Title: Entrepreneurship Department of Horticulture and Food Technology
1EntrepreneurshipDepartment of Horticulture and
Food Technology
Nazier Paulsen e-mail Paulsen_at_pentech.ac.za C
ell 083 235 6628 Work 021 9596817
2Outline for Today
- Entrepreneurship in South Africa
- Changing South Africa
- Traits of an Entrepreneur
- Risk Analysis
- Selecting a Project
3Entrepreneurship? Its importance
- What is it?
- Many different definitions
- Rapidly changing World
- 21st Century realities
- - SA economy growth
- - Corporates
- - Job losses, re-structuring
- - Modernisation, e-commerce
- Vital for job creation
4Entrepreneurial RevolutionSAs Entrepreneurial
Revolution
- High potential revolution
- Small business revolution
- Barefoot revolution
5Entrepreneurship
6Some vexing questions about the entrepreneur
herself
- Are entrepreneurs born?
- Is there a prototype of the entrepreneur?
- Are all small business owners entrepreneurs?
- Are entrepreneurs different from managers?
- Can people be taught to be entrepreneurs?
- Is there a better time to pursue
entrepreneurship? - What makes for a successful entrepreneur?
7Some vexing questions
- Are entrepreneurs born? no
- Is there a prototype of the entrepreneur? no
- Are all small business owners entrepreneurs?
yes and no - Are entrepreneurs different from managers? Yes
no - Can people be taught to be entrepreneurs? no
- Is there a better time to pursue
entrepreneurship? no - What makes for a successful entrepreneur?
?????
8Some Common Traits and Characteristics Associated
with the Entrepreneurial Individual
Achievement Motivation Internal Locus of
Control Calculated Risk-taking Tolerance of
Ambiguity Independence Persistence/Perseverance/Te
nacity Self-confidence Dedication/Strong Work
Ethic Organizational Skills Sense of humour
Opportunistic Adaptability/Versatility Initiative/
Energetic Resourcefulness Creativity Perceptivenes
s Assertiveness Persuasiveness Passionate Problem
Solver
9Entrepreneurs
- Predisposing factors
- Role model
- Early sales experience
- Early P L responsibility
- Experience in the industry
- Ability to see patterns where others see chaos
disorder - Education
- Aptitude
- Its possible
- Interpersonal skills
- Team building maintenance
- Ideas
- Opportunities
- Analytical
10Non Entrepreneurial Attitudes
- Trait
- Invulnerability
- Macho
- Anti-authority
- Impulsiveness
- Perfectionist
- Know-all
- Action
- Unnecessary risk taker
- Irrational battling to prove oneself
- Doesnt listen to advisors, clients
- No analysis
- Paralysis misses the opportunity
- Turns off the team
11OPPORTUNITY IS .
a set of forces that come together in the
external environment to create a need (market
opening) for a new business concept from which
profit or returns can be realised
12Pursuit of opportunity
- Ideas are not the same as opportunities
- Opportunities are perishable
- -----Ideas last forever
- Ideas are free
- ----Opportunities require work
- Window of opportunity depends on changes with
shifts in Technology - Demographics
- Competitors
- Consumer
13Sources of Opportunity
- Industry and market changes
- Changes in perception, mood or meaning
- The unexpected e.g.. War, floods, epidemics
- Demographic changes
- Technologies disruptive continuous
14Entrepreneurial triggers
- NEGATIVE TRIGGERS
- Survival
- Job dissatisfaction
- Lay offs/ retrenchments
- Business in trouble
- Divorce
- Death
- POSITIVE TRIGGERS
- Fresh start
- Opportunity knocks
- Curiosity
- Desire to improve ones lot
- Now or never
- Windfall
- Deliberate search
15Risk
RISK
Actual outcome
Expected outcome
RISK magnitude of loss x probability of loss
16The Odds
- Study of 218 Ventures over 10 year
- Total loss 15
- Partial loss 25
- 5-10 x original investment after tax 8
- gt10 x original investment 4
- Modest return 48
17The Odds
- Study of 218 Ventures over 10 year
- Total loss 15
- Partial loss 25
- 5-10 x original investment after tax 8
- gt10 x original investment 4
- Modest return 48
18Risk in a new venture
- The risk in a new venture will be higher if
- Amount of capital is high
- Investment in fixed assets is high
- Payback period is long
- Product is totally new
- Product is the only one produced by the venture
- No alternative uses for product
- Product can easily be copied
19Most common causes of failure
- Managerial incompetence
- Lack of experience
- Poor financial control
- Failure to plan
- Inappropriate location
- Lack of inventory control
- Improper attitudes
- Inability to make the entrepreneurial transition
20Managing risk
- Renting rather than owning equipment facilities
- Using multiple sources of financing
- Building an entrepreneurial team whose members
have different but compatible skills - Undertaking multiple ventures simultaneously with
varying degrees of risk
21Why products fail
- Market too small
- Poor match for company
- Not new/ not differentiated
- No real benefit
- Poor positioning
- Inadequate support
- Competitive response
- Changes in consumer tastes
22Global Entrepreneurship Monitor South
Africa 2002 and 2003 John Orford, Mary Lynn
Foxcroft, Eric Wood Carina Fischer, Mike
Herrington, Nick Segal
23What is GEM
- International study of entrepreneurship
- It includes
- an annual adult population survey
- interviews with experts on entrepreneurship
- Additional country specific research
- Its purpose is to understand
- International variation in entrepreneurial
activity - Is entrepreneurship is associated with growth
- What factors are associated with entrepreneurship
24(No Transcript)
25TEA 2003 (persons per 100, 18-64)
26TEA 2001 to 2003
27Start-ups / new firms(2002)
Salaries 0 3 months
Salaries 3 42 months
15th
29th
0.55 m
1.3 m
28Job creation potential ( 2002 )
- Start-ups
- 1m entrepreneurs
- 0.13 ave jobs
- New Firms
- 0.46m entrepreneurs
- 2.17 ave jobs
- 140,000 jobs
- Share of employment
- 4
- 1m jobs
- Share of employment
- 28
1/3 of all jobs in privately owned firms
29Start-ups / new firms(2002)
- Start-Up New Firm
- All GEM countries 1.3 1
- Developing countries 1.7 1
- South Africa 2.4 1
Low success rate of start-ups
30Project Ideas