Developing New Venture for an Entrepreneur - Essay Example

? Reflective Report: Developing New Venture for an Entrepreneur Executive summary The essay above is organized into main important units. The first one is Introduction. This is where I explain to the new entrepreneur the reason for my writing down this reflective report. The new entrepreneur might not really know the exact importance of having information from a past experienced entrepreneur; this part explains the logic towards it. The second section is the background information on entrepreneurship in the UK. It is a matter of importance for the new entrepreneur to know where the UK has come from in terms of entrepreneurial development and where it is heading to. It helps them have a dream that will assist them work hard to try and achieve. The next topic is about the risks that the entrepreneur will face on his journey in entrepreneurship and how best he can be able to counter them. It obvious that the entrepreneur will encounter risks and challenges here and there in the business every now and then, but how to counter it is a real problem. This is where the skills he or she acquires from this unit will be useful. The next topic explains the diverse development I have faced as an entrepreneur working in the salad master and the diverse experience I have gained from it as well as all I have learnt from it. The next topic is on opportunities found and those that are made. This explains to the new entrepreneur the fact that in the entrepreneurial world, he or she will meet opportunities that have already been found, but more importantly he will need to make more. It explains different methods by which opportunities can be found and made. It also explains to the new entrepreneur the different types of industries in the entrepreneurial world and what service or products they offer, how competitive they are and what their value is in the market. The next topic is on effectuation. These are the principles used by experienced entrepreneurs in case of uncertainty and there exist different principles under it which are explained to the new entrepreneur. Introduction It is a matter of importance that all new entrepreneurs in the market learn that in order to start any successful business venture, he or she must be ready to learn from already existing ventures. This is done best by learning from existing entrepreneurs’ past experiences. As an already existing entrepreneur, I thought it a matter of importance to help other upcoming entrepreneurs know how best to approach the market (Cuervo, Ribeiro & Roig, 2007). This I thought will be best if I used my past experiences to help them learn through my very own experiences to become even better. My experience in the salad master business is very subtle in the learning experience I will be giving them. There is need for the entrepreneur to learn and be conversant with developments in the entrepreneurial culture up to date. There exists some background information on the development of entrepreneurship in the UK. In the 1970s, the economy of the UK economy was under crisis. This was brought about by the fact that there existed large companies which were really inflexible and quite slow. In the 1980s, there was a little improvement. There was growth of the small firm sectors of entrepreneurship; it was termed as “Enterprise culture”. The changes continued and from the 1990s to now, the importance of entrepreneurship in the UK grew in importance (Carsrud & Bra?nnback, 2007). This was in response to the rapidly changing economy globally. In the present, the entrepreneurship culture has developed and extended to health levels, education levels and policing levels. It has now been termed as “Entrepreneurial child”. The government now strives to find individuals with psychological profiling techniques to take over the entrepreneurial culture and help improve it. Risks involved and how to counter them by use of prediction In the field of entrepreneurship, there exist different factors of production. These include land, which can involve either the raw material to put up the business on or the rent paid for a rented premise. There is labor, this is the people who give their skills for production in the business for either salaries or wages, and there is capital. I have learnt that these factors only work in cases where the market is efficient that is when demand is equal to supply (Knight, 1921). I have learnt that as a successful entrepreneur, one must be a risk taker who is ready and willing for the well being and continuity of his business. There is a huge relationship between risks and profit, and it goes all well with the adage, ‘no sweat no gain’ hence an entrepreneur must be willing to take all risks that arise in the business. There are risks which are quite obvious of their existence in the business and can be predicted. Then there exists the uncertainties in the business which might arise at anytime unexpectedly. As an entrepreneur, one must be ready at all times but the big question remains HOW? I learnt that when any future risks in the business is predictable to you as then entrepreneur, then one must or rather should use the past knowledge and data on previous cases to predict the future. A new entrepreneur can collect data from the other entrepreneurs in practice to know how best to prepare and for what to prepare for best. There exist another risk in predicting risks from previous cases, this is that the future might as well come with its new risks and this might be a hard hit on the entrepreneur. Dealing with the unknown is usually quite hard. Despite this, the new entrepreneur can use the knowledge of past risks to learn new tricks on how to counter any possible related risk that might come up. There exist times when the future can be completely unpredictable, especially in cases when the entrepreneur is starting up a business, which is completely new in the market or where the business has not really stayed in the market by other competitors and this is where the big question pops up, What does he or she do? (Cuervo, Ribeiro & Roig, 2007). There is a prediction map known as the static map that can be used for effective prediction. In 1776, Smith, also known as a father of economics, explained about entrepreneurship stating how rational self to economic well being. He also stated that the market is also led by this as well as capitalism and free trade. Smith’s prediction was based on historic information i.e. information he had gathered from the existing historical occurrences on past entrepreneurship activities. With this information, he created a dynamic map on n prediction which he called the static map. There exists another map on risk which can be used to calculate against the odds based on trial and errors (Zacharakis, Spinelli, Rice, Habbershon & Minniti, 2007). This maps shows that prediction allows defensive tactics to be used when preparing while risks involved have to be managed through a proactive or proactive measures. This map shows that risks can be countered through a planning means known as scenario planning. The map is shown below During my starting time as an entrepreneur, there was a challenge I faced. Most times I tended to confuse approaching the risks involved with entrepreneurship to those involved in banking. The two were completely different things, and had to be approached differently (Kumar, 2003).  One of the main reasons I learnt was that entrepreneurship was a venture I was just starting on my own, while the banking world was an already established institution which had so many ways of countering risks and preventing any seeming downfall. Below are the different graphs differentiating between the two? Conclusion and plans Effectiveness of conclusion highlighting further development required to direct further entrepreneurial work and personal development. The main aim of the study is to help improve on the business apart from helping improve on the entrepreneurial skills of the individual (Henry, 2007).  The issues below have been put up for consideration taking in the case study of our company the salad master organization which deals with kitchen ware. Market Viability The kitchenware industry is required and expected to grow by 11.2% between years 2012 and 2016 (Keynote, 2012). With the current economic issue of healthy eating being predicted to over the few years in the future, there is a gap made which allows for popularity of the service. This is what I as an entrepreneur has predicted for the salad master future expectations for our upcoming market. This is a way I which an upcoming entrepreneur can always prepare for any outcome i.e. by planning efficiently for the future market especially by planning ahead and prediction (Strydom, Antonites & Nieuwenhuizen, 2007).  Technical viability This is the service that is to give the customers what they have paid for, which is the after-care service of high quality. The proposed business idea happens to be in-tangible; hence there is low or no risk of damage of the product. An upcoming entrepreneur should know that they should always provide what they have promised to the customer in order to ensure efficiency and steady profits. It is always thought by many entrepreneurs that forfeiting some promises to offer to the customer will help save on certain costs (Kumar, 2003).  What they must learn is then fact that with time, all this go down and become losses. Business Model Viability There exists a revenue model that allows the Mahubey to have 2 unrelated product streams. One can be for the existing products while the other can be for new service in provision. Management Model Viability The business plans to have two managers who are to oversee if the service is successful or not. These two managers have a big impact on the behavior of the staff they manage as well as the customers. Planned functions of the managers include being in charge of finances which will help prevent wastage. He/she will also be the one to make most crucial decisions on the need to expand or not. An upcoming entrepreneur must know that management is a very important part of the business and it can either lead to the downfall or rise of the company. Economic and Financial Model Viability As shown by the breakeven figure that was calculated, this service idea is thought to be one that will generate appropriate income for the Salad Master which will help meet payments. There is a low breakeven figure, which is thought to allow for expansion in the future. Exit Strategy Viability There exists also a strategy, the exit strategy, which is for the warranty services. This has been seen to be a small issue to the business. This is because the initial cost to be earned by the business will be few. Return on investment This was declared inapplicable since the start-up costs are found internally not externally. Conclusion made In conclusion, there seems to be hope. There seems to be likelihood of success. The proposed service seems to have high chances at success. This is because the projected figures are based on secondary and primary research into the industry and service idea. ‘Only a reduced number of packages are to be sold yearly. From assessing the breakeven analysis, the proposed service can make a profit on an annual basis, leading it to thrive within the first few years of running the service.’ Opportunities Found and Those Made An aspiring entrepreneur needs to know that there exist opportunities) that are found and those opportunities that are made. There exist different methods of finding opportunities as well as different ways of making others. The first method of finding opportunities is known as the Search and Select. This method is one which is considered a casual process. Under the search and select method, there exists different ways of seizing the different types of available opportunities (Strydom, Antonites & Nieuwenhuizen, 2007). First, an entrepreneur can seize an opportunity in markets which already exist and which offer better. This means that the entrepreneur can start a business offering products which already exist in a certain market but has to now get various ways on how to deal with competition (Gottschalk, 2009).  This markets might at times be flooded, what will set the entrepreneur apart from the rest will now be what he or she offers unique from the rest. Secondly, an entrepreneur can sit down and predict the market size. The entrepreneur considers the already existing related markets and determines how with the introduction of his or her business he or she can get market response. This helps in being ready for any outcome (Bill, Bjerke & Johansson, 2010). This helps him or her get better opportunities to know what to present in business and of what capacity to present. In the third view, an entrepreneur can plan different tasks to enable him or her exploit the various opportunities in the marks (Fayolle, 2007). This is when an entrepreneur wants to get into the market and explore different opportunities. He or she must plan different approaches of getting into the market to avoid early downfall. Fourthly, the new entrepreneur can decide to follow the economics supply and demand theory which is classical. Next, we have to create and transform effectual method. This is a method which is available for making entrepreneurial opportunities. The transformation logic shows that an entrepreneur can generate opportunities using ideas without the search and select method from the already existing market (Kaplan, 2009). Entrepreneurs are advised to use this effectual method in different ways. They can do this by first; knowing who they are, second knowing what they have, third they must know who they should ‘know’ in the sector, Fourth they should undergo the process of being self selected stakeholders as part of their new creation of the market. Opportunities are found through the following ways; 1) It can be found based on search and select theory 2) It can be found by means of planning casually. 3) They can be found by assuming the potential ventures that are similar to an already existing businesses based on historical information existing. Opportunities can be made by; 1) Use of incomplete and overwhelming existing information 2) By taking over ideas from markets not yet defined 3) By use of the advantage of the fact that clients are unaware of their future preferences. 4) An entrepreneur can also take up the advantage that new technology may emerge; hence use this to determine whether or not the business venture being planned will really prosper (Greene, 2008).  5) The entrepreneur should also take into consideration conflicting and a lot of various confusing data on the market to avoid future mistakes or regrets. There exist differences between the difference methods of either finding or making business opportunities as shown below Difference Between The market The logic The process Search and Select This makes assumption It has the conscious intention of searching in order to capture new market It relates to individual exploit which is visionary in exploitation opportunities by individuals The entrepreneur presents a set of possibilities which is finite. The search in this case in the long run has given in to a set of possibilities This is determined by goals set at the beginning of the business venture. This therefore makes it a static process and surprise in this case seem to be quite bad Creation and transformation Effectuation In this case, the results are not intentional or do not result from mere imagination. It is all about and individual having the motivation to do things that are possible It is also basically fulfilling It starts with the local existing possibilities It is the opposite of the search and select The entrepreneurial action in this case transforms possibilities into possible opportunities It is dynamic. In this case, it is interactive in that there is interaction with stakeholders. These stakeholders self-select into the entrepreneurial process which all comes as a surprise. The entrepreneur should know that there exist opportunities that are affected by the environment; for instance, Environmental opportunities. There exist different types of industry structure. M. Porter identified them as; Fragmented, emerging, mature, declining and international structures Chang on the other hand identified Network, Hypercompetitive and empty core as being types of the Industry Structure. An entrepreneur needs to identify the structure of the firm he or she is about to set. The entrepreneur also needs to know that’s there exist different opportunities in various fragmented industries. Examples of industries include: Retailing, service and the restaurant type of industries. He or she needs to identify strategic opportunities in the related industry he or she has chosen. This may involve either new economies of scale or mechanisms of governance done through consolidation. Apart from knowing the different type of industries, an emerging entrepreneur should also know about the different opportunities existing in the different markets affected by environmental factors. A) Opportunities in emerging industries. This emerging industries include those which most have come up as a result of emerging technology as well as changes in already existing technology which comes about as a result of changing needs and demand from the customers. Examples of such industries include; Microprocessors, personal computers, biotechnology as well as biotechnology. B) Opportunities also exist in mature industries. Mature industries are those which have grown at a slow rate and have experienced customers. The production growth rate is limited as well as existence of new products. The graph above shows the structure on the process and product innovation and industry. C) Opportunities in declining industries. This is those industries which have absolute decline in unit sales. In this case, the strategic market includes, market leadership, harvest and divestment. D) Opportunities in International industries. This is the sales volume and growth which comes from two or more countries. This includes multinational, global and transitional industries and each has strategic opportunities. E) Opportunities in Network industries These are industries are those where the value of products or services offered depend on the number of the total items sold. Its other name is the “increasing returns industry”. Examples of such opportunities include telephone, fax and VCRs. F) Opportunities in hypercompetitive industries. These are industries where competition is unstable, unpredictable and or constantly evolving. Examples of such industries are like the Biotechnology, the music download and the internet TV. The attributes of successful proactive disruption related to it include; satisfying the current stakeholders, anticipating customer needs, acting quickly with surprise, changing the bases of competition, investing in multiple efforts or a sequence of activities. G) Opportunities in empty core Industries These are the industries whose bases of competition may be stable. However, industry conditions make it difficult to earn profit. Buyers here are shopping as sellers are selling, but at the end transactions may not take place. Examples of such industries include; industries with high fixed costs, with low variable cost such as airlines/ they are also known as the “fixed cost with wings”. Strategic opportunities in this case include Collusion, government regulation, product differentiation and better demand prediction. Effectuation Effectuation entrepreneurship is a set of principles that are used by expert entrepreneurs in cases when they experience uncertainty. Therefore the application of these five principles, to take decisions in cases of uncertainty is effectuation. Most entrepreneurs have a commons secret known as effectuation-named by Sarah D. Sarasvathy, an Indian entrepreneur and researcher. This she did after finding that her experience as an entrepreneur was quite different from what literature told her. She was therefore motivated to interview other successful entrepreneurs and she managed to come up with effectuation.  Often successful entrepreneurs consider these five principles: Bird at hand, affordable loss, lemonade principle, pilot on the plane and crazy quilt. Bird in Hand Principle- This principle is where an entrepreneur starts with what he or she knows and who he or she knows Affordable Loss Principle- In this principle, the entrepreneur decides on what to loose Lemonade Principle- This is the principle where the entrepreneur leverages challenges into opportunities Crazy-Quilt Principle- This is the principle where he or she devises strategic partnerships  Pilot in the Plane Principle- This is the principle where he or she focuses on what he or she can control The bird in hand principle means that you should start with the things that you have with you. Whether they are people, things whatever the case just use what you have to begin what you intend to achieve. Entrepreneurs are so visionary and creative. When they set out to build a new venture they do it creatively with the means that is available to them. An entrepreneur asks himself questions like who am I, whom or what do I know. Through these questions, they are able to know where exactly they need to start whom they need to talk to in order to buy their products or help them in one way or the other. A bad in hand is worth two in the bush. This is certainly what drives entrepreneurs. They make use of the God given resources to venture into a business. Entrepreneurs are advised to start with their means. Don’t wait for the perfect opportunity because there is no such thing as a perfect opportunity.  They should take actions on what is readily. For instance, a case of two brothers who wanted a bag for keeping their work clean and dry when biking. Since they couldn’t find any, they decided to make their own. Their friend asked for a similar one and so they decided to turn their dorm into a workshop for stitching bags. These two brothers made use of what they had learned to create a business that they did not see forthcoming. The lemonade principle means leveraging challenges into opportunities. This principle is the perfect example of this saying. As an entrepreneur it is so obvious that you will encounter so many challenges as you go about you activities.  Project management is used by the entrepreneur to plan his activities in order to get through the milestone and finally reach the destination. Even after you assign different jobs to different people and expect nothing less than perfection, you will face situations of inadequacies, imperfection and poorly performed projects with serious quality issues and jobs only get to be completed way after the deadlines set. This happens because managing project gives us a false sense of control since in our minds its recorded that every form of obstacle was thought of during planning and therefore no milestone is expected on the way. Life is full of so many changes, surprises and challenges and thus we should expect that the life we live now is totally different from what we will have the next minute.  The new changes that we may encounter may lead us to something more creative and more innovative than what we could have ever imagined.  An effectuator is open-minded. He knows this and thus makes good use of it. Being open minded exposes the entrepreneurs to serendipity.  Serendipity is a happy accident or a pleasant surprise especially whereby something good or useful is found when not necessarily being searched for. When an obstacle is met along the way, an entrepreneur can turn it into chances and unexpected results may be achieved. Crazy-quilt Principle involves devising strategic partnership. Pilot in the plane principle means that you should focus on what you yourself can control…Rely on human agency as prime driver of opportunity rather than technical/economic trends. Affordable Loss Principle – Set affordable loss. Affordable loss principle means that you should decide from all the things you have, what you are willing to lose of them all.  An entrepreneur is a risk taker, and a very big one for that matter. They are very much willing to invest large sums into projects. They may even put all they have on the line just so that they achieve their desired goal.  This doesn’t mean that they can decide to throw all their money into a business venture without carefully evaluating the risks involved. An entrepreneur makes use of risk management strategies. This involves proper business planning in order to predict how successful the venture may turn out. Successful entrepreneurs are insecure about the returns they expect should they invest their money in a business. Entrepreneurs take risks only to that sum of money they are willing to put on the line. They are not willing to lose just everything in the business in case the business strategies fail. They take risks with great care and consciousness such that they easily find solutions to problems, resources and opportunities. Conclusion This entire experience in the world of entrepreneurship has been of great assistance in by development and growth as a great and successful entrepreneurship. The most valuable and great lesson I have learnt in my entrepreneurship journey determination is significant for success and productivity. There is never a perfect opportunity to do anything, all one has to do is dream and turn the dreams into reality by working real hard. This module has helped me learn so much, especially in the sense that there are many existing opportunities that need to be utilized fully. This module has helped me open my mind further to the fact that in the near future, I can as well start my entrepreneurial journey as I do something else like continue with my studies and that just sitting and waiting to seek employment by already established entrepreneurs forever is not the best, I can as well start my successful entrepreneurial journey to success. Success really is not about what has been done by others and they have succeeded but rather what really makes ones venture a success. It can be different from all the rest but become a success finally, it is also notable that one’s success can be another person’s failure and so with this I conclude that no matter how much experience a new entrepreneur gains from the successful entrepreneur, there must be a touch of uniqueness in his work to perfect the whole process. References Stokes, D., Wilson, N., & Mador, M. (2010). Entrepreneurship. Hampshire, UK: South- Western/Cengage Learning EMEA. Cuervo, G. 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