Introduction to Entrepreneurship
Why be an Entrepreneur?
Reasons for becoming an Entrepreneur
The only factor found to be associated consistently with becoming an entrepreneur is that one or both of your parents were entrepreneurs.This suggests that if the entrepreneurial path is familiar to you, then you are more likely to follow that path yourself.
Beyond having the common trait of having parents who were entrepreneurs, there are many personal reasons why individuals decide to become entrepreneurs.
Becoming an entrepreneur can be motivated by personal interests and values, the prospects of financial rewards, or lifestyle preferences. It is also sometimes driven by “necessity” when there is a paucity of other employment or income-earning opportunities.
The motivations for being an entrepreneur include the ability to pursue a passion or interest that is exciting and one feels deeply about. It can include the opportunity to create something new, enhance one’s personal reputation, and make an impact or a difference in customers’ and employees’ lives and in society in general. All of these are motivations for many sustainability entrepreneurs.
The motivation for becoming an entrepreneur can also be driven by a desire to be independent, to be your own boss, to make your own decisions, and to make your own schedule. This moves into the so-called lifestyle motivations for being an entrepreneur-to have a more flexible work schedule that allows time for other activities including more time for family and recreational and creative pursuits.
While entrepreneurship is normally thought of as starting a new business, it applies to applying innovation to existing organizations. Often, this type of entrepreneurial activity is distinguished as intrapreneurship (meaning entrepreneurship from within).
Intrapreneurship applies the entrepreneurial mindset characterized by innovation, risk taking, and flexibility to an established firm. The objective is to enhance the ability of an established firm to react to market opportunities in a timely and effective manner much like start-up ventures do.
General Electric: Large established companies like General Electric (GE) often encourage intrapreneurship to foster innovation and accelerate new product development, to take advantage of a new opportunity, or to assess feasibility of a new process or design.
Jack Welch at GE: An Industry Leader as an Intrapreneur
Some of the greatest business leaders of the past century made their early mark in business as intrapreneurs. For example, former General Electric (GE) chairman Jack Welch made a name for himself by building GE’s engineering plastics business as if he were starting his own company.
General Electric invested about $1.8 billion in 2010 on research and development of clean technologies. This investment helped lead to the development in 2010 of twenty-two new products and solutions such as WattStation, a user-friendly charging station designed to accelerate the adoption of plug-in electric vehicles, and Nucleus, a smart meter technology that helps homeowners manage energy use.
The program called “ecomagination” is a competitive force for growth across GE’s businesses. With $85 billion in sales and services since 2005, ecomagination is a business strategy that represents an area of continued strength for the company.
Being a successful entrepreneur is not easy and there is no guarantee of success. It requires broad competence across a range of functional areas-including finance, accounting, strategy, marketing, management and operations, and strong interpersonal skills. There are also significant risks and significant likelihood of failure. Part of being an entrepreneur is assessing and managing risk.
Also part of being an entrepreneur is being resilient and persistent. As an entrepreneur, there will always be challenges and difficult times and being able to endure through the tough times and being persistent in working to achieve success is critical for entrepreneurs.
Remember that even Steve Jobs got removed from his position at Apple before he came back to transform the company with the introduction of innovative new products including the iPod, iPhone, and iPad.
Factors of Risk
More business start-ups fail before four years than make it to their fifth year according to the US Small Business Administration. The risks and failures can come from internal factors-such as limited access to funding, poor planning and decision making, or the idea just simply being a bad idea for a business.
Failure can also be a result of external factors beyond the entrepreneur’s influence, such as weak economic conditions and changing public policies, that can have profound market implications.
Also with entrepreneurship-and with ownership, independence, and decision-making authority-comes significant responsibility and the potential for high personal stress and possible burnout.
It is important to understand that not all ideas for businesses are good business opportunities. Potential customers have to perceive that the product has value to them (above its cost and better than the products or services provided by competitors) and have the means and desire to purchase it.
Furthermore, the pricing options have to cover expenses, and funds have to be available to finance the start-up of the business before revenue from sales cover expenses. These various dimensions must be explored rigorously before a business is launched.
While business plans can serve multiple purposes, the first and most important reason for writing a business plan is to test whether an idea is truly an economically promising market opportunity.
A business plan for an entrepreneur, in its simplest definition, will define where the entrepreneur expects the business to be within a certain period of time and how the entrepreneur plans on getting there.
It can serve as an effective tool to manage entrepreneurial risk. It should include details about financing, target market and customers, competitors, and organizational development, including staffing. A business plan is for starting a business as blueprints are for building a home-they are essential.
End of Unit