Scammers have cheated Malaysians of more than RM800 million in the past four years, making this form of cheating one of the most lucrative illegal business schemes around.

It’s not hard to imagine that fraud and scams are a part of the entrepreneurial ecosystem, as well.

When you see “easy money,” “be your own boss,” “giant profits” or “guaranteed grants for free,” proceed with extreme caution!

Lack of understanding

These trollers will capitalise on the emotional plea that you must be passionate about your project and not let anyone or anything get in your way.

This danger is prevalent for those with low entrepreneurial competency. Lack of understanding in multiplying profit, for instance, can cause them to be involved in get-rich-quick schemes.

Rich-quick schemes, either Pyramid schemes or Ponzi schemes, even those that are similar to get rich-quick schemes, always ensure profit or income only through bringing in more people to apply for membership.

In spite of that, there is a lack of clarity on the issue as to ‘from where’ or ‘how’ the income is obtained or even not stating the investment concept of the scheme.

Based on research, get-rich-quick schemes that are promoted as entrepreneurial ventures or digital-based business occur mostly during economic crises. These schemes are not business or companies but they are mere gambling. At the end of the episode, these schemes always have a sad ending – loss of money.

Get-rich-quick schemes are wrong in the face of the law. One should avoid being accomplices of get-rich-quick schemes as one would be labelled as cheaters or liars forever.

Entrepreneurial competency

Thus, entrepreneurial competency is needed. In a nutshell, entrepreneurial competency is one’s ability in performing entrepreneurship functions effectively. Hence, the need for underlying characteristics such as generic and specific knowledge, motives, traits, self-images, social roles, and skills which result in venture birth, survival, and/or growth.

Specifically, entrepreneurial experience, training, education, family background and other demographic variables are considered as factors influencing entrepreneurial competency.

Competency or self-esteem is different from skills. Competency exists from the influence of life values, attitude and drive or internal insistence of a person to commit to their duties perfectly and yield outstanding results.

On the contrary, skills are measured from academic excellence or based on good work results which ignore the attitude and motivation towards the profession that one is undertaking.

Preaching entrepreneurial competency must be grounded on risk and return trade-off.

An entrepreneur needs to invest his or her hard-earned money in order to be competitive in the field that he or she is in. Consequently, as an entrepreneur who has high competency, it is his or her responsibility to manage the risk involved in multiplying their investment.

Risks and returns

To succeed, there is a need for the ability on how to identify and assess or evaluate potential risks as a means of being entrepreneurially competent.

The trade-off between risk and return is related to each and every investment decision that is made. We would always face the risk of loss based on each trade decision, but will gain if we effectively manage those risks.

Only, the risk differs from one company to the next. As what has been known generally, the higher the expected rate of return, the greater the risk.

Fundamentally, the more risks taken, the higher will be the returns. However, looking at the implied meaning of it, it brings understanding that the more risks taken, the higher the probability of loss that is to be covered.

Despite that, to obtain profit or returns from investment, it is impossible for one who wishes to invest to avoid any risk. That being the case, the meaning of risks taking here refers to risks that can be accounted for based on the concept of risk management.

Risk management is a systematic process to identify and evaluate risks that can possibly be faced by an individual or an organisation, then choose and implement risk management techniques that are most suitable to reduce the impact of the loss.

Therefore, the entrepreneurial competency in this context is the ability to take calculated risks and not gambling. In contrast, incompetent entrepreneurs will always try to avoid risks. Risk avoidance means you have to abandon the activities/operations that expose you to risks. In doing that, your business will remain idle.

Conclusively, entrepreneurship education can evoke entrepreneurial competency of youths in behavioural competency, competency in starting a business and also competency in managing a business. This is due to the tendency of a person to entrepreneurship competency being heavily influenced by one’s cultural values.

Therefore, in accordance with the goal to the direction of this ability, it is suggested that one who wishes to venture into this field should learn these dimensions of entrepreneurial competencies. Does our national culture that we hold on to permeate these values?

-- BERNAMA

Oswald Timothy Edward is Senior Lecturer in the Faculty of Business & Management at Universiti Teknologi MARA (UiTM) Johor, Malaysia.