NORTHWESTERN UNIVERSITY

Basic Education Department

Junior and Senior High School

LESSON 2: SALIENT FEATURES OF ENTREPRENEURSHIP

At the end of this lesson, the learner should be able to:

1. Enumerate the salient features of entrepreneurship; and
2. Explain each feature

From its operational definition, entrepreneurship consists of salient

features.
1. It is an art of correct practices
2. It is a wealth-creating venture
3. It provides valuable goods and services
4. It entails opening and managing the self-owned enterprise.
5. It is a risk-taking venture

The salient features of entrepreneurship provide better understanding of the

whole concept. They also act as the point of reference in determining whether
a particular business endeavor is operating within the realm of
entrepreneurship.

Entrepreneurship is an art of
correct practices.

Entrepreneurship is an art an not a

science. It is not governed by
fixed and absolute rules, whereas
science is. Thus, there is constant
change which denotes movement
and innovation. Entrepreneurship,
therefore, is not static or stagnant.
It continuously grows, develops,
improves and expands; the
change does not stop. The
development of entrepreneurship
through the years is a proof that it
is an art that continuously evolves
and responds to the changing needs of the people.

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Art in entrepreneurship is also related to the correct practices or ways of

carrying out entrepreneurial activities. The owner of an ordinary small business
has the freedom to manage and operate his/her business according to what
pleases him.her. Ideally, he/she prefers business activities which are done
easily. The entrepreneur, however, has to perform entrepreneurial activities
correctly regardless of whether they are undertaken easily or not. What is
important in entrepreneurship is that the business activities are performed
correctly.

Now ask yourself the following questions:

1. Is creativity present in the operation of ordinary business along

the streets and highways and in your neighborhood? Why do you say
so?
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2. Will you consider the daily business practices of the small business
owner within the concept of entrepreneurship? Why?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Entrepreneurship is a Wealth-creating Venture

This feature sounds simple, but this has been most

misconstrued because of the word wealth. we often
hear the old maxims, “Health is wealth.” or “Knowledge
is wealth.” However, that is not the concept of wealth in
entrepreneurship.

In most instances, ordinary small business people

equate wealth with the term profit. In the parlance of
accounting, profit represents the excess income or
revenue from the cost and expenses.

Entrepreneurship, however, is operating within the concept of wealth creation

rather than profit generation. The concept of profit is more applicable in the
area of accounting as a way of measuring the operating performance of a
business.

The conceptual definition of wealth, in its strict sense, does not even refer to
business profit. This book strongly underscores the word “abundance” in the
conceptual definition of wealth. The concept of abundance and not of
accounting profit is the very essence of wealth in entrepreneurial endeavor.

Now ask yourself the following questions:

1. Is your small business a wealth-creating venture or an

income-generating enterprise? Why do you say so?
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2. Does your business help improve life? How?

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

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Entrepreneurship Provides Valuable Goods and Services

The owner of a business, in most instances, is engaged in the sales of goods

and services. However, the mere act of selling goods or providing services does
not make a person perform or act within the concept of entrepreneurship.
Anybody can sell goods or services fro a price. A peddler in the bus station, for
example, sells foods to the travelers. However, he/she cannot be considered as
an entrepreneur. It would be safe to address him/her as an ordinary business
person.

Entrepreneurship creates economic wealth

by providing goods and service to the
consumers. These goods and service must
have a value in order to create wealth.
Otherwise, they become wasted. One
essential principle in entrepreneurship then
is, “not to sell waste to consumers but only
valuable goods and services.” Anything of
no value to anybody is definitely a waste.

Valuable goods and services highly satisfy the target buyers in terms of quality
and price. The entrepreneur convinces the consumers that they gain more
benefits that what they pay for the goods and services.

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself the following questions:

1. Is your product or service valuable? Why do you say so?

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2. From whose perspective is your product or service valuable?

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3. How will you make your product or service valuable to your target
market?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Entrepreneurship Entails Opening and Managing the Self-owned

Enterprise

This feature highlights two important

elements: the concept of opening a
self-owned enterprise and the concept
of managing it.

The entrepreneur opens his/her

business under the principle of
entrepreneurship. It must be
self-owned in order to qualify as an
entrepreneurial endeavor. A business is
considered self-owned when the person managing its daily activities is also its
owner. This is a straightforward requirement of entrepreneurship. Businesses
that are being managed by others for the benefit of the owners do not fall
within the sphere of entrepreneurship. Such businesses are operating under
the concept of intrapreneurship.

The issue in a self-owned business is very clear and simple; it is plainly about
ownership. It is neither about the amount of invested capital nor about the
nature of the business enterprise. Therefore, business falling under the concept
of entrepreneurial endeavor may range from a small bakery or restaurant in the
neighborhood to a multi-million construction company operating throughout
the Philippines, provided that the business is managed by the owner
himself/herself.

In entrepreneurship, the owner of a business must also be the manager of the

daily operations of the entrepreneurial venture. A business whether big or
small , that is managed by a person other than its owners is not within the
concept f entrepreneurship. In such a case, the owner cannot be considered as
an entrepreneur but as an ordinary business person. Similarly, the person
handling the activities of the venture is nor an entrepreneur but a manager.

As a future entrepreneur, you have to constantly plan for the course of your
entrepreneurial endeavor. Planning does not cost anything but the benefit you
will gain from exercising it can be rewarding.

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself the following questions:

1. Do you know someone who owns a small business?

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2. Does he/she personally manage his/her business? How?

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3. Do you think he/she is an entrepreneur or an ordinary small

businessperson? Why do you say so?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Entrepreneurship is a Risk-Taking Venture

The basic concept of risk in entrepreneurship can be expressed in this

statement, “Risk is inherent in an entrepreneurial venture.”

In other words, once an entrepreneurial venture is born of new ideas or

opportunities, risk comes simultaneously with the venture. Risk cannot be
detached from any entrepreneurial venture and the only way to remove it is to
close the venture. However, closing the business means giving up becoming a
successful entrepreneur. Hence, closing the business is not the ultimate answer
in handling its inherent risks. The risk in entrepreneurial is called a business risk.
So every time the word risk is used in this module, it refers to a business risk.

The approach in handling business risks differentiates an entrepreneur from an

ordinary businessperson. Usually, an ordinary businessperson does not
understand the nature of business risk which in one way or another may lead to
the failure of his/her business. He/She shuns or avoids it which indicates that
he/she only favors operating under favourable condition.

How can one avoid something hat is inherent in one self? Or, in the light of
entrepreneurship, how can a business avoid something that is intrinsic in its
process? One definitely cannot avoid something that is already a part of his/her
being. Whenever one goes, he/she brings it along. In other words, wherever
the business goes, there will always be business risks.

Hence, an entrepreneur should face risks intelligently. He/She cannot eliminate

something ingrained in entrepreneurship. Instead, he/she must find ways to
minimize the effects of the risk.

Now ask yourself the following questions:

1. Are you a risk-taker or not? Why do you say so?

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

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2. How do you face or avoid risks?

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3. What business risks do you foresee in your future entrepreneurial

venture?
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