Introduction to entrepreneurship: who is an entrepreneur?

Think of the woman near your school who started by selling rolex from a small charcoal stove and now runs a busy food kiosk with two workers. Or the young man who began repairing phones under an umbrella and now owns a shop. They saw a need, took a risk and turned an idea into a business. They are entrepreneurs.

By the end of these notes you should be able to:

• explain the purpose of studying entrepreneurship education;
• identify the characteristics of an entrepreneur;
• assess the benefits of entrepreneurs to themselves, the community and the country;
• use creativity and innovation to design, make and evaluate a product;
• identify, assess and manage risks in business;
• explain the role of technology in business.

Key terms

• Entrepreneurship is the process of identifying a business opportunity, gathering the resources needed, and starting and running a business to make a profit while taking risks.
• An entrepreneur is a person who sees an opportunity, takes the risk of starting a business, and organises resources (money, people, materials) to make it succeed.
• Entrepreneurship education is the learning that gives you the knowledge, skills and attitudes to create your own opportunities, whether in business or as a valued employee.

Why study entrepreneurship?

1. To create jobs, not only look for them. Many school leavers in Uganda compete for few formal jobs. Entrepreneurship helps you employ yourself and others.
2. To spot opportunities in problems around you, such as a lack of clean water, waste plastic, or long distances to a market.
3. To develop useful skills: problem solving, decision making, communication, record keeping and managing money.
4. To build positive attitudes such as hard work, honesty, saving and self-reliance.
5. To add value to local resources, for example turning fruits into juice or jam instead of letting them rot.
6. To contribute to national development through production, exports and taxes.

Characteristics of an entrepreneur

Successful entrepreneurs usually share these qualities:

Benefits of entrepreneurs

To the entrepreneur:

• earns income and profit, and becomes financially independent;
• is their own boss and makes their own decisions;
• gains respect and recognition in the community;
• develops skills and personal growth.

To the community:

• creates jobs for other people;
• provides goods and services close to where people live;
• uses local raw materials and adds value to them;
• supports community projects and other businesses (suppliers, transporters).

To the government and country:

• pays taxes that fund schools, hospitals and roads;
• reduces unemployment and the problems that come with it;
• earns foreign exchange through exports such as coffee, fish and crafts;
• promotes development and new technology.

Creativity and innovation

• Creativity is the ability to come up with new and useful ideas.
• Innovation is putting a creative idea into practice to make a new or improved product, service or process.

Example: making briquettes from banana peelings, sawdust or charcoal dust is an innovation. It turns waste into fuel and reduces the cutting of trees for charcoal.

Design, make and evaluate

Entrepreneurs develop products in a cycle:

1. Identify the need or problem. Learners at a day school have nowhere to buy affordable snacks.
2. Generate ideas through brainstorming. Bake buns, make popcorn, sell roasted groundnuts.
3. Choose the best idea using criteria such as cost, demand, skills and available materials.
4. Design: sketch the product, list materials and costs, and plan the steps.
5. Make a sample (a prototype).
6. Evaluate: test it with customers, ask for feedback, and check the cost and quality.
7. Improve the product based on the evaluation, then produce more.

Risks in business

A business risk is the chance that something will go wrong and cause a loss. Common risks include:

• Fire and theft of goods or money;
• Losses when costs are higher than sales;
• Changes in prices of raw materials, or customers' tastes changing;
• Competition from new businesses;
• Bad debts: customers who buy on credit and never pay;
• Damage to goods, such as perishable produce rotting;
• Illness or death of the owner;
• Natural disasters such as floods, drought and pests on farms.

Assessing risks

To assess a risk, ask two questions:

1. How likely is it to happen? (low, medium or high)
2. How serious would the loss be? (small, medium or large)

A risk that is likely and serious needs urgent action. For example, for a learner selling fresh juice, the juice going bad is both likely and serious, so a cool box and small daily batches are priorities.

Managing risks

The role of technology in business

Technology helps businesses work faster, reach more customers and reduce costs:

• Mobile money (MTN MoMo, Airtel Money) lets businesses receive and send payments safely without carrying cash.
• Phones and social media (WhatsApp, Facebook, TikTok) are used to advertise products and talk to customers at low cost.
• Computers and apps keep records of sales, stock and accounts.
• Machines such as maize mills and sewing machines increase output and quality.
• Online platforms connect sellers with buyers far away, for example farmers selling produce to city traders.

Summary

• Entrepreneurship is identifying opportunities and taking risks to start and run a business; an entrepreneur is the person who does it.
• Studying entrepreneurship helps learners create jobs, spot opportunities and build useful skills and attitudes.
• Entrepreneurs are opportunity seeking, creative, persistent, hardworking, confident, honest and good planners.
• Entrepreneurs benefit themselves, their communities and the country.
• New products are developed by designing, making, evaluating and improving.
• Business risks must be identified, assessed by likelihood and seriousness, and managed.
• Technology such as mobile money and social media makes businesses more efficient.

Practice questions

1. Distinguish between entrepreneurship and an entrepreneur.
2. Give four reasons why entrepreneurship education is taught in Ugandan secondary schools.
3. Describe five characteristics of a successful entrepreneur, with an example for each.
4. Explain four benefits of entrepreneurs to the government of Uganda.
5. Differentiate between creativity and innovation, and give one local example of an innovation.
6. A learner sells chapati at the school gate. Identify three risks she faces and suggest how she can manage each one.
7. Activity of integration. Your school produces a lot of waste paper and plastic bottles every term. As a group of young entrepreneurs, propose a business that turns this waste into a useful product. Describe the product, how you will make it, two risks you face and how you will use technology to sell it.