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Understanding Communication Management and Entrepreneurship 1

Module
3
The Communication
Management and
Entrepreneurship as a
Field of Study

Submitted by: Jezelle Mae I. Corbeta


Understanding Communication Management and Entrepreneurship 2

Learning Objectives:

 Define entrepreneurship and characterize the


entrepreneur in the contemporary setting

Keywords and Phrases:

 Entrepreneur
 Economic
 Development
 Careers
 Ethics
 Nature
 Responsibility
 Role
 Management

INTRODUCTION

Entrepreneurship

What is Entrepreneurship? Entrepreneur Definition and Meaning


Entrepreneurship is the act of creating a business or businesses while building and scaling it to
generate a profit.

However, as a basic entrepreneurship definition, it’s a bit limiting. The more modern
entrepreneurship definition is also about transforming the world by solving big problems. Like
Understanding Communication Management and Entrepreneurship 3

initiating social change, creating an innovative product or presenting a new life-changing


solution.

What the entrepreneurship definition doesn’t tell you is that entrepreneurship is what people do
to take their career and dreams into their hands and lead it in the direction of their own choice.
It’s about building a life on your own terms. No bosses. No restricting schedules. And no one
holding you back. Entrepreneurs are able to take the first step into making the world a better
place, for everyone in it.

The process of launching, developing and running a business venture along with its financial
risks is called entrepreneurship.

In simple terms, it is the willingness to launch a new business venture. It is very important for the
economic development of the expanding global marketplace. A person who undertakes
entrepreneurship is called an entrepreneur.

Generally, starting your own business is a tough proposition as 90% of startups fail each year.
However, it comes as no surprise that more and more people choose to be independent in their
professional careers. According to statistics compiled by dealsunny.com, 2 out of 3 people
worldwide think entrepreneurship is a good choice.

What is an Entrepreneur? Entrepreneur Definition

An entrepreneur is a person who sets up a business with the aim to make a profit.

This entrepreneur definition can be a bit vague but for good reason. An entrepreneur can be a
person who sets up their first online store on the side or a freelancer just starting out.
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The reason why they’re considered entrepreneurs, though some disagree, is because where you
start out isn’t where you’ll end up. An entrepreneur is someone who starts a side hustle that can
eventually create a full-time, sustainable business with employees. Same with the freelancer. If
you’re focused on creating a profitable business, you fit the entrepreneur definition.

However, the entrepreneur meaning involves much more than being a business or job creator.
Entrepreneurs are some of the world’s most powerful transformers. From Elon Musk sending
people to Mars to Bill Gates and Steve Jobs making computers part of every household,
entrepreneurs imagine the world differently.

And the entrepreneur definition rarely ever talks about the enormous impact entrepreneurs have
on the world.

Entrepreneurs see possibilities and solutions where the average person only sees
annoyances and problems.

Understanding what is an entrepreneur can help more people recognize the value they contribute
to the world.

What Is the Meaning of Entrepreneurship?

The meaning of entrepreneurship involves an entrepreneur who takes action to make a change in
the world. Whether startup entrepreneurs solve a problem that many struggle with each day,
bring people together in a way no one has before, or build something revolutionary that advances
society, they all have one thing in common: action.

It’s not some idea that’s stuck in your head. Entrepreneurs take the idea and execute on it.
Entrepreneurship is about execution of ideas.
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Entrepreneur Meaning from Real Entrepreneurs

Number of Business Establishment


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Importance of Entrepreneurship

What is entrepreneurship really about? And why’s it so important? An entrepreneur is the person
who sees a problem in the world and immediately focuses on creating the solution. They’re the
leaders that strike out on their own to improve society. Whether they’re creating jobs or a new
product, they constantly take action to ensure world progress. In the process of understanding
what is entrepreneurship, let’s look at why entrepreneurs are important in society.

 Entrepreneurs create jobs: Without entrepreneurs, jobs wouldn’t exist. Entrepreneurs take on
the risk to employ themselves. Their ambition to continue their business’ growth eventually
leads to the creation of new jobs. As their business continues to grow, even more jobs are
created. Thus, lowering unemployment rates while helping people feed their families.
 Entrepreneurs create change: Entrepreneurs dream big so naturally some of their ideas will
make worldwide change. They might create a new product that solves a burning problem or
take on the challenge to explore something never explored before. Many believe in improving
the world with their products, ideas or businesses.
 Entrepreneurs give to society: While some have this notion of the rich being evil and greedy,
they often do more for the greater good than the average person. They make more money and
thus pay more in taxes which helps fund social services. Entrepreneurs are some of the biggest
donors to charities and nonprofits for various causes. Some seek to invest their money in
creating solutions to help poorer communities have access to things we take for granted like
clean drinking water and good health care.
 Entrepreneurs add to national income: Entrepreneurship generates new wealth in an economy.
New ideas and improved products or services from entrepreneurs allow for the growth of new
markets and new wealth to be created in an economy. Adding to that, increased level of
employment and earnings add to the national income.
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Why Do People Become Entrepreneur?

What is entrepreneurship’s appeal? With over 400 million entrepreneurs, entrepreneurship has an
international appeal. Every entrepreneur has their own ‘why’ that drove them to dive into being
their own boss. Whether entrepreneurs need more freedom or to make the world a better place,
they all take control of their life by living life on their own terms. Here are a few of the reasons
why people become entrepreneurs:

 To change the world: Many entrepreneurs strive to make the world better. Whether
entrepreneurs believe in space exploration, eliminating poverty or creating a practical but game-
changing product, they ultimately build a brand in service of others. Some entrepreneurs use
their business as a way to raise capital quickly to funnel into their noble causes. To social
entrepreneurs, building an empire is about creating a better world for everyone.
 They don’t want a boss: Entrepreneurs often struggle with having a boss. They often feel
suffocated, restricted and held back. Some entrepreneurs may feel that they have a more
effective way of doing things. Others may dislike the lack of creative freedom. Ultimately, they
become attracted to entrepreneurship to succeed on their own terms. Being the boss can be
more fulfilling than having one. Check out 10 Obvious Signs You Should Be Working for Yourself.
 They want flexible hours: Entrepreneurship is often popular around those who need flexible
hours. Many people with disabilities often enjoy entrepreneurship as it allows them to work
when they’re able to. Parents with young children might also prefer entrepreneurship as it
allows them to raise young children at home or pick them up from school without having to feel
guilty about it. Students may also like the flexibility of entrepreneurship as their course
workload might not allow them to work standard office hours.
 They want to work from anywhere: Along with flexibility in working hours, entrepreneurship is
popular among those who don’t want to be tied down to a specific location. Entrepreneurs
might not want to work from the same place every single day, as it might get boring for them.
So, if you’re looking for the freedom to work from anywhere in the world, maybe the
entrepreneur lifestyle is the right one for you.
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 They’re risk-takers: Calculated risk taking and entrepreneurship go hand in hand. Entrepreneurs
don’t apply to jobs, they create them. With that comes risk. Whether it’s the financial risk of
starting your first brand or the risk from not knowing what to expect, business is risky.
Entrepreneurs are often taking risks by trying things the average person won’t, to do things the
average person can’t.
 They can’t get a job: Many stumble into entrepreneurship when they can’t get a job. Getting
fired, a lack of experience or a criminal record can prevent the average person from getting a
job when they’re desperate. Instead of being defeated by their situation, they create new
opportunities for themselves. A new graduate might start an online store the summer after
graduation to build up their resume. A parent who is seasonally laid off each winter might start a
business to ensure they can continue feeding their family while keeping a roof over their heads.
 They don’t fit into the corporate environment: Entrepreneurs don’t often thrive in corporate
environments. It’s often very restricting for their growth. They may dislike the lack of control
they have in their role or the office politics. In general, you can spot an entrepreneur in a
corporate environment as they’re usually trying to gain more control in their role and learning
their coworkers responsibilities to better understand how everything fits together.
 They’re curious: Entrepreneurs love finding out the answer to the question, ‘what will happen
if…’ They’re experimental. Entrepreneurs love learning. They regularly read business books to
advance their knowledge. So naturally, entrepreneurship appeals to them because doing allows
them to learn the most in the shortest amount of time. Their curiosity allows their continued
growth.
 They’re ambitious: Those who love reaching difficult goals and milestones are made to be
entrepreneurs. There’s no limit to how much an entrepreneur can make and so they can always
work to achieve higher levels of greatness. Since there’s no limit to what they can achieve,
entrepreneurs constantly find themselves growing and achieving more than they ever imagined.
When obstacles get presented in front of them, they find the workaround to their goal.
Entrepreneurs are unstoppable.

What is entrepreneurial management?

The adjective “entrepreneurial” is used in a host of varying contexts and embodies a wide variety
of meanings and implications. For instance, “entrepreneurial knowledge,” as J.J. Kao points out
in The Entrepreneurial Organization, can be referred to the concepts, skills, and mindset
associated with operating large corporations with greater flexibility, innovation, and
responsiveness.

However, for our discussions, entrepreneurial knowledge is restricted to the concepts, skills, and
mindset that individual business owners must employ in the process of starting and operating
high-growth-potential ventures.

Entrepreneurial Management vs. Corporate Management

In their book, Entrepreneurship, Robert Hisrich and Michael Peters say that managing a new
venture differs from managing an existing operation along five key management issues:
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 strategic orientation
 commitment to opportunity
 commitment of resources
 control of resources
 management structure

The entrepreneurs born with these management skills come from a rare breed of people with
intelligence, great heart, and creative skills. They are visionary and self-confident, good
communicators with unlimited energy, and have a strong passion for what they do.

Fortunately for those of you who were not born blessed with these skills running through your
blood, we know that the most critical skills in launching and running a new venture can be
learned. We will teach you some of the most important ones.

Entrepreneurs are directly involved in the dynamic, and very complex, interrelationship between
financial management and business strategy. This is the significant difference that sets
entrepreneurial management apart from all business management practices. In almost all cases,
the person making the decisions has personal risk at stake.

The worst-case scenario for folks “at work” is getting fired. The worst case for entrepreneurs is
losing their home, personal credit, and lifestyle, as well as the destruction of family relationships.

Defining Entrepreneurial Management: Peter Drucker remarked that for the existing large
company, the controlling word in the phrase “entrepreneurial management” is “entrepreneurial.”
In any new business venture, the controlling word is “management.” Therefore, for the purposes
of our discussions we lean toward “management” as a discipline for entrepreneurs. We define
entrepreneurial management as the practice of taking entrepreneurial knowledge and utilizing it
for increasing the effectiveness of new business venturing as well as small- and medium-sized
businesses.

The heart of entrepreneurial management is continually juggling these vital management


issues:

 What is this venture about? (mission and values statement)


 Where should it go? (goals and objectives)
 How will it get there? (growth strategy)
 What does it need to get there? (people and resources)
 What structure is best? (organizational capabilities)
 How much money does it need and when? (financing strategy)
 How will it recognize the final destination? (vision of success)
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Types of Entrepreneurship
1. Small business entrepreneurship

In today’s world, the majority of businesses are still small businesses. In the U.S, 99.7% of all
companies are small businesses and they employ 50% of all non-governmental workers.

They are mostly barely profitable, but they make profits only to make a living and support their
families. Such businesses lack the scale to attract venture capital and they are funded via
friends/family or small business loans.

Examples of small business entrepreneurship include hairdressers, grocery stores, electricians,


carpenters, plumbers, consultants, etc.

2. Scalable Startup Entrepreneurship

In this type of entrepreneurship, entrepreneurs start their company believing that their vision can
change the world. Their funding comes from venture capitalists and they hire the best employees.
Finding a scalable and repeatable business model is their goal. Once they find it, further funding
from venture capitalists is required for growing their business.

Scalable startups only make up a small proportion of all businesses due to the risk capital and

outsize returns.

Examples of scalable startup entrepreneurship include Facebook, Instagram, Online shopping for
electronics, etc.

3. Large Company Entrepreneurship

Large companies through sustaining innovation, offering new products that are variants around
their core products. New products are developed in order to meet with changing customer needs
and advanced technology. Often, companies do this by partnering with or buying innovative
companies.

Examples of large company entrepreneurship include Google, Microsoft, Samsung, etc.

4. Social Entrepreneurship

Social entrepreneurship is where an entrepreneur creates products and services to solve social
needs and problems. Their only goal is to make the world a better place and not to make profits
or acquire wealth. They can be non-profit, profit or hybrid.

One example of social entrepreneurship is an organization named Safepoint Trust by Marc


Koska, which works to redesign medical tools and introduce inexpensive non-reusable syringes
for underfunded clinics around the world. This organization was able to deliver 4 billion safe
injections across 40 countries with their breakthrough Auto-Disable syringes.
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Importance of Entrepreneurship

Haven’t we all wondered at least once in our lives why entrepreneurship is so appealing to the
majority? Why is it so important?

 Entrepreneurs create jobs: Entrepreneurs, in addition to employing themselves, also create a


number of job opportunities with their business venture. And as their businesses grow, more job
opportunities are created, thereby reducing unemployment.
 Entrepreneurs create change: When an entrepreneur makes a product in the hopes of solving a
problem or when they explore a new idea, it brings a change into the world. Their ambitions and
ideas thus improve the world.
 Entrepreneurs give to the society: It is a common notion that the rich are greedy, but it is
mostly wrong. The more money they make, the more in taxes they pay which in turn funds
social services. Some entrepreneurs as we know, like Bill Gates, the founder of Microsoft, are
the biggest donors to charities and non-profits.

Factors affecting entrepreneurship

As much appealing the idea of entrepreneurship may seem, there are a few factors to be kept in
mind before choosing when and where to start your business. Some of the factors that affect
entrepreneurship are:

 Political Factors: The market in a place can be capitalistic, communistic or a mixture of both.
Capitalism requires innovation while communism requires entrepreneurs and the political class
to be well connected with each other. Ideally, a country should be capitalistic for
entrepreneurship to flourish in the region.
 Legal Factors: The strength and fairness of the judicial system in a country has a big role to play
in the quality of entrepreneurship. This is because entrepreneurs in many cases might require
the courts to enforce the contracts agreed between two parties. But in many countries, such
contracts are not enforced properly, and this risk prevents the development of
entrepreneurship in those countries.
 Taxation: Governments sometimes resort to excessive taxation as they adopt the policy of
taking from the rich and giving it to the poor. However, the basic principle of entrepreneurship
believes in the survival of the fittest and the excessive taxation rule contradicts it. Hence,
entrepreneurs want to set up businesses in places where there is very little interference from
the government on taxation.
 Capital Availability: Capital is the first requirement to start risky ventures and they might also
require instant capital to scale up the business once an idea becomes successful. Therefore,
entrepreneurship helps the economies to grow in those countries where there is a well-
developed system of providing capital at every stage i.e. seed capital, venture capital, private
equity as well as stock and bond markets.
 Labour and raw materials: Availability of skilled labour and required raw materials at
reasonable prices are an important factor for the launching of a business venture in a region.
Countries like India, Bangladesh and China have witnessed a huge rise in entrepreneurial
activities because of the labour markets being favourable for them.
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Make sure to plan your business startup keeping all these factors in mind to improve the chances
of your success.

Any independent individual with leadership qualities would opt for entrepreneurship in today’s
world even though there comes a lot of risks and responsibilities along with it. “Entrepreneurship
is about being able to face failure, manage failure and succeed after failing” – Kiran Mazumdar
Shaw

If you believe you have the skills and talent to be an entrepreneur, do read our article “How to
Become an Entrepreneur” to guide you in your journey towards success.

Discussion About Managing Entrepreneurial Risks


It is important to understand the construct of risk and uncertainty. Businesses have always faced
risks. As we discussed in another Article, recent events around the world in the last few years
have provided dramatic evidence that, in today’s business world, risk is now a reality.

How Do We Keep From Failing?


Entrepreneurship, risk, and uncertainty are long-time bedfellows, and they push the entrepreneur
to the limit. Peter Bernstein, in Against the Gods, the Remarkable Story of Risk, describes that
the modern concepts of risk dates back more than 800 years with the early principles of
gambling. According to Bernstein, “The revolutionary idea that defines the boundary between
modern times and the past is the mastery of risk.”

The period of global exploration and trade during the 1500s and 1600s transformed these
principles into the creation of wealth and “the inevitable result was capitalism, the epitome of
risk-taking.” Bernstein writes, “You do not plan to ship goods across the ocean, or to assemble
merchandise for sale, or to borrow money without first trying to determine what the future may
hold in store.” In fact, when the Revolutionary War broke out, the Americans had to create their
insurance industry from scratch and underwrite maritime business and life insurance policies for
sea captains.

Uncertainty means that decision-makers do not have sufficient information about environmental
factors, which increases the risk of failure. For our research we define risk as the degree of
certainty or uncertainty as to the realization of expected future financial returns in a business
venture.
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Risks Specific to Entrepreneurial Capitalism

Risk-taking is essential to capitalism. Without risk the free enterprise system cannot function.
Not all risks and challenges can be anticipated, but once identified, they can be managed by lead
entrepreneurs, executives, and boards working together. We all have some kind of belief that
entrepreneurship is risky, but the facts are startling. Estimates from the SBA’s database suggest
that of the 850,000 new businesses started each year, about 60 percent fail in the first six years
and more than 70 percent fail in the first eight years. Risks that are specific to entrepreneurial
capitalism are listed here. Entrepreneurial management is knowing how to manage these specific
risks.

Economic Risk
How is the business world today? What is the window of opportunity for this venture? Includes
geopolitical threats, economic cycles, interest rates, and governmental regulations.

People Risk
What about the venture team? How did they come together? Have they worked together before?
Can they make through the growth stage, or will there be too many cooks in the kitchen?

Market Risk
How are the dynamics of this industry sector? Is there going to be room for growth in this
market? What about the risks of other competitors?

Technical Risk
Does the product work? What about some technology coming along in the future that will make
this product/technology worthless like a buggy whip?

Strategic Risk
Is there a sustainable competitive advantage? Includes sharing the risk with strategic alliances
and finding the right operations strategy with a viable business model.

Financial Risk
Can this venture or activity get funded now? What about later rounds of financing, when growth
kicks in and it needs fed with cash?

Personal Risk
Can the lead entrepreneurs truly commit? There are many sacrifices, as other priorities in life,
like family, friends, and vacations that will have to come second.

Unwinding this Knot of Uncertainty

Left unmanaged, these risks get tightly wound into a knot. When it is wound so tight,
management skills, expert advice, and even hope are passed up as humans go into the survival
mode. In fact, the human organism can tolerate anything except uncertainty, which causes so
much stress that people are no longer capable of thinking in a cognitive, creative manner. They
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focus on survival. What makes this “knot of uncertainty” so difficult to deal with is that all the
entrepreneurial risks interact with each other.

For surviving the “deep, dark canyons of uncertainty” we again draw on Bernstein. He tells us
that the essence of risk management lies in maximizing those areas where we have some control
over the outcome while minimizing those areas where we have absolutely no control.

Unwinding this knot, one risk at a time, starts with keeping your blood cool in the heat of the
battle, or as military experts say, having a sang froid. You need this cool temperament and a
clear head to separate the “controllables” from the “uncontrollables.” Controllables are the
elements that management can control like the cash burn rate, the activities of the venture itself,
personnel, finance, and production. The uncontrollable forces are external forces over which
your venture team has no direct control, although sometimes it can exert influence.

Becoming Risk Technicians

William J. McDonough, president of the Federal Reserve Bank of New York, says that taking
calculated risks is part of any business venture. Each venture needs to have in place the systems
and management processes necessary not only to identify the risks associated with the business
activities, but also to effectively measure, monitor, and control them.

Identifying and being able to openly discuss the risks inherent in your venture is very key. It
demonstrates your leadership and management skills. It increases the credibility of you and your
venture with investors and strategic partners. It creates confidence that quickly clears open the
channels of communication.

The strategy for dealing with risk and uncertainty includes three key components:

 The business plan is the heading that provides guidance even in the roughest seas.
 Entrepreneurial knowledge is knowing where the rocks (or risks) are at sea.
 Entrepreneurial management is the skill of steering from the rocks.

By reading the content on our Web site and working hard to follow the strategies and concepts
outlined herein, you will become expert risk technicians: experts at identifying risks, knowing
how to manage around risks, and becoming comfortable in high-risk environments. Developing
an effective strategy for dealing with risk and uncertainty sets apart the winners from those lost
at sea.

Venturing into Stormy Seas

Historically, ventures that launched during economic downturns had difficulty in raising money
and had to grow in a step-by-step approach. Tim Draper, a partner at Draper Fisher Jurvetson,
believes that entrepreneurs launching today must find ways to build revenue and be more capital-
efficient than in the past. Ventures that are watertight in stormy seas will last longer and become
market leaders. Examples of great companies that started in economic downturns are Hewlett
Packard, Sun Microsystems, Dell Computer, Genentech, Palm Computing, Intuit, and even
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Starbucks. They did not go out and raise $50 million in venture capital. They became huge,
successful companies because they watched money carefully.

Even large corporations must batten down the hatches and watch each dollar more carefully.
According to T. J. Rogers, founder of Cypress Semiconductors, “We’ve had two recessions in
seventeen years. They were tough times, but I think I’m a better manager for it.”

Don Valentine, founder of Sequoia Capital, has been around since 1972 and helped launch Apple
Computer, LSI Logic, Oracle, and Cisco Systems in economic downturns. He says, “I think a
retrospective from 2010 will show that 2001 was the beginning of (a new) golden era. Some of
the great companies of all time have been started in prior recessions, and my forecast is they will
be started (again) in this recession.”

Our discussion is not about whether you should write a business plan to help manage a start-up
activity. Our discussion is about planning effectively.

References/Bibliography

1. https://www.oberlo.com.ph/blog/what-is-entrepreneurship
2. https://news.gcase.org/2011/10/24/what-is-entrepreneurial-management/
3. https://www.feedough.com/what-is-entrepreneurship-types-importance/