Notes on ENTREPRENEURSHIP (Based on KLB Form 1 Business Studies)
1. Meaning of Entrepreneurship
- Entrepreneurship refers to the process of identifying a business opportunity, gathering resources, and
starting a business to produce goods or services.
- An entrepreneur is a person who takes risks to start and manage a business with the aim of making a
profit.
- Entrepreneurship involves innovation, creativity, and the ability to solve problems.
2. Importance of Entrepreneurship
Entrepreneurship plays a crucial role in the economy and society. Its importance includes:
1. Job Creation: Entrepreneurs create employment opportunities for themselves and others.
2. Economic Growth: Businesses contribute to the country’s GDP and increase national income.
3. Innovation: Entrepreneurs introduce new products, services, and technologies.
4. Wealth Creation: Entrepreneurs generate income and wealth for themselves and the nation.
5. Improved Standards of Living: Businesses provide goods and services that improve people’s quality of
life.
6. Utilization of Resources: Entrepreneurs make use of idle resources like land, labour, and capital.
7. Reduction of Poverty: Entrepreneurship creates income-earning opportunities, reducing poverty.
3. Qualities of an Entrepreneur
Successful entrepreneurs possess the following qualities:
1. Innovative: They come up with new ideas and solutions.
2. Risk-Taker: They are willing to take calculated risks.
3. Hardworking: They are committed and dedicated to their work.
4. Self-Confident: They believe in their abilities and decisions.
5. Visionary: They have clear goals and plans for the future.
6. Persistent: They do not give up easily, even in the face of challenges.
7. Good Communicator: They can effectively communicate with customers, employees, and suppliers.
8. Flexible: They adapt to changes in the business environment.
4. Challenges Faced by Entrepreneurs
Entrepreneurs encounter various challenges, including:
1. Lack of Capital: Difficulty in raising funds to start or expand the business.
2. Competition: Facing stiff competition from established businesses.
3. Poor Infrastructure: Inadequate roads, electricity, and communication facilities.
4. Unfavourable Government Policies: High taxes and strict regulations.
5. Lack of Market Information: Difficulty in identifying customer needs and market trends.
6. Inadequate Skills: Lack of managerial and technical skills.
7. Unpredictable Economic Conditions: Inflation, currency fluctuations, and economic downturns.
8. Corruption: Bribes and unethical practices increase the cost of doing business.
Practice Questions and Answers (KCSE Format)
Paper 1 Questions
1. Define the term entrepreneurship. (2 marks)
Entrepreneurship is the process of identifying a business opportunity, gathering resources, and starting a
business to produce goods or services.
2. State three importance of entrepreneurship in an economy. (3 marks)
- Answer: Job creation, economic growth, and innovation.
3. List four qualities of a successful entrepreneur. (4 marks)
Innovative, risk-taker, hardworking, and self-confident.
4. Explain five challenges faced by entrepreneurs. (5 marks)
Lack of capital, competition, poor infrastructure, unfavourable government policies, and lack of market
information.
5. Identify four rewards of entrepreneurship. (4 marks)
Profit, independence, personal satisfaction, and wealth creation.
Paper 2 Questions (Hapa lazima you explain sasa.1 mark to state, 1 mark to explain)
6. Discuss five ways in which entrepreneurship contributes to economic development. (10 marks)
1. Creates employment opportunities.
2. Encourages innovation and technological advancement.
3. Generates income and wealth.
4. Improves standards of living.
5. Utilizes idle resources.
7. Explain five qualities that make an entrepreneur successful. (10 marks)
1. Innovative: Comes up with new ideas.
2. Risk-Taker: Willing to take calculated risks.
3. Hardworking: Committed to achieving goals.
4. Self-Confident: Believes in their abilities.
5. Visionary: Has clear goals and plans.
8. Analyse five challenges faced by entrepreneurs in developing countries. (10 marks)
1. Lack of capital to start or expand businesses.
2. Poor infrastructure like roads and electricity.
3. Unfavourable government policies such as high taxes.
4. Competition from established businesses.
5. Lack of access to market information.
9. Explain five ways the government can support entrepreneurs. (10 marks)
1. Providing low-interest loans and grants.
2. Improving infrastructure like roads and electricity.
3. Offering training and mentorship programs.
4. Reducing taxes and simplifying regulations.
5. Creating market linkages and access to information.
10. Discuss five benefits of entrepreneurship to society. (10 marks)
1. Creates jobs and reduces unemployment.
2. Provides goods and services that improve living standards.
3. Encourages community development through corporate social responsibility.
4. Promotes innovation and technological advancement.
5. Reduces poverty by creating income-earning opportunities.
