:

Environment understanding helps an enterprise to recognize qualitative information in advance,

which can be used to prepare it for facing likely challenges.

For example, if any new multinational company is entering the Zimbabwean market, the
manager of an Zimbabwean firm dealing with same product as that of the multinational
company, should take it as a warning signal. He should handle this threat proactively & well
ahead of the launch of MNC’s product, take measures like improving the quality of his product,
heavy advertisement etc.

3. Tapping useful resources:

Business requires many resources like raw materials, tools, equipments, finance, labour etc. for
performing business activities. These resources are known as inputs. Business environment
provides all these inputs to the business firms for carrying out their activities and also expects
something in return.
The firms supply their output to the environment, for example goods and services to the
customer, payment to investors on account of money invested by them, payment of wages to the
workers and so on. Thus, we can say that business firms depend fully on the environment, for
supplying inputs and for receiving their outputs.

4. Coping with the rapid changes:

Business environment is very dynamic. One can see changes like new technologies, fragmented
markets, more demanding customers, heavy global competition and so on. Thus, in order to
efficiently cope with these changes, managers must understand the environment and should
adopt appropriate courses of action at the right time. It helps management become more sensitive
to ever changing needs of customers. As a result, they are able to respond to such changes
effectively.

5. Assisting in planning and policy formulation:

Business environment brings both threats and opportunities to a business. Hence, understanding
of environment helps the management in future planning and decision making. For example,
competition increases with the entry of new firms in the market.

The management has to draft new plans and policies to deal with new competitors.
Environmental awareness provides intellectual stimulation to planners in their decision making.
They can make changes in their plans efficiently and effectively.

6. Improvement in performance:

Environmental awareness provides a continuing, broad based education for management.

Objective qualitative information generated by such understanding provides a strong basis for
strategic thinking. The enterprises that monitor their environment closely can adopt suitable
business practices not only to improve their performance but also to become leaders in the
industry.

7. Image building:
Environmental understanding generates a feeling among public that business is sensitive and
responsive to its environment. This helps in building the image or reputation of the firms.

The understanding of its business environment helps an organization to make realistic plans and
ensure their effective implementation. It also helps the business enterprise in identification of
opportunities and threats. Consequently, such an enterprise is likely to succeed in achieving its
goals smoothly & consistently.

8. Successful Conduct of Business

The business executive can successfully conduct the business operation. Since chances for losses
are minimized, the firm can withstand in the long run, widen its financial base and face
competition more effectively. All these finally lead the business venture to a grand success

9. Opening of New Avenues

Environment opens fresh avenues for the expansion of new entrepreneurial operations. When the
business climate is favorable, new ideas, schemes and ventures may be put into action. The firm
can utilize its resources advantageously and derive the maximum benefits.

10. Dynamism in Approach

Business enterprise is essentially a dynamic endeavor. Hence the business executive should be a
dynamic personality. Acquisition of knowledge about the changing environment will keep the
businessmen always alert and dynamic in his approach. His dynamic approach in turn will help
the firm to avoid ecological stresses and to maintain harmony with the environment.

11. Chances for Growth

By identifying itself with the changing situations and environment, the firm can gain the popular
support and win the confidence of the consumers and others. This popular support will produce
many chances for growth and development of the firm.

12. Control over Environment

We all know that environment exercises vital control over the scope and performance of a
business firm. A proper understanding of the nature, character and influence of the environment
over the activities of the firm and its continued efforts to identify with the changing economic
conditions will at one stage enable the business firm to exercise control over the environment
itself. This will result in a smooth and successful running of the venture in the short run as well
as in the long run.

Thus, a clear understanding of the environment shall bring many benefits, while a minimum
disregard of these factors will entail a heavy penalty to the firm.

Barriers to Market Entry

A barrier to market entry is an obstacle (usually high costs) which prevents a product from
gaining traction in a new market. Such obstacles can be natural (i.e., due to the nature of the
product and the characteristics of its target market) or artificial (i.e., imposed by existing
dominant players or governments to prevent newcomers and competition).

Economies of scale

These are declines in the unit costs of a product as the absolute volume per period increases.
These force the entrant to either come in at a large scale (risking strong reaction from
incumbents) or a small scale (forcing a cost disadvantage).

Product differentiation

Incumbents have brand identification and customer loyalties. This forces entrants to spend
heavily to overcome these loyalties. Startups may bring a different product to market, but its
benefits must be clearly communicated to the target customer. Startups must find an
effective positioning, which often requires marketing resources beyond their means.

Capital requirements

These are the financial resources required for infrastructure, machinery, R&D and advertising.
Startups may get around capital requirements by outsourcing parts of the operation to companies
that can leverage existing investments.
Switching costs

These are one-time costs the buyer faces when switching an existing supplier’s product to a new
entrant (for example, employee retraining, new equipment, technical support).

Access to distribution channels

This can be a barrier if logical distribution channels have been locked up by incumbents.

Cost disadvantages independent of scale

Incumbents may have cost advantages that cannot be replicated by a potential entrant. Factors
include the learning or experience curve, proprietary product technology, access to raw
materials, favourable locations and government subsidies.

Government policy

Governments can limit or prevent entry to industries with various controls (for example,
licensing requirements, limits to access to raw materials). Startups in highly regulated industries
will find that incumbents have fine-tuned their business according to regulation

Question: How to Break Barriers to Market Entry?

4. ESSENTIALS OF BUSINESS OWNERSHIP

ENTERING THE BUSINESS ENVIRONMENT

One can go into business through various forms

 A new start up

 Franchise

 Buying an already existing business

 Inheriting a business

Start up

This involves creating a new business from scratch, but this does not mean that the idea
necessarily new.

Owner entrepreneurs prefer to start a business from scratch because it is their own creation and
they can be proud of it!!

Advantages

 No predetermined formulas or rules to follow, therefore its much less rrestrictive as

compared to a franchise

 The owner has full control of all aspects of the business, including location, standards of
operation

 The entrepreneur may draw from previous their job some experience, skills and passion
to help them establish the business

 Enables the owner to design and create a unique business climate and image.

Disadvantages

 Startup businesses are typically more costly and risky since there is no proven formula

 It is not always easy to attract an effective team to start with

  All the details of starting the business are the responsibility of the owner e.g. coming up
with the business plan, licensing , product sourcing, etc

 Lack of credit worthiness is a serious barrier to financing

 It takes time to be established and be known.

 Increasing the chances of startup success

 Start the business in a business incubator

 Take time in a mentoring program

 Have a detailed start up budget

 Produce a product or service fro which there is a proven demand/ have established
customers

 Have experience in managing small ventures

Franchise

This involves starting a business within the framework of an existing larger business entity.

This is a form of business ownership created by contract whereby a company grants to a buyer
the rights to engage in selling or distributing its products or services under a prescribed business
format in exchange for royalties or shares of profits

The franchisor (owner) sells the rights to the franchisee and receives a fee for ongoing
support ,therefore having a vested interest in the success of the franchise.

A franchisor expands through a network of income producing enterprises that share a common
name, use common materials, sell similar products, and benefit from integrated distribution
systems and national brand name advertising.

Advantages

 The franchisee has a protected market

  A proven business opportunity, i.e. guaranteed supplies, systems already in place as well
as the market

 Access to management expertise through management training and technical assistance

 The experience of the franchiser makes up for the inexperience of the new entrepreneur

 An already established corporate image and brand awareness

 Financial support from franchisers

 Reduced changes of failure as compared to new start up

Disadvantages

 Its not the entrepreneur’s own creation

 They can be costly to implement e.g the charging of ongoing royalties cuts on profits on
franchises

 Too much control and restrictions which limits creativity on the part of the franchise i.e
lack of independence

 Standardisation of products and services to create a uniform image to customers limits

creativity

 Regular disclosure of information by the franchisee to protect royalties can be intrusive to

the financial affairs of the franchisee.

 Brand image of the franchiser can become a distinctive liability if things go wrong.

Buying an existing business

This is an outright purchase of an existing business

Advantages

 Business processes are already in place

 Established customers, employee, suppliers and facilities

 The entrepreneur can capitalise on the experience of the previous owner

 The established enterprise may have an ideal or the best location

 It can be a bargain!!

Disadvantages

 It is difficult to find a successful business for sale that is appropriate for an entrepreneur’s
needs. The business may have reached its maturity stage already and starting to decline

 Existing employees may resist change , or they may just be unsuitable for the new
entrepreneur

 There are high chances of buying something obsolete, such as equipment

 Performing due diligence can be time consuming and costly

Due diligence is the process of investigating a business to determine its value.

When buying an existing business it is important to ask 5 critical questions

1. Why does the owner want to sell?

2. What is the physical condition of the business?

3. What potential is the business left with?

4. What legal aspects should be considered?

5. Is the business financially sound?

Inheriting a business
Family owned businesses usually fail after the retirement or death of the founder.

There is lack of proper succession planning in small entrepreneurial ventures.

Clever entrepreneurs know the art of imparting their vision to their desired successors and they
mentor them on how they (the successors) should pursue the vision when the entrepreneur
retires.

Types of ventures

The appropriate legal and organizational format used to establish a new venture will vary
according to several factors such as context, people, legal and tax consequences, and cultural and
social norms. In this chapter, we consider the various organizational and legal forms that
entrepreneurs employ to achieve their objectives.. The most common business types include:

 Sole proprietorship

 Partnership

 Company

 Corporation

Government agents requirements in running a business

 NATIONAL SOCIAL SECURITY AUTHORITY (NSSA)

 CITY COUNCIL

 ENVIRONMENTAL MANAGEMENT AUTHORITY (EMA)

 ZIMBABWE REVENUE AUTHORITY (ZIMRA)

 ZIMBABWE MANPOWER DEVELOPMENT FUND (ZIMDEF)

Understand the importance of ethics and social responsibility in operating venture.

Ethics

Learning Objectives

1. Define ethics.

2. Explain business ethics.

3. Describe small business ethics.

4. Understand why a small business should have an ethics policy.

5. What are the Costs of Unethical Business Conduct?

Ethics are about doing the right thing. They are about well-based standards of right and wrong
that prescribe what humans ought to do—usually in terms of rights, obligations, benefits to
society, fairness, or specific virtues.

Business Ethics

Business ethics is applying the virtues and discipline of ethics to business behavior. They set the
standard for how your business is conducted and define the value system of how you operate in
the marketplace and within your business.

As businesses interact with society a shared interest and interdependence develops between the
business and other groups as the organization is interacting with stakeholders (Freeman, 1984).
These stakeholders refer to the people and groups affected by or whom can affect a business’
operations, policies, and decisions (Twomey & Jennings, 2011), and stakeholder power,
especially consumers, has become more important in the 21st century where the power in the
market has shifted from producers and sellers to buyers and consumers

Business Ethics Violations

Companies who violate the ethical standard might face the judgement of law and criticism of the
public. Legally, an act is not a criminal act until proven guilty; many businesses abide the law,
however their actions wouldn’t be called ethical. When a business violates the law, it also
violates the business ethics standard. The most common legal cases against big corporations
often are:

PROPOSED SOLUTIONS OR RECOMMENDATIONS IN MEETING ETHICAL

CHALLENGES

 Training in Business Ethics and Morality

 Develop a Professional Code of Ethics

 Legal Requirements: Good Faith

 Know and obey the law (Emerson, 2009).

 Conduct business in good faith and make goodwill a broad philosophy of doing business.

 Emphasize and value business relationships (Weinstein, 2012).

  Engage in practices that will demonstrate that the business values and wants to retain
customers and employees, as well as grow its customer base (Peppers & Rogers, 2004).

 Exercise moral courage by doing the right thing (Sims, 2013), even if its costs the
business in terms of losses or decreased profits.

Social responsibility in operating venture.

Business ventures are a unit of society in which they operate. These enterprises depend on
society for the needed resources like men, material, capital and also for selling their products. In
fact, business depends on the society for its existence, growth and promotion. Hence
entrepreneurs have a definite social role and responsibility towards the society. Social
responsibility denotes the responsibility of the business towards various sections of the society.
Businessmen must consider wider public interest while taking business decisions. 

In the words of Adolph Berle, “Social responsibility is the business’s responsiveness to public

consensus, i.e., the obligation of the business to meet those demands and aspirations of the
society about which there is public consensus.” 

H.R. Bowen defines as “Social responsibility is the obligation to pursue those policies, to make
those decisions or to follow those lines of action which are desirable in terms of objectives and
values of our society,”

Nicholas Sirpolis has defined social responsibility as: “The circle of care and concern that a
business has for the well-being of society.”

Causes of Growing Concern for Social Responsibility

 Success in Competition

 Consumer Movement

 Protection to Existence
  Increase in Profits

 Expansion and Development of Business

 To Provide Maximum Satisfaction

ADVANTAGES OF SOCIAL RESPONSIBILITY IN OPERATING A VENTURE

 Social responsibility doubles as marketing.

 It attracts investment.

 Improves your team motivation and productivity

 Improves employee retention and attracts better candidates

 Is seen by customers as a competitive edge

 Provides governance flexibility and financial grant opportunities

ARGUMENTS “AGAINST” ENTREPRENEUR’S SOCIAL RESPONSIBILITY

 Reduction in Total Profits : It is thought that diverting resources away from the firm to
socially responsible programmers may undermine the competitive strength of
entrepreneur.

 Financial Burden: Social obligations can be very expensive and may cause entrepreneurs

to forgo attractive business investments or even to go out of business. 

 Dilution of Purpose : The pursuit of social goals may dilute the economic productivity of
the business enterprise. 

 Challenges in Capital Formation

 Dilution in the Reputation of Business

 Increase in Financial Load

CREATIVITY AND INNOVATION

Majaro (1988:27) differentiates between creativity and innovation as constructs. Creativity is the
thought process that leads to the development and generation of ideas. Innovation is the practical
implementation of the idea concept to ensure that the set aims on a commercial, profitable basis
are met, in line with a specific opportunity in the market environment. Innovation is therefore
ideas that seem to be newer, faster, more cost effective and possibly more aesthetical.

Creativity involves an ability to come up with new and different viewpoints on a subject. It
involves breaking down and restructuring our knowledge about the subject in order to gain new
insights into its nature.

‘It is your ability to combine ideas in a unique way or to make useful associations among ideas.

Involves the development of UNIQUE & NOVEL responses to problems / opportunities”“ability

to combine ideas in a unique way

The ability to make or otherwise bring into existences something new, whether a new solution to
a problem, a new method or device, or a new artistic object or form”\“new and useful”

Creative solutions are more than ideas, they must work in the real world. A creative solution has
3 attributes,It is NEW It is USEFUL, in that it solves the problem It is FEASIBLE, given the
messy real world constrains like time and money

WAYS IN WHICH CREATIVITY MAY BE USED IN MANAGEMENT

Creativity is considered to be a vital asset for any person who is interested in entrepreneurship

 To make more effective use of a manager’s time

  To improve a product’s appeal to customers

 To improve motivation amongst staff

 To appeal to customers’ wants and needs

 To cut costs through more efficient/effective production methods

 To identify new and profitable product-market opportunities

The following are typical of the kinds of problem which require creative thinking:

 How to make more effective use of a manager’s time

 How to improve a product’s appeal to customers

 How to improve motivation amongst staff

 How to appeal to customers’ wants and needs

 How to cut costs through more efficient/effective production methods

 How to identify new and profitable product-market opportunities

 How to get skilled and experience staff to stay with the company without paying them
excessively high salaries

CHARACTERISTICS OF CREATIVE THINKING AND CREATIVE THINKER

Measures of intelligence do not explain creative ability. Highly productive creative thinkers form
more novel combinations than the merely talented. If one particular style of thought stands out
about highly productive creative thinking, it is the ability to make juxtapositions between
dissimilar subjects. It is a facility to see things to which others are blind.

Creativity is a quality which exhibits itself in the way in which people conduct their lives.
People who exhibit creative behaviour:

 challenge the status quo

  confront assumptions

 exhibit curiosity

 like to investigate new possibilities

 tend to take the initiative in most matters

 are highly imaginative

 are future-orientated

 tend to think visually

 see possibilities within the seemingly impossible

 are not afraid of taking risks

 are prepared to make mistakes

 are adaptable to different work environments

 are adaptable to changing circumstances

 see relationships between seemingly disconnected elements

 distil unusual ideas down to their underlying principles

 synthesise diverse elements

 are able to spot underlying patterns in events

 are able to cope with paradoxes

 look beyond the first ‘right idea’

Acquiring creative problem solving skills

Research has shown continuously over the past fifty years that people can be taught, encouraged
and coached or counselled to be more creative. Four basic creative strengths and skills can be
easily taught:
Fluency – ability to produce many ideas (many of which may be fairly similar or have the same
kind of theme

Fluency can be developed by holding creative thinking sessions at which ideas for a hundred
different uses for everyday objects (sponge, toothpick, eraser, brick, paper-clip,etc.) should be
generated. After reaching this number, move on to work-related objects.

Flexibility – ability to produce a varied mix of ideas (none or few of which are similar or share
the same kind of underlying theme). Flexibility can be improved by listing fifty different kinds of
uses for everyday objects and then moving on to work on related challenges.

Elaboration – ability to add detail, depth, mixtures of viewpoints or perspectives. Elaboration

can be developed by describing something (hobby, TV show, tree, cat, athletic event, etc.) in
considerable detail, using all the physical senses.

Originality – uniqueness, novelty, newness, creativeness (new) or innovativeness (improvement

of existing). Originality can be learned by picking one common object and listing many new uses
for it.

Regular practice in each of the above activities can lead to the acquisition of improved creative
skills.

The creative person

Botha (1999:38) reviews Sternberg in Davis (1992) who stated that the creative person is the
result of three integrative psychological variables: Intelligence, cognitive style and personality.
Mandler quoted by Smith et al. (1995:9) ellaborates on the latter by defining creativity as the
result of a cognitive process resulting in any form or degree of novelty. The cognitive process
involves “individual or social context”; “deliberate or non-intentional”; “goal defined”
dimensions; a “subjective sense of novelty” (does one really ever know whether an idea is novel
or not?); “continuous or discontinuous problem solving”; “dreams”.
Csikszentmihalyi (1996:45) distinguishes the creative person in a definition that states that no
clear-cut characteristics can be allocated to the individual to declare him or her as someone who
is able to create a novelty (e.g. a new product or service). The individual is creative on a
cognitive level firstly due to his or her “genetic predisposition for a given domain”.

The role of the individual’s immediate social environment is an essential in creative thinking.
The author correctly describes this domain as “cultural capital”. This environment may, for
example, be “interesting books”, “stimulating conversations”, “role models” and “expectations
for educational advancements” (see also the creative press).

Rothenberg and Hausman (1976:4) formulate a definition surrounding motivation, cognitive

functioning, psycholinguistics and personality theory. The definition depicts the creative person
as someone with an unusual thought with a positive outcome.

The creative process

Davis (1986:60) distinguishes the different meanings of the creative process by means of the
three different views. The first meaning involves the successive steps from identifying a problem
up and till the novel solution thereof. Secondly it shows the expeditious “perceptual” changes
that take place when new idea creation occurs in a short time frame. The third meaning
encompasses all the techniques that are used hen new ideas or solutions are generated. Davis
describes the basic process as one that starts with problem recognition, a solving phase and the
final solution phase.

The historical course of creativity-process development (as recorded by Davis) started with
Graham Wallas in 1926 who suggested a process that consisted of four steps namely:

1. Preparation (problem assessment)

2. Incubation (conscious and unconscious mental dynamic)

3. Illumination (new idea conception)

4. Verification (evaluation of idea/s).

The creative press (environment)

The context witin which creativity takes place, or the creative environment, has attracted a
multitude of research interventions. The main focus in defining creativity in an environmental
context or the creative systems approach focused on the educational environment.

A creative environment is also an environment that permits the individual to evaluate his/her
own novel idea and/or product without the criticism of externals. It thus implies that the
environment should allow individuals to firstly develop confidence in what is regarded as new
and secondly to take the risk that enables differentiation.

McManus (1999:7) suggests that “complexity” be encouraged because of its integral position in
the creative environment. She states, in a training context, that the following aspects should be
part of the creativity-training environment and will encourage complexity:

o encourage the flow of stimulating information;

o ensure informational feedback whenever possible and as quickly as possible;

o provide new experiences and create sources of information;

o process whatever learning occurs;

o share stories of successes and failures;

o tolerate mistakes as inevitable, i.e. learning through experience or trail and error

Barriers within the creative environment

Certain variables in an environment may not be conducive to creative development. These

variables are seen as barriers to creativity. Barriers are normally blockages to thinking and acting
creatively. These barriers are based on the individual and will influence many tasks in the
workplace. Antonites in Nieman and Bennet (2001), identified the following barriers to creativity
within an environmental context:
• The social environment

The social environment entails all the variables affecting the human being, whether individually
or in group format on a social or societal level. The following factors in this environment can
influence creative behaviour negatively:

 A lack of understanding and support for new ideas in communities, among peers and
parents.

 Many families have an autocratic decision-making structure, and therefore do not allow
children to think independently.

 Risk taking is not allowed.

 Culture and certain customs or beliefs within a sub-culture might form barriers to creative
behaviour (e.g. women in particular African cultural structures are not allowed to own or
run entrepreneurial ventures. Their sole purpose is to raise children.)

• The economic environment

 Broadly speaking, the macro economy does not support the development of
new ideas and products (e.g. an enabling environmnent that advances
entrepreneurial performance).

 There are no growth prospects in the economy.

 No financial support is available for the development process of new products.

- Risk taking is seen as a negative element of the economy.

 No rewards exist for new and feasible ideas.

• The physical environment

 There are continuous or once

  off distractions in the thinking process (e.g. disruptive sounds, climate and
energy).

 In the education and training environment the venues are conventional

(e.g. even rows and grey/dull colours).

 The existence of routine or related tasks (e.g. you have to eat, work, study
and sleep as part of a specific timetable and routine).

 The work routine consists of always conducting the same tasks at the same
time and in the same way.

 Cultural barriers

The role of culture in creativity development is not neglectable. There are many different
cultural groups in Zimbabwe. Each one of them has characteristics that will, at some point in
time, negatively or positively influence creative development. It is important not to stereotype in
this regard due to the sensitive and proudness factors involved in cultural beliefs. The following
barriers are reckoned to be generic cultural barriers:

 Individuals have to go to school, after that study at a university or college, then

find a job with a governmental institution (cultural mindset). Entrepreneurial
endeavour is not a feature of such a cultural group.

 The unknown is unsafe and therefore risk averseness is the rule. Although
calculated, entrepreneurship entails a certain level of risk-taking.

 An expectation is created in certain cultures, which prescribes that one has to be

practical and think economically before your ideas can be generated.

 To ask a question, or to question an issue, is impertinent and unacceptable.

 Stereotyping implies making assumptions about certain issues without proper

knowledge of the background or particulars of the matter, with specific reference
to cultural characteristics.
  The policy of a company is to follow strict orders and procedures, and also stay in
line with the organisational structure.

• Perceptual barriers

Perceptual blocks are barriers in the way of perceiving things (objects and/or abstract figures)
clearly and correctly. The following aspects are potential blocks to creativity:

 Applying a narrow mindset to analyse problems. An example in this regard is for

instance idea anxiety. Here one has an idea and you focus on the “great” idea
without analysing the relevant facts supporting it.

 Making assumptions about a problem or idea without a holistic viewpoint or

displaying an inability to structure the problem and evaluate the smaller elements.

 Prematurity. Individuals tend to assume that something will work without proper
marketing research or feasibility studies. In this case they rely on the intuitive
ability only.

 Characteristics and even the utilities of the new product are sometimes perceived
differently by the owner in comparison to the potential customer. In many new
products this perceptual block has resulted in failure in the market place.

How to Foster Creativity within Your Organization

There are several smaller steps leaders can take to make a big change on their organization. Here
are five ways you can foster creativity within your own team:

1. Reward Creativity

 Not every idea will be a success, but big breakthroughs won’t occur if the company plays
it safe. Executives need to be comfortable with failure, and give employees the freedom
and flexibility to experiment with and explore new opportunities.
  Global conglomerate Tata gives out a “Dare to Try” award to employees with the “most
novel, daring, and seriously attempted ideas that did not achieve the desired results,”
while Google’s innovation lab, X, offers bonuses to each team member who worked on a
project the company ultimately decided to kill as soon as evidence suggested it wouldn’t
scale.

 Companies that reward creativity show they value it, inspiring individuals within the
organization to pursue untested theories and concepts.

2. Hire the Right People

 The “right” people in this context aren’t solely creatives. Organizations should instead
focus on diversity, bringing in a variety of viewpoints, cultural backgrounds, and skill
sets. Tom Kelley, partner at global design firm IDEO, established “The Ten Faces of
Innovation,” describing how each type of person—such as “The Hurdler,” who tackles
problem-solving head-on, or “The Caregiver,” who works to understand and form
relationships with each individual customer—adds to the overall creativeness of a project.

 “Not everyone is going to be creative, but most people can learn the tools and techniques
for being innovative,” Marion says. “It helps to look at things from a different vantage
point.”

 It is also worth considering building an innovation team within your organization, whose

role is to tap into creative energies to develop new products, services, or processes within
an organization.

3. Try the “Yes, And…” Approach

 One method for spurring creative brainstorming is trying a technique used in

improvisational theater: “Yes, and…” The approach encourages colleagues to build off
their peers’ thoughts by first agreeing and then adding something to the discussion.
Taking “no” off the table ensures all ideas are heard.
  Employees could test this approach by simply putting a paperclip in the middle of the
table and thinking up as many use cases for it as possible. The activity might sound silly,
but it could help inspire creativity.

4. Try Flexible Work Hours

 Not everyone is suited for the traditional nine-to-five schedule.

 Offering flexible arrangements, such as the ability to work from home, is known to make
employees healthier, happier, and more productive.

 As long as employees are clear about expectations, complete their work on time, and
coordinate appropriately with their team, it’s an easy strategy to test and enables
everyone to work when they’re feeling most creative, as opposed to a set time during the
day.

5. Give Employees Time to Recharge

 With creativity can also come burnout. Employees need time to step back and hit the
refresh button.

 Companies do need to take burnout into consideration

 The only thing companies can’t do is ignore creativity altogether, or hope the problem
will solve itself. Creativity needs to be prioritized and for good reason

 Creativity lends itself to unique solutions to problems,

THE IMPORTANCE GIVEN TO CREATIVITY IN BUSINESS

 It’s the starting point of invention or spotting an opportunity

  Creativity provides entrepreneurs to develop an ability to see, recognize and create
opportunities where other find only problems

 Let entrepreneurs to analyze a problem from every possible angle

 Essential for survival, growth expansion & most importantly for building competitive
advantage

 It makes companies competitive

 It nurtures company culture

 It aids productivity

 New competitive advantage

 It helps you discover unique ideas that will keep your users interested and engaged,

 Extraordinary productivity boost

 Makes people feel appreciated. It helps their personal and professional growth

 Creative thinking as a problem-solving skill 

 Global impact

Innovation

Schumpeter (1934) described innovation as the creation and implementation of ‘new

combination’. This new combination may be associated with new products and services,
processes, mar- kets, delivery systems and policies. Innovation not only creates added value to
the firm itself, but also to other stakeholders and the community. Most definitions of innovation
include the development and implementation of the ‘something new’. According to Zimmerer
and Scarborough (2005), innovation is the ability to apply creative solutions to problems and
opportunities to improve and enrich people’s lives. In other words, innovation means the
opportunity for employees to transform an idea that can be marketed.
Drucker (1994:20) suggests that innovation is an entrepreneurial instrument, one which is used to
develop a differentiated undertaking or service. It is possible to regard innovation as a discipline
in itself, where it is possible to be taught as well as to practise. He adds that entrepreneurs should
purposefully search for sources of innovation, as well as changes and their symptoms. This could
point to certain opportunities for successful innovation. It is furthermore also important to
identify the principles of innovation and to successfully implement them.

The origin of innovation is of the utmost importance. It is critical that the causal relationship that
leads to the invention of the successful instrument is pointed out. Drucker identifies seven
resources of innovative opportunities:

The unexpected

Unexpected success, or failure and the unexpected external incident are highlighted. IBM is a
very relevant example pertaining to unexpected success. IBM developed computer equipment to
use in banks during the 1930s. Due to the depression of the American economy nothing could in
reality be sold to the banks. However, state libraries saw this computer equipment as very
advantageous for their systems. All stacked stock was sold, which resulted in unheard of and
unplanned success.

The business world is full of surprises – not only the unexpected failures but also the unexpected
success that comes to the organization can be a great source of inspiration for innovation. Both,
unexpected success and unexpected failures, shouldn’t stay unnoticed and shouldn’t be
overlooked as opportunities for a change.  Unexpected situations can be extremely powerful in
the business world as they inspire the leaders and innovators to get another perspective on the
situation (no matter if it is positive or negative) and to take advantage of the opportunities that
emerge.

Incongruency/Incompatibility

Incompatibility exists between reality as it appears in practice and as it is supposed to be. Many
companies fall into the trap of developing their product without to actually do the appropriate
research to determine what the target customers really want. The dissonance between what is and
what it is supposed to be or what is and what everybody else assumes it to be can lead the
company to a downfall but can be also a great source of inspiration for innovation. The customer
reviews, feedback, and complaints are often the best way to determine incongruity.

Process need

The task-related nature, rather than the situation-orientated source of innovation is emphasised.
The change occurs within the processes of the venture, industry or service. The importace of the
completion of a specific task is crucial. It also points to the improvement of an already existing
task or process, or the replacement of a missing or weak link in the process of the development
of a new process, based on newly generated knowledge. This need arises where everyone in the
venture or industry realises that there is a problem in the process, but virtually nothing is being
done about. Should a solution to the problem be found, it is usually accepted as obvious and later
on as the standard. This source of innovation is said by Drucker to be more task-focused rather
than situation-focused. Here the source of opportunity for innovation comes after looking closely
at the processes of the company and identifying clearly the weak spots and the ways they can be
improved. Knowing what the weak links are after a detailed evaluation of the company’s
capabilities, the teams will be able to create more effective and innovative solutions.

Changes in marketing and industry structures

These phenomena usually occur unexpectedly. The change in the market structure of any
industry (for instance the information technology industry), often creates opportunities for
innovation. Should there be a definite change in the market structure, all role players should
adapt to it. In this instance the leadership is often replaced. many industries are disrupted almost
overnight. The leaders need to keep an eye on these changes and to treat these changes not as
threats but more like opportunities.

Demographic changes
Companies are affected in one way or another by the change of demographics. These changes
affect the markets as they determine the demand for products, who is buying these products and
what quantities of the product are bought. The demographic changes in age, education,
employment, affect the direction that the business takes and can open new horizons to the
company if it manages to appropriately identify the opportunity.The Internet per se formed a
platform for new venture creation by innovative young entrepreneurs.

Changes in perception, state of mind and reason

It could be most dangerous when the temporality of change with regards to perception is not
addressed correctly. With the years, there are significant changes in the way people perceive the
world. Perception changes over time, and, nowadays, due to the involvement of technology and
the power of social networks, these changes happen faster than ever. People can change their
perception about certain product, brand or industry overnight. The changes of perception open a
road for businesses to innovate, to develop new products and services that align with the new
perspective of the customers.

New knowledge

Both scientific and non-scientific knowledge is emphasised. Knowledge-based innovation

features high on the list of successful innovations. New knowledge is often used as a byword for
innovation. Technological and scientific breakthroughs are the source of innovation that can’t be
overlooked by businesses. Companies that refuse to adapt to the changes inspired by new
discoveries are doomed to fail. New knowledge, however, can be applied in every aspect of the
company – from learning more about the customers through analytics through improving the
supply chain to hiring the best employees.

Types of innovation

 Product
  Process

 Radical

 Incremental

Methods of protecting Innovation and creativity

Intellectual property rights:

 Branding.

 Trademarks.

 Patents.

 Copyrights.

 Registered design protection.

 Trade secrets (processes, techniques, confidential disclosure agreements).

The process of nurturing and managing innovation

Our world today is evolving faster (technologically speaking), than it ever did in the past.
Technology is constantly being improved to better suit our lifestyles and needs. How then, do we
as business owners nurture a culture of innovation and creativity in the workplace to keep our
companies thriving and progressing?

Much of the debate has tended to focus on how individuals within an organization innovate,
rather than analyzing how an organization itself can utilize the talents of its employees.

The concept of 'intrapreneurship'

How can an organization help foster innovation? And how does a large organization deal with
entrepreneurs when they are on the inside?
According to Gifford Pinchot, a Harvard academic and expert on innovation, the answer is to
foster what he calls "intrapreneurship" - people who focus on innovation and creativity within
the organisation.

Supporting this intrapreneurial behaviour is often the best way to promote company-wide
innovation. But this debate has yet to trickle down into public discourse or policy discussion.

It is part and parcel of an economy that is increasingly dominated by knowledge and where
businesses are reliant on the flow of information. In this new business reality, innovation is more
important than ever.

Employee empowerment that allows intrapreneurial behaviour is the first step in expressing
innovation. However, this necessitates new operational systems for managing a worldwide
organisation to help intrapreneurs thrive. Intrapreneurs are eager to see change and progress, and
if they are held back they can quickly become disenchanted.

Systems and processes, therefore, need to be designed to channel that energy into a meaningful
reality. But many organisations still fail to grasp the importance of providing the infrastructure to
capture the great ideas that intrapreneurs have.

Innovation is not a mathematical equation that can be applied to a brand or company. Instead, it
is an environment that is nurtured in such a way that leaders are able to unlock and harness the
“light bulb” ideas that go off. Business leaders and owners can not just announce that the office
is now an innovative office and encourage all staff to get thinking creatively. Rather, they must
procure an environment, both physical and mental, that engages employees in a non-traditional
way. Here are just a few suggestions to help you shape the environment in your company into an
innovative one that allows for employees to be open and able to take risks in their thinking:

Taking a break to innovate

This type of leadership in an organisation is critical to establishing an experimental culture. At

Microsoft, Bill Gates has done a great deal to create a vision for innovation in the business. Two
or three times a year, he sets aside dedicated time to think about the future.

Schedule Brainstorming
Teams should brainstorm at the beginning of each project. Bouncing ideas off each other can be
helpful to mold and stretch ideas that may have been ignored in other traditional offices. All
members of staff should be included in the brainstorming, not just the people with a “creative”
title. During these sessions encourage “out-of-the-box” thinking by making it a safe place to say
anything. Who knows one idea may spur another and so on.

Rewards

Give rewards, even small ones for creative ideas around the office. This might include a longer
lunch or a premium parking spot or a small gift card.

Don’t be afraid to fail

Failure may seem negative, but it also means that you were not afraid to try. Even Ben Franklin
failed hundreds of time before his experiment succeeded. 50 to 70 per cent of all new product
innovations fail at even the most successful companies.

Provide Education and Training

Learning should be a lifelong adventure. Give employees a chance to be learning and expanding
their knowledge base. That knowledge will allow for more creative thinking.

The Physical Office

Make the office fun where ever possible. Google International allows for games, couches and
even resting areas to get employees comfy and relaxed. A relaxed mind can think more
creatively.

Allow Alone Time Most of us think about the innovative process as a group of like-minded
individuals pounding out the solution to a problem. Don’t forget to allow for some alone time
for employees to really think through a solution.
Carrier (1999:4) summarised the problematic situation and suggests that the following
transformations should take place:

 Courses offered by training institutions that focus on training the traditional manager and
not the entrepreneur.

 Lack of skills training for growth-oriented business (thus primarily opportunity driven)
should receive attention.

 The lack of models addressing the creativity, innovation and opportunity finding issues
directly, should form part of entrepreneurship training.

 Proper differentiation should be made between a business idea and an opportunity in a

training context

 Less emphasis must be placed on the pre-entrepreneurial phase of actively seeking

business opportunities, but rather an accentuation of feasibility and realistic market
related opportunities.

 The total lack of tools, textbooks and approaches to cultivate creativity, innovation and
opportunity finding must be addressed.

 Creativity, innovation opportunity finding and the contrasting stifling pedagogical

paradigms in the teaching of business and entrepreneurship should be considered.

 Lecturing as a teaching method, is an approach that often reveals more about the teacher
than about the subject taught.

Entrepreneurs and enterprises will gain tremendously where innovation is fed by absolute
creative ideas and the processes involved with it. It is further reasoned that a large number of
successes can be linked to the dualistic force of combined creativity and innovation.

6.THE ENTREPRENEURIAL PROCESS

Steps in the Entrepreneurial Process:

 Idea generation,

 opportunity identification,

 business concepts,

 resources,

 implementing and managing,

 harvesting.
Methods of generating ideas;

As an entrepreneur-to-be, always remember that a business must be firmly founded on the

existing business opportunities and there can be no business opportunities in the absence of an
entrepreneurial idea.

 Generating ideas is not just a chance process. Ideas appear to arise by chance only when
people are actually looking for them. It does not happen to people who are not curious or
enquiring or who are not engaged in a hard search for opportunities, possibilities, answers
or inventions.

 One might, indeed, think of ideas as ‘the sentences of thought’. Ideas are mental
phenomena which somehow drift into the mind, wander through and often vanish into
obscurity, never to be recalled again. Making notes on ideas as they arise is extremely
important.

 Many ideas seem to occur by chance. Fleming discovered the effects of penicillin quite
by accident – it was blown in from an open window and killed bacteria in a saucer which
contained a strain he was investigating. While searching for a way to hear the sounds of
the heart, Laennec found his answer when he noticed two boys playing in an unusual way
with a see-saw. The one was hitting one end of the wooden see-saw with a stone while
the other listened with his ear pressed close to the other end. The idea of the stethoscope
leaped to Laennec’s mind. Westinghouse discovered the idea of the air-brake when he
casually read in a journal that compressed air power was being used by Swiss engineers
in tunnel building

 However, generating ideas is not just a chance process. Ideas appear to arise by chance
only when people are actually looking for ideas. It does not happen to people who are not
curious or enquiring or who are not engaged in a hard search for opportunities,
possibilities, answers or inventions.

 It is also widely recognised that immersion in one’s subject matter can be an important
factor in gaining creative insights. Newton, for example, arrived at the law of gravitation
by being preoccupied with the problem all the time.It is also known that Einstein tried for
 years to clarify the problem of the relation of mechanical movement to electromagnetic
phenomena. Creative insights appear to be easiest to gain in fields where we have
considerable prior knowledge and experience.

 Nevertheless, there is a paradox here, for we tend not to think about what we think we
know already

 Motivation also plays an important role in our ability to be creative. Again there is a
paradox, for creative work demands both a passionate interest on the part of the thinker
and a certain degree of detachment from the work and ideas. Creative thinking, however,
does not appear to occur where the individual’s interest in the subject matter is relatively
low. There seems to be a delicate balance whereby the creative thinker has to remain
sufficiently detached from the work.

Identify sources of entrepreneurial opportunities

Defining opportunity

Before exploring how people identify opportunities, it is important to clearly define what exactly
constitutes an opportunity.

The Identification of Entrepreneurial Opportunities

 The concept of “opportunity” has been closely associated with entrepreneurship in recent
years. Many recent definitions of entrepreneurship have tended increasingly to focus on
the identification of opportunities as being central to understanding entrepreneurial
behaviour (Shane & Venkataraman, 2000).

 The ability to identify entrepreneurial opportunities is generally considered to be a core

attribute of entrepreneurship (Shane & Venkataraman, 2000).

 Before they are able to act upon opportunities, aspiring entrepreneur’s first need to be
able to identify them (Shane & Venkataraman, 2000).
 Shane (2003) defines an entrepreneurial opportunity, as a situation in which
entrepreneurs are able to create a completely new means-ends framework by
reassembling resources in a manner which they believe will yield a profit.

 Not all people are able to identify a specific entrepreneurial opportunity which exists
within a given environment or set of circumstances (Shane & Venkataraman, 2000).
Some people are able to identify opportunities which others overlook (Kirzner, 1973).

 In order to attempt to explain why some people and not others are able to identify
entrepreneurial opportunities, studies which have been conducted suggest that possession
of prior knowledge, social networks and superior cognitive capabilities help individual
entrepreneurs to notice specific opportunities (Gaglio & Katz, 2001; Kaish & Gilad,
1991; Mitchell et al., 2002; Shane, 2000).

 According Kirzner (1973), as noted in Clydesdale (2008), the presence of an opportunity

presupposes either one of the two errors that people usually make. The first type of error
that results in failure actualizes as the result over-optimism. For instance, this happens in
the market in the case where one sets a goal that cannot be achieved. Unlike the first,
over-pessimism is the second type of error that provides opportunities. Over-pessimism
occurs when people believe that something is impossible when in reality it can be done.
In this circumstance, people do not understand that opportunities exist and are just
waiting to be grasped.

 Casson, Shane (2000) defined entrepreneurial opportunities as “opportunities to bring

into existence new goods, services, raw materials, and organizing methods that allow
outputs to be sold at more than their cost of production” (p. 451).

 Hills and colleagues (Hills, Lumpkin, & Singh, 1997) referred to opportunities as either
the possibility to create new businesses or significantly improve the position of an
existing business, in both cases resulting in new profit potential.

 Other scholars emphasize the role of the market in their definitions of opportunities. Choi
and Shepherd (Choi & Shepherd, 2004), for example, suggest that opportunities exist
when there is customer demand for a new product.
  Likewise, Kaish and Gilad (Kaish & Gilad, 1991) define opportunities as market gaps
resulting from disequilibrium. In definitions like these, opportunities are defined as
unmet demand that currently exists in a particular market, although the potential for
economic profit is not made explicit.

Sources of Business Opportunities

1. Value

2. Scarcity

3. Expertise

4. Identifying and leveraging uniqueness (and competitive advantage)

5. Import and export (from an area of high concentration to an area of low concentration)

6. Employees

7. Start-Up Partners (Collaboration (example is professional associations)

8. Previous Employment

9. Friends (friends helped to identify the business opportunity which resulted in the
establishment of my present business enterprise )

10. Members of Families (a member or members of my family helped me to identify the

business opportunity which resulted in the establishment of my present business
enterprise)

11. Members of Ethnic Networks

12. Chance Factors (The business opportunity resulted in the establishment of my present
business enterprise was identified by chance)

13. Prior Knowledge of Markets (prior knowledge of the market before i started my business)

14. Prior knowledge of operating in specific markets (prior knowledge of how to serve the
market which my business serves)
 15. Prior knowledge of the problems which are likely to be encountered with customers

16. Changes in the environment

17. Technological discovery and advancement

18. Government’s thrust, programs, and policies

19. People’s interests

20. Idea Sites

21. Serendipity

22. Education and expertise

23. SCAMPER

Schumpeter outlined five forms of entrepreneurial opportunities: the introduction of new goods,
the introduction of a new method of production, the opening of a new market, the control of a
new source of raw materials or half-manufactured goods, and the creation of a new type of
industrial organization

Distinguish between an idea and an opportunity

What is a business idea?

 A business idea is a concept that can be used to make money.

 Usually it centers on a product or service that can be offered for money. An idea is the
first milestone in the process of founding a business.

 Every successful business started as someone’s idea.

 Although a business idea has the potential to make money, it has no commercial value
initially.
  In fact, most business ideas exist in abstract form; usually in the mind of its creator or
investor and not all business ideas, no matter how brilliant they may seem, would end up
being profitable.

 To find out about an idea’s chances in the market and check its innovative content and
feasibility, you need to conduct a plausibility check.

 A promising business idea must have the following characteristics:

 Relevant (must fulfill customers’ needs or solve their problems)

 Innovative

 Unique

 Clear focus

 Profitable in the long run

What is a business opportunity?

 A business opportunity on the other hand is a proven concept that generates on-going
income.

 In other words, a business opportunity is a business idea that has been researched upon,
refined and packaged into a promising venture that is ready to launch.

 While multiple business ideas may strike you on a daily basis, only few of them will be
profitable in the long run based on market research and feasibility study conducted.

 These few are the real business opportunities. An opportunity is regarded as one after it
has been found to meet the following criteria:

 It must have high gross margins.

 It must have the potential to reach break-even cash flow within 12 months – 36 months.
  The startup capital investment must be realistic and within the range of what you can
provide.

 You must have the strength and ability needed to drive the business to success.

 Your level of enthusiasm for the business must be very high.

 It must have the potential to keep on improving with time.

 It must have a low level of liability risk.

Idea vs. Opportunity?

From Idea to Opportunity

Successful entrepreneurs are good at turning ideas into opportunities. They act. They execute.
Turning an idea into an opportunity is a process. It takes time, resources and hard work. It helps
to think of it in terms of The Recipe for Business Success. You can take an idea, from a secret
pickling recipe to space tourism, and use the five elements of The Recipe to start turn it into an
idea.

1. Strategic Fit. To have an opportunity the market needs to want what you have and you need to
be able to provide it.
2. Business Plan. The process of writing a business plan actually helps develop an idea into an
opportunity. It forces you to ask and answer hard questions and explore your options.
3. Team. An idea rarely becomes an opportunity without a team. No individual has all the
knowledge and skills necessary to make the transformation.
4. Leadership. Once you have a team, the right leadership is essential to guide the development
from idea to opportunity.
5. Resources. The planning process will have given you a good idea of the resources that will be
required to turn your idea into an opportunity.

Factors to Use When Evaluating a Business Opportunity

Many of us are faced with business opportunities on a regular basis. Deciding what’s worth
embracing, though, can be difficult. Whether you’re starting a new business or whether you’re
trying to expand your current business with a new opportunity, it’s vital to know how to
appropriately evaluate it.

1. Market Size

 One of the most important factors when evaluating a business opportunity is market size.

 Do a little market research. Figure out if there is a market for the opportunity and how
big that market is.

 Before you move forward, you want to be sure the demand is there. You don’t need to
appeal to a massive market, but it does help if you understand the market.

 Additionally, knowing how engaged the market is and how likely they are to pay for
what’s being sold can help.

2. Relationships

 Does the business opportunity come with some relationships? For example, do you have
an “in” that can help you leverage the opportunity? If you know someone who is
technically minded, that can help you with certain aspects of the opportunity.

 What are your relationships with potential investors or customers? When you have more
relationships, the opportunity is likely to run smoother.

3. Ability to Manage Cash Flow

 You need to look at the ability to manage cash flow. Is there start-up funding for the
business?

 What about ways to keep funding the business each month.

 Figure out how the cash flow will be managed, and take a look at the business plan.
  You want to make sure that the business is likely to sustain itself after a period of time.

4. Management Skillsets

 What are the skillsets of those involved? If you are evaluating your own business
opportunity, you need to be honest about what you bring to the table, and what you need
to make up for.

 When looking for a business opportunity to invest in, or expand into, look at the
management. What skills do they have? Are they appropriate and diversified? Do you
trust the competence of the principals to make the opportunity a success?

5. Passion and Persistence

 Even if there is a bit of a talent deficit, it’s possible, in some cases, to make up for that
with passion and persistence. Are you working with people who will get the job done?

 Do you trust that they have the passion to make things happen? Will they approach
problems with a can-do attitude in order to solve them?

 When dealing with your own startup, you need to make sure you have the passion and
persistence for the opportunity. Will you push through even though things get a little
dark? If you’ve done your research, and you are confident in your team and your plan,
then being able to push through is vital.

7. NEW VENTURE PLANNING AND CREATION

Understand the importance of a market research and feasibility analysis (Presentation)

Process of determining the viability of a venture

What Is Business Viability?

 Business viability is measured by a business' potential for long-term survival and the
ability to sustain profits over a period of time.
 Business viability means that a business is (or has the potential to be) successful. A viable
business is profitable, which means it has more revenue coming in than it's spending on
the costs of running the business.

 If a business isn't viable, it's difficult to recover. The business would need to increase
revenue, cut costs, or both. Viability is closely linked to profit as well as solvency and
liquidity. 

 Creating a viable business is a two-part process. First, it means creating a marketing

strategy by knowing who you are, who you are selling to, and who else is selling to them.
Second, it means having your financial house in order. 

 To create a marketing strategy that will make your business viable, you'll need to have
this information: 

 Unique selling proposition: This is a critical factor in having a viable business. Being
unique keeps your business out in front of the competition. 

 Stable customer base: To be viable, you have to know who is going to buy your product
or service. That means researching to find out who these people are.

 Competitive advantage: Even if your product is unique and you know who you're selling
to, you must always consider the competition. Find out who your competitors are and
keep them in mind as you create your marketing strategy. 

 In addition to your marketing strategy, a continuing focus on your business' financial

status will help create a viable business. This includes:

 Cash stability: The most important factor that makes a business viable is that it has
enough assets (cash and other reserve funds) for day-to-day operations and to weather the
ups and downs that all businesses experience. Getting to cash stability doesn't happen
overnight. It means being frugal, not over-spending in anticipation of sales, and not
taking too much out of the business. 

 Continuing attention to your financial status: Having a viable business means always

knowing where your business is financially. Get good financial software, input all your
 business information regularly, and analyze it against your goals for cash stability and
other factor

Determining The Viability of Your Business Idea

How do you validate your idea to determine whether it can be a business success and help you
achieve your personal and professional goals as an entrepreneur? There is no magic formula, but
there are certainly ways that you can have a better sense of whether your idea has legs.

Taking the time to validate the viability of your idea is a critical step in being a good
entrepreneur.

You have a great business idea, and even got started on a business plan. But now you wonder: is
my upstart business model really viable? Here is an eight-point test to tell you if you should
forge ahead with your business idea.

1. Uniqueness

Before you worry about upstart financing, marketing or business location, you should begin with
an idea not just any idea, but one that's unique. What makes your business stand out from the
rest?

Uniqueness doesn't necessarily mean you have to invent something it just means that you have to
set yourself apart from the competition.

2. Upstart Funds

What will your start-up cost be? Every business has some expenses at the start, whether you're
paying for equipment, rent or just basic marketing materials. Make a realistic estimation; you'll
need these figures to obtain a loan or simply to budget if you're paying these expenses out of
pocket.
3. Customer

Who's your customer? Knowing who will be buying your product or service is vital to your
business success how else will you find your customers if you don't know who they are? Are you
catering to busy professionals, stay-at-home moms, college students, retirees? Define your
customer, even if you have to be broad at first. If you'll be renting a space, make sure the local
demographic fits this profile; the real estate agent will be able to provide you with that data.

4. Competition

Unless you're lucky enough to find a hole in the market, your business will have competitors.
Check them out, because your future customers surely will. Competitors can be a great resource
to you as an upstart; you can see how much they charge, what marketing strategy they use and
the location they chose. Ask yourself: how can I do better than the competition? Use your
uniqueness identified in step one to find ways to outdo your competitors.

5. Economic Mood

Your business' success can greatly depend on economic mood: imagine starting a luxury real
estate business at the start of the housing crisis. Gauge the state of the economy, and think of
how it relates to your upstart: where are consumers' mind right now? Are they cutting back,
spending more time at home, concerned about the environment? Even an economic downturn
can be an opportunity if you can meet the mood of the consumer. If your business idea doesn't fit
the current trends in spending, think of ways you can tweak it to tap into today's needs.

6. Timing

Timing is crucial, especially for an upstart. Opening an ice-cream shop in January is a bad idea;
opening Memorial Day can make it the place to be that summer. Do you expect your business to
be seasonal? If so, time your opening to the strongest consumer demand. You'll come out of the
gates with a flood of new customers, customers who will come back for more.

7. Marketing

Remember step three, where you identified your customer? Now you have to develop a
marketing strategy to make sure these potential buyers know about your great new business.
With today's internet capacity, marketing can be relatively low-cost, using online coupons and
mailing lists. Brainstorm ideas with friends and family, and look at what your competitors do to
get new business.

Steps to Guarantee Business Viability

How to transform a business idea into a viable business venture

Create a Business Road-Map

Do you have a clear plan of where your business is heading to in the next 12 months? Hence,
predict a bigger picture and draw a road-map for the next 1 to 3 years. This can simply be
achieved by creating your foretasted cash flows and profit and loss statements. If you need a
template to start, click here. “If you don’t know where you are going, any road will take you
there”.

Calculate Financial Forecasts

Does the business plan indicate how much revenue will flow into the business to cover the costs.
How about future cash availability?

Plan Your Working Capital

Do you have enough cash-on-hand to pay the bills, cover emergencies and support future
investments and growth? So, if the business always struggles to sustain enough cash, maintain a
detailed cash flow to have the matters under control.

Maintain a Business Budget

Do you follow a well-structured budget that emphasizes on your business priorities? A solid
budget enables your business to stay on track and be sustainable. 

Track Your Customer Satisfaction

Do not forget that customers are the life blood of your business. So, what plans do you have to
capture your customer satisfaction and to retain the profitable customers?

Lower your Receivables and Analyze Debtors

What are your invoicing and collection policies? Do you carry old aged receivable? If so, they
can put your cash availability at a greater risk. Consider reviewing your receivables on a weekly
basis. Check out these simple steps on how to manage your receivables.

Slow Down your Supplier Payments Ethically

How do you handle the supply chain and how is your relationship with the supplier? Take
advantage of good relationships and ask for discounts and extended payment periods.

Have an Exit Strategy

What would be the end game? The exit strategy should be a cornerstone of your business
planning as it will determine how you carry the business into the future. “It is much better to
over- deliver than to fall short”

Be aware of the components of a business model and a business plan

Business model

 A business model describes the rationale of how an organization creates, delivers, and
captures value, in economic, social, cultural or other contexts.

 The process of business model construction and modification is also called business
model innovation and forms a part of business strategy.

 A plan for the successful operation of a business, identifying sources of revenue, the
intended customer base, products, and details of financing.

The key components of any business model are: 

1. High-level vision: A basic description of your business model. Establish business

processes. Before your business can go live, you need to have an understanding of the
activities required to make your business model work. Determine key business activities
by first identifying the core aspect of your business’s offering. Are you responsible for
providing a service, shipping a product or offering consulting?

2. Key objectives: The top goals and how you plan to measure them.

3. Customer targets and challenges: The types of customers who will purchase your
solution, along with their exact pain points. Identify your specific audience.Targeting a
 wide audience won’t allow your business to hone in on customers who truly need and
want your product or service.

4. Solution: The primary way that you solve your customer’s problems.

5. Develop a strong value proposition. The core elements of your solution that make it
unique and differentiated (and ultimately valuable). How will your company stand out
among the competition?

6. Pricing: How you will package your solution and what it will cost.

7. Messaging: A clear and compelling message that explains why your solution is worth
buying.

8. Go-to-Market: The channels that you will use to market and sell to your customers.
Create a demand generation strategy.

9. Investment required: The costs required to make the solution a success.

10. Growth opportunity: The ways that you will grow the business, including key
partnerships if you need them. Determine key business partners. No business can function
properly (let alone reach established goals) without key partners that contribute to the
business’s ability to serve customers. When creating a business model, select key
partners, like suppliers, strategic alliances or advertising partners.
 11. Record key business resources: What does your company need to carry out daily
processes, Document essential business resources to ensure your business model is
adequately prepared to sustain the needs of your business. Common resource examples
may include a website, capital, warehouses, intellectual property and customer lists.

Business plan

 A business plan is a formal written document containing the goals of a business, the
methods for attaining those goals, and the time-frame for the achievement of the goals

 A business plan lays out a written roadmap for the firm from marketing, financial, and
operational standpoints

Components of a Good Business Plan

Whether you’re planning to open a shop that makes the best coffee or you want to sell eco-
friendly office supplies, you’ll need to explain why your business is necessary and how it’ll
differ from its competitors. That’s where your business plan comes in. It provides investors,
lenders and potential partners with an understanding of your company’s structure and goals.

1. Executive Summary

Your executive summary should appear first in your business plan. It should summarize what
you expect your business to accomplish. Since it’s meant to highlight what you intend to discuss
in the rest of the plan, you write this section last.

A good executive summary is compelling. It reveals the company’s mission statement, along
with a short description of its products and services. It might also be a good idea to briefly
explain why you’re starting your company and include details about your experience in the
industry that you’re entering.
2. Company Description

A company description includes key information about your business, goals and the target
customers that you want to serve. This is where you explain why your company stands out from
other competitors in the industry and break down its strengths, including how it offers solutions
for customers, and the competitive advantages that will give your business an edge to succeed.

3. Market Analysis

This is where you show that you have a key understanding of the ins and outs of the industry and
the specific market you plan to enter. Here you will substantiate the strengths that you
highlighted in your company description with data and statistics that break down industry trends
and themes. Show what other businesses are doing and how they are succeeding or failing. Your
market analysis should also help visualize your target customers, how much money they make,
what their buying habits are, which services do they want and need, etc. Above all, the numbers
should help answer why your business can do it better.

4. Competitive Analysis

A good business plan will present a clear comparison of your business vs your direct and indirect
competitors. This is where you prove your knowledge of the industry by breaking down their
strengths and weaknesses. Your end goal is show how your business will stack up. And if there
are any issues that could prevent you from jumping into the market, like high upfront costs, this
is where you will need to be forthcoming. Your competitive analysis will go in your market
analysis section.

5. Description of Management and Organization

Your business must also outline how your organization is set up. Introduce your company
managers here and summarize their skills and primary job responsibilities. An effective way
could be to create a diagram that maps out your chain of command.
Don’t forget to indicate whether your business will operate as a partnership, a sole proprietorship
or a business with a different ownership structure. If you have a board of directors, you’ll need to
identify the members.

6. Breakdown of Your Products and Services

While your company description is an overview, a detailed breakdown of your products and
services is intended to give a complementary but fuller description about the products that you
are creating and selling, how long they could last and how they will meet existing demand.

This is where you should mention your suppliers, as well as other key information about how
much it will cost to make your products and how much money you are hoping to bring in. You
should also list here all relevant information pertaining to patents and copyright concerns as well.

7. Marketing Plan

This is where you describe how you intend to get your products and services in front of your
target customers. Break down here the steps that you will take to promote your products and the
budget that you will need to implement your strategies.

8. Sales Strategy

This section should answer how you will sell the products that you are building or carry out the
services that you intend to offer. Your sales strategy must be specific. Break down how many
sales reps you will need to hire and how you will recruit them and bring them on board. Make
sure to include your sales targets as well.

9. Organizational Structure

The organizational structure of the company is an essential element within a business plan
because it provides a basis from which to project operating expenses. This is critical to the
formation of financial statements, which are heavily scrutinized by investors; therefore, the
organizational structure has to be well-defined and based within a realistic framework given the
parameters of the business.
10. Financial Projections

This final section breaks down the financial goals and expectations that you’ve set based on
market research. You’ll report your anticipated revenue for the first 12 months and your annual
projected earnings for the second, third, fourth and fifth years of business. If you’re trying to
apply for a personal loan or a small business loan, you can always add an appendix or another
section that provides additional financial or background information. The three common
statements are a cash flow statement, an income statement and a balance sheet.

Understand the importance of start-up capital and sources of finance in venture creation

Establishing Start-up Capital in Your Business

Raising start-up capital is an important part of developing your own business as an entrepreneur.
Once you are committed to the idea of your company you will need funding to get started. This
funding is called startup capital. Startup capital is the fuel that feed the fire and every business
needs capital. There are many factors which go into to determining the necessary start-up capital
and we will discuss some of them as well as start of financing and methods to restart of capital.

As an entrepreneur it may be difficult to find the level of financing you need as a startup but
there are several options. New businesses most often meet resistance because of the risk involved
in their funding. The ability for you to obtain financing is based on your diligence and creativity.

As a business entrepreneur you are responsible for developing your strategy, a business plan, and
developing your own feasibility analysis. Your strategy for raising start-up capital is the plan of
action you need to develop the right marketing, design, and production for your product or
service. Your strategy will be based on your business vision, personal values, goals, business
model, and the market definition.
Why is startup capital important?

The question “why do you need startup capital” is a great place to start, before you begin the
process of seeking capital. There are plenty of businesses that don’t need any serious startup
capital.

Sources of finance in venture creation

Friends and Family

It's very common that new businesses receive startup capital from their friends and family. This
is a very easy way to receive funds, but there can be many drawbacks.

Personal savings

When starting a business, your first investor should be yourself either with your own cash or
with collateral on your assets. This proves to investors and bankers that you have a long-
term commitment to your project and that you are ready to take risks

Retained earnings

Profits that a company decides to keep and generate back to business

Share capital

Share capital refers to the funds that a company raises from selling shares to investors
Loan capital

Bank loans are the most commonly used source of funding for small and medium-
sized businesses. Consider the fact that all banks offer different advantages, whether it's
personalized service or customized repayment. It's a good idea to shop around and find the bank
that meets your specific needs.

Grants

Government grants and subsidies. Government agencies provide financing such as grants and
subsidies that may be available to your business

Venture capital

Venture capitalists pledge to invest in a company in exchange for equity, or a stake in the
business, and a portion of the profits down the line.

Business angels /Angel Investors

An angel investor is a high net worth individual who will invest in your company in exchange
for partial ownership

Angel Groups

This is a group of angel investors who pool their money to share deal flow. Angel groups can do
priced rounds, and if a high enough percentage of the group is interested in your business, they
can lead your deal.

Business incubators
Business incubators (or "accelerators") generally focus on the high-tech sector by providing
support for new businesses in various stages of development. However, there are also local
economic development incubators, which are focused on areas such as job creation, revitalization
and hosting and sharing services. Commonly, incubators will invite future businesses and other
fledgling companies to share their premises, as well as their administrative, logistical and
technical resources.

The Importance of Funding for Business

 Money as a Barrier to Entry.

 Funding for Market Research

 Money for Product or Business Development

Understand the importance of a business model and a business plan.

The importance of a business plan

 To help you with critical decisions

 To avoid the big mistakes

 To prove the viability of the business

 To set better objectives and benchmarks

 To communicate objectives and benchmarks

 To provide a guide for service providers

 To secure financing

 To better understand the broader landscape

 To reduce risk
8. MANAGING AND GROWING THE VENTURE

Understand the stages in the venture life cycle

The Life Cycle of Entrepreneurial Ventures discusses topical issues in entrepreneurship

organized around the various stages of venture creation, development and performance. As
shown in fig, the traditional life-cycle stages of an enterprise. These stages include new venture
development, startup activities, growth, stabilization, and innovation and decline.

New-venture development

This is first stage, consists of activities associated with the initial formulation of the venture. This
initial phase is the foundation of the entrepreneurial process and requires creativity and
assessment. In addition to accumulation and expansion of resources, this is a creativity,
assessment and networking stage for initial entrepreneurial strategy formulation. The enterprise’s
general philosophy, mission, scope and direction are determined during this stage.

Start up activities

This is second stage, encompasses the foundation work needed for creating a formal business
plan, searching for capital, carrying out marketing activities and developing an effective
entrepreneurial team. These activities typically demand on aggressive entrepreneurial strategy
with maximum efforts devoted to launching the venture.

Growth

This stage often requires major changes in entrepreneurial strategy. Competition and other
market forces call for the formulation of strategies. This growth stage presents newer and more
dominant problems than those the entrepreneur faced during the startup stage. This growth stage
is a transition from entrepreneurial one person leadership to managerial team oriented leadership.

Business stabilization

This stage is a result of both market conditions and entrepreneurs efforts. During this stage a
number of developments commonly occur, including increased competition, consumer
indifference to the entrepreneurs good(s) or service (s), and saturation of the market with a host
of “me too” look alike. Sales begin to stabilize and the entrepreneur must begin thinking about
where the enterprise will go ever the next three to five years.
Innovation or Decline

The last stage, firms that fail-to innovate will die. Financially successful enterprises often will try
to acquire other innovative firms, thereby ensuring their own growth. Also, many firms will
work on new product/service development in order to complement current offerings. All of
venture’s life cycle stages are important strategic points and each requires a different set of
strategies

Key Issues about the Venture Cycle

 There are static and dynamic forces which need a special attention of the entrepreneur

 Entrepreneur needs to manage for changes and not changes

 The growth stage of the venture is more sophisticated with competition and dilemmas

 At a certain stage, you need to decide whether to do more innovation or allow decline

Limitations of Life Cycle Model

 Growth is rarely as smooth as the curve of the graph suggests. It is more likely to
represent spikes of growth and contraction rather than rounded peaks. For example many
small businesses have relatively few customers, so that the addition of one new
significant client will lead to a sudden growth spurt. Conversely, the loss of one large
client can significantly shrink the size of the business.

 The transition from one stage to another does not necessarily take place in the order
predicted by the model. Economic or trade cycles outside the control of the firm may
contribute substantially to the growth or decline of an enterprise at any time irrespective
of the stage of development. The economic downturn of 2008/9 forced a large number of
businesses to decline in size, whatever stage in their development they had reached.

 The contention that the transition from one stage to the next is triggered by a particular
kind of crisis has not been tested through empirical research. The development of an
enterprise is likely to be subject to many different internal and external variables so that
 isolating one primary cause for the evolution of a firm from one stage to another is an
over simplification of a very complex process.

 Many enterprises reach a stable size and never make the transition out of this phase. Once
they have developed a business to a stage of survival, life-style entrepreneurs will have
little motivation to grow it further. Some take deliberate steps to avoid growth which they
see as threatening the very independence they sought when they created the enterprise

Conclusion

“ALL STAGES ARE STRATEGIC POINTS OF THE VENTURE HENCE A NEED FOR
SPECIFIC STRATEGIES FOR EVERY STAGE!”

Understand how E-Commerce can aid in the operations and growth of the venture.

 Ecommerce is a huge part of the economy and is vital to businesses that sell their
products or services online.

 Ecommerce gives businesses the ability to reach more customers than traditional retail
reaches.

 With so many people making their purchases online, It is the fastest-growing retail
market.

 Ecommerce offers consumers a more convenient way to shop for the products or services
they need without having to visit a retailer's physical location to make a purchase.

Advantages of e-commerce

There are many advantages of e-commerce. Some of these advantages are:

  Increasing reach. E-commerce allows small businesses to reach a broad range of
consumers. It allows all sellers to be a part of a global marketplace.

 More jobs. As these small e-commerce businesses grow, they employ more people.

 Lower operational costs. E-commerce also helps small businesses to grow because it can
have fewer operational costs. Without having to pay rent on a shop, many small business
owners can afford to run their e-commerce shops.

 Easier and more convenient shopping. One of the major advantages of e-commerce is that
it allows customers to quickly find and get what they're looking to buy. It also offers
consumers the convenience of not needing to leave their homes to get what they need,
which saves time.

 Allows comparison shopping. Consumers also gain power through the experience of

online shopping. They can research and compare products and companies easily.
Websites can offer things like detailed product descriptions and consumer reviews that
can help consumers make decisions wisely.

Disadvantages of e-commerce

 While there are plenty of advantages to the growth of ecommerce, there are some
disadvantages. Limited face-to-face interaction with customers

 One of the disadvantages of e-commerce is that business owners have more limited
relationships with their clients. Since their clients are typically on the other end of a
computer, it can be more difficult to build meaningful relationships, something that is
important to many business owners and customers.

 Bandwidth challenges

 Bandwidth and reliability can vary from country to country, so it can be challenging if
you are targeting or wanting to work in a particular region.

 Shifting retail jobs

 Another disadvantage of e-commerce is that it can cause a shift in retail jobs. While the
employers of small businesses that sell on the internet may be hiring as a result of their
success with e-commerce, traditional department stores may experience some job loss as
a result. Retailers have to sell online to stay competitive, but some have been more
successful at that than others.

 Rapidly changing trends

 This field is changing remarkably quickly. It can be challenging to keep up with trends
and technology in such a rapidly changing field.