Text 3 Risks in Entrepreneurship

In order for modern production to occur, somebody must decide what products are to be produced. Someone must take the initiative in bringing men, machines and materials together; assign jobs; and organize and direct the operations. The important function of initiating and organizing production is called enterprise, and people who perform this function are called entrepreneurs, or enterprisers.

Skillful, energetic, and imaginative enterprisers are the most valuable of all our productive resources. Without them, resources and labor represent only unrealized possibilities. The more enterprisers there are, and the easier it is for them to assemble effective combinations of workers and equipment, the more rapidly productivity rises. In an economic system like America's, enterprisers organize firms to carry out their plans.

It requires their full attention. Such firms can seldom afford to hire enough employees, even if the firm succeeds, you might work hard for months and not take a penny out except for the salary you pay yourself. Moreover, there always exists a risk of failure. Entrepreneurs generate ideas but of course, not every new idea is a good one. Sometimes expensive equipment and labour are assembled to make something that few people want. Sometimes the enterpriser is less effective as a manager than he thought he would be. Sometimes a better idea, a superior product, or a cheaper process is developed a little later. In each of these cases, the enterpriser has made a mistake. The labour, materials, and equipment assembled by the firm actually have produced something less valuable than they could have in some other employment. Instead of raising productivity, the enterpriser has actually lowered it.

Before it commits resources to new uses, society must protect itself from the consequences of such mistakes by making sure that enterprisers balance the gains possible from successful organization against the losses that will accompany failure. This is done by requiring the enterpriser to finance part of the investment with his own money and to receive, as his reward, only the residual of the value added by the operation, after all claims have been paid. If he is successful in taking labour, equipment, and materials from less valuable jobs and using them to produce a more valuable profit, the profit resulting from the difference in value is his. If he is unsuccessful and puts valuable resources to a less valuable use, the loss is also his. His investment acts as a buffer to the rest of society, protecting it from his mistake.

Read the following related statements and underline the key words that describe the qualities of an entrepreneur. Add to this list the words from text 3 and other relevant vocabulary.

There are two things that entrepreneurs have that others do not. One is a kind of visionary imagination to spot a commercial opportunity where others simply do not see it. And the second is the ability to persevere in the face of skepticism or criticism even the fear of failure.

George Smith, Harvard University

Entrepreneurs perform the function of creative destruction. They rethink conventional assumptions and discard those that no longer apply. They reform or revolutionize the pattern of production by exploiting an invention or an untried technological possibility for production, by opening up a new source of supply for materials or a new outlet for products, by reorganizing industry.

Joseph Schumpeter, Harvard University

Assignments to text 4:

1. Read the following text.

2. Find the factors which contributed to the success of Barbara Proctor.

3. Find the sentences which reveal Barbara’s personal qualities which helped her succeed.

4. Translate the text.

5. Answer the following questions:

· What obstacles did Barbara have to overcome?

· What personal qualities helped her overcome such obstacles?

· Describe some of the experiences she has had in her life.

· Assess Barbara’s entrepreneurial skills.

Text 4 Against All Odds: Barbara Proctor, Millionaire

“The spirit of enterprise is sparked by small business people with big ideas- people like Barbara Proctor, who rose from a ghetto to build a multimillion dollar agency in Chicago.” Thus did President Ronald Reagan describe Barbara Proctor in his 1984 State of the Union Address. Proctor& Gardner is on of the leading advertising agencies in the US. It specializes in the black consumer market and handles more than US$ 12 million in business annually. How did a black woman lift herself out of poverty to excel in a career dominated by men?

Barbara Proctor was born in Asheville, North Carolina, in 1932. Her parents never married, and Barbara was left in the care of her grandmother. “If there ever was a guiding force in my life it was my grandmother”, Barbara explained. “She is the one who taught me to accept your circumstances because it is only by accepting them that you can deal with them.” Barbara lived with her grandmother in a shack that had no water and no electricity. Her grandmother, who worked as a maid, was determined to see Barbara achieve her goal in life.

With the help of a scholarship and savings from summer jobs, Barbara graduated from Talladega College in Alabama. But success did not come easy. After a short career in the record business, Barbara worked for several advertising agencies in Chicago. The highest position she reached was copy supervisor. She was fired from that job when she refused to write a television commercial she considered offensive to blacks.

She had her own ideas about running an advertising agency. In 1970 she received an US$80,000 loan from the Small Business Administration that enabled her to open her own company. She called her agency Proctor & Gardner because, she explained, “clients assumed a Mr. Gardner was sitting back there manning the shop with everything under control”. There was, of course, no Mr. Gardner.

Starting from a few employees and working out of an office above a pizza store, Barbara worked incessantly to achieve her goals. Her single-mindedness combined with her enormous creative abilities to guarantee her success. She signed up large companies interested in advertising aimed at blacks. Before long her staff grew to 30 employees, and her clients included Sears, Roebuck&Co., Alberto-Culver Company and Kraft Foods.

Today she is considered one of America’s outstanding businesswomen. Her innovative marketing and creative concepts have been widely recognized. Her awards include Achievement in the Business World of Black Women, Women’s Day Advertising Merit Award, and Dynamic Woman of the Year. United Airlines Magazine called her “one of the most courageous people in the ad business, who is constantly tackling new challenges.”

Assignments to text 5:

1. Assess potential of M.Twain for entrepreneurship.

2. What struck your most in this story?

3. Read the first sentence and say if you agree that Mark Twain’s example should be avoided. Why?

4. Would you like to have M.Twain as your business partner?

Text 5 Mark Twain as a Businessman

Mark Twain commenting on his experience once said, “To succeed in business, avoid my example”. The reality of his life was that he had probably had more exposure to business than most writers of his time. He sold his books by subscription, making millions of dollars. He marketed his products well, selling even a scrapbook he invented and one of the first photographic albums. But like many small businesspersons, he had some costly failures including an invention he called the Paige typesetter. Another invention was a device he hoped would prevent children from falling out of their beds—it was a business failure. He also invented a much too complicated table game and a medicine that was supposed to cure all illnesses.

Mark Twain was creative and talented in many ways and he made and lost several fortunes as a businessman during his lifetime. It might be noted, however, that even though he made errors and lost a great deal of money, he always made good on his debts. One noted example of this is when his publishing went bankrupt in 1894. Twain was able to pay back his creditors all the money that had been lost in the venture within four years of the business failure.

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