Federal College of Agriculture

P. M. B 7008, Ishiagu, Ebonyi State, Nigeria

Usanga, U. J
Lecturer/HOD
Call: 08107504273
e-mail: [email protected]

EED 413: ENTREPRENEURSHIP DEVELOPMENT

HND II APT/CST/HRE
(Kadurumba, C., Usanga, U. J. and Martin, C. E.)

1. Introduction to Entrepreneurship: Meaning and Elements of Entrepreneurship

2. Various Life Skills Needed by an Entrepreneur
3. Business Planning
4. Team Work Versus Team Spirit

Lecture Series
Introduction to Entrepreneurship: Meaning and Elements of Entrepreneurship

Course Aims:
The aims of this course are to expose you to the skills that will lead you to successful
entrepreneurship in the emerging macroeconomic environment. The course is partly case-
oriented and students will be expected to engage in small group projects and practicals and also
visit successful enterprises within the school and outside to identify and understand the secret of
their success.

Objectives
By the end of the course the student should be able to:

i) Understand what entrepreneurship means;

ii) Understand the development of entrepreneurial skills;
iii) Understand the nature of small businesses as they relate to Entrepreneurship;
iv) Development; and
v) Develop skills to manage small business enterprise

THE NATURE OF ENTREPRENEURSHIP

Usanga, U. J (2020) EED 413: Entrepreneurship Development
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Introduction

If we look at the Nigerian Economic environment today, we will observe the existence of many
enterprises whose origins dates back to the Colonial days of Nigeria’s history. Companies like
UAC Nigeria PLC fit such description. There are others like the ExxonMobil, Shell Petroleum
Development Company of Nigeria Limited, Leventis Group, P Z Nigeria, First Bank off Nigeria
Plc, Nigeria Breweries Plc among others. These large multinational corporations with huge
assets at their disposals started as small enterprises before they grew to the sizes that they are
today. Although we are aware of their existence and operations, we will not pay any attention to
a study of their operations. What is important to us to study of how new businesses emerge and
also how they are run or managed. Therefore, our interest in studying entrepreneurship
development is not to understand existing business organizations but to understand how to
establish and manage new small enterprises.

Definition of Entrepreneurship
In elementary economics, we were told that there are four factors of production. The four factors
of production are land, labour, capital and the entrepreneur. The Entrepreneur according to
economic theory is the person who coordinates the other three factors of production. The
Entrepreneur is someone who starts an enterprise or business, arranges business deals and takes
the risks in order to make a profit. The words underlined in our definition are very important.
Firstly, the Entrepreneur is the one who starts an enterprise, grow and develop the enterprise.
Interestingly, one of the key objectives of this course is to equip students with the necessary
skills to start their own business. Secondly, the entrepreneur takes the necessary business risks.
The Entrepreneur takes the necessary business risks in the market place. If the Entrepreneur is
successful, she/he makes a profit. However, if the Entrepreneur is unsuccessful, the result will be
a loss.

The Functions of the Entrepreneur

There are five basic functions of the entrepreneur. The functions are planning, organizing,
staffing, leading and controlling and this holds for any business.

1. The Planning Function

An enterprise does not give birth to itself. It does not just emerge like that, but must be started by
someone. And that person is the Entrepreneur. Every enterprise or business organization must
have a goal and a given set of objectives, which must be clearly stated at the onset and there must
be however, ways of attaining the objectives. Therefore, planning is essentially deciding in
advance what is to be done, how it will be done, who will do it, what resources will be used and
of course the implementation and control mechanism. The critical elements of planning are: the
objectives, strategies, resources and implementation.

2. Objectives of the Enterprise/Organization

Ideally every organization should have a purpose or mission – that is, what it seeks to achieve in
any given environment in a specific period of time. But most of the time, the mission statement
of an enterprise or organization turns out to be vague and intangible, because, most often they
cannot be measured. It must be stressed that the Aim or Goal of every business enterprise is to
make profit and so most of the objectives of business are defined in relation to the profit motive.
Therefore, the Aim or Goal and objectives of a business enterprise may be stated in terms of
return on capital employed. An Entrepreneur may state his/her objectives in terms of Naira
profit e.g. N10 million per annum, while the other may base his or her Aim or Goal and
objectives in terms of resources, or number of customers or market share. A key aspect of
planning is to budget for the resources necessary to execute a plan. The budgeting process
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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recognizes the fact that resources are limited and therefore should be optimally allocated.
Resources, we implies: people (Labour and Management), fund (Capital or financial resources)
and Land.

Implementation of Plans
The entrepreneur in implementing plans must use subordinates who must be prepared to carry
out the plans of the manager. Generally, it is believed that a team-based approach to planning
turns out to be more effective. It enables every member of the team to understand the plan and
how it is to be executed.

3. Organizing Function

After planning, the next function of the Entrepreneur is organizing. Every business enterprise
should have an organizational structure. An organizational structure defines how activities
such as task allocation, coordination, and supervision are directed toward the achievement of
organizational aims. Organizational structure affects organizational action and provides the
foundation on which standard operating procedures and routines rest. It determines which
individuals get to participate in which decision-making processes, and thus to what extent their
views shape the organization's actions. Organizational structure can also be considered as the
viewing glass or perspective through which individuals see their organization and its
environment to achieve its goal. An enterprise can be structured in many different ways,
depending on its objectives. The structure of an organization will determine the modes in which
it operates and performs. Organizational structure allows the expressed allocation of
responsibilities for different functions and processes to different entities such as: the unit, branch,
department, workgroup, and individual to harmonize their activities towards the set goal.
Organizations need to be efficient, flexible, innovative and caring in order to achieve a
sustainable competitive advantage in the world of work.

4. Functional Organization Structure

The term organizational structure refers to how the people in an organization are grouped and to
whom they report. One traditional way of organizing people is by function. Some common
functions within an organization include: Production, Marketing, Human Resources, and
Accounting. This organizing of specialization leads to operational efficiency, where employees
become specialists within their own realm of expertise. On the other hand, the most typical
problem with a functional organizational structure is that communication within the enterprise
can be rather rigid, making the organization slow and inflexible. Therefore, lateral
communication between functions becomes very important, so that information is disseminated
not only vertically, but also horizontally within the organization. Communication in
organizations with functional organizational structures can be rigid because of the standardized
ways of operation and the high degree of formalization.

As a whole, a functional organization is best suited as a producer of standardized goods and

services at large volume and low cost. Coordination and specialization of tasks are centralized in
a functional structure, which makes producing a limited number of products or services efficient
and predictable. Moreover, efficiency can further be realized as functional organizations
integrate their activities vertically so that products are sold and distributed quickly and at low
cost.[12] For instance, a small business could make components used in production of its products
instead of buying them.

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Even though functional units often perform with a high level of efficiency, their level of
cooperation with each other function is sometimes compromised. Such groups may have
difficulty working well with each other as they may be territorial and unwilling to cooperate. The
occurrence of infighting among units may cause delays, reduced commitment due to competing
interests, and wasted time, making projects fall behind schedule. This ultimately can bring down
production levels overall, and the company-wide employee commitment toward meeting
enterprise goals.

i) The Divisional Structure

The divisional structure or product structure consists of self-contained divisions. A division is a

collection of functions which produce a product. It also utilizes a plan to compete and operate as
a separate business or profit centre. Employees who are responsible for certain market services
or types of products are placed in divisional structure in order to increase their flexibility.
Examples of divisions include: regional division, consumer type (a division for companies and
one for households), and product type (a division for trucks, another for automobiles). The
divisions may also have their own departments such as: marketing, sales, and engineering
services.

Advantages of Divisional Structure

The advantages of divisional structure are that:

i) It uses delegated authority so that the performance can be directly measured with each
group. This results in managers performing better and high employee morale.
ii) Another advantage of using divisional structure is that it is more efficient in coordinating
work between different divisions, and there is more flexibility to respond when there is a
change in the market trend.

iii) Also, an enterprise will have a simpler process if they need to change the size of the
business by either adding or removing the divisions.

iv) When divisional structure is utilized, more specialization can occur within the groups.

v) When divisional structure is organized by product, the customer has their own advantages
especially when only a few services or products are offered which differ greatly.

vi) When using divisional structures that are organized by either markets or geographic
regions, they generally have similar function and are located in different regions or
markets. This allows business decisions and activities coordinated locally.

Disadvantages of the Divisional Structure

The disadvantages of the divisional structure are that:

i) It can support unhealthy rivalries among divisions.
ii) This type of structure may increase costs by requiring more qualified managers for each
division.
iii) Also, there is usually an over-emphasis on divisional more than organizational goals
which results in duplication of resources and efforts like staff services, facilities, and
personnel.

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 ii) The matrix structure

The matrix structure groups employees by both function and product simultaneously. A matrix
organization frequently uses teams of employees to accomplish work, in order to take advantage
of the strengths, as well as make up for the weaknesses, of functional and decentralized forms.
An example would be an enterprise that produces two products, "product a" and "product b".
Using the matrix structure, this enterprise would organize functions within the company as
follows: "product a" sales department, "product a" customer service department, "product a"
accounting, "product b" sales department, "product b" customer service department, "product b"
accounting department.

i) Weak/functional matrix: A project manager with only limited authority is assigned to

oversee the cross-functional aspects of the project. The functional managers maintain
control over their resources and project areas.

ii) Balanced/functional matrix: A project manager is assigned to oversee the project.

Power is shared equally between the project manager and the functional managers. It
brings the best aspects of functional and projectized organizations. However, this is the
most difficult system to maintain as the sharing of power is a delicate proposition.

iii) Strong/project matrix: A project manager is primarily responsible for the project.
Functional managers provide technical expertise and assign resources as needed.

There are advantages and disadvantages of the matrix structure.

Advantages of the Matrix Structure

The matrix structure has significant advantages that make it valuable for companies to use.

i) The matrix structure may improve upon the "silo" critique of functional management in
that it aims to diminish the vertical structure of functional and create a more horizontal
structure, which allows the spread of information across task boundaries to happen much
quicker.
ii) It aims to allow specialization to increase depth of knowledge and allows individuals to
be chosen according to project needs.

Disadvantages of the Matrix Structure

Some of the disadvantages include:

i) Tendencies towards anarchy, power struggles and 'sinking' to group and division levels.

ii) Matrices increase the complexity of the chain of command, which can present problems
because of the differentiation between functional managers and project managers. This,
in turn, can be confusing for employees to understand who is next in the chain of
command.

iii) An additional disadvantage of the matrix structure is higher manager to worker ratio that
results in conflicting loyalties of employees.
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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A simply organizational structure of the Entrepreneurship Development and Vocational Studies
of FCAI is shown as in Figure below:

Head of Department

Administration EED Courses, Lectures, Training & EED Exams,

& Finance Practicals & Instructors Regulation & Standards Vocational Studies
=

Consultancy, Partnerships, Projects Printing Press Internal Security ICT, Media

Programmes & Linkages Coordination & Publishing & Sanitation & Publicity

Source: Usanga, 2020 -Organizational Structure o EDVSC, Federal College of Agriculture, Ishiagu, Ebonyi State, Nigeria

Departmentation is very crucial for any organization to succeed. Departmentation divides an

organization along functional lines. For example, the marketing department will carry our
marketing functions, finance carry out finance functions, production will carry production
function, purchasing department will carry out purchasing function while administration will
carry out administration function. This shows that organizing involves dividing the business
along functional units

5. The Staffing Function

The next important function of the Entrepreneur is staffing the enterprise. The staffing function
involves effective staff recruitment and selection, staff placement and later the appraisal and
development of the staff. The performance of any enterprise depends on the quality of its staff.
This is why staffing in any organization must be approached professionally and carefully. In the
first place, all the jobs in the organization must be identified, first. Secondly, the level of skills
required to perform the tasks in the enterprise must also be determined. And finally, people who
fit properly into the jobs will be recruited. Invariably, the Entrepreneur “should get the right
man/woman for the right job”. After deploying staff to various jobs, the Entrepreneur is expected
to monitor the performance of all staff through an effective appraisal system. Besides, motivation
and development of staff should be a very important task so that the enterprise will be able to
move along with the changing times.

6. The Leading Functions of the Entrepreneur

After staffing, the next important function of the Entrepreneur is leading. Leadership is at the
core of the function of leading. Leadership is the act or process of influencing or guiding people
so that they will strive willingly towards the achievement of group or corporate goal. The
primary essence of leadership in Entrepreneurship is followership.
A good leader will guide, motivate and conduct his or her followers in line with the goal of his or
her enterprise. Leadership is the human factor that binds a group together.

Leadership styles

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There are two types of leadership styles: job-centred leadership and employee-centred
leadership.

i) Job-centred Leadership

Here the leader simply structures the job of his/her subordinates and ensures that they perform
the assigned tasks. In a way, this leadership style pays little or no attention to the fact that the
workers are human beings and should be treated as such.

ii) Employee -centred Leadership

Here the Entrepreneur pays more attention to the human aspects of managing employees thereby
building high performance teams and trusts. In employee-centred leadership, the Entrepreneur
will strive to motivate the workforce. Motivation is defined as “all those inner-striving
conditions described as wishes, desires and drives that influence a person’s behaviour, positively
or negatively. It is an inner state that activates or moves”. From a management perception, a
positively-motivated person:

i) works hard;
ii) sustains the pace of hard work;
iii) has self-directed behaviour towards important set goals.

In motivating employees, the Entrepreneur has to properly understand what actually motivates
people. Motivators are simply defined as those things, which influence an individual to perform
and they include the following:
‐

i) Good and prestigious job title;

ii) Recognition by colleagues; and
iii) Job enrichment

It is therefore important that the Entrepreneur recognizes the importance of motivators in

designing his or her enterprise personnel policies.

7. Controlling Functions of the Entrepreneur

The control function of the Entrepreneur basically involves the measurement and correction of
the performance of the business activities to ensure that enterprise goal and objectives are being
met. For control to be effective, there are two pre‐requisites:

i) There must be laid out plans against which performance will be measured;
ii) There must be a clearly defined organization structure. This enables the Entrepreneur to
determine where things go wrong in the organization and identify the officer responsible
for every act.

The Control Process involves three critical stages.

i) The establishment of standards whether in quantitative or qualitative terms. These may

be simply objectives or if in production, may relate to the number of rejected itemsin a
production line or raw material stores;

ii) Measurement of performance against the set plans and set standards; and

Usanga, U. J (2020) EED 413: Entrepreneurship Development

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 iii) Correction of observed deviations.

Resources
Davis, Stanley M.; Lawrence, Paul R. (1978). "Problems of Matrix Organizations". Harvard
Business Review. Vol. 56 no. 3. Boston, Massachusetts: Harvard Business School
(published 1 May 1978). pp. 131–142. ISSN 0017-8012. Archived from the original on 9
March 2019. Retrieved 9 March 2019.

Pugh, D. S., ed. (1990).Organization Theory: Selected Readings. Harmondsworth: Penguin.

Jacobides., M. G. (2007). The inherent limits of organizational structure and the unfulfilled role
of hierarchy: Lessons from a near-war. Organization Science, 18, 3, 455-477.

Feldman, P.; Miller, D. (1986-01-01). "Entity Model Clustering: Structuring A Data Model By
Abstraction". The Computer Journal. 29 (4): 348–360. doi:10.1093/comjnl/29.4.348.
ISSN 0010-4620.

Lim, M. (2017). Examining the literature on organizational structure and success. College
Mirror, 43, 1, 16-18. http://www.cfps.org.sg/publications/the-college-mirror/article/1098

Federal College of Agriculture

P. M. B 7008, Ishiagu, Ebonyi State, Nigeria

Usanga, U. J
Lecturer/HOD
Call: 08107504273
e-mail: [email protected]

EED 413: Entrepreneurship Development

HND II

1.0 Introduction to Entrepreneurship: Meaning and Elements of Entrepreneurship

Key Concepts
Entrepreneurship, entrepreneur, business, initiative, independence, ambition, growth, development, opportunity, management,
risk, innovation, creativity, enterprise.

Introduction
Entrepreneurship revolves around five elements: Opportunity, Creativity, Risk –taking,
Innovation and Enterprise development

Opportunity Risk Innovation

Entrepreneurship

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 Creativity Enterprise
Source: Usanga, 2015

The word entrepreneur originated from the French word, “entreprende” which means “to
undertake” (Akanni, 2010). In business context, it means to start a business, identify a business
opportunity, organize resources (men, machines, materials and the environment), manage and
assume the risk of a business or an enterprise. It is also used to describe those who (take charge)
lead a project, which would deliver valuable benefits and bring it to a successful completion. In
other words, entrepreneurs are those who can manage uncertainty and bring success in the face
of daunting challenges that would destroy a less well-managed venture.

Hornby (2006) defined an entrepreneur as a person who makes money by starting or running
businesses, especially when this involves taking financial risks. Drucker (1995, quoted in
Jimngang, 2004) defined an entrepreneur as someone who shifts economic resources out of an
area of lower and into an area of higher productivity and greater yield. This definition has two
aspects that deserve to be underlined. First, there are resources that undergo manipulation;
second, the activity seeks to attain “higher productivity” and “greater yield”. In the science of
Economics, we learn how to optimize the factors of production and at the same time seek to
attain equilibrium in the distribution of wealth. In other words, we strive to get the most out of
the existing resources and to establish equilibrium. The entrepreneur therefore is someone who
sees change as normal and healthy. Usually, the entrepreneur does not bring about change;
rather, he “searches for change, responds to it, and exploits it as an opportunity. Entrepreneurs
are characterized by the need to be independent, to create value, to contribute to family and
society growth, to become wealthy or, quite often, not to be unemployed.

Potential entrepreneurs display initiative and ambition, have business sense and foresight, and
are decisive. They are agents of change who accelerate the generation, application and spread of
innovative ideas (UNDP, 2010). UNIDO (1999) defined entrepreneurship as the process of using
initiative to transform business concept to new venture, diversify existing venture or enterprise to
high growing venture potentials. The entrepreneur acts in a different way. The entrepreneur
brings to light a differentiator, something unique, which represents value in the eyes of the buyer
or consumer. The idea is that the person at the helm of affairs in a venture should consider the
organization as operating under a process designed to provide “value” to the consumer. When all
aspects of the business are geared towards achieving this goal – that is, value to the customer or a
perception of it – then, such an organization is entrepreneurial or represents entrepreneurship.

Abraham Maslow, the American human psychologist, sees the entrepreneur as someone who
can “discern change, enjoy it and improvise without being forewarned”. According to him, the
entrepreneur is a “here-now” creator, an improviser, who is not afraid of being viewed as
operating in dissonance with general practice and belief (Stephens, 2000). To say it in another
way, the entrepreneur is someone who perceives or senses opportunity where others fear
rejection; he will not talk of obstacles but challenges. His mindset is tuned to success, and
failure though he is aware of the possibility, does not preoccupy him.

The Conceptual view of Entrepreneurship

Entrepreneurship is the practice of starting new organizations, particularly new businesses
generally in response to identified opportunities. Entrepreneurship is often a difficult
undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially
different depending on the type of organization that is being started. Entrepreneurship may
involve creating many job opportunities in the face of obstacles and providing solutions to
societal numerous problems. To some, entrepreneurship is all about taking risks. The behaviour
of the entrepreneur reflects a kind of person willing to put his/her career and financial security on
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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the line and take risks in the name of an idea, spending much time as well as capital on an
uncertain venture. Still another view of entrepreneurship is that, it is the process of creating,
inventing, discovering (identifying), innovating, evaluating, and exploiting opportunities to come
up with a new business venture. Entrepreneurs have many of the same character traits as leaders.
Similar to the early great theories of leadership, however, trait-based theories of entrepreneurship
are increasingly being called into question. Entrepreneurs are often contrasted with managers and
administrators who are said to be more methodical and less prone to risk-taking. Therefore,
Entrepreneurship is the process of creating and distributing wealth (Usanga, 2015)

UNDP (2010) defined entrepreneurship as the process of using private initiative to transform a
business concept into a new venture or to grow and diversify an existing venture or enterprise
with high growth potential. Entrepreneurs identify an innovation to seize an opportunity,
mobilize money and management skills, and take calculated risks to open markets for new
products, processes and services. You will observe that entrepreneurship is a derivative word
from entrepreneur. To Shane (2010), entrepreneurship is the act of being an entrepreneur, which
can be defined as "one who undertakes innovations, finances and displays business acumen in an
effort to transform innovations into economic goods". This may result in new organizations or
may be part of revitalizing mature organizations in response to a perceived opportunity.

The most obvious form of entrepreneurship is that of starting new businesses (referred to as
Startup Company); however, in recent years, the term has been extended to include social and
political forms of entrepreneurial activity. When entrepreneurship is describing activities within
a firm or large organization, it is referred to as intra-preneurship and may include corporate
venturing, when large entities spin-off organizations. Garba (2010) asserted that the term
entrepreneurship means different things to different people and with varying conceptual
perspectives. He stated that in spite of these differences, there are some common aspects such as
risk taking, creativity, independence and rewards.

The concept of entrepreneurship has a wide range of meanings. It was first used in the early 18 th
century by an Irish man by name Richard Cantillon in 1755, who was then living in France. On
the extreme, it is a term used broadly in connection within the innovation of modern industrial
business leader, which describe an originator of a profitable business idea (Akanni, 2010).
According to Joseph Schumpeter, an economist, the single function which constitute
entrepreneurship concept is innovation, such as: new products, new production method, new
market and new forms of organization. Wealth is created when such innovation results in new
demand. Entrepreneurship is therefore a process which involves the creation of an
innovative economic organization for the purpose of gain or growth under condition of risk
and uncertainty (Dollinger, 2001 quoted in Akanni, 2010).

Vanderwerf and Brush (1989 quoted in Akanni, 2010), after reviewing twenty-five definitions,
concluded that entrepreneurship is a business activity consisting of some intersections of the
following behaviours: creativity, innovation, general management, risk bearing and
intention to realise high levels of growth. Hisrich and Peters (1992) state that entrepreneurship
is a continuous process of creating something different that has value to the users.

Definition of Development

Abianga (2010) defined development as the act or process of growth, progress and
improvement within a physical setting. Hornby (2006) similarly defined development as the
gradual growth of something so that it becomes more advanced and stronger.

Definition of Entrepreneurship Development (ED)

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A worldwide consensus on the critical role of competitive markets and entrepreneurs in
economic development has emerged in the last decade. In developing countries, the primary
barrier to economic growth is often not so much with a scarcity of capital, labour or land, but it is
the scarcity of dynamic entrepreneurs that can bring these resources together and the markets
and mechanisms that can facilitate them in this task. Relating all the earlier three definitions of
an entrepreneur, entrepreneurship and development, UNDP (2010) then defined
entrepreneurship development as referring to the process of enhancing entrepreneurial
skills and knowledge through structured training and institution building programmes.
According to UNDP, ED aims to enlarge the base of entrepreneurs in order to hasten the pace at
which new ventures are created. This accelerates employment generation and economic
development. Entrepreneurship development focuses on the individual who wishes to start
or expand a business. Furthermore, entrepreneurship development concentrates more on
growth potential and innovation.

The Federal Government of Nigeria recognized the role entrepreneurship could play in
jumpstarting the growth and development of the economy decided on two things in 2009, one,
that entrepreneurship education should be made a general studies course for all
undergraduates of the tertiary institutions. The second was that a centre for entrepreneurial
development be established in each of the tertiary institutions where different skills would
be taught. At the end of their programme of study, graduates of the tertiary institutions would be
able to set up their own businesses with a view to contributing economy growth and
development.

Characteristics of an Ideal Entrepreneur

Every business is an adventure and the ability and possibility for the venture to succeed or fail
depends on the ability of the entrepreneur to effectively employ his or her positives attributes,
while retraining his/her negative attributes. Some of this attributes include:

1. Self-confidence: This is can be characterized as one of the most essential attributes an

entrepreneur must possess. The entrepreneur must believe in his/her self and the project he/she
intends to embark on. The entrepreneur should be able to see the obstacles or difficulties in
achieving his/her goals as challenges which must be faced squarely and conquered. The
entrepreneurs must maintain a high level of emotional stability in the face of difficulties.

Self-Confidence is in two forms:

a) Self Motivation – the Entrepreneur sets his or her own goal rather than having them
set by someone else. Since these goals are set by entrepreneur, it means he/she will be
motivated to achieve those goals.

b) Self Discipline – Every entrepreneur must have self discipline, if not, the business will
fail, Brown, (1997) observed that. “Entrepreneurs correct errors and improve on
their own performance without any prompting from someone else”. These are
confident people who believe in what they are doing and believe that the project is worth
doing and that this project will provide solution to societal problems.

2. Opportunity Identification
Ucbasaran, Westhead and Wright, (2009) observed that, experienced entrepreneurs identify more
opportunities and exploit more innovative opportunities with greater wealth creation potentials.
Entrepreneurs have an unusual foresight to identify the potential demand for the production of
goods and services. They are persons who recognize a business opportunity, organize, manage,
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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and assume the risk of a business enterprise, focusing on that business opportunity.
Entrepreneurs venture into areas and opportunities that other people fear to venture; these
opportunities may include:

i) Meeting the demand that is not currently met for a certain product, good or service.

ii) Pushing up a product, good or service that is much better than what is currently in the
market through innovation;

iii) Solving a problem, complaint or annoyance that consumers have.

Entrepreneurs recognize opportunities where they are and they utilize them by producing goods,
product or services that will fill the vacuum so identified.

2. Risk taking Ability: An Entrepreneur must analyze and determine the risk inherent in the
project he/she is embarking on and as such adopting strategies aimed at mitigating the potential
exposure to these inherent risks. According to Gana (2011) the entrepreneur employs and focuses
on his/her personal talent, attention, capabilities, competencies, technical know-how and values
to navigate these inherent risks. Any entrepreneur is a risk taker; they take calculated or
measurable risks whether formally or informally. Mostly they take risk informally because they
make calculations within their brain on what to produce, for whom to produce, when to produce
and where to produce or what to buy, what to keep and sell latter. They equally try to figure out
the probability of success of their business once they are convinced that it is going to bring them
reward, benefit or profit, they will go into such business, which means they take risk. Also,
marketing research is undertaken by Entrepreneur consciously and unconsciously. If this
research is carried out, they venture into such businesses. Entrepreneurs are not tired of trying. If
they invest in a business and they fail, they still try another business so that they can succeed.

How the Entrepreneur takes Calculated Risks

The Entrepreneur starts by asking some questions like:

i) Is the goal of my project worth the risk?

ii) How can I maximize the risk?
iii) What information do I need before I take the risk?
iv) Why is this risk important?
v) Am I willing to try my best to achieve the goal?
vi) What preparation do I need to make before I take the risk?
vii) What are the biggest obstacles to achieving my goal?

3. Job orientation: An Entrepreneur is result-orientated. He/she sets difficult but achievable

goals. The entrepreneur is a dogged, tenacious and strong-minded person.

4. Drive and Energy: An Entrepreneur shows high levels of drive, willingness and energy by
putting a serious amount of physical and mental energy into the project process. He/She is a
goal-getter. Some authors say “Entrepreneurs swim against the tide”.

5. Innovativeness: Entrepreneurs are very innovative. They create new thins and add value to
already existing ones. Sometimes they see and utilize opportunities in worse situations. The
recent Ebola Outrage and the Corona Virus is an opportunity for Entrepreneurs in the medical
profession and other disciplines to produce Hand Sanitizers and vaccines to combat the disease.

Usanga, U. J (2020) EED 413: Entrepreneurship Development

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6. Leadership: An entrepreneur encourages and guides individuals towards achieving set out
goals and objectives (Gana, 2001).These can only be effectively accomplished by good leaders
who possess excellent skills in motivating, managing and leading other individuals.

7. Desire for Independence: One of the consistent characteristics of an entrepreneur is his/her

desire for independence. What it means is that an entrepreneur would want to work for
himself/herself rather than work for others. They want to take decisions on their own. There is
the general believe that if you acquire some skills and you are unemployed or when you are
terminated or sacked from your former organization, you are likely to become a better
entrepreneur. This is because you are in a better position to take decision on your own. A lot of
people have resigned their position in organizations to set up their own business. What they
mostly say is that ‘I can wake up at anytime to go to work’. It means that it is independence they
require. It also affords the entrepreneur, ‘financial or economic independence’, which allows the
entrepreneur to be accountable to his/her business.

The Entrepreneurial Process

Entrepreneurship is a continuous process that needs to be followed by an entrepreneur to plan

and launch the new ventures more efficiently into the market.

Usanga, U. J (2020) EED 413: Entrepreneurship Development

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 Entrepreneurial Process
 

Source: Bryan, in Academia.edu, 2020

1. Discovery: An entrepreneurial process begins with the idea generation, wherein the
entrepreneur identifies and evaluates the business opportunities. The identification and the
evaluation of opportunities is a difficult task; an entrepreneur seeks inputs from all the persons
including: Landlords, employees, consumers, partners, middlemen and women, technical people,
experts, Government and consumers to reach to an optimum business opportunity. Once the
opportunity has been decided upon, the next step is to evaluate it.
An entrepreneur can evaluate the efficiency of an opportunity by continuously asking certain
questions to himself, such as: whether the opportunity is worth investing in, is it sufficiently
attractive? Are the proposed solutions feasible or can they be achieved? Is there any competitive
advantage? What are the risks associated with it? And so on. Above all, an entrepreneur must
analyze his/her personal passion for the project, personal skills and hobbies, whether these
coincides with the entrepreneurial goals or not.
The First stage of the entrepreneurial process deals with opportunity identification. An
opportunity by definition is a favourable set of circumstances which creates a need for a new
product, business, or service (Barringer and Ireland, 2010). Opportunity identification is the
process by which the Entrepreneur comes up with a prospective idea for a new venture.
Identifying the opportunity is not simple. Identification takes research, exploration, and
evaluation of current needs, demands, and trends from consumers and others (Dhenak, 2010).
With researching and surveying, the product or service can be developed. The organization or
individual can now innovate what is lacking as long as the market exists for the opportunity to
present itself.

If the market is mature, the window of opportunity is closed (Barringer and Ireland, 2010).
Qualities through innovation add value to a product, good, service, or business. The qualities are
attractiveness, durability, timeliness, and fixation to the product (Barringer and Ireland, 2010).
These four conditions are what the consumers and the end users want from the Entrepreneur.
Evaluating the opportunity through observing environmental forces, social forces, technology
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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advances, and political or regulatory changes are attributes to thriving in any industry
(Dhenak, 2010). From an individual point of view, opportunity identification and evaluation is
the most important element because it identifies general trends, needs, and risks that are involved
in the original idea, which the entrepreneurial process can improve.

2. Developing a Business Plan: Once the opportunity is identified, an entrepreneur needs to

create a comprehensive business plan. A business plan is critical to the success of any new
venture since it acts as a benchmark and the evaluation criteria to see if the organization is
moving towards its set goals. An entrepreneur must dedicate his/her sufficient time towards its
creation, the major components of a business plan are: mission and vision statements, goals and
objectives, capital requirement, a description of products and services, SWOT Analysis, among
others.
Business plan development is an integral piece for submitting a proposal for an entrepreneurial
or intra-preneurial business (Harjai, 2012). The organization or Entrepreneur develops a
description of the future direction of the business. A good business plan must be in place that
displays a distinct opportunity (Harjai, 2012). The process in business plan formulation can be
the most time-consuming stage for the individual Entrepreneur or organization (Harjai, 2012).
An example of this is researching and doing a feasibility analysis for business plan formulation
(Barringer and Ireland, 2010). Testing the viability of the idea gives the ability to change the
thought process from idea to a business plan and action. Business plan development is part of
strategic thinking and planning and works well with organizational activities. On an individual
basis, the sole Entrepreneur must rely on brainstorming with smaller focus groups. From a
corporate perspective, business planning is the essential element to the entrepreneurial process.

3. Resourcing: The third step in the entrepreneurial process is resourcing, wherein the
Entrepreneur identifies the sources from where the finance, funding and the human resource can
be arranged. Here, the Entrepreneur finds the investors for the new venture and the personnel to
carry out the business activities. Ascertaining resource needs is a requirement to opportunity and
business plan implementation (Dhenak, 2010). Assessing the risks in association with
insufficient or inappropriate resources must be set apart from useful ones (Harjai, 2012). The
question that needs an answer here is: Can the organization or individual propositioning the
venture be capable of obtaining sufficient resources to move forward (Barringer and Ireland,
2010)? The entrepreneurial process calls for securing financial and non-financial resources as
well as intellectual proprietary protection where it applies (Barringer and Ireland, 2010).
Financial resources in this case include: start-up costs, the financial performance of like business,
and economic attractiveness (Barringer and Ireland, 2010).

Non-financial resources include: skill sets and labour pools for potential employees (Barringer
and Ireland, 2010). In the health care setting, for example, the skill set for nurses is different
from radiology technicians. Organizations and individuals performing a resource assessment
must be aware of the community the business exists in and whether or not this is a major factor.
Resource allocation and availability are important to corporations because sustainability and
profit depend on proper planning and understanding the physical internal and external
environments, which normally present threats to the business or project. For the individual
gaining funding from investors and loans and knowing where to cut cost in the execution and
implementations tage is the most important issue with resource determination and allocation
(Barringer and Ireland, 2010). An example from an individual perspective is making a product
via a manufacturer that already exists (Franchising) as opposed to manufacturing the product
themselves (Barringer and Ireland, 2010).

4. Managing the company: The fourth stage is managing the enterprise. Once the funds are
raised and the employees are hired, the next step is to initiate the business operations to achieve
Usanga, U. J (2020) EED 413: Entrepreneurship Development
15
the set goals. First of all, an Entrepreneur must decide the management structure (Organogram)
or the hierarchy that is required to solve the operational problems when they arise. Once
resources are secured with the entrepreneurial process, business plan implementation can take
place. Managing the company means examining the operational issues that will occur when
implementation begins and throughout the entire business plan cycle (Barringer and Ireland,
2010).

The management process involves implementing structure and business style, while determining
variables for success (Harjai, 2012). Establishing a control system to identify and resolve any
problem areas will help the management process. Lack of experience can give the individual
Entrepreneur issues with business growth and administration (Harjai, 2012). Organizations
understand the business development, growth, and sustainability better than individuals in many
cases because resources are easier to harness and utilize as well as methods with strategic
management and system development cycles (Harjai, 2012). Individuals fare better in the
entrepreneurial process improving on existing ideas that have a strong consumer focus and
demand.

5. Harvesting: The final step in the entrepreneurial process is harvesting wherein, an

entrepreneur decides on the future prospects of the business, i.e. its growth and development.
Here, the actual growth is compared against the planned growth and then the decision regarding
the stability or the expansion of business operations is undertaken accordingly, by an
Entrepreneur. The entrepreneurial process is to be followed, again and again, whenever any new
venture is taken up by an Entrepreneur, therefore, it is an ever ending process. A wide range of
factors influences Entrepreneurs and organizations in the entrepreneurial process. These factors
include environmental, social, personal, and economic influences. There are four steps or stages
in the entrepreneurial process: 

1. Spot and assess the opportunity

2. Draw up a business plan
3. Establish resources
4. Run the company (Dhenak, 2010).

Each step ranks in importance; the first is the most important followed by the second, third, and
fourth. All stages are a part of the entrepreneurial process.
 

Resources
Barringer, B. A., and Ireland, R. D. (2010). Entrepreneurship: Successfully launching new
ventures (3rded.). Upper Saddle River, NJ: Prentice Hall.

Bryan, Burke in Academia.edu, 2020: The entrepreneurial process

Dhenak, M.S. (2010). The entrepreneurial process. Retrieved from https://www.scribd.com/

Gana, J.S. (2001), Entrepreneurship, Kaduna: Jofegan Associates.

Gana, J.S.S (2011), “Entrepreneurship in Nigeria. Enugu: Jofegan Associate”. International

Journal of Research in Engineering, IT and Social Sciences. Available at: http:
www.indusedu.org

Harjai, K. J. (2012). Success of business plan development course offered to physicians enrolled
in a master's in medical management program: A pilot educational project. The Journal
of Health Administration Education,  29(2)
Usanga, U. J (2020) EED 413: Entrepreneurship Development
16
Koelewijn, W.T., Rover, M.D., Ehrenhard, M.L., and Van Harten, W.H. (2014, May). Physician’
entrepreneurship explained: a case study of intra-organizational dynamics in dutch
hospitals and specialty clinics. Human Resources for Health , 12(28), 16. 

Ucbasaran, Deniz, Westhead, Paul and Wright, Mike (2009) The extent and nature of
opportunity identification by experienced entrepreneurs Journal of Business Venturing,
Elsevier, vol. 24(2), pages 99-115.

Usanga, U. J., Anozie, R. O.and Nwaobiala, C. U. (2015) Entrepreneurship Skills for the 21st
Century Agricultural Development in Nigeria In: Contemporary Issues in Agricultural
Extension Systems and Development. Rural Sociology and Extension Book of Readings,
Edited by: Ike Nwachukwu, Ekumankama, G. E.., Ifenkwe, G. E., Onumadu, F. N.,
Agbarefo, M. N. B., Apu, U., Odoemelam, L. E. and Nwaobiala, C. U., Michael Okpara
University of Agriculture, Umudike, Abia State, Nigeria

Federal College of Agriculture

P. M. B 7008, Ishiagu, Ebonyi State, Nigeria

Usanga, U. J
Lecturer/HOD
Call: 08107504273
e-mail: [email protected]

HND II EED 413: ENTREPRENEURSHIP DEVELOPMENT

A PRACTICAL BUSINESS IDEA FOR CLASS DISCUSSION AND PRACTICE

Commercial Production of Popcorn

Popcorn is a type of corn which when heated explodes into bigger fluffy masses. Although
popcorn is not used as food, it has become very important for use as snacks, especially by
children in nursery, primary, secondary schools and tertiary institutions nationwide. Although
firm market data for it is unavailable, what is seen in the various popcorn locations nationwide
suggests that the demand for the product is on the high side and stable too. To enjoy synergy,
we suggest that popcorn project be combined with pure water. Ice cream production will be
treated elsewhere in this course.
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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Technical Production Techniques
The project under consideration is a small‐scale process dedicated to the production of popcorn.
Although there are various popping machines in the market: the manually driven popping
machine, semi-auto popping machines and continuous popping machines, we will use the stand
alone type for our initial popping. Note that as a starter, we should start small before going into
mass commercial production. This is to enable us study and understand the risks involved in
popcorn production and also to study consumer preferences, competitors’ activities and the
market trend for our brand. The machine required (the pop corn machine) for the production of
popcorn is a rugged stand alone continuous popper. The popper has a popping bowl, which is
heated by gas and connected to a relay switch. Working on a single shift of 8 hours, the machine
can pop 1 ton (1,000 kg) of popcorn on a continuous basis. On three shifts of 8 hours each per
day, a total output of 3 tons (3,000 kg) is assured, but the actual production in this practical is
based on a production of 1 ton per shift of 8 hours for 300 days in a year.

The Production Process

Vegetable oil is sprinkled on the popcorn to be popped and the corn is fed into the popping bowl
in the popping machine. Sugar or salt may be added depending on the type of popcorn that we
want to produce. Heat is transferred to the popping bowl through a switch‐regulated cylinder.
The popping is continuous and stickiness is prevented by a rotary spindle that is rotated manually
within the popping bowl in a clockwise and anti clockwise directions. This is controlled by the
popper (the person popping the corn). The popped corn is collected in the chamber from where it
is packed and sealed ready for the market.

Popcorn (popped corn, popcorns or pop-corn) is a variety of corn kernel which expands and
puffs up when heated; the same names are also used to refer to the foodstuff produced by the
expansion. A popcorn kernel's strong hull contains the seed's hard, starchy shell endosperm with
14–20% moisture, which turns to steam as the kernel is heated. Pressure from the steam
continues to build until the hull ruptures, allowing the kernel to forcefully expand from 20 to 50
times its original size and then cool. Some strains of corn (taxonomized as Zea mays) are
cultivated specifically as popping corns. The Zea mays variety everta, a special kind of flint corn,
is the most common of these used for popcorn making. The six major types of corn are dent corn,
flint corn, pod corn, popcorn, flour corn, and the sweet corn.

Popping mechanism
Each kernel of popcorn contains a certain amount of moisture and oil. Unlike most other grains,
the outer hull of the popcorn kernel is both strong and impervious to moisture and the starch
inside consists almost entirely of a hard type. As the oil and water within the kernel are heated,
they turn the moisture in the kernel into pressurized steam. Under these conditions, the starch
inside the kernel gelatinizes, softens, and becomes pliable. The internal pressure of the entrapped
steam continues to increase until the breaking point of the hull is reached: a pressure of
approximately 135 psi (930 kPa) and a temperature of 180 °C (356 °F). The hull thereupon
ruptures rapidly and explodes, causing a sudden drop in pressure inside the kernel and a
corresponding rapid expansion of the steam, which expands the starch and proteins of the
endosperm into airy foam. As the foam rapidly cools, the starch and protein polymers set into the
familiar crispy puff. Special varieties are grown to give improved popping yield. Though the
kernels of some wild types will pop, the cultivated strain is Zea mays everta, which is a special
kind of flint corn is ideal.

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Cooking methods
Popcorn can be cooked with butter or oil. Although small quantities can be popped in a stove-top
kettle or pot in a home kitchen, commercial sale of freshly popped popcorn employs specially
designed popcorn machines.

How to Make Popcorn on the Stove

Requirements

 2 tablespoons vegetable oil with a high smoke point, like peanut/groundnut oil
 1/3 cup popcorn kernels
 Melted butter
 Salt
 Sugar
 A large, heavy-bottomed pot with a lid (this ensures even heat and prevents the corn from
scorching)
This will yield a big batch about 10 cups.

Method

Step 1: Bring the Heat

Pour the oil and kernels in the pot and cover. Set on the stove over medium heat. Wait. You will
hear the popcorn begin to sizzle. Keep waiting. Eventually, you’ll hear the first pop.

Step 2: Shake It
Once the first kernel pops, start shaking the pan, holding onto the lid so that the popped corns do
not fly off.

Test Kitchen tip: For extra-crisp popcorn, keep the lid ajar or use a lid with a vent hole to allow
some of the steam to escape. The popping rate will accelerate. Keep on shaking and turning.
After two to three minutes, the popping will slow down and eventually putter to an infrequent
pop. Take the pan off the heat.

Test Kitchen tip: Keep the lid on the pot for another minute. Usually, a few kernels will pop after
you stop shaking. When you remove the lid, open it away from you to avoid contact with the
steam.

Step 3: Add Mix-Ins

Pour your melted butter over the popcorn and shake/turn. Do this right in the pan, then add salt
and sugar last so it adheres more evenly.

Test Kitchen tip: For better output, use superfine popcorn salt or grind up regular salt in a mortar
and pestle. The fine grains make your batch pleasantly salty, and you can use less.

When the popcorn has finished popping, sometimes un-popped kernels remain. Known in the
popcorn industry as "old maids", these kernels fail to pop because they do not have enough
moisture to create enough steam for an explosion. Re-hydrating prior to popping usually results
in eliminating the unpopped kernels.
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Consumption
Popcorn is a popular snack food at sporting events, marriage ceremonies, naming functions,
birthday parties, religious events and cultural festivals around and in movie theaters the World.
Nutritional value of Popcorn

Popcorn, air-popped, no additives

Nutritional value per 100 g (3.5 oz)

Energy 1,598 kJ (382 kcal)
Carbohydrates 78 g
Dietary fiber 15 g
Fat 4g
Protein 12 g

Vitamins Quantity %DV†

Thiamine (B1)17%
0.2 mg
Riboflavin (B2) 25%
0.3 mg

Minerals Quantity %DV†

Iron 21%
2.7 mg
One cup is 8 grams.

Units
• μg = micrograms
• mg = milligrams
•IU = International units

†Percentages are roughly approximated using US recommendations for adults.

Source: USDA Nutrient Database

Health risks
Popcorn is included on the list of foods that the American Academy of Pediatrics recommends
not serving to children under four, because of the risk of choking. Microwaveable popcorn
represents a special case, since it is designed to be cooked along with its various flavouring
agents. One of these formerly common artificial-butter flavourants, diacetyl, has been implicated
in causing respiratory illnesses in microwave popcorn factory workers, also known as "popcorn
Usanga, U. J (2020) EED 413: Entrepreneurship Development
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 lung". Air-popped popcorn is naturally high in dietary fiber and antioxidants, low in calories and
fat, and free of sugar and sodium. This can make it an attractive snack to people with dietary
restrictions on the intake of calories, fat or sodium. For the sake of flavour, however, large
amounts of fat, sugar, and sodium are often added to prepared popcorn, which can quickly
convert it to a very poor choice for those on restricted diets.

Traditions differ as to whether popcorn is consumed as a hearty snack food with salt
(predominating in the United States) or as a sweet snack food with caramelized sugar
(predominating in Germany). Popcorn smell has an unusually attractive quality for human
beings. This is largely because it contains high levels of the chemicals 6-acetyl-2,3,4,5-
tetrahydropyridine and 2-acetyl-1-pyrroline, very powerful aroma compounds that are also used
by food and other industries either to make products that smell like popcorn, bread, or other
foods containing the compound in nature, or for other purposes.

Getting Started With Your Popcorn-Making Business

Name and Register Your Business

Choose a name that immediately identifies your business with popcorn making. It pays to hire a
professional graphic designer to create an eye-catching logo incorporating your business name
that you can use for signage, advertising and paper goods.

Obtain a National Tax (TIN) ID number (also called Tax identification number) by visiting the
website of the FIRS via: www.firs.gov.ng The application is free, and you'll usually receive your
unique number quickly.
Create a Popcorn Business Plan
A formal business plan may seem excessive for a small, even home-based business, but it will
guide you through many of the decisions that you will have to make in order to build a successful
enterprise. If you will be working with suppliers, investors, schools, banks or other lenders, they
will want to see a written business plan as a condition of working with you. Look online for a
business plan template suitable for a small business.
A simple popcorn business plan should contain the following elements:
 Executive Summary: In this section, the most important section of your business plan,
tells who you are and what market niche you aim to fill. Tells about yourself and other key
personnel in the enterprise. Summarize the financial details.
 Description of the Enterprise: Include information such as: when the enterprise was
founded, the physical address, i.e. where it is located, the state where it was registered and the
business structure (e.g., sole proprietorship, limited liability company, etc.).
 Products and Services: Describe the products and services you will provide. Aim to
show the customers' perspective by explaining what market niche you are planning to fill. You
can start with a statement as simple as, "Pop's Popcorn will be made fresh, satisfying customers'
cravings for a healthier snack in one of five gourmet flavours."

 Market Analysis: Who are your target customers? Is anyone else in the area selling
popcorn? (Competitors). How are you going to distinguish yourself in the market? Will you offer
unique flavours or perhaps delivery service? Or how is your popcorn going to be different from
others in the market? What are your plans in maintaining and satisfying your customers?
 Management Team: Tell about the knowledge and experience each individual,
including yourself, brings to the business. What qualifies them to run a popcorn business such as
the one you want to start?

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21
 Financial Plan: Provide a detailed overview of your finances, including cash-flow
statements and financial projections for the next three to five years, including estimated popcorn-
business profits and loss accounts. If you are seeking outside funding, it pays to get the
assistance of a professional accountant or an Economist to prepare your documentation.

 Appendix: Use an appendix to include any additional documents such as: CV or

resumes, legal documents, letters of reference, bank statements and credit histories.

Licensing Requirements
Licensing requirements for businesses vary by state and Local Governments, so speak with
someone from the small business development department in your city or town. In addition to
permit and licensing fees for the town, you may be subject to inspections from the health
department, NAFDAC and, since you are using a heat source, the fire department may also like
to inspect the Popcorn facility.
Basic requirements to start a Popcorn Making Business
Raw material Supplier
You will need various materials to produce the popcorn. So do a proper research about the
various raw material suppliers in your area. The lists of materials required are:

1. Bags of corns: – As corn is the main raw material so you need to find the best supplier for the
same. If you want to start with the general quality of popcorn then you can choose local suppliers
but for a higher quality of production, you may need a supplier who imports top quality corns
from other countries. You may order the same online also. You can get the other ingredients
from the local suppliers.

2. Sugar, salt, butter: – You will need this to add taste to the popcorn to give it a good flavour.
Find out some local suppliers who can supply you with this in a quantity you need. Do a price
analysis first like compare the price of different suppliers and select the one with the most cost
effective rate. Do not compromise standard because of low price.

3. Nylon bags: – Brand is something which differentiates your product from other competitors.
So if you want to make it large, get a top quality nylon bags with your brand and details printed
on them. The look of the packaging needs to be attractive to generate more sales.

4. Other ingredients: – You can also make a different quality of popcorn by adding different
other spices or ingredients to give a different taste like: cheese, different masalas, aroma etc; but
for this, you need to have the training of mixing the correct proportion of ingredients.
Equipment
You may need two different machines depending on your type of business:
i) Popcorn Machine: – It is also known as popcorn maker. The size of the same will also
depend on your business type like if you want to distribute or sell popcorn from one location
then you will need a bigger machine then if you have different branches. The popcorn maker
usually starts from N18, 000 to N20, 000. Get the machine from a reputed supplier and check the
servicing offerings.
ii) Sealing Machine: – This one will be needed if you are giving packed popcorns. In case you
sell in cardboard cups you will not need the same.

Addition to your energy, stamina and patience, these are the steps and requirements for starting a
popcorn enterprise. If you do not have the experience of popcorn making or business, it is
Usanga, U. J (2020) EED 413: Entrepreneurship Development
22
suggested to begin from a small scale business. Create your customer base and goodwill to your
brand, earn some experience and expertise in the area and you can easily expand your popcorn
making business.

Popcorn

Resources

Higgins, Michelle (5 May 2017). "How Popcorn Pops". Thoughtco.com.

Franklin, Linda Campbell (2013) "Corn", in Andrew F. Smith (ed.), The Oxford Encyclopedia of
Food and Drink in America. 2nd ed. Oxford: Oxford University Press, (pp. 551–558), p.
553.

The Popcorn Board (2013)"Popping Tips ("Saving 'Old Maids'" tab)".. Retrieved 25 July 2013
Hallauer, Arnel R. (2001). Specialty Corns. CRC Press. ISBN 978-0-8493-2377-5.

Lusas, Edmund W.; Rooney, Lloyd W. (2001). Snack Foods Processing. CRC Press. ISBN 978-
1-56676-932-7.

Smith, Andrew F. (1999). Popped Culture: The Social History of Popcorn in America.
University of South Carolina Press. ISBN 978-1-57003-300-1.

Smithsonian Magazine (3 October 2013).Why Do We Eat Popcorn at the Movies?". Smithsonian

Mag. 3 October 2013.

Vinson, Joe (25 March 2012). "Popcorn: The snack with even higher antioxidants levels than
fruits and vegetables". American Chemical Society. Retrieved 28 October 2014.

Nicole Ferring, M.S., R.D. (2008) "Health Food Impostors". MSN.com. Archived from the
original on 18 December 2008

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 Federal College of Agriculture
P. M. B 7008, Ishiagu, Ebonyi State, Nigeria

Usanga, U. J
Lecturer/HOD
Call: 08107504273
e-mail: [email protected]

EED 413: ENTREPRENEURSHIP DEVELOPMENT

HND II APT/CST/HRE
(Kadurumba, C., Usanga, U. J. and Martin, C. E.)

Entrepreneurship as a Business Activity

We had earlier on described entrepreneurship as the activities of the entrepreneur geared towards
identifying an innovative idea, to seize an opportunity, mobilize money and management skills,
and take calculated risks to open markets for new products, processes and services. Koce, (2009)
state that business is all of the activities of an individual or group of individuals in producing and
distributing goods and services to customers. According to him, an Entrepreneur or a business
wants to identify the needs, wants, goals, values etc. of the potential and prospective buyer or
consumer with a view to developing a product or service that would be tailored to satisfying
these needs, wants, goals, values etc. The business of an Entrepreneur therefore involves the
following activities:

Producing Goods and Services

Entrepreneurs provide goods and services to society. In today’s business, goods and services are
many and varied. Examples of goods are: GSM handset, clothing, computers, radio, cars, house,
etc. The examples of services include: education, insurance, banking, offering consultancy in a
clinic or hospital, serving as travel agency, or providing accommodation and a hotel or guest
house, barbing, etc.

Activities that Add Value to the Goods and Services

A lot of activities happen before goods and services get to a consumer’s door step. A product is
not just made in a day and finds its way to the store. These are some of the activities that are
performed by Entrepreneurs. They include organizing, managing, producing and marketing.

a) Organizing – within a company someone will be in charge to organize human,

machines and material resources to provide products.

b) Manage – if there is no one to manage finance, human resources and production, the
company cannot go on smoothly.

c) Production – it is the responsibility of a business to produce those physical items you

are using i.e. radio, wrist watches, bread, Chin chin, bread, milk, clothing, etc.

d) Marketing – business is involved in advertising, distributing and selling those

products produced to customers so that money could be collected and put back to
production.

Usanga, U. J (2020) EED 413: Entrepreneurship Development

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Resources Used by the Entrepreneur

Entrepreneurs use resources to be able to perform those functions listed above. These resources
include:

1. Human Resources – salesmen, accountants, manager, machine operators.

2. Materials – building offices, stores, raw materials for production. The Entrepreneur decides
on choices of how to combine these resources and many more everyday at what cost to achieve
their aim.

Characteristics of a Business

Business has some or all of these characteristics:

1. Exchange, sale or transfer of goods and services. For every business there must be exchange
of goods and services for money.

2. Profit motive. For every business activities undertaken, it is for profit making motive.
However, profitable organizations and some corporations are established to provide services.
Example,: Fire Service, Customs and Excise, Police, etc.

3. Dealing in goods and services. For every organization that is business-oriented, it must
produce goods and services.

4. Uncertainty and risk bearing. Every business undertaking must take risk and there is always
uncertainty. Uncertainty may arise as a result of competition, wrong decisions or unethical
behaviour/action toward a worker or customer.

5. Continuity and regularity. A business undertaking must always be in business and not on
and off.

6. Growth. A business needs to grow. Many businesses that we see around us today started
small and now they have branches all over Nigeria, this is growth.

Objectives of Business

The objectives of a business are as follows:

1. Profit –The aim of an organization is to make profit;

2. Survival – Every business must have as a goal to continue to survive or exist;

3. Growth – A business must not only survive, but it must have as goal to be the biggest;

4. Market share – Every business concern must be able to carry out its market share to control
in terms of market coverage and patronage of its products and services;

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25
5. Productivity – It must continue to produce;

6. Innovation – Business must try to see that it is the first and best to bring up new ideas;

7. Employee’s welfare – Business must maximally want to take care of its workers so that it can
achieve higher productivity;

8. Service to consumer – Business must ensure that consumers are well satisfied. This is another
objective of any business concern; and

9. Social responsibility. Apart from doing 1-8 objectives mentioned above, it must do other
things that people around the business must benefit.

Koce, (2009) concluded that business plays an important role in everybody’s life today and will
play an increasingly important role in the future. Likewise, the Entrepreneur must affect what
his/her business does now and will do in the future. It is important to know business tricks and
how you can relate to the business world. Entrepreneurs are proud to be the owners of their
business i.e. there is satisfaction of being their own boss. Income comes into the Entrepreneur’s
hands. There is equally an opportunity to grow.

Entrepreneur as an Investor
Hornby (2006) defines an investor as someone who spends his/her energy, time, efforts, financial
resources, etc. on something he/she considers to be good or useful in anticipation that it will
yield benefits. Finance is a fundamental issue in the development of entrepreneurship. An
Entrepreneur relies heavily on personal savings, contributions from friends, relations and
business partners as well as loan from the banks. Babalola, (1999) states that modern businesses
derive their finances from two sources which include: owned capital and loaned capital.

1. Owned Capital
The owned capital available to an Entrepreneur is made up of the personal savings,
contributions from family, friends and relations. It also includes support from business partners.

i) Personal Savings – Many individuals during their working life decided to save and
that is the money they used in setting up their enterprises. We have a lot of sole
traders, who got money from this method to setup their businesses.

ii) Borrowing particularly from Friends and Relatives – It is common, among the
Entrepreneurs that once their brothers are willing to do business, they give them a
helping hand by borrowing some amount of money to start the business, when the
Entrepreneur starts making profit, he/she will pay back. This is common among the
Igbos and other tribes in Nigeria. This borrowing is not limited to brothers alone;
friends and relatives equally help out in this situation for people to start up a one-man
business.

iii) Credit Purchase from Manufactures or Wholesalers – Sole traders get financed
through credit-buying from the manufactures or wholesalers. By selling goods to sole
traders on credit, the wholesalers are financing the sole traders.

iv) Donations from Friends and Relatives – Friends and relatives can dash money
purposely to help a friend or relative continue with his/her business.

2. Loaned Capital
Usanga, U. J (2020) EED 413: Entrepreneurship Development
26
A loan is the lending of money by one or more individuals, organizations, or other entities to
other individuals, organizations and entities. The recipient (i.e., the borrower) incurs a debt and
is usually liable to pay interest on that debt until it is repaid as well as to repay the principal
amount borrowed. The document evidencing the debt (e.g., a promissory note) will normally
specify, among other things, the principal amount of money borrowed, the interest rate the lender
is charging, and the date of repayment. A loan entails the reallocation of the subject asset(s) for a
period of time, between the lender and the borrower. The interest provides an incentive for the
lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced
by contract, which can also place the borrower under additional restrictions known as loan
covenants. This book focuses on monetary loans, in practice, any material object might be lent.
Acting as a provider of loans is one of the main activities of financial institutions such as Money
Deposit banks and credit card companies. For other institutions, issuing of debt contracts such as
bonds is a typical source of funding.

Personal loan

A secured loan is a loan in which the borrower pledges some asset (e.g., a car or house) as
collateral.

A mortgage loan is a very common type of loan, used by many individuals to purchase
residential property. The lender, usually a financial institution, is given security – a lien on the
title to the property – until the mortgage is paid off in full. In the case of home loans, if the
borrower defaults on the loan, the bank would have the legal right to repossess the house and sell
it, to recover sums owing to it. Similarly, a loan taken out to buy a car may be secured by the car.
The duration of the loan is much shorter – often corresponding to the useful life of the car. There
are two types of automobile loans, direct and indirect. In a direct auto loan, a bank lends the
money directly to a consumer. In an indirect auto loan, a car dealership (or a connected
company) acts as an intermediary between the bank or financial institution and the consumer.

Other forms of secured loans include, loans against securities - such as: shares, mutual funds,
bonds, etc. This particular instrument issues customers a line of credit based on the quality of the
securities pledged. Gold loans are issued to customers after evaluating the quantity and quality of
gold in the items pledged. Corporate entities can also take out secured lending by pledging the
company's assets, including the company itself. The interest rates for secured loans are usually
lower than those of unsecured loans. Usually, the lending institution employs people (on a roll or
on a contract basis) to evaluate the quality of pledged collateral before sanctioning the loan.

Personal

Common personal loans include mortgage loans, car loans, home equity lines of credit, credit
cards, installment loans, and payday loans. The credit score of the borrower is a major
component in and underwriting and interest rates (APR) of these loans. The monthly payments
of personal loans can be decreased by selecting longer payment terms, but overall interest paid
increases as well.

Commercial

Loans to businesses are similar to the above but also include commercial mortgages and
corporate bonds. Underwriting is not based upon credit score but rather credit rating.

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27
Loan Repayment
The most typical loan repayment type is the fully amortizing payment in which each monthly
rate has the same value over time. The fixed monthly payment P for a loan of L for n months and
a monthly interest rate c is:
P = L.c(1 + c)n
(1 + c) n - 1

Federal College of Agriculture

P. M. B 7008, Ishiagu, Ebonyi State, Nigeria

Usanga, U. J
Lecturer/HOD
Call: 08107504273
e-mail: [email protected]

EED 413: ENTREPRENEURSHIP DEVELOPMENT

HND II APT/CST/HRE
(Kadurumba, C., Usanga, U. J. and Martin, C. E.)

ENTREPRENEURSHIP AND SMALL BUSINESS ORGANIZATION (Sole

Proprietorship)

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28
A Sole proprietorship, also known as the sole trader, individual entrepreneurship or
proprietorship, is a type of enterprise that is owned and run by one person and in which there is
no legal distinction between the owner and the business entity. A sole trader does not necessarily
work 'alone'-it is possible for the sole trader to employ other people. The sole trader receives all
profits (subject to taxation specific to the business) and has unlimited responsibility for all losses
and debts. Every asset of the business is owned by the proprietor and all debts of the business are
paid by the proprietor. It is a "sole" proprietorship in contrast with partnerships (which have at
least two owners). A sole proprietor may use a trade name or business name other than their or
its legal name. They may have to legally trademark their business name if it differs from their
own legal name, the process varying depending upon countries.

Advantages:

1. It requires small capital. Business can be established quickly and easily with small cash,
there are no organization fees and the services of lawyers and draw up terms are not generally
required. It is the commonest and the cheapest form of a business organization.

2. Easy to establish: This is because it requires no formalities and legal processes attached to
establishing the business and is subject to very few government regulations as no business of
balance sheet to the registrar of companies is required.

3. Ownership of all profit: The sole trader does not share profit of the business with anyone.

4. Quick decision-making: The sole trader can take quick decisions since he has no parties to
consult or a boss whose permission he must sought. He/she takes action as soon as
circumstances arise or as soon as he/she conceives an idea, such flexibility could be very vital
to his business success.

5. Ease of entry and exit: Small businesses are easy to enter and to opt out. One can use a small
amount of money to start a small business and if it is not a favourable line, can equally opt out
without much protocol.

6. Easy to withdraw his assets: Proprietorship can be liquidated as easily as it is begun. All
what he/she needs to do is to stop doing the business. All his assets, liabilities and receivable
are still his own.

7. Single handedly formulates all policies: S/he determines the firms’ policies and goals that
guides the business internally and externally and works towards achieving them. S/he enjoys
the advantage of independence of actions and personal freedom in directing his/her own
affairs.

8. Boss: S/he is free and literally his/her own boss but at the same time continues to satisfy
his/his own customers.

9. It is flexible: The owner can combine two or more types of occupation as a result of the
flexibility of his business e.g. a barber can also be selling cold water/soft drinks and musical
records CDs.

10. Personal Satisfaction: There is a great joy in knowing that a person is his/her own master.
The sole proprietor has a great deal of those advantages. S/he also knows that the success and

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29
 failure of the business completely lies with him/her. This gives him/her the incentive to make
his business as efficient as possible.

11. Cordial Relationships with workers and customers: Since the One man business is usually
small, the owner can have a very close relationship with his workers to the extent that
domestic/personal issues can be discussed and addressed. S/he also knows firsthand from
customers what their wants are. It also enables him/her to know which of the customer is
credit-worthy. This kind of relationship is usually beneficial to both parties (Entrepreneur and
customers).

12. Tax saving: Unlike in companies, the profits of the sole trader are not taxed; the owner only
pays his/her income tax.

13. Privacy: The sole trader is not under any legal obligation to publish his accounts for public
consumption as in joint stock companies.

OTHER SOURCES OF FINANCE AVAILABLE TO THE ENTREPRENEUR

1. Short-term Loan Capital

Loan capitals otherwise called borrowed facility and consist of loan from the commercial bank or
Money Deposit Banks (MDBs), Government agencies set up to provide needed support to the
entrepreneurs like NAPEP, SEDAN, Bank of Industry (BOI), NARDB, NDE, etc. Its advantages
are that it is a source of capital required for the take off of the business, provides guaranteed
funds for the entrepreneurship business and it is instrumental to business growth and expansion.
However, bank loan attracts high rates of interest and has tough and stringent conditions attached
to it. Loans from commercial banks are short term in nature.

2. Long-term Loan Capital

Long-term loan is usually made available to limited liability companies (whether private or
public) from the following sources:

a) New issues of equity shares, preference shares, loans stock or bonds, debentures;
b) Retained profits;
c) Medium term borrowing from banks

These sources of finance are for long term period and gives adequate gestation period to enable
the business to effectively put same to use in the business for profitability.

Elements of Entrepreneurship

Discovery – ability to see what others cannot see in an environment

Opportunity – utilizing available chance to do something

Creativity – converting idea into action

Innovation – adding value to existing thing, idea or product

Risk taking – ability to forge ahead without minding the consequences or responsibility for/and
bearing loss or gain.

Enterprise formation – commercializing innovation

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The entrepreneur is the person who coordinates controls and organizes the process of production
in order to make the maximum output at minimum cost thereby making profits. He is the
Managing Director or Chief Executive office in an executive office.

Fig. 1: Characteristics of the Entrepreneur Source: Karlsson, Fris, Paulsson (2004) Relating
Entrepreneurship to economic growth

Creativity and Entrepreneurship Development Conceptualized

Our perception of the creative formation of organizations through entrepreneurship has changed
dramatically during the past ten years. For a long time, entrepreneurship was construed in terms
of managing a small business or being the owner-manager thereof. However, entrepreneurship is
not directly associated with this particular context; it is essentially context-free organizational
creativity. It is equally likely to be present in large corporations’ renewal efforts and in the
identification of new markets and technologies as in the development projects of public
organizations. At the core of entrepreneurship lies the creation and exploitation of
entrepreneurial opportunities regardless of the context. Entrepreneurship is a creative activity
taking place when neither the goal nor often the initial conditions are known at the start, but
constructed during the process. This happens, because there is no single right or best solution,
and even the starting situation may be so complex and constantly changing that it is difficult to
analyze it reliably in the extent necessary. Bearing in mind the discussion above, this book uses
the term entrepreneur to refer to an individual or a community of individuals (organization) that
creates new business in its operational environment.

Crucial for the study of entrepreneurship is the theory of organizational creativity, for it is
impossible to understand the behaviour of an entrepreneurial individual without considering the
entrepreneur's psychological abilities, the social impact of the environment and the interplay
between the two, manifesting itself in the entrepreneur's capacity to create something new or
original. Rational models of entrepreneurial activity presume that the environment induces
individuals to perceive opportunities in it, to identify promising market niches or introduce new
innovations. Regarding this view as being too narrow, it is assumed nowadays that individuals
construct their own realities using concepts available in their culture. Thus, entrepreneurs and
Usanga, U. J (2020) EED 413: Entrepreneurship Development
31
their business opportunities are not merely products of the environment, which the entrepreneurs
will find, if they only know how to search rationally; rather, they are a product of the interplay
between the entrepreneurs' own creativity and their organizational environment. This line of
thinking is in alignment with the research of Sigrist (1999), who posits that perceiving and
exploiting business opportunities involves the creative discovery of something new.

Recognized as the creation of business opportunities, entrepreneurship comprises ideas, beliefs

and actions directed toward generating new economic activity that emerges gradually as the
process continues Hence, entrepreneurship is strongly present when the actors enter a business
space ("entre") without knowing what it is all about, what kind of business they want to conduct
or even what they are striving at. It is also less relevant, whether the outcome of the activity is
the establishment of a new firm, an extension of existing activities or expansion into a new
market. We are dealing with a problem-solving situation in which the situation, rules, solutions
and goals must be created through action "Entreprendre", the original French term for
entrepreneurship, offers an excellent description of the concept's essence (for further details, see
Hjorth 2003; Chell 2007). Entrepreneurship is stepping into a space where new business can be
hatched, without an idea of the nature of that business, and then making an effort to outline it. It
also includes stepping out of that space with a business opportunity and realizing it through other
measures, such as management initiatives and marketing. What goes on in this space is an
exceedingly interesting phenomenon. This entrepreneurial space and the creation of a business
opportunity within it, is by no means an isolated process, detached from its environment, nor a
closed, internal process from which a novel business idea crops up. Rather, this space is a
process in which the mental creative powers of the entrepreneur and the environment are in
continuous dynamic interaction.

Creativity develops from Cognitive constructivism, which according to Steyaert (2007), “focuses
upon (mostly individualized) cognitive processes through which individuals mentally construct
their worlds using socially mediated categories, simultaneously ‘downplaying’ the role of
language as an external expression of internal cognitions”. Cognitive process is not seen as a
systematic and rational arrangement of knowledge gleaned from the environment but as a
creative process, in which information is utilized to develop a completely new knowledge
structure,

It is entrepreneurs who are specifically good at spotting business opportunities based on snippets
of information found in the environment. Nevertheless, information alone is not enough, because
piecemeal information tells us precious little about business opportunities. They only emerge
when the entrepreneurial mind (either individually or collectively) arranges and assembles the
pieces, putting them in a meaningful relation to one another, and thereby create a new knowledge
structure. Similarly, a large circle, two small circles, a triangle and a line are devoid of meaning
as separate entities, other than as geometric shapes, and yet they acquire a meaning when
arranged in a specific order, such as a human face. Relationships among the pieces are just as
important as their meaning content.

Thus, business opportunities are processed such that the entrepreneur uses acquired knowledge
and previous experiences to assemble a new whole of the pieces, because the situation is
baffling, confusing, chaotic and, most of all, inconducive to providing a right answer.
Reassembling the pieces does not lead to a collection of pieces, but to a novel image, whose
totality is defined by the relationships among its elements. Equalling the content of knowledge in
Usanga, U. J (2020) EED 413: Entrepreneurship Development
32
importance, these relationships are forged through creative thinking. Creativity therefore is seen
as the sum total of the various system elements. Creativity requires an entrepreneur, a context
and a process as well as interaction between these elements to produce a novelty, such as a
business opportunity or innovation. In terms of the entrepreneur, the essence of creativity may be
explored by asking what it means to the entrepreneur; or rather, what is entrepreneurial
creativity. In other words, what happens within the entrepreneur, when she creates something
new? What are the forces, desires or intentions that pull or push her forward? Then again,
creativity might equally well turn out to be a commonplace and even constantly ongoing human
activity, which just happens to produce something, new and unique on particular occasions.
Maybe creativity is at the core of the human experience, a key function that separates us from
other, purely biological organisms.

Creative personalities have internal intentions that drive them to realize their dreams. In this
sense, the goal of the creative personality is self-actualization, and the means of achieving that
goal are mustered from the deep structures of personality. Creative personalities have the ability
to tap into the preconscious and conscious, and even to access the unconscious, and use the
symbol collections found there as material for self-fulfillment. Thus, they pursue their internal
intentions under conscious control and exploit preconscious and unconscious deep structures to
find an expression for their creative urges.

How Creativity Works

Creativity works by the following processes: Personality, Process and Context

Personality. Attempts to explain the creative personality are many and varied, but this lack of
unity is not necessarily a disadvantage, but an asset, helping to construct a many-faceted picture
of it. As the starting point for a description of creativity, this book contends with Abraham
Maslow that creativity is self-actualization. This is because entrepreneurs are neither separate
entities, satisfying their own motives regardless of those around them, nor are they entirely social
or institutionalized objects; rather, they have a free will within the framework that we, as rational
agents with restricted abilities, are able to understand. Hence the entrepreneur is a social
psychological actor.

Process. It is through the creative process that entrepreneurs seek to realize themselves, as it
allows them to fulfill the potential their personality holds. However, the creative personality
itself does not generate a product; it merely sets a goal and provides a source from which to
derive content, tools with which to work toward that goal and means of converting experiences
into new sources of creativity. But the implementation of a creative product requires the concrete
process of actualizing an entrepreneur's potential.

Context. Referred to as context, the creative environment in which entrepreneurs perform

creative acts influences their personalities and processes. This environment also determines what
is recognized as creative. Thus, though entrepreneurs may feel creative, the context may not
confirm this belief, and it is the context that ultimately settles the matter. In this way, context
prevails over all aspects of entrepreneur existence.

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33
Stages of Entrepreneurial Development

An Ideal Entrepreneur should determine where he or she is in the stages listed below:

1. Discovery – a stage in which the entrepreneur perceives why he or she is in a particular

place or environment by asking ‘Why am I here?’

2. Opportunity identification – a stage where the Entrepreneur observes the environment

identifies a need/want and tries to think what to do to satisfy that need or want.

3. Concept Development – a stage where the Entrepreneur generates ideas, recognizes

opportunities, and determines the feasibility of the ideas, markets, ventures, strengths,
weaknesses, opportunities and threats.

4. Resourcing– a stage in which the Entrepreneur plans the venture, identifies needed
resources using a business plan, identifies strategies to protect intellectual property,. The
Entrepreneur also identifies and acquires the financial, human, and capital resources
needed for the venture to startup.

5. Actualization – a stage in which the Entrepreneur operates the venture and utilizes
available resources to achieve its goals/objectives

6. Harvesting – a stage in which the Entrepreneur decides on the venture’s future (growth,
development, demise)

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