Chapter 2: Entrepreneurship

Origin & Definition

• "Entrepreneur" from French: entre (to enter) + prendre (to take).
• Coined by Richard Cantillon; later expanded by J-B Say & British economists.
• Core idea: individual enters business, reallocates resources, pursues profit through identified market gaps.

Push vs Pull Factors

• Push (forced into entrepreneurship):
  • Unemployment (SA: 34\% - 43\% in 2020)
  • Job insecurity; no formal training; employer disagreement.
• Pull (attracted to entrepreneurship):
  • Independence, self-actualisation, recognition, wealth creation.

Key Entrepreneurial Characteristics

• Opportunity seeking
• Creativity & innovation
• Risk tolerance (calculated)
• Determination & perseverance
• Self-reliance & networking
• Flexibility (planning, organising, leading, control)
• Motivation (internal locus of control; aim for Maslow’s self-actualisation)

Entrepreneurial Venture vs Survival Business

• Innovation: continuous product/service improvement, tech adoption.
• Growth potential: expand customer base, new markets.
• Sound, measurable objectives (e.g. market entry, share growth).

Types of Entrepreneurs

• Techno-entrepreneur
• Social-entrepreneur (often NGO-based)
• Tourism entrepreneur
• Enviro-entrepreneur
• Emerging (previously disadvantaged, PPP/tenders)
• Informal (hawkers, street markets)
• Youth entrepreneurs (PPP support)

Paths to Entrepreneurship

• Starting a new business: high setup cost, legal formation, higher risk.
• Buying an existing business: assess skills fit, financials, contracts, goodwill, location.
• Buying a franchise: proven brand, systems; pay for rights.
• Joining/expanding a family business.

Entrepreneurial Process

1. Identify & evaluate opportunity
   • Conduct feasibility (workability) & viability (profit/ROI) studies.
   • Use research instruments; analyse macro & market factors; perform SWOT.
2. Assess resources required (finance, materials, machinery, skills)
   • Build the right team (Timmons Model: match team size/skills to opportunity, minimise input, maximise output).
3. Develop business plan
   • Detail venture; show resource needs; demonstrate competitive advantage (price, time, convenience, differentiation, customer experience).
4. Manage venture through life-cycle stages.

Business Life Cycle & Typical Challenges

• Incubation (pre-birth): concept testing, resource mobilisation.
• Start-up: production begins; break-even delays; marketing costs.
• Breakthrough: rapid growth; strain on cash flow, labour, production, distribution.
• Maturity: stable market share; need for efficiency & incremental growth.
• Decline/Rejuvenation: prevent obsolescence via redesign, new markets, relocation; otherwise exit.

Essential Takeaways

• Entrepreneurship bridges market gaps through innovation & risk-taking.
• Success hinges on matching opportunities with resources & skills, backed by sound planning and adaptability.
• Continuous innovation and proactive management are vital to avoid decline and sustain growth.