1.

1 Factors affecting entrepreneurship development are explored as per

principles of Entrepreneurship
Entrepreneurship is influenced by various factors:
 Economic development.
 Culture.
 Technological development.
 Education.
 Political factor
 Legal factor
 Capital
These conditions may have both positive and negative influences on the emergence of
entrepreneurship.
a) Economic factors: Economic environment exercise the most direct and
immediate influence on entrepreneurship. These factors include:
 Capital.
 Labor.
 Raw materials.
 Market.
 Infrastructure.
b) Social factors: These can go a long way in encouraging entrepreneurship. In fact
it was the highly helpful society that made the industrial revolution a glorious
success in Europe. Main components of social environment include:
  Caste factor.
 Family background.
 Attitude of the society.
 Education.
 Cultural values.
c) Technological factors: Technology has influenced entrepreneurship development
through innovations and use of internet to gather new and existing information.
d) Education: Many entrepreneurial theorists have propounded theories of
entrepreneurship that concentrate especially upon psychological factors. They may
include:
 Need achievement.
 Withdrawal of status respect.
 Motives.
e) Political and government changes in government policy can have a very huge
effect on the business in question. Example the tobacco industries have been on
forced to put warning labels on their product and lost the right to advertise on the
television.

TOPIC 2. DEMONSTRATE KNOWLEDGE OF ENTREPRENEURSHIP

Definition of key terms

Entrepreneurial traits: These refer to characteristics of entrepreneurship and are always

possessed by the entrepreneurs. All the entrepreneurs possess these characteristics and they
distinguish them from the other persons.

Entrepreneurship culture: It is the behavior that is possessed by most of the individuals.

Are also the attributes, values, beliefs, and behavior in which an individual learns from one
generation to another i.e. behaviors of carrying out entrepreneurship activities e.g. starting up
a business.
Self-employment: This is where one is his/her own boss, is in full control of the business,
makes all decisions affecting the business and enjoys all the profits of the business or incurs
all the losses of the business.an individual can even hire employees to work for him or her.
National Development: This explains the benefits accrued from entrepreneurship to the
nation. It may include benefits like revenues, employment, cohesion, infrastructure [lights
roads, electricity] increased imports and exports among others.

2.1 Distinguish between entrepreneurship and self-employment

To distinguish means recognizing the differences between two aspects in this case
entrepreneurship and self-employment.

Table 8. Differences between entrepreneurship and self-employment

Entrepreneurship Self-employment.
Doesn’t have to physically be at the The individual is very hardworking and
workplace, they have partners and should be at the workplace for them to
employees who run the entire business for make money hence rigid.
them hence flexible.
Emphasizes on creating opportunity even Emphasizes on maintaining a secure
though there may be no actual work or no income and remain working – not tolerant
income. Hopes for growth and expansion, is of great financial risk.
tolerant of great risk i.e. he is concerned
about risk and reward
Has invested in different businesses. Normally have one business
Not everyone can be an entrepreneur, it is a Anyone can be self-employed because
title bestowed upon you. To becomes an anyone can have a business idea, register a
entrepreneur when people see you as company and try to make the business
creative, inspired and overcome challenges work.
One cannot start a business as entrepreneur One can starts as self-employed and not as
i.e. I am self-employees, but one day I an entrepreneur.
strive to be an entrepreneur.
You can have people go are working with You can have people working for you i.e.
you and not just under you i.e. partners. employees.
The business outruns the existence of the If one decides to retire, the business dies as
owner because, workers are working with well because workers are working for him,
him hence understand vision, mission and hence just run the business of the owner,
value of the business. they do not understand the mind of the
owner.
 2.2 The importance of self-employment
To analyze means to interpret and explain in detail the importance of self-employment based
on business procedures and strategies. The importance includes:
i. Being your own boss
One is control of all key decisions affecting his business because it is your business you have
started. You work for your clients. Clients state what results they expect from you, but they
do not direct your work. You are your own boss therefore you decide when and where and
how to work to get the job done.
ii. Flexibility
To decide hours of operation, working conditions, business location. You do not have to go
where your employer forces you to do work.
iii. Harmony with your life
If you are working for yourself, chances are you will be doing ok that you enjoy hence self-
fulfillment.
iv. Income generating
If all goes well and you are making money, chances are you will make more money than
you did while working for someone else.
v. Profitable
You get to enjoy all the business profits. If your business is doing well, you may not have to
share proceeds with anyone else. The fruits of your labor will all be yours because you own
the vineyard.

2.3 Requirements for entry into self-employment

i. Identify business structure: Determine whether your business will operate as a
sole proprietorship or partnership. You can also set your business up as a limited
liability company or as a corporation.
ii. Register your business: Apply to receive employer identification number. Also
register your business with state and local tax offices.
iii. Licenses and permits: Seek for licenses and permits required to operate a business.
iv. Record keeping: Create and maintain accurate records. Items to list in your records
are details of customers, dates sales or purchases, amount of sales, taxes collected
on sold items and unsold.
v. Taxes – be aware of the taxes that apply to the business to ensure you are fully
compliant.
vi. Will you enjoy your work? – You can only run a business you are passionate
about because it brings happiness that satisfies your life goals. You will have to run
a business that fill the sense of your purpose.
2.4 The role of an Entrepreneur in business
 Initiator: One who initiates the process of creating a business by coming up with
the idea for the business and planning out how to turn that idea into a reality.
 Risk taker: He is the biggest risk taker in business because he is the one who
invests capital and accountable in the face of failure.
 Allocator: He allocates various resources in the organization. These resources
include; manpower, machines, funds, etc.
 Forecasting: He should be prepared on how to deal with various forecast changes
such as strikes, machine breakdowns, budget cuts, legal policies, political or social
unrest, technological advancement etc.
 Adhering to legal norms: To ensure the enterprise adheres to legal norms and
policies. Not pertaining to this can mean serious legal consequences.
 Reduces risk: Best achieved by bringing people that can help the organization
grow. These people can be stakeholders or investors that have stake in the
company.

2.5 The contributions of entrepreneurs to national development

 Entrepreneurs spur economic growth. New products or services created by
entrepreneurs can produce a cascading effect, where it stimulates relate businesses
or sectors that need support the new venture, furthering economic development.
 Boosts national income. Entrepreneurial ventures help generate new wealth,
additionally increased employment and higher earnings contribute to better
national income in the form of higher tax, revenue and higher government
spending.
 Entrepreneurs create social change. Through offering unique goods and services,
entrepreneurs break away from tradition and reduce dependence on obsolete
systems and technologies.
 Community development. Entrepreneurs regularly nurture venture by other
likeminded individuals. They also invest in community projects and provide
financial support to local charities.
 Conservation of foreign exchange – You are able to produce goods hence no need
to import therefore contributing to conservation of foreign exchange.
 Promotion of entrepreneurial culture – They encourage individuals to set up and
manage their business and this reduces importation of goods.

2.6 Entrepreneurship culture in Kenya

 Entrepreneurship culture in Kenya is influenced by the following factors:
 Availability of funds
 Modern technology
 Availability of developed infrastructure
 Appropriate knowledge and skills
 Appropriate training
 Government policies
 Individual strength and talents
  Availability of markets
 Availability of resources
 Culture
 Natural factors
 Political stability
 Competition
 Resource persons and entrepreneurs
 Social security
Born or made Entrepreneurs traits
Born entrepreneurs dream big, take what they want and never stop trying to achieve
their goals. They have the following traits:
 Believe in themselves
 Have some security
 Takes charge
 Crafty and innovative
 Outspoken
 Observed with making money
 Fearless and thrive on challenges
 Take huge financial risks
 They can have a business idea that doesn’t have to bring income
instantly when it is implemented.

Made entrepreneurs are those that are self-made successful individuals. They may
have different traits from those who were successful before. They have the
following characteristics.
 Determined.
 Enjoy what they do.
 Serious.
 Risk taker.
 Can manage money.
 High level of confidence.
 Recognizes failure.
 Plan everything.