DAR ES SALAAM MARITIME INSTITUTE (DMI)

SCIENCE AND MANAGEMENT DEPARTMENT

PRINCIPLES OF ENTREPRENEURSHIP

SLT 06210
Prepared by Hakizimana B.M
 LECTURE ONE

Meaning of Entrepreneurship

Entrepreneurship refers to the process of identifying opportunities, creating and

developing new businesses or ventures, and taking on the financial risks associated
with them in order to profit. It involves innovating, developing new products or services,
and organizing resources (including capital, labor, and time) to create value.

Opportunities are identified through problems available in everyday life. Ability of seeing
problems as opportunities that is Entrepreneurship. Ability to think outside the box

Entrepreneurship is all about turning ideas into reality through business

Entrepreneurs are individuals who engage in entrepreneurship, driving the economy

through the creation of new companies and the generation of jobs. Examples are
Bakhresa group, IPP Media, Zan Fast Ferries etc

PRINCIPLES OF ENTREPRENEURSHIP

Principles of Entrepreneurship are the core beliefs and values that guide
entrepreneurs in their efforts to build successful ventures. These principles help ensure
sustainability, growth, and long-term success. Here are some key principles:

Innovation: Entrepreneurs are often driven by the desire to create something new or
improve existing products or services. Innovation could mean developing new
technology, business models, or unique approaches to solving problems.

Risk-taking: Entrepreneurship inherently involves risk. Entrepreneurs must be willing to

take calculated risks, whether financial, personal, or professional, while understanding
the potential rewards and consequences.

Vision: Successful entrepreneurs usually have a clear vision for the future. This vision
helps them set goals and create a roadmap for the development of their business, even
when challenges arise.

Value creation: Means Entrepreneurs should have activities which aim at delivering
meaningful and measurable benefits to customers
Resilience: Entrepreneurship often involves facing setbacks and failures. A resilient
entrepreneur learns from mistakes and continues to push forward toward their goals.

Adaptability: The business environment is dynamic, and entrepreneurs must be able to

adapt to changing market conditions, customer preferences, and technological
advancements.

Leadership and Management: Effective entrepreneurs lead teams, manage resources,

and delegate tasks. Good leadership is key to motivating others, aligning goals, and
achieving success.

Customer Focus: Entrepreneurs must focus on understanding and solving customers'

needs or problems. A successful business idea often starts with identifying a gap in the
market and creating a solution that benefits consumers.

Resourcefulness: Entrepreneurs are skilled in utilizing the resources they have

(financial, human, or material) efficiently to achieve their goals. This includes finding
creative solutions to challenges.

Financial knowledge: Understanding financial aspects, such as budgeting, cash flow

management, and investment strategies, is essential for ensuring the long-term success
and sustainability of a business.

Ethical Practice: Ethical behavior, honesty, and integrity are essential for building trust
with customers, partners, and employees. Entrepreneurs should act responsibly,
adhering to ethical standards in business operations.

Investment: Entrepreneurs are investors meaning an act of putting any resource

available into a process or system that will add value with the expectation of making
profit. Four major areas of investment are
a. Investing in the kingdom of God,
b. Personal investment,
c. Investing in resources and
d. Investing in people.

However, Entrepreneurship is all about recognizing opportunities, taking risks, and

utilizing resources to create a business, while the principles of entrepreneurship provide
the framework for making strategic, informed decisions that increase the likelihood of
success.
 CHARACTERISTICS OF ENTREPRENEURSHIP

Entrepreneurship is marked by a set of key characteristics that define successful

entrepreneurs. These traits enable individuals to navigate challenges, innovate, and
create valuable businesses. Here are some common characteristics of
entrepreneurship:

Innovation: Entrepreneurs are often innovative and creative. They have the ability to
think outside the box and come up with new ideas, products, or services that meet a
market need or solve a problem.

Risk-taking: Entrepreneurship inherently involves risk. Entrepreneurs are willing to take

calculated risks by investing time, money, and effort into new ventures, knowing that
success is not guaranteed. They embrace uncertainty but try to minimize risks through
planning and research.

Vision: Entrepreneurs usually have a clear vision of what they want to achieve. This
vision helps them set long-term goals, make strategic decisions, and keep focused on
their mission despite obstacles.

Determination and Persistence: Entrepreneurs are highly determined and persistent.

They don’t give up easily when faced with setbacks or failures. They are driven to push
through challenges and keep striving toward their goals, often learning from their
mistakes.

Leadership: Entrepreneurs are leaders who inspire and motivate others to work toward
a common goal. They need to build and manage teams, delegate tasks, and ensure that
their business operates smoothly.

Adaptability: The ability to adapt to changing market conditions, customer needs, or

unexpected circumstances is crucial. Entrepreneurs must be flexible, able to pivot when
necessary, and open to new ideas or approaches.

Self-confidence: Successful entrepreneurs believe in their abilities to execute their

ideas and overcome obstacles. They are confident in their decision-making and vision,
even when others may doubt them.
Resourcefulness: Entrepreneurs are skilled at making the most out of available
resources. Whether it’s limited capital, time, or personnel, they know how to optimize
and use what they have to achieve their objectives.

Financial Understanding/Knowledge: Entrepreneurs need a solid understanding of

finances, including budgeting, funding, and cash flow management. Financial acumen
helps them make informed decisions, secure investments, and maintain profitability.

Passion: Entrepreneurs are passionate about their ventures. This passion drives them
to put in long hours, keep pushing forward even during difficult times, and inspire others
to get involved in their business.

Problem-solving: Entrepreneurs are natural problem-solvers. They see challenges as

opportunities and are constantly looking for ways to fix problems, improve processes, or
address customer needs.

Decisiveness: Entrepreneurs must make decisions quickly and confidently, often with
limited information. Being able to make timely, informed decisions is critical to the
success of a business.

Networking and Relationship Building: Entrepreneurs recognize the value of building

strong relationships with customers, investors, mentors, and other businesses.
Networking helps them access resources, advice, and opportunities for growth.

Time Management: Entrepreneurs often juggle multiple tasks and responsibilities.

Effective time management helps them stay organized, prioritize important tasks, and
maintain productivity.

Customer Focus: Successful entrepreneurs are customer-centric. They deeply

understand their target market and strive to meet or exceed customer expectations,
creating value that keeps customers coming back.
 LECTURE TWO

What is Business?

Business. refers to the organized efforts of individuals or entities to produce, sell, and
distribute goods or services with the primary aim of generating profit. It encompasses
various activities that facilitate the exchange of value, aiming to meet consumer needs
and contribute to economic growth. Types of Business can be categorized in two ways
by Operational Model and Legal Structure

TYPES OF BUSINESS BY OPERATIONAL MODEL

Service-Business
This kind of business provide intangible products like skills, expertise, or labor instead of
physical goods. They often have lower overhead costs and can be more flexible in
operations. Examples: Educational institutions, Consulting firms, law offices, healthcare
providers, salons, repair services etc.

Merchandising-Business
A kind of business which buy products at wholesale prices and sell them at retail prices
without altering the product. Profit is made by marking up the selling price over the
purchase-cost. Examples: Grocery stores, Clothing shops, Electronics retailers, etc

Manufacturing-Business
It transform raw materials into finished products for sale. They combine labor,
technology, and overhead to produce goods. Examples: Automobile manufacturers,
bakeries, and furniture makers. Etc

TYPES OF BUSINESS BY LEGAL STRUCTURE

Sole-Proprietorship
Owned and operated by a single individual, offering simplicity and full control but with
unlimited personal liability. Advantages: Easy to set up, complete control, and tax
benefits. Disadvantages: Unlimited liability and difficulty in raising capital.

Partnership
Owned by two or more individuals sharing profits, losses, and management
responsibilities .Pros: Shared resources and expertise. Cons: Joint liability and
potential for disputes.
Limited-Liability-Company(LLC)
A hybrid structure that combines the limited liability features of a corporation with the tax
efficiencies of a partnership. Pros: Limited liability protection and flexible taxation
options. Cons: Varies by jurisdiction; may have formation and maintenance costs.

Corporation
A separate legal entity owned by shareholders, providing limited liability protection but
subject to more regulations and higher taxes. Pros: Limited liability and ability to raise
capital through stock. Cons: Double taxation and complex regulations.

Cooperative(Co-op)
A business owned and operated for the benefit of its members, who share profits and
decision-making. Pros: Democratic control and shared benefits. Cons: Potential for
slower decision-making and limited capital.

Understanding these classifications helps in determining the appropriate structure and

operational model for a business, considering factors like liability, taxation, and
management preferences.
 LECTURE THREE

Survival and Prosperity of the Organization

Organizational survival and prosperity are critical for businesses aiming to thrive in
competitive and dynamic environments. Achieving these objectives requires a
multifaceted approach encompassing strategic planning, adaptability, innovation, and a
strong organizational culture.

Organizational Survival: Navigating Challenges

Survival focuses on maintaining operations and stability amid external and internal
challenges. Key strategies include:

Strategic Planning

Developing a clear roadmap with defined goals, resource allocation, and performance
metrics helps organizations anticipate challenges and align efforts towards common
objectives. Regularly updating the plan ensures responsiveness to changing
circumstances.

Operational Resilience

Building robust operational processes, such as diversified supply chains and scenario
planning, enables organizations to withstand disruptions and maintain continuity.

Financial Prudence

Maintaining healthy cash flow, managing debt, and having contingency funds are
essential for weathering economic downturns and unforeseen expenses.

Organizational Prosperity: Achieving Growth and

Success
Prosperity involves sustainable growth, innovation, and value creation. Strategies to
foster prosperity include:

Innovation and Adaptability

Encouraging a culture of innovation and flexibility allows organizations to respond to

market changes and technological advancements, ensuring long-term relevance.
Employee Development

Investing in training and development enhances employee skills, engagement, and

retention, contributing to overall organizational success.

Customer-Centric Approach

Building strong relationships with customers through personalized experiences and

excellent service fosters loyalty and drives repeat business.

Integrating Survival and Prosperity

Organizations that integrate strategies for both survival and prosperity are better
positioned to navigate challenges and seize opportunities. This holistic approach
ensures not only the continuity of operations but also sustainable growth and success
 LECTURE FOUR

There are different factors affecting business through SCOT/SWOT and PEST analysis

1. A PEST ANALYSIS. A PEST analysis is a strategic tool used by organizations

to assess and understand the Political, Economic, Social, and Technological
factors that could impact their operations and decision-making processes. This
analysis helps businesses identify external influences that may present
opportunities or pose threats, enabling them to adapt and plan effectively.

Components of PEST Analysis

Political Factors
These pertain to the influence of government policies and political stability on the
business environment. Key considerations include:

o Tax policies and regulations

o Trade tariffs and restrictions
o Employment laws and labor rights
o Government stability and public sector policies
o

Economic Factors
Economic conditions significantly affect business performance. Factors to evaluate are:

o Economic growth rates

o Inflation and interest rates
o Exchange rates and currency fluctuations
o Consumer spending and income levels

Social Factors
These involve societal trends and cultural aspects that can influence demand for a
company's products or services. Aspects include:

o Demographics and population growth

o Cultural attitudes and lifestyle changes
o Education levels and social mobility
o Health consciousness and environmental awareness
Technological Factors
Technological advancements can create new opportunities or render existing products
obsolete. Considerations are:

o Innovation and research & development (R&D) activity

o Automation and technological infrastructure
o Cyber security and data protection
o Technological awareness and adoption rates

Applications of PEST Analysis

 Strategic Planning: Helps in formulating long-term strategies by understanding

external factors.
 Market Research: Assists in evaluating market conditions and identifying
potential markets.
 Risk Management: Aids in identifying external risks and developing mitigation
strategies.
 Competitive Analysis: Provides insights into factors that may affect the
competitive landscape.

2. A SWOT/ SCOT analysis is a strategic planning tool used to identify and

evaluate the Strengths, Weaknesses/Challenges, Opportunities, and Threats
that can impact a business. It helps organizations understand internal capabilities
and external factors, guiding decision-making and strategy development.

Strengths (Internal, Positive Factors)

These are internal attributes and resources that support a successful outcome.
Examples include:

Strong Brand Reputation: A well-recognized and trusted brand can attract customers
and foster loyalty.

 Skilled Workforce: Employees with expertise and experience contribute to high-

quality products and services.
 Financial Stability: Adequate capital and healthy cash flow enable investment
and growth.
 Innovative Technology: Proprietary technologies or processes that improve
efficiency and product offerings.
 Customer Loyalty: A dedicated customer base that provides repeat business
and referrals.
Weaknesses (Internal, Negative Factors)

These are internal factors that may hinder the achievement of objectives. Examples
include:

 Limited Resources: Insufficient financial, human, or technological resources to

compete effectively.
 Outdated Technology: Reliance on obsolete systems that reduce efficiency and
competitiveness.
 Poor Location: A business location that is hard to access or lacks visibility can
deter customers.
 High Employee Turnover: Frequent staff changes can lead to loss of expertise
and increased recruitment costs.
 Weak Online Presence: Limited digital marketing or e-commerce capabilities
can restrict market reach.

Opportunities (External, Positive Factors)

These are external factors that the organization can exploit to its advantage. Examples
include:

 Market Growth: Expanding markets or increasing demand for products/services.

 Technological Advancements: New technologies that can enhance products or
streamline operations.
 Regulatory Changes: New laws or policies that open up new markets or reduce
barriers.
 Partnerships and Alliances: Collaborations with other businesses that can
provide mutual benefits.
 Changing Consumer Preferences: Shifts in consumer behavior that align with
the business's offerings.

Threats (External, Negative Factors)

These are external challenges that could jeopardize the business's success. Examples
include:

 Economic Downturns: Recessions or financial crises that reduce consumer

spending.
 Intense Competition: Emerging competitors offering similar or superior
products/services.
 Supply Chain Disruptions: Interruptions in the supply of materials or products.
 Changing Regulations: New laws or regulations that increase operational costs
or limit activities.
 Negative Publicity: Bad press or social media backlash that damages the
brand's reputation.
Using SWOT Analysis for Strategic Planning

After identifying the factors in each category, businesses can develop strategies by:

 Leveraging Strengths to Capitalize on Opportunities: Utilize internal

strengths to take advantage of external opportunities.
 Using Strengths to Counteract Threats: Apply strengths to defend against
external threats.
 Improving Weaknesses to Avoid Threats: Address internal weaknesses to
prevent external threats from impacting the business.
 Mitigating Weaknesses to Seize Opportunities: Work on internal weaknesses
to better capitalize on external opportunities.

This approach helps in aligning internal capabilities with external possibilities, ensuring
a balanced and informed strategic plan.
 LECTURE FIVE

Meaning of a Business Plan

A business plan is a formal written document that outlines the goals of a business, the
strategy for achieving them, and the time frame within which these goals are expected
to be met. It can be used both by startups and existing businesses to guide growth,
secure funding, and evaluate performance.

It acts as a roadmap for the business, detailing key elements/Components which are;

1. Executive Summary

 Brief overview of the business

 Mission statement
 Summary of products/services
 Basic information about the company’s leadership, employees, and location
 Summary of financial projections and funding needs

2. Company Description

 Nature of the business

 Market needs the business aims to fulfill
 Business structure (e.g., sole proprietorship, partnership, corporation)
 History and background of the business (if existing)

3. Market Analysis

 Industry overview
 Target market and customer segments
 Market size and growth potential
 Competitive analysis
 Market trends and projections

4. Organization and Management

 Organizational structure
 Ownership information
 Profiles of the management team and key staff
 Roles and responsibilities
5. Products or Services

 Description of products/services offered

 Unique selling proposition (USP)
 Product lifecycle
 Research and development activities
 Future products or services

6. Marketing and Sales Strategy

 Marketing plan (promotion, pricing, positioning)

 Sales strategy and tactics
 Customer acquisition and retention plans
 Distribution channels

7. Operations Plan

 Location and facilities

 Technology and equipment
 Production/workflow processes
 Supply chain management
 Quality control measures

8. Financial Plan

 Income statements, cash flow statements, and balance sheets (projected for 3–5
years)
 Break-even analysis
 Funding requirements and use of funds
 Assumptions and risk analysis

9. Appendix

 Supporting documents (resumes, legal documents, permits, charts, product

images)
 References
 Additional research or data

Importance of a Business Plan

1. Guides Business Strategy

A business plan helps define the mission, vision, and strategic direction of the business.
It keeps the team focused on the goals and aligned on priorities.
2. Attracts Investors and Funding

Investors and lenders require a detailed business plan to assess the viability and
profitability of the business before providing financial support.

3. Identifies Risks and Opportunities

By analyzing the market, competition, and internal operations, a business plan helps
identify potential challenges and ways to mitigate them.

4. Improves Decision Making

A business plan provides data-driven insights that help business owners make informed
decisions on marketing, hiring, pricing, and expansion.

5. Sets Clear Objectives and Milestones

It defines what success looks like for the business and sets measurable goals, allowing
performance to be tracked over time.

6. Facilitates Communication

It serves as a communication tool for internal teams, partners, investors, and other
stakeholders to understand the business and their role in it.

7. Helps in Financial Planning

A business plan includes financial forecasts (such as income statements, cash flow, and
balance sheets) that help manage the budget and prepare for future needs.

THE END
Required
Materials:

[1] Johnson, K.D. (2013). The Entrepreneur Mind: 100 Essential Beliefs,
Characteristics, and Habits of Elite Entrepreneurs. Johnson Media Inc,
ISBN-13: 978-0988479708.
[2] Aulet, Bill. (2013). Disciplined Entrepreneurship: 24 Steps to a
Successful Startup. Wiley, ISBN-13: 978-1118692288.
[3] Michael S. Maurer, (2012); Essentials Principles of Entrepreneurship,
1st Edition, Indianapolis, USA.
[4] Thomas W. Zimmarer, Normal M. Scarborough, Dong Wilson, (2010);
Essentials of Entrepreneurship and Small business Management,
Pearson Education, Inc. New Jersey USA.
[5] Drucker, P.F. (2011). Innovation and Entrepreneurship. Reprint edition,
Harper Business, ISBN-13: 978-0060851132.

Recommended References:-
[1] Rolf Wusternhagen, ‘et al’; (2010), Sustainable Innovation and
Entrepreneurship, MPG Books ltd, Bodmin, Cornwall.
[2] Timmons, J.A. & Spinelli, S. (2010). New Venture Creation:
Entrepreneurship for the 21st Century, 6th Edition. McGraw Hill,
Singapore.