LESSON 2: CHARACTERISTICS OF 7 Characteristics of Entrepreneurs

ENTREPRENEURS
1. Reasonable Risk-Takers - A risk situation exists
There are several definitions or meaning of when results are not certain. Either it is success or
entrepreneur: failure. In business, it is profit or loss.

1. Cantillon defines an entrepreneur as one who 2. Self-Confident - Entrepreneurs are optimistic

bears uncertainty, buys labor and materials, individuals or positive thinkers. They always think of
and sells products at uncertain prices. He is one success. Such deep faith drives them to work more
who takes risks and makes innovations in the enthusiastically and persevere to reach their goals.
factors of production.
3. Hardworking - Thomas A. Edison said that
2. In the French concept, an entrepreneur is an success is 99 percent perspiration and 1 percent
adventurer, undertaker, and projector. His inspiration. They enjoy challenges and difficult
function is to supply and accumulate capital. tasks, and they love their work. Thus, their being
hardworking is not a sacrifice. When people love
3. To Schumpeter, an entrepreneur is an innovator. their work, it is no longer work.
He does new things or does things in a new
way. He supplies new products; makes new 4. Innovative - They create new products or
techniques of production; discovers new markets; services, new methods of production, new markets,
and develops new sources of raw materials. and new sources of raw materials. They love to
explore the unknown and to blaze new paths of
4. Peter Drucker says that an entrepreneur always progress.
searches for change, responds to it, and
exploits it as an opportunity. 5. Leadership - They are people who are
task-oriented. They are effective planners,
5. Economist, explains that an entrepreneur is one organizers, implementors and they are achievers.
who shifts economic resources from an area of
lower productivity to an area of higher Essential leadership qualities:
productivity and greater yield. - Selfless dedication
- Integrity
6. The American Heritage Dictionary defines an - Conviction
entrepreneur as a person who organizes, - Enthusiasm
operates, and assumes the risk for business - Courage
ventures. - Hard-work
- Purpose and vision
7. The pure entrepreneurs are those who launch
their own ventures from scratch. They develop 6. Positive Thinkers - Dr. Charles Flory, a noted
scarce resources into successful business by their American psychologist, said that wealth does not
instinct for opportunities, to gather the necessary always come to the most intelligent or to the most
resources and to take advantage of them, and to ambitious individuals, but to those individuals who
initiate appropriate action to ensure success. think money.

8. Geoffrey Mereedeth, author of The Practice of 7. Decision-Makers - They always make decisions
Entrepreneurship, entrepreneurs are people who on how to improve their products, how to create
have the ability to see and evaluate business new markets, how to increase consumer
opportunities, gather the necessary resources and satisfaction, or how to maximize profits.
to take advantage of them, and to initiate
appropriate action to ensure success.
6 Distinct Phases of Decision-Making: MANAGERIAL SKILLS

1. Identifying the problem 1. ABILITY TO CONCEPTUALIZE AND PLAN

2. Gathering the data about the problem - The entrepreneur must view all the aspects of the
3. Analyzing the data business, such as product, price, cost inventory,
4. Formulating alternative solutions etc., in a related and coordinated manner.
5. Selecting the best solutions - He must be able to plan for the total operation of
6. Implementing the solution/decision the business.
- His ability to foresee future problems of his
Peter Drucker’s Criteria of Choosing the Best business is an excellent asset.
Solution:
1. Presence of risk 2. ABILITY TO MANAGE OTHERS
2. Economy of effort - The entrepreneur must be able to organize work
3. Time factor properly so that these employees can perform their
4. Availability of resources jobs efficiently and effectively.
- Good human relations and communications are
7 Concept of the Filipino Entrepreneurs very important for the entrepreneur

Self Reliant - He relies principally on his own merit 3. ABILITY TO MANAGE TIME AND TO LEARN
and work. His self-reliance founded on hard work. - The entrepreneur is a generalist. Especially when
the business is still small, the owner does
Risk Taker - He rises to a challenge and transfers everything: clerk, salesman, and manager. In view
problems into opportunities. Despite his setbacks of the various functions of the entrepreneur, he/she
and mistakes, he is willing to start all over again. should be an expert on time management.
- A real entrepreneur does not actually stop
Industrious - He/she has a strong sense of pride in learning.
the workmanship of a product. Quality conscious in
all the components of his/her business 4. ABILITY TO ADAPT TO CHANGE
A businessman who refuses to adapt his operations
Humble - Where there is a chance to earn, no to changing needs and taste of consumers is most
matter how lowly the task, he is at work patiently, likely to fail. Entrepreneurs, being innovative or
unmindful of his social status. creative, quickly respond to changes for
comparative advantage.
Helpful - He thinks of others, especially those
working for him, and of the opportunities for Small Business is Beautiful:
advancement he can provide for them. - Small business is better than big business,
especially in a poor country. The poor masses
Creative - Never satisfied with things as they are, cannot start with a big company. Although small
he continues to improve, trying new and better business has shortcomings or disadvantages, it is
ways of doing things. most relevant to poor or developing economies like
the Philippines.
Happy - The joy of this entrepreneur lies in the - Business is defined as an organized effort of
satisfaction of a customer, whom he puts first over individuals to produce and sell goods and services
everybody else. to satisfy society's needs The primary objective of
business is to acquire profit. To organize a business
the entrepreneur must combine four types of
productive resources: human, financial, material,
and informational
Two kinds of Small Business
7. Capital comes from the owner or small
1. A very small business where the owner is the group.
principal worker, and he/she employs one or more - If ever the business is funded by a small group, it
assistants. This is the micro business. comes from relatives and close friends.
2. The bigger small business where the owner
mainly directs the work of the employees. 8. The area of operation is small.
- This means the business is community-based.
Common Characteristics of Small Business The owner and the employees live in the
community where the enterprise is located.
1. It is privately owned.
2. It has few or no layers of management. 9. The size of the enterprise is small in relation
3. Generally, insufficient it has resources to to the industry.
dominate its field of business. - For example, the shoe industry is a large one. But
there are very many stores of shoes. Clearly, one
Features of a Small Business shoe store cannot dominate the market for shoes.

1. Low in capital but high in labor intensity. Differences Between Big and Small Enterprises:
- Use labor instead of machines in their business
operations 1. Small businesses as a group change through a
cycle of births and deaths. In the case of big
2. Efficient in specialized skill or services. enterprises, change is through expansion or
- Provide services that require specialized contraction.
knowledge for specific needs.
2. Small business risk or reward estimate is done
3. Succeeds in small, isolated, or overlooked by the individual owner who either gets profit or
markets. loss, while in large corporations, the risk or
- Markets are small due to the few residents, and a reward calculation is done by
small business is viable. Clearly, giant corporations employee-managers.
cannot survive in small towns where demand is
limited. 3. Small business has little or no economic
power. On the other hand, big business has
4. Often operates in unstable markets. tremendous influence on the economy,
- Big corporations conduct market or feasibility including the political sector.
studies while small ones are not afraid to
experiment. Can easily respond to changing 4. Small business serves markets which big
economic conditions. business does not like to serve or cannot serve
effectively.
5. Closer to the market place.
- They get first-hand information about consumer Advantages of the Small Business
tastes and preferences. Such an advantage 1. Personalize relationships with customers and
enables the small business to respond quickly to employees
the needs of consumers. 2. Flexibility in management
3. Government incentives
6. Owners of small businesses are also the 4. Simple record keeping
managers. 5. Independence
- Owner-manager employs his wife and children.
If the business grows, the owner hires more
employees, usually relatives or townmates.
Disadvantages of the Small Business 4. They fill needs of Society and Big
1. Difficulty of raising capital Businesses.
2. Risk of failure Big enterprises, because of their large-scale and
3. Limited management skills mass production, are not willing or are not able to
4. Lack of opportunities for employees satisfy the special needs of smaller groups of
consumers, while small producers or sellers can
Reasons Why Small Businesses Fail: profitably fit their products and services to the
- Lack of experience needs of smaller groups of consumers.
- Lack of money Wrong location
- Mismanagement of inventory The Search for Business Opportunities
- Poor credit practices - Business opportunities are everywhere as long as
- Poorly planned expansion there are people with money, and who are willing to
- Unsound or too little analysis in choosing the satisfy their needs. However, there are more
business business opportunities for individuals who are
creative, resourceful, and risk-takers because they
create opportunities instead of waiting for
opportunities to come. These are the real
Economic Contribution of Small Businesses: entrepreneurs.

1. They introduce Innovation. Factors to take into account in searching for

Invention and innovation are the key factors in business opportunities:
economic development. These are responsible in - Resources
reducing time, labor and cost of production. Based - Skills
on the U.S. study, more than 50 percent of the - Interest
major technological advances come from individual - Economic needs
small companies.
Here are examples of innovations contributed by Entrepreneurial Activities
small individual enterprises; - Business activities are concentrated in cities and
- ball-point pen - FM radio other urban communities. The primary reasons are
- instant camera - penicillin that more buyers, more incomes, and more
- Xerox - zipper facilities are located in the said heavily populated
- disposable razor - paper clip areas.
- Entrepreneurs explore market opportunities.
- Entrepreneurs offer better quality, lower prices,
2. They Create Employment. and more convenience.
Small businesses are the main providers of jobs. - Entrepreneurs create several marketing
Almost all non-governmental employees come from innovations of goods and services, like the express
small businesses. teller of banks, the 24-hour service of some grocery
stores, and home delivery service of food items

3. They Provide Competition. Business Opportunities in Rural Communities

In their own particular ways, small businesses have - Our rural areas are abundant with cheap raw
a combined competitive force against bigger firms. materials and labor force. Yet these are
In like manner, this is the concept of cooperatives. underdeveloped and have greatly contributed to
By pooling their small resources, they acquire poverty in the rural communities. Many Rural folks
economies of scale. Therefore, they can compete are unemployed or underemployed. This results in
with big enterprises. low-level income among the people.
- The productive resources in the rural sector are 3. Capital - Money is very important in putting up a
sleeping business potentials. Our raw farm business enterprise. The availability of funds should
products can be a good source of agribusiness. fit the type of business to be organized. One who
Other raw materials can be transformed into toys, has limited capital should start with a micro
hats, bags, slippers, decors, etc. business.

Senate President Neptali Gonzales 4. Skills - The entrepreneur should have the proper
- Learned during his political campaigns throughout skills in the business he/she is going to undertake.
the country that there are entrepreneurs who have It is not advisable to depend completely on the
succeeded in selling their products to foreign services of assistants or employees.
markets like:
5. Suppliers of Inputs - there are steady suppliers
• Davao is exporting cut flowers to Singapore of raw materials and other inputs of the business. If
• Artisans in Cebu have elevated local stonecraft to production is delayed due to a lack of materials,
world-class status then it is not good for the businessman.
• Pina-cloth weavers in Aklan have attracted the
attention of international fashion designers 6. Manpower - The success of any business
• The goldsmiths of Bulacan have created jewelry enterprise primarily depends on the efficiency of its
that is admired even in places as far as Dubai employees. In putting up the business, make sure
• And the automotive tinsmiths of Pampanga get that experts or trained personnel are available.
job orders from California
7. Technology - Innovation is the product of
Resources in the Community technology. Entrepreneurs should be aware of the
- Business opportunities and successes greatly presence of technology, particularly new
depend on people. The efforts of an entrepreneur technology. This is an opportunity for them to avail
are useless if he does not get the full support and of such technology to improve their products or
cooperation of efficient workers and others who are services, or introduce new ones in the markets.
linked with the operations of the business
enterprise. SWOT Analysis (Strengths, Weaknesses,
Opportunities, and Threats)

- A tool for evaluating the strengths, weaknesses,

opportunities, and threats associated with a
7 Factors/ Resources have to be Evaluated in particular product or service.
Discovering Business Opportunities

1. Markets - The number of prospective buyers, the

presence of competitors, and the prices and the
quality of goods and services must be analyzed.

2. Individual Interest - The business interests of (Kulang ‘to dito sa SWOT pg.39 ‘til dulo wala
individuals vary. There are those who are interested basahin niyo nalang dun, ‘di ko na nilagay since
in agriculture. Others are inclined to industries. wala sa reviewer para sa Recit.)
Interest should have many business opportunities.
For example, if there is a good business
opportunity for poultry or piggery, one should be
interested in such fields.