Develop an understanding of entrepreneurship as a crucial part of business development, and enhance your ability apply entrepreneurial principles to achieve business success and innovation.
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What is an Entrepeneur?
Entrepreneurs try to identify and meet a need for a product or service. Entrepreneurs come from all types of backgrounds, may be of any age, and create all kinds of businesses. Some own small businesses, while others own huge ones. Entrepreneurs try to identify the needs of the marketplace and to meet those needs by supplying a service or product. When they succeed, their businesses flourish and the profits go to them. When they fail, their companies decline and they may have to go out of business.
Entrepreneurship benefits the economy by filling unmet needs and increasing productivity. In many cases, the historical entrepreneurs started businesses that are today large corporations. Entrepreneurs assume risk. This makes them different from employees, who work for someone else. Both may make decisions, but only the entrepreneur is directly and wholly affected by the consequences of those decisions.
Most newly emerging entrepreneurial ventures almost always follow certain stages in the business development process. This process will of course differ from venture to venture because the problem solving requirements or each venture will differ widely. However there are also some commonalities in most entrepreneurial business start-ups. The main asset for the entrepreneur is to have problem solving skills; to recognise the types of problems that could occur, before they occur, and to solve the problems that have occurred, before they spiral out of control. The next asset is to understand the business processes and stages of development within a new venture.
The following are the most usual and commonly considered aspects of business development, by the entrepreneur, in the development of a new business venture:
- The scale (size) of the business;
- The size of the organisational structure;
- How to decrease risk;
- How to increase value;
- How to pass on the running of the business to others.
Consider the following stages used the entrepreneur in launching a new venture:
1. Recognising an Opportunity
This is the first stage of a new business venture. It requires research and analysis to see if their idea is worth pursuing. Sometimes this can take months or even years to formulate. This is the most difficult stage for any entrepreneur and many ideas never make it past this stage.
2. Focusing on an Opportunity
The entrepreneur needs to understand the scope of the opportunity they have recognised; to determine its true potential, rather than a perceived potential and to also recognise their own capabilities in turning an opportunity into a successful venture. At this stage an entrepreneur will solicit the ideas and inputs of others to help determine the value of the opportunity they have uncovered. This is an important stage as the ideas of others can bring an opposite point of view.
3. Committing Resources to the Venture
This is the stage when you need to develop a business plan – see the outline last page. Now you have recognised and researched your business opportunity to determine its viability, all your focus should be on writing a coherent and effective business plan. You won’t be resigning from your job at this stage! You need to understand where you will start, the focus of your business and how your business venture will proceed in the early stages and also into the future. This may take you several months to formulate.
4. Entering the Marketplace
You followed your business plan, committed resources, allocated them where required, and by now made your first sales; but you should be keeping this a simple business at this stage. Once your sales increase and you have determined that the venture will be profitable you can make further decisions on growth. You need to be astute at this stage because this is when you could move too quickly or too slowly. More funds may be required from outside sources or you may need to decide to allow turnover to keep growing the business for the present.
5. Accelerating Growth
This is the time to determine whether you will launch into accelerated growth or stay as a small business. The factors that will determine this may be too much competition that may have not been recognised in earlier stages or when the plan was formulated; the limits of management and production systems and the inability to upscale management and production facilities.
6. Business Maturation and Expansion
If you have survived the first 5 steps then your business should be a market leader and at this point you will be cruising. Your cash flow should be extremely healthy and your business should be running efficiently in all areas. It is now up to a solid management team to decide on how the growth of the venture will proceed – this could be through acquisition of other companies, through business partnerships or through global expansion. Your business has matured!
7. Liquidity selling off your asset
This is the exit program the time to consider exit strategies. Sound odd doesn’t it? But most entrepreneurs and the people investing in them are looking for cash returns. This means that the entrepreneur can move onto another venture (with the capital to do it) and their investors have received a return on their investment. Sometimes a company may be ‘floated’ i.e. a public offer to buy shares (i.e. invest in the company). Other times a company may be bought out by another.
When an entrepreneur understand these stages it goes a long way towards them succeeding; staying focussed on the original aims and objectives in their business plan helps a business stay on course
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