Entrepreneurship and Small Business Start-Ups
What is an Entrepreneurship?
Entrepreneurship is the process of starting a business venture, organizing the necessary resources, and assuming the associated risks and rewards.
- It is different from many small business owners in their strong desire to make their business grow.
- Different from managers through their overriding responsibility to use the resources of the organization to fulfill their goals.
- willing to take risks. Assume financial and legal risks of ownership.
Who is a Entrepreneur?
Entrepreneur is a “person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business.”
Richard L Daft
- They take calculated risks.
- They have long term vision.
- Also looking at larger business.
Small Business Means
This is an independently owned and managed business that does not dominate its market.
Five Types of Small Business Owners
- Idealist – Different from others. Desire to work with something new, creative or personally meaningful.
- Optimizer- They happy with lesser degree of achievement. They get personal satisfaction from being business owner.
- Hard Worker – Like putting in the long hours and dedication to build a larger and more profitable. So, they put lot of time, energy and effort.
- Jugglers – Because they are high-energy people who like to handle every detail of their business.
- Sustainers – They enjoy chance to balance both work and personal life.
Impact of Entrepreneurial Companies
Job creation: According to the researchers, the age of the company more than the size of the company determines the number of jobs it creates. That is why most new jobs are created by new companies including small companies and branches of large companies.
Innovation: They come up with new things. So, they modify something new.
Importance to Big Business: They will follow the small business. Because someday small businesses will be a threat to big businesses. Also, they improve their activities.
Characteristics of Entrepreneur
- Vision- Entrepreneur has long term objective.
- High energy level – a high level of passion helps them to overcome inevitable obstacles and traumas.
- Need to achieve – They are motivated to excel and pick situations in which success is likely.
- Internal forces of control – They believe their future is within their control and that external forces have little influence.
- Self confident – people who start and run a business must act decisively.
- Creativity – Entrepreneurs come up with new ideas. So, they always try to think beyond the frame.
- Tolerance for ambiguity- Many people work in situations with clear structure, specific instructions, and complete information.
- Awareness of passing time – Entrepreneurs tend to be impatient and feel a sense of urgency. Because they want to progress things as if there is no tomorrow.
An Entrepreneurial Start Up
1. Starting with an Idea
Two most important considerations;
– Finding something that you love to do and are good at
– Determining whether your idea can satisfy market needs.
Guidelines for Selecting an Idea
- Make a list of your interest and abilities. Then easily can select your margins.
- List the type of businesses that match with your ideas and abilities
- Identify future needs for products that no one yet offers
- Evaluate existing goods and services and ways you can improve them
- Choose a product that offers profit potential
- Conduct market research to determine potential profitability
- Learn as much as you can about the appropriate industry
– Ability to manage their day to day business activities
– To win customers & keep business moving
– To deal with future unexpected problems
Characteristics of High Achievers
• They set their vision. Because of that, they are not copying other’s ideas.
• They prefer personal accountability
• Consider feedback. From that, they can get a better idea.
•They like to accept challenges. As a result, they can come up with new ideas.
Reason for Starting a Business
- Joined family business
- control own business
- To be my own business
- To fulfill a dream
- Downsized or Layoff
Source of New Business Ideas
- In depth studying of the industry of profession
- Market niche spotted
- Brainstorming
- Copying someone else
- Hobby
2. Writing a Business Plan
A business plan should consist of the following:
– Demonstrate a clear, compelling vision
– Provide a clear and realistic financial project
– Profile potential customers and the target market
– Keep the plan short. After that, they can easily achieve it.
– provide evidence of an effective entrepreneurial management team
– Highlights critical risks that may threaten the business success
– spell out the resources and uses of start-up funds and operating funds
3. Choosing a Legal Structure
- Sole Proprietorship
- Partnership
- Corporations
4. Arranging Finance
Debt Financing – Borrowing from somebody to be repaid at a later date.
Sources – family, friends, personal credit cards, bank loan
Equity financing – Funds that are invested in exchange for ownership of the company
Sources – Shareholders
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