UNIVERSITY OF SOUTH AFRICA (UNISA)
College of Economic and Management Sciences
⋄
ASSIGNMENT 3
Entrepreneurial Skills – ETP2601
⋄
Module Code: ETP2601
Module Name: Entrepreneurial Skills
Assignment No.: Assignment 3
Total Marks: 40
Lecturers: Dr W Sambo; Dr NM Mmako
Submitted in partial fulfilment of the requirements for ETP2601
at the University of South Africa.
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
Question 1: Entrepreneurs or Small Business Managers? A Critical Evaluation
of Hlanganani Baloyi and Ndzalo Hlungwani
1.1 Introduction
The distinction between an entrepreneur and a small business manager is not simply a matter
of business size or sector; it is rooted in behaviour, risk orientation, opportunity recognition,
and the manner in which resources are mobilised (Schumpeter, 1934; Kirzner, 1973). Apply-
ing these theoretical lenses to the case of Hlanganani Baloyi and Ndzalo Hlungwani reveals a
profile that sits closer to the entrepreneurial end of the spectrum, though with characteristics
that reflect the practical constraints of operating in a resource-scarce, rural environment. This
response classifies the founders as entrepreneurs and provides a theoretically grounded justifi-
cation through analysis of four key dimensions.
1.2 Theoretical Framework: Entrepreneur Versus Small Business Manager
Joseph Schumpeter (1934) defined the entrepreneur as an agent of creative destruction: some-
one who introduces new combinations of resources, opens new markets, or identifies new sources
of supply, thereby disrupting existing equilibria. Israel Kirzner (1973), by contrast, placed em-
phasis on alertness: the entrepreneur’s ability to notice profit opportunities that others have
overlooked and to act on them before equilibrium is restored. Neither theory requires that the
entrepreneur operate at scale; what matters is the quality of the behaviour.
A small business manager, by distinction, typically maintains existing operations, manages
routine processes, and avoids significant risk. Their orientation is administrative rather than
opportunity-seeking (Lumpkin and Dess, 1996). The manager runs what exists; the entrepreneur
creates or reshapes what does not yet exist in that form.
Key Distinction
Entrepreneur vs. Small Business Manager: An entrepreneur is characterised by
opportunity recognition, calculated risk-taking, innovation, and resource recombination.
A small business manager maintains existing operations with minimal risk appetite and
little appetite for new market entry (Schumpeter, 1934; Lumpkin and Dess, 1996).
Page 1 of 16
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
1.3 Opportunity Recognition
Baloyi and Hlungwani identified a genuine market gap: the absence of dignified and reliable
funeral services in rural and peri-urban settlements around Bushbuckridge. This is consistent
with Kirzner’s (1973) concept of entrepreneurial alertness. They did not stumble upon an ex-
isting business; they read an underserved community’s need and moved deliberately to fill
it. Their decision to acquire selected operational territories and client bases from an existing
operator also reflects strategic market entry thinking rather than passive management. They
scanned their environment, assessed what was missing, and positioned themselves to serve ar-
eas including Bushbuckridge, Acornhoek, Mkhuhlu, Thulamahashe, Rolle, and Hazyview.
1.4 Risk Orientation
Risk-taking is a defining characteristic of entrepreneurial behaviour. Baloyi and Hlungwani ac-
cepted substantial personal financial risk: they secured a loan of R130 000, financed two vehi-
cles, and supplemented operational costs using their personal salaries from full-time municipal
employment. This dual-income strategy is not uncommon among emerging entrepreneurs in
South Africa, but the willingness to pledge personal income to fund a business that operated
below break-even in its first year is a meaningful risk commitment.
The case also notes that both founders continue in municipal employment while running the
business. This could be read as risk aversion. However, in the context of resource constraints
in rural South Africa, it is more accurately understood as a bootstrapping strategy that al-
lowed the venture to survive its early stage without collapsing under debt pressure. Using per-
sonal salaries as operating capital is a recognised form of entrepreneurial resource mobilisation
under conditions of capital scarcity (GCM Legal, 2023).
1.5 Resource Mobilisation
One of the clearest entrepreneurial markers in this case is how Baloyi and Hlungwani have
managed severe resource limitations creatively. Unable to afford their own storage infrastruc-
ture, they rent facilities from a competitor in Thulamahashe. They subcontract tents and hire
vehicles on demand rather than carrying fixed asset costs they cannot yet sustain. This is con-
sistent with Schumpeter’s (1934) notion of new combinations: they are not creating new prod-
ucts, but they are assembling resources in non-obvious ways to deliver a service that the mar-
Page 2 of 16
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
ket was not receiving adequately.
The establishment of a third coordination office in Mkhuhlu, while still operating from re-
source constraints, also reflects a growth orientation rather than a maintenance mentality. A
small business manager would likely have consolidated; these founders are expanding their geo-
graphic footprint.
1.6 Critical Evaluation
That said, a fully Schumpeterian reading of their behaviour requires some caution. Their ser-
vice offering is not radically innovative; funeral services are well-established across South Africa.
What is entrepreneurial is the context: serving rural and peri-urban communities that had
been neglected by existing providers. In Kirzner’s terms, they exercised alertness to a disequi-
librium condition and moved to correct it. This is entrepreneurship, even if it does not involve
technological disruption or entirely new products.
Critical Consideration
The founders’ continued municipal employment and below-break-even performance in
year one could be misread as evidence of small business management behaviour. How-
ever, these factors reflect resource constraints and prudent bootstrapping rather than a
lack of entrepreneurial orientation. The distinction lies in intent and trajectory, not in
immediate profitability (Kirzner, 1973).
1.7 Conclusion
Baloyi and Hlungwani should be classified as entrepreneurs. Their behaviour demonstrates
Kirznerian alertness in identifying an underserved market, a willingness to absorb personal
financial risk, creative resource mobilisation under constraints, and a growth trajectory that
goes beyond mere operational maintenance. They are not simply managing a business; they
are building one in a context where doing so requires persistence, adaptability, and genuine
entrepreneurial resolve.
Page 3 of 16
, UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
Question 2: The Partnership Structure of Ndzalama Funeral Services – A Crit-
ical Assessment
2.1 Introduction
The choice of business structure is a governance decision with long-term legal, financial, and
operational consequences. Ndzalama Funeral Services was registered as a partnership, a legal
form that is common among small and emerging businesses in South Africa, particularly those
with low setup capital and a need for operational flexibility (SARS, 2021). This response as-
sesses whether the partnership structure is appropriate for the founders’ context, weighing
both its advantages and its limitations.
2.2 What a Partnership Is in the South African Context
Under South African law, a partnership is not a separate legal entity. It is formed when two
or more persons agree to contribute resources, whether money, labour, or skills, toward a shared
business purpose, with the intention of sharing profits and losses (SARS, 2021). Partnerships
are governed primarily by a partnership agreement, which may be written or oral, though a
written agreement is strongly advisable (Shopify, 2023). The South African Companies Act
(71 of 2008) does not regulate partnerships; they fall largely under common law principles.
Partners are jointly and severally liable for the debts and obligations of the business (PM At-
torneys, 2025).
2.3 Why the Partnership Structure Was Appropriate at Entry Stage
For Baloyi and Hlungwani, the partnership structure made practical sense at the time of found-
ing in 2012 for several reasons.
First, ease and low cost of formation. South African law imposes no formal registration
requirement for a general partnership, making it one of the quickest and cheapest business
forms to establish (GCM Legal, 2023). Given the founders’ limited capital and reliance on a
loan of R130 000, avoiding the compliance costs of a private company was a reasonable deci-
sion.
Second, combined resources and complementary skills. Both founders brought their
own networks, community standing, and professional experience from their municipal employ-
Page 4 of 16
College of Economic and Management Sciences
⋄
ASSIGNMENT 3
Entrepreneurial Skills – ETP2601
⋄
Module Code: ETP2601
Module Name: Entrepreneurial Skills
Assignment No.: Assignment 3
Total Marks: 40
Lecturers: Dr W Sambo; Dr NM Mmako
Submitted in partial fulfilment of the requirements for ETP2601
at the University of South Africa.
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
Question 1: Entrepreneurs or Small Business Managers? A Critical Evaluation
of Hlanganani Baloyi and Ndzalo Hlungwani
1.1 Introduction
The distinction between an entrepreneur and a small business manager is not simply a matter
of business size or sector; it is rooted in behaviour, risk orientation, opportunity recognition,
and the manner in which resources are mobilised (Schumpeter, 1934; Kirzner, 1973). Apply-
ing these theoretical lenses to the case of Hlanganani Baloyi and Ndzalo Hlungwani reveals a
profile that sits closer to the entrepreneurial end of the spectrum, though with characteristics
that reflect the practical constraints of operating in a resource-scarce, rural environment. This
response classifies the founders as entrepreneurs and provides a theoretically grounded justifi-
cation through analysis of four key dimensions.
1.2 Theoretical Framework: Entrepreneur Versus Small Business Manager
Joseph Schumpeter (1934) defined the entrepreneur as an agent of creative destruction: some-
one who introduces new combinations of resources, opens new markets, or identifies new sources
of supply, thereby disrupting existing equilibria. Israel Kirzner (1973), by contrast, placed em-
phasis on alertness: the entrepreneur’s ability to notice profit opportunities that others have
overlooked and to act on them before equilibrium is restored. Neither theory requires that the
entrepreneur operate at scale; what matters is the quality of the behaviour.
A small business manager, by distinction, typically maintains existing operations, manages
routine processes, and avoids significant risk. Their orientation is administrative rather than
opportunity-seeking (Lumpkin and Dess, 1996). The manager runs what exists; the entrepreneur
creates or reshapes what does not yet exist in that form.
Key Distinction
Entrepreneur vs. Small Business Manager: An entrepreneur is characterised by
opportunity recognition, calculated risk-taking, innovation, and resource recombination.
A small business manager maintains existing operations with minimal risk appetite and
little appetite for new market entry (Schumpeter, 1934; Lumpkin and Dess, 1996).
Page 1 of 16
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
1.3 Opportunity Recognition
Baloyi and Hlungwani identified a genuine market gap: the absence of dignified and reliable
funeral services in rural and peri-urban settlements around Bushbuckridge. This is consistent
with Kirzner’s (1973) concept of entrepreneurial alertness. They did not stumble upon an ex-
isting business; they read an underserved community’s need and moved deliberately to fill
it. Their decision to acquire selected operational territories and client bases from an existing
operator also reflects strategic market entry thinking rather than passive management. They
scanned their environment, assessed what was missing, and positioned themselves to serve ar-
eas including Bushbuckridge, Acornhoek, Mkhuhlu, Thulamahashe, Rolle, and Hazyview.
1.4 Risk Orientation
Risk-taking is a defining characteristic of entrepreneurial behaviour. Baloyi and Hlungwani ac-
cepted substantial personal financial risk: they secured a loan of R130 000, financed two vehi-
cles, and supplemented operational costs using their personal salaries from full-time municipal
employment. This dual-income strategy is not uncommon among emerging entrepreneurs in
South Africa, but the willingness to pledge personal income to fund a business that operated
below break-even in its first year is a meaningful risk commitment.
The case also notes that both founders continue in municipal employment while running the
business. This could be read as risk aversion. However, in the context of resource constraints
in rural South Africa, it is more accurately understood as a bootstrapping strategy that al-
lowed the venture to survive its early stage without collapsing under debt pressure. Using per-
sonal salaries as operating capital is a recognised form of entrepreneurial resource mobilisation
under conditions of capital scarcity (GCM Legal, 2023).
1.5 Resource Mobilisation
One of the clearest entrepreneurial markers in this case is how Baloyi and Hlungwani have
managed severe resource limitations creatively. Unable to afford their own storage infrastruc-
ture, they rent facilities from a competitor in Thulamahashe. They subcontract tents and hire
vehicles on demand rather than carrying fixed asset costs they cannot yet sustain. This is con-
sistent with Schumpeter’s (1934) notion of new combinations: they are not creating new prod-
ucts, but they are assembling resources in non-obvious ways to deliver a service that the mar-
Page 2 of 16
,UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
ket was not receiving adequately.
The establishment of a third coordination office in Mkhuhlu, while still operating from re-
source constraints, also reflects a growth orientation rather than a maintenance mentality. A
small business manager would likely have consolidated; these founders are expanding their geo-
graphic footprint.
1.6 Critical Evaluation
That said, a fully Schumpeterian reading of their behaviour requires some caution. Their ser-
vice offering is not radically innovative; funeral services are well-established across South Africa.
What is entrepreneurial is the context: serving rural and peri-urban communities that had
been neglected by existing providers. In Kirzner’s terms, they exercised alertness to a disequi-
librium condition and moved to correct it. This is entrepreneurship, even if it does not involve
technological disruption or entirely new products.
Critical Consideration
The founders’ continued municipal employment and below-break-even performance in
year one could be misread as evidence of small business management behaviour. How-
ever, these factors reflect resource constraints and prudent bootstrapping rather than a
lack of entrepreneurial orientation. The distinction lies in intent and trajectory, not in
immediate profitability (Kirzner, 1973).
1.7 Conclusion
Baloyi and Hlungwani should be classified as entrepreneurs. Their behaviour demonstrates
Kirznerian alertness in identifying an underserved market, a willingness to absorb personal
financial risk, creative resource mobilisation under constraints, and a growth trajectory that
goes beyond mere operational maintenance. They are not simply managing a business; they
are building one in a context where doing so requires persistence, adaptability, and genuine
entrepreneurial resolve.
Page 3 of 16
, UNISA | ETP2601 Assignment 3 – Entrepreneurial Skills
Question 2: The Partnership Structure of Ndzalama Funeral Services – A Crit-
ical Assessment
2.1 Introduction
The choice of business structure is a governance decision with long-term legal, financial, and
operational consequences. Ndzalama Funeral Services was registered as a partnership, a legal
form that is common among small and emerging businesses in South Africa, particularly those
with low setup capital and a need for operational flexibility (SARS, 2021). This response as-
sesses whether the partnership structure is appropriate for the founders’ context, weighing
both its advantages and its limitations.
2.2 What a Partnership Is in the South African Context
Under South African law, a partnership is not a separate legal entity. It is formed when two
or more persons agree to contribute resources, whether money, labour, or skills, toward a shared
business purpose, with the intention of sharing profits and losses (SARS, 2021). Partnerships
are governed primarily by a partnership agreement, which may be written or oral, though a
written agreement is strongly advisable (Shopify, 2023). The South African Companies Act
(71 of 2008) does not regulate partnerships; they fall largely under common law principles.
Partners are jointly and severally liable for the debts and obligations of the business (PM At-
torneys, 2025).
2.3 Why the Partnership Structure Was Appropriate at Entry Stage
For Baloyi and Hlungwani, the partnership structure made practical sense at the time of found-
ing in 2012 for several reasons.
First, ease and low cost of formation. South African law imposes no formal registration
requirement for a general partnership, making it one of the quickest and cheapest business
forms to establish (GCM Legal, 2023). Given the founders’ limited capital and reliance on a
loan of R130 000, avoiding the compliance costs of a private company was a reasonable deci-
sion.
Second, combined resources and complementary skills. Both founders brought their
own networks, community standing, and professional experience from their municipal employ-
Page 4 of 16
