Important Attributes in Entrepreneurship - Essay Example

?Important Attributes in Entrepreneurship Pursuit of an entrepreneurial dream starts with a viable dream. Entrepreneurship begins with conceptualizing a new idea, drawing a business plan, and making decision concerning the legal structure. Additionally, basic tactics such as pursuing an international opportunity or starting a new business venture, and financing issues are also considered before one can embark on the entrepreneurship journey. Most people, who venture into entrepreneurship, prefer a new business rather than already existing business opportunities (Reuvid, 2008, p. 16). Some people begin with a desire to begin a business and then look for an idea while others start by having an exciting idea and then consider entrepreneurship later. However, there are basic issues that one must consider when considering an entrepreneurial venture. Some of these basic issues include finances, industry concerned, legal issues and potential risks and rewards. It is thus important for entrepreneur to consider various things that would boost or affect their success in the pursuit of small businesses. Entrepreneurship refers to the undertaking of innovations, or business acumen with the aim of transforming the innovations into useful economic goods. The undertaking may result in a new business or new organization. Entrepreneurial activities differ substantially depending on the conceptualized business idea and they range from solo business projects to major undertakings that create job opportunities (Reuvid, 2008, p. 16). Most successful entrepreneurs demonstrate certain personal attributes such as dedication, creativity, flexibility, determination, passion, leadership, and self-confidence. Creativity is a spark that drives development of new services and products and pushes for improvement and innovation. Creativity allows for continuous learning, thinking beyond prescribed formulas, and questioning various possibilities. Determination is a strong desire to attain success and it includes ability to continue pursuing even during difficult times. It also persuades the entrepreneur to remain motivated and not necessarily by money gained from the business venture. Dedication motivates entrepreneurs to work hard and drive their ideas and plans. Flexibility refers to the entrepreneur’s ability to take a swift move in response to change in market conditions. Leadership is the capacity and ability to formulate rules, set goals, and ensure follow-through, and accomplishment of the established goals (Mariotti & Glackin, 2011, p. 63). Self-confidence rises from thorough planning since effective planning reduces uncertainty and risk. Effective planning requires expertise and skills. A self-confident entrepreneur is not easily intimidated or discouraged by market changes or challenges faced in business. More often, an entrepreneur will not demonstrate all these attributes and may lack one of them or even have only one or two of the attributes. The important thing is that the attributes can be learned. The entrepreneur, for instance, could hire someone to help him build or strengthen weak areas and attributes. Of importance is to know the personal strength and build on it while putting effort to minimize the weaknesses (Boone & Kurtz, 2010, p. 32). It is however, critical for entrepreneurs to ensure that they have developed these attributes for successful entrepreneurship. For instance, it is futile to start a business venture with little or no confidence in workability of the venture. Self-confidence instills optimism, which resembles fearlessness to face difficult odds. Self-confidence and determination helps one to see opportunities where other people see danger lurking (Bone & Kurtz, p. 240). Entrepreneurs conceive new ideas and devise innovative ways that helps overcome the difficult situations and problems. Creativity is a common denominator in entrepreneurship (Bone & Kurtz, p. 241). Besides the mentioned attributes, it is important to develop relevant values and integrate them within the business culture. Such values include integrity, honesty, trustworthiness, and commitment. These values not only apply in money transactions, but also affect the reliability of the entrepreneur by the suppliers, customers, creditors, and other businesses including human resource. Energy, professionalism, perseverance, and drive are also core values and characteristics that determine failure or success of business (Bone & Kurtz, 2010, p. 242). Sense of community is another value that is often neglected but it has the capacity to break or make a business. It is advisable that the business entrepreneur participates in community activities through civic affairs that focus on helping the less fortunate and the marginalized groups. The recognition of business by community on non-profit services provides intangible benefits. Starting a Diesel Repair Business in Southwest Virginia Heavy vehicles are critically important for the transport of goods across the country and for the management of construction projects as well as hauling equipment. Diesel engines are also important for added power. Unlike the gas engines that rely on sparks that are ignited by electric spark plugs, diesel engines use combustion actions in burning the fuel and powering the combustion chamber. Diesel engines must therefore, be kept running in order to effectively grow the economy (Cooney & Yacobucci, 2007, p. 84). Starting a diesel repair business would play a critical role in maintaining these diesel engines, electrical, system malfunctions, and hydraulic systems that are essential in running of the economy. Being certified by the National Institute for Automotive Service Excellence (ASE) further enhances the survival of the business. With the certification, customers will recognize the quality of service they will get (Knowles & Erjavec, 2004, p.23). However, exercising skills strictly may not yet give the relevant results that are acceptable in the marketplace. It is therefore, important that one find a market niche. Both market needs and personal skills must be synergistically applied for an idea of starting a new business to work. Options Diesel is one of the eligible fuel forms that have some tax reduction programs offered by the government. One is likely to benefit starting a diesel repair business. Most transporters and vehicle owners are more likely to prefer diesel consumption as opposed to other fuels (Cooney & Yacobucci, 2007, p. 107). It is important to select an ideal business location for the business. Such a site could be expensive since the venture may call for a big office space and space for diesel repairs. It would be advisable for the entrepreneur to seek assistance from professionals who are well versed in designing the business place. In addition, hiring competent and skilled professionals for the venture would play a critical role in driving its success. It is important that such staff have good knowledge in business practices in order for them to develop and build customers’ confidence. One mistake by the staff can be expensive and could actually cost the whole business. In this business venture, the entrepreneur plans to begin with a sole proprietorship ownership business where he will be running the business independently with family labor assistance. This minimizes cost of labor since there will be no employees’ salaries and benefit in the business. In addition, sole proprietorship is more flexible with easy start up and rather inexpensive to create. Although all the income can be kept, it is not possible to gain absolute protection against liability and taxes (Madura, 2006, p.159). Besides providing repair services to diesel engines, it would be advisable to diversify the business so that there can be two types of product to supplement each other in case of slow-down in one line. Bio-diesel alternative would be the best for this type of entrepreneurship since the business would enjoy government tax reductions as well as easily convince customers by showing them that the business is simply embracing the considerable profits of ‘going green’. Bio-diesel refers to domestically produced diesel that is obtained from different renewable resources. It is an advanced alternative fuel made from plant and fat oils (Gorelick, 2009, p. 175). Providing bio-diesel in addition to diesel repair services would help diversify the business and increase the benefits of economies of scale. Preparing a Business Plan After coming up with a business idea that is viable, the next important thing is to write a good business plan. A business plan in this case refers to a clear document that specifies the details of the business and guides the entrepreneur in opening up the business. Planning helps the entrepreneur to consider the problems and issues that are associated with starting and operating the business. In most cases, an entrepreneur borrows money to finance the venture. This makes having a business plan critical to enable one to consider the business activities, procedures and the budget as absolutely critical and with clarity (Pinson, 2008, p. 15). A carefully thought-out business pan enables one to most likely succeed and attract interest of other venture capitalists or investors. Details involved in the business plan may differ but one of the most critical issues that should get into the plan include a clear vision that compels one towards starting the business and creates a room for excitement. A good business plans offers a clear and realistic projections of finances required, a target market and profile of potential customers, detail information concerning the industry involved, and the competitors in the industry and the market. It is also important to provide evidence on effectiveness of the entrepreneurial management team or the entrepreneurial skills possessed by entrepreneur. It is good to pay attention to good formatting and keep the business plan short, highlighting critical risks that threaten business success. Spelling out the sources of funds for start-up and for operations are all relevant points to consider and critically examine in the business plan. A good business plan enables one to come up with a budget that is followed in starting up the business and carrying out the operations (Balanko-Dickson, 2006, p 62). The very critically important way of ensuring success in the diesel repair business is creating a thorough business plan that would be essential in assessing whether one is ready for the venture as well as gathering relevant knowledge. Analyzing Business Needs As mentioned by Reuvid (2008, p. 23), once the entrepreneur has realized that the business idea is viable in the market, it is vital to consider the required immediate resources. The most common immediate resources required in business are start-up funds, location, and staff. Some business may take time to pick up and generate profit. This implies that the entrepreneur will need to have cash that can pay some of the business expenses, suppliers, and wages. In the case of the diesel repair business, the cash would be required to pay suppliers, meet business expenses such as rent, electricity, telephone charges, and postage among other expenses (Reuvid, 2008, p. 23). The entrepreneur can develop a preliminary cash flow forecasts to get a clear view of the required cash for the opening period. The cash flow forecast will show the entrepreneur whether the personal savings will be adequate in meeting cash requirements or not. Once a good business plan comprising of budget has been developed, it is advisable to secure financing. This can be done by approaching banks for loan applications and asking business colleagues and bank managers to refer one to possible venture capital firms. The prepared business plan should be submitted to the venture capital firms. This plays a significant part in securing financing that may not be received from banks. Securing finance would open up the opportunity to search for good property for the diesel repair shop or site. It is advisable to go for big spaces in consideration of holding multiple trucks, vans, and other transport vehicles that may be brought for repair. To get considerable and friendly offer, it is good to use commercial real estate agents who will advise on cost and possible sites for the business. The next important step is to purchase cargo haulers, engine hosts, hydraulic equipment, and other diagnostic and repair tools that are required in repairing diesel engines. Analyzing Risks and Costs Involved in Entrepreneurship The greatest risk that entrepreneurs face is the possibility that the business can fail and ultimately result in financial loss as well as emotional suffering. Substantial amount of capital is required in starting up a business like the diesel repair business since the entrepreneur would be required to buy tools and equipment for startup, rent office premises or site and various other needs of the business (Fielden & Davidson, 2006, p. 44). The entrepreneur may not have all the capital required and may therefore borrow from creditors such as banks or Sacco’s. If such a business fails, the entrepreneur stands to pay the credit from personal funds and bear all the related financial costs. Such losses push the entrepreneur to suffer emotionally. In addition, the starting up of a business requires hard work that may strain the family and social life of entrepreneur and destroy social relationships leading to emotional stress. This is often considered a less obvious type of risk but one that requires consideration prior to starting up the business since it can be a source of conflict and ultimately lead to business failure. Minimizing the Risks Carrying out initial market research on the ground to detect weaknesses and problems that would face the business is essential and it would help in making the appropriate decisions and developing strategies that would work in the particular market. Market research would for instance help in revealing the potential threats to the business such as competition and high prices and these will guide the entrepreneur in devising the most appropriate business strategy. The other critical factor that helps minimize the risks is drawing up a clear and well detailed business plan that indicates the implementation plan and all the activities involved in launching the venture as well as the budget arrived at. It is also advisable to keep investment cost at a minimum. This could be done by leasing or renting of business premises instead of purchasing. Taking out insurance cover for the business properties and buildings is also importance and would help the entrepreneur deal with uncertainties and risks. Ensuring adequate work supervision and training of any labor employed is also critical (Kuratko & Hodgetts, 2008, p. 62). In the context of diesel repair business, it would be advisable to take insurance to cover for this business to avoid huge risks and minimize uncertainties. For instance, some trucks may be brought for repair and some of the works may take some time implying that such trucks will remain in the business premises. Such trucks are very expensive and in case of any incidence of fire or robbery, the entrepreneur cannot pay the cost incurred. Such risks can only be eliminated or reduced through insurance. It is however, important to know the risks involved in any business cannot be completely eliminated but can only be minimized. Numerous factors that influence business performance cannot be controlled such as competitiveness, technological, social, economic, and political factors. Some of these factors cannot be foreseen and they simply impinge on business’ success. In the context of the diesel repair venture, the entrepreneur will take loans from lenders in addition to his personal funds to finance the business. This is only done out of the determination and the dedication that would drive the idea and the plan. The entrepreneur will develop a workable business plan showing the vision, core activities, and the related budget to guide the process of launching the diesel repair business (Cooney & Yacobucci, 2007, p. 199). It is thus important to be prepared to take the risks in return for potential financial rewards as well as other rewards of entrepreneurship. Rewards Financial reward is the most critical reward especially when we consider capital invested that was given by lenders and must be paid back. Financial reward in entrepreneurship is the profit that is gained from the difference between revenue and costs (Oyama, 2008, p. 11). Profit is one of the objectives why people choose do entrepreneurship. There are other several benefits that one enjoys in entrepreneurship including being the boss and thus making decisions with ease as well as the ability to participate in all business operations from design, creation, sales, to operations and customers’ response (Chahal, 2009, p. 93). Entrepreneurship also offers prestige, being in charge of the business. It provides opportunity to enhance equity since a woman can as well start-up a venture where men have dominated and vice versa. For instance, a woman can venture into diesel repair business that has been known to be male dominated. Legal Aspects It is important to obtain a business license from the relevant departments in order to comply with all the legal requirements. Such licensing should be applied prior to the opening up of the business and the certificate should be well displayed in the business premises. For a diesel repair business, the entrepreneur should apply for professional license to work as diesel repair technician. The requirements of the professional license should be reviewed within Virginia and should be done at the revenue department. As mentioned by Layton (2011, p. 4), it is advisable to meet with the attorney to discuss any copyright and trademark issues. Upon receiving the professional license, the entrepreneurial should then approach local municipal council at Southwest Virginia and apply for business license where he would be advised on the relevant application requirements. Occupational outlook handbook that was developed in 2004/2005 requires that diesel repair technicians be in possession of commercial drivers’ license so that they can test-drive the trucks or buses after repair and exercise that on public roads. In case of expansion of the business, the business may require hiring a staff or many other employees. It is important to ensure that any applicant for such position have passed drug-test. This will help in ensuring that test-drives are carefully done. It would be also advisable to secure the required liability insurance for the products to be offered. Such insurance cover would be essential in securing the business and reducing cost in case of risks like fire or theft (Dlabay et al 2011, p. 216). Given that diesel does not have chemical procedures or reactions, one may not need to obtain a license from the environmental agencies in Southwest Virginia. It would also be advisable that the entrepreneur obtains the relevant business certification and license to sell bio-diesel such that after repairing the diesel vehicles, they can also be fueled from the same place. Educating the customers that the business is selling bio-diesel would go a long way in convincing them and building their loyalty through satisfaction. The mentioned legal requirements are fit for a sole proprietorship business. The sole proprietor must also keep careful records of transactions for taxation purposes and must inform the revenue department about the business (Gooderl & Estela, 2010, p. 222). For a partnership business, the partners involved would be advised though not mandated, to prepare a partnership agreement and keep each a copy. The agreements guide the partners in power sharing, about their liability, in profits and loss sharing, and in case of dissolution, retirement of some partners or death. The partners pay taxes individually from their total income and are not supposed to disclose their business transactions or register with revenue department as a partnership. For a limited liability company, the company is deemed a separate legal entity. The limited liability company must have its shareholding authorized. The company must hold annual general meetings with the shareholders and auditors and directors must approve the reports. The reports include list of directors’ names, accounts, and shareholders details. Annual return must also be submitted to companies’ registration office. All these details are included in the certificate of incorporation (Gooderl & Estela, 2010, p. 223). A C corporation refers to a corporation that is taxed separately from the owners. Such a corporation pays a fee for incorporation according to the state charges and obtains a certificate of incorporation from the companies’ registrar. For an S corporation, the entity and the owners are not taxed separately. The owners pay taxes from the shared profits. The corporation is registered as a separate legal entity. Such a company enjoys benefits of a partnership business. A C corporation, S Corporation, and limited liability company must obtain certificate of incorporation. Market and Industry Analysis Market Trends and Conditions The market for diesel vehicles has been influenced by various factors that are political, economic, and environmental (Prakash & Energy and Resources Institute, 2006, p. 192). Some of the states in U.S. have been pushing the government to allow for diesel vehicles as a way of addressing the high fuel price challenge facing the U.S. population. Fuel price being one of the economic factors that largely affect the economic growth and industrial performance, any factor deemed to address the problem is often preferred. Fuel price is thus an important aspect in an economy, volatility of fuel prices has seen government review their policies on price and relax the tightened environmental policies in the states to allow for diesel vehicles. Diesel fuel in U.S. has for long been deemed a dirty-burning fuel, the U.S. government has for long tightened emission policies and this has seen low sales in auto manufacturers and auto dealers that have been manufacturing diesel models (Prakash & Energy and Resources Institute, 2006, p. 201). Diesel repair is not a new product and it can be challenging since its success rests on winning over consumers by use of advertising and merchandising appeal. Entry costs can also be high and the profits expected can be uncertain but the market is truly viable (Gorelick, 2009, p. 173). In examining and arriving at the market target, it would be important to establish connections with relevant trade associations that focus on bio-diesel products; these would play a significant role in enabling the entrepreneur sell the diesel repair services with ease and generate trust and confidence with the customers (Tabak, 2009, p. 90). This business requires no chemistry or education except research on the industry to examine its situation. Starting a diesel repair business requires careful planning and evaluation of key issues in the market so that one can adopt the most applicable and effective methods of advertising the business. It is advisable that the entrepreneur develops a budget separate to cater for advertising campaigns and monitor customers interests (Dlabay et al, 2011, p. 119). Using methods like billboards, banners, business cards, and flyers is essential for this kind of business. Billboards and banners placed along highways would particularly enable the transporters to spot the business easily. The United States diesel vehicle market has shown rapid growth, this is because diesels are incredibly fuel efficient and more environmental friendly. West Virginia has allowed for introduction of diesel technologies as one way of meeting emissions requirements for all the 50 states. United States diesel market is estimated to expand by one million in terms of units produced and consumed by 2013(Dlabay et al, 2011, p. 123). Auto manufacturers have launched several diesel models in United States market and the market is expected to have several other new diesel models as competition among auto manufacturers continues (Gorelick, 2009, p. 178). Competition in the auto market has seen auto companies focus on quality enhancement and meeting emissions requirements that the government has set. Some of the marketing leaders in the diesel market include Audi, which has focused on developing cars with diesel engines ranging from public transport vehicles to personal cars. BMW has also ventured United States market offering diesel vehicles. Ford, Chevrolet, and Dodge have recently introduced pickup trucks. Other brands of diesel vehicles include Honda, GMC, Hyundai, Jeep, Infiniti, Jaguar, Mazda, and Nissan diesels (Griffin, 2008, p. 222). Trends and Situation in the U.S. Diesel Sector For a long time, United States government was resisting diesel engines in the market. As emissions requirements standards were established, auto manufacturers saw it difficult to make diesel that would meet the standards required by the state governments across United States Diesel is however, consumed in small quantities as compared to other fuels though at a growing rate. Financial and economic crisis have forced auto manufacturers to reveal that diesel vehicles could help the transport industry from collapsing following high fuel costs. This saw introduction of many other diesel vehicles and increased fuel efficiency among the uses. Introduction of bio-diesel has shown that the product can play significant role in enabling states to go green and enhance people’s quality of life (Tickell, 2006, p. 79). Introduction of low-sulfur diesel has significantly reduced levels of nitrous-oxide emissions and this has been essential in developing the 50-state diesel market. In 2006, diesel had about 40% of the total United States market share. However, as we entered the recession period in 2007/2008, the sales dropped and diesel was about 2.2% of the total United States market share. Gasoline engines have slowly been eliminated from the market and replaced with modern diesel engines that emit less greenhouse gases and allow up to 40% improvement in terms of mileage. Clean-diesel technology has been introduced in the states requiring drivers to monitor the tank of urea that is released as spray into vehicle’s exhaust in order to neutralize harmful emissions. Diesel repair market is a subsection of the diesel market and as the diesel market rapidly increase, diesel repair market is also enlarging. According to Tickell (2006, p. 79), the recent increase in United States diesel vehicles sales have been linked to the rising fuel prices that has pushed the population to the need for vehicles that are more fuel-efficient. Increase in sales of diesel vehicles enhances the market for diesel repair making diesel repair market to grow rapidly. As mentioned by Gorelick (2009, p. 176), there are various commercial plants that are currently producing diesel fuel from gas and coal using Fischer-Tropsch process. This has seen the diesel sector be deemed compliant with society and government’s plan to ‘go green’ and has played a significant role in boosting the diesel industry. Some of these coal-based diesel plants have been established in Montana, Pennsylvania, and Colorado. It is also possible that soon, a coal-based diesel plants will be established in every state making diesel market and the diesel repair business a largely profitable and viable (Gorelick, 2009, p. 176). Challenges faced in the diesel markets by auto manufacturers, auto dealers, and the diesel repair businesses include high volatility of diesel fuel particularly during summer. This discourages people from using diesel and thus affects sales in the market. In addition, diesel engines take a long time to warm up and some vehicles have to depend on cabin space heaters especially during winter. In addition, United States has continued to tighten emission regulations and if the regulations are further tightened to consider diesel as a carcinogen, this might see most businesses including auto dealers, auto manufacturers that manufacture diesel vehicles as well as diesel repair businesses being faced out of the market (Prakash & Energy and Resources Institute, 2006, p. 186). Success of the Diesel Repair Business For those large machines and equipment, the most critical customer service elements include repair, maintenance, and installation (Havaldar, 2010, p. 82). For instance, diesel engines for trucks require high quality maintenance and installation services, repairs, and spare parts. Within the diesel industry, there are spare parts and service centers that have been established to offer diesel spare parts and repair services. With the growth in diesel market in United States that is now marked by increasing sales of diesel vehicles, diesel repair business offers a seemingly profitable business option. Developing long-term buyer-seller relationship is essential in such businesses since the trucks and other diesel vehicles are durable goods, strong customer relationship will be critical in enhancing customer retention, satisfaction, and loyalty. Proper advertisement of the business within Southwest Virginia would be important to create product awareness and attract customers into the business (Havaldar, 2010, p. 82). The entrepreneur can ensure that the service offered is of high quality and use that as a basis for the advertisement and customer satisfaction. The location of the business will also matter in this kind of venture. For instance, locating the diesel repair business along a highway or at least near a petroleum station would create convenience for the customers since the transporters can easily access the service. Use of billboards located along highways would be effective in advertising the business. Some of the factors that would see failure in diesel industry is United States include further tightening of environmental standards on emissions. Such policies would see reduced number of diesel vehicles, reduced need for diesel repair service, and thus reduces sales in the diesel-repair business sector. According to Gottschalk and Kalmbach (2007, p. 229), policies such as early replacement of old diesel vehicles would play a significant role in reducing emission and this will pave way for relaxing the tight emission standards and thus allow for more sales of diesel vehicle. This will in turn increase the number of customers or the number of vehicles to be serviced. Currently the business sector is not competitive but as sales increase, many investors may enter the market and increase competitiveness. In case of stiff competition, the entrepreneur can explore business strategies like differentiation to attract and retain customers in the market. Application of diesel technologies in the business would be critical in ensuring compliance with established environmental policies and it would ensure that customers are given high quality and up to date service. (add these two works to list of references) Works Cited Knowles, D & Erjavec, J 2004, TechOne: Basic automotive service and maintenance, Cengage Learning, London. Madura, J 2006, Introduction to business, Cengage Learning, London. Read More