Why become an entrepreneur?
What leads a person to strike out on his own and start a business? Perhaps a person has been laid off once or more. Sometimes a person is frustrated with his or her current job and doesn’t see any better career prospects on the horizon.
Sometimes a person realises that his or her job is in jeopardy. A firm may be contemplating cutbacks that could end a job or limit career or salary prospects. Perhaps a person already has been passed over for promotion.
Perhaps a person sees no opportunities in existing businesses for someone with his or her interests and skills.
Some people are actually repulsed by the idea of working for someone else. They object to a system where reward is often based on seniority rather than accomplishment, or where they have to conform to a corporate culture.
Other people decide to become entrepreneurs because they are disillusioned by the bureaucracy or politics involved in getting ahead in an established business or profession.
Some are tired of trying to promote a product, service, or way of doing business that is outside the mainstream operations of a large company.
In contrast, some people are attracted to entrepreneurship by the advantages of starting a business. These include:
• Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business with and what work they will do. They decide what hours to work, as well as what to pay and whether to take vacations.
• Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else.
• It provides the ability to be involved in the total operation of the business, from concept to design and creation, from sales to business operations and customer response.
• It offers the prestige of being the person in charge.
• It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation
Influences and characteristics of entrepreneurial behaviour
Some say that successful entrepreneurs are born, not made. Others disagree, saying good entrepreneurship is a talent that can be learned and nurtured.
The truth probably lies somewhere in the middle.
The desire to create and grow a business – large or small – requires a combination of character, talent, vision, energy, timing, and a bit of luck.
Although certain entrepreneurial traits are required, entrepreneurial behaviours are also dynamic and influenced by environmental factors.
To date, researchers have not been able to identify a core and necessary bundle of attributes, characteristics or qualities that mark out successful entrepreneurs unerringly from the large crowd of business owners.
However, a commonly quoted empirical and desk research study of new venture start-ups, that has stood the test of time over the past quarter-century, was conducted through the Massachusetts Institute of Technology by Jeffrey Timmons and colleagues (Timmons, et al. 1977).
They identified 14 important entrepreneurial characteristics of successful enterprise owners, which still frequently crop up in entrepreneurship research.
1. Drive and energy
2. Self-confidence
3. High initiative and personal responsibility
4. Internal locus of control
5. Tolerance of ambiguity
6. Low fear of failure
7. Moderate risk taking
8. Long-term involvement
9. Money as a measure not merely an end
10. Use of feedback
11. Continuous pragmatic problem solving
12. Use of resources
13. Self-imposed standards
14. Clear goal setting.
Few entrepreneurs would possess all traits but strengths in one might compensate for weaknesses in others.
Decisions involved with entrepreneurship
While deciding to become an entrepreneurship is an attractive career choice, many decisions have to be made before launching and managing a new business, no matter its size.
Among the questions that need to be answered are:
• Does the individual truly want to be responsible for a business?
• What product or service should be the basis of the business?
• What is the market, and where should it be located?
• Is the potential of the business enough to provide a living wage for its employees and the owner?
• How can a person raise the capital to get started?
• Should an individual work full or part time to start a new business?
• Should the person start alone or with partners?
Answers to these questions are not empirically right or wrong. Rather, the answers will be based on each entrepreneur’s judgment.
An entrepreneur gathers as much information and advice as possible before making these and other crucial decisions.
The entrepreneur’s challenge is to balance decisiveness with caution – to be a person of action who does not procrastinate before seizing an opportunity – and at the same time, to be ready for an opportunity by having done all the preparatory work possible to reduce the risks of the new endeavour.
Preparatory work involved with entrepreneurship
• Evaluating the market opportunity
• Developing the product or service
• Preparing a good business plan
• Figuring out how much capital is needed, and sources to obtain that capital
• Choosing the form of business – sole proprietorship, partnership, limited liability
• Intellectual property protection – trademarks, copyrights, patents, trade secrets
The strengths and spirit of entrepreneurship
Any entrepreneur who is contemplating a new venture should examine the strengths of small businesses as compared to large ones and make the most of those competitive advantages.
With careful planning, an entrepreneur can lessen the advantages of the large business vis-a-vis his operation and thereby increase his chances for success.
• Small start-up firms have greater flexibility than larger firms and the capacity to respond promptly to industry or community developments.
They are able to innovate and create new products and services more rapidly and creatively than larger companies that are mired in bureaucracy.
Whether reacting to changes in fashion, demographics, or a competitor’s advertising, a small firm usually can make decisions in days – not months or years.
• A small firm has the ability to modify its products or services in response to unique customer needs.
The average entrepreneur or manager of a small business knows his customer base far better than one in a large company.
If a modification in the products or services offered — or even the business’s hours of operation — would better serve the customers, it is possible for a small firm to make changes. Customers can even have a role in product development.
• Another strength comes from the involvement of highly skilled personnel in all aspects of a startup business.
In particular, start-ups benefit from having senior partners or managers working on tasks below their highest skill level.
• Another strength of a start-up is that the people involved — the entrepreneur, any partners, advisers, employees, or even family members — have a passionate, almost compulsive, desire to succeed.
This makes them work harder and better.
• Finally, many small businesses and start-up ventures have an intangible quality that comes from people who are fully engaged and doing what they want to do.
This is “the entrepreneurial spirit,” the atmosphere of fun and excitement that is generated when people work together to create an opportunity for greater success than is otherwise available.
This can attract workers and inspire them to do their best.
