The Role of Entrepreneurship in the Financial and Economic Growth - Literature review Example

? Entrepreneurship Table of Contents Introduction 3 Literature Review & Critical Analysis 3 Conclusion 9 References 11 Bibliography 12 Appendices 13 Introduction The Entrepreneurship concept was established in the 1700s. Entrepreneurship is a specific art or act that helps an individual to undertake several innovative strategies, such as introducing new things, business and finance acumen. Effective entrepreneurship helps an entrepreneur to transform innovations into the economic goods and services. Entrepreneurs play important roles in the new business establishment. It is true that the leading entrepreneurs use technology, innovation and systematic strategies to cultivate positive impact. Capable entrepreneurs try to learn in order to find, select, elaborate and communicate the necessity of several effective new opportunities that can create a successful business venture. Successful entrepreneurs generally describe the precious contribution of a new venture and propose a design of business model which can be prolonged by several potential competitive advantages. After the development of business model, the venture team develops a strategy or road map. This developed road map or strategy will help to commercialize the new developed products or services in the potential and competitive market place with a combination of several sustained and stabilized competitive advantages (Byers, Dorf and Nelson, 2012). Entrepreneurs play an important role in the economic development of a country. Entrepreneurs are key contributors to the new job growth and technological innovation. This essay will critically analyze the statement of Kalpan, JM and Warren. Literature Review & Critical Analysis Entrepreneurship is an important economic growth driver of a country. Successful and leading entrepreneurs help in community building in several ways, such as conducting business in local market, providing jobs, conducting local charity, investing in key community projects, developing and participating in several entrepreneurial networks. Understanding the social and economic impact of entrepreneurship is important and several local communities and states implemented various aggressive strategies in order to nurture and cultivate the entrepreneurs. Several common myths need to be dispelled in order to understand the concept of entrepreneurship. According to several common myths, it can be stated that the entrepreneurs start their business with break-through invention and take uncalculated risks in order to accomplish business goals. According to Allen (2011), entrepreneurs should have effective and detailed business plan with broad research findings. Moreover, the entrepreneurs need to have sufficient financial resources and years of work experience (Allen, 2011, p.56). Taking uncalculated risk is the major objective of a successful entrepreneur while starting a new venture. According to Sahay (2009), there are several important driving forces that create potential opportunity for the new venture (Sahay, 2009, p.121). Securing sufficient capital is an important driving force. In the early stage of business development, the entrepreneurs need to secure business capital. They can think about several options like direct investment or investment through venture capitalist. In terms of investment through venture capitalist, the entrepreneurs should design an effective business plan that can attract the venture capitalists. Reformed securities regulation is another major driving force. It helps the entrepreneurs to find business capital for their new venture. Creating entrepreneurial networks and industry clusters can help the entrepreneurs to develop business contacts. Through this process the entrepreneurs can fill specific industry niches within the networks and clusters. This process is highly beneficial to entrepreneurs and economic development strategies. The entrepreneurs should take important management and financial guidance from several professional small business assistance entities as these lessons are effective for a new venture. The entrepreneurs should follow state and licensing environment regulations before establishing a new venture as it reduces several issues regarding permitting and licensing. Effective license and registration process can provide huge benefits to the entrepreneurs through the reduction of time, resources, paperwork and unethical processes. According to Block and MacMillan (2003), successful entrepreneurs and investors always try to capitalize on the potential business opportunities (Block and MacMillan, 2003, p.29). Identification of the potential opportunity is the most critical thing. They always try to create and implement new strategies to capitalize on the opportunities. Most successful entrepreneurs generally share certain effective personal attributes such as dedication, creativity, flexibility, determination, leadership, self-confidence and passion. Creativity drives the entrepreneurs to develop new goods or services or several business procedures. It is an important push for improvement and innovation. Creativity comes through continuous questioning, learning and thinking beyond prescribed business formulae. Dedication helps an entrepreneur to shift towards the potential opportunities. Effective dedication motivates entrepreneurs to work hard at the initial time of business establishment. Effective ideas and significant planning process need to be integrated in order to achieve success from the new venture. Determination is another important aspect of success. The entrepreneurs should have tremendous strong desire in order to achieve success through new venture. Strong determination includes perseverance and ability to accept the challenge during rough times. According to Strauss (2012), for a true entrepreneur, success is the motivator and money is just a reward (Strauss, 2012, p.283). Flexibility is another important tool to achieve success. Effective flexibility helps the entrepreneurs to take appropriate action in several organizational and market needs. A successful entrepreneur should have effective leadership quality. Leadership is the particular ability that helps an individual to develop rules and set effective future objectives and goals. An effective leadership strategy helps an entrepreneur to accomplish future goals. Entrepreneurs need to follow delegating, supporting, directing and coaching leadership style based on different business or organizational situation (Figure 1). They should be passionate about organizational goals and successful business outcomes. Passion can force an entrepreneur to capitalize on several new and potential opportunities. These strategies help them to establish a successful business ventures. It helps the entrepreneurs to increase their ability to motivate subordinates to believe in the organizational mission and visions. Passionate entrepreneurs help the employees to stay focused on the developed plans and strategies. Effective and systematic planning increases the self-confidence level of the entrepreneurs. It reduces the level of risk and uncertainty. Superior self-confidence increases the ability of listening without being intimidated. A successful entrepreneur always tries to locate a potential opportunity in order to capitalize on it. It helps them to convert these opportunities into a commercial success. Slowly and gradually, this process helps him to create value for himself and others. It is known to all that an entrepreneur is the axle for a business success, whether it is a mature business or a start up business. Quality product line and customer service helps an entrepreneur to achieve business success. Sustainable business success comes through significant entrepreneurial competences. A thorough E-Scan process can help the entrepreneurs to achieve awareness of their internal strengths, weakness and external opportunities and threats. Realizing personal entrepreneurial weaknesses and strengths can help the entrepreneurs to create value for them. Through this e-scan process the entrepreneurs can transform their weakness to potential strengths through sheer dedication and hard work. This e-scan process enhances awareness, empowerment and significant business performances. Action plan and self awareness leads to effective and quick focus on the activity and behaviour. According to Minniti (2006), strong empowerment helps the entrepreneurs to increase their determination and desire to develop understanding of own capability and entrepreneurship (Minniti, 2006, p.74). Without realizing own value strengths and weaknesses it is difficult for an entrepreneur to achieve success within the competitive business environment. Therefore, they have to increase the level of integrity and credibility in order to become a successful entrepreneur. Most of the people do not like change process but successful entrepreneurs thrive on several potential change process as they understand that an effective change process can create several potential opportunities. According to several successful entrepreneurs, opportunities are golden and ideas are cheap. It can be stated that the successful entrepreneurs are risk lovers. They have effective risk management capability and always love to take critical challenges in business process. However, they see a similar situation through a different lens comparing to the other individuals. Therefore, they can take appropriate decisions based on the nature of the situation within a quick point of time comparing to the other individuals. These attitudes and behaviours help the entrepreneurs to create value for themselves and others. A new venture start-up stage is generally characterized by the three different phases such as starting, executing and penetrating stage that need to be accomplished by the entrepreneurs. The entrepreneurs should try to design an effective business plan and allocate sufficient start-up capital in order to establish the new venture effectively. Then it is important for the entrepreneurs to accomplish execution phase significantly. In this phase, the organizations or the entrepreneurs of the business generally tries to implement effective product and service marketing strategy. It is the most critical venture development stage. Success or failure or direction of a business entity heavily depends upon this execution stage. Effective implementation plans and growth tactics help an entrepreneur to achieve significant business success. Penetration phase significantly focuses on the marketing of products and services to a group of potential customers within a new market entry segment. Several key organizational processes, such as manufacturing, processing, distributing and marketing can be considered under this penetration phase. It is the responsibility of a successful entrepreneur to understand current market trend (Lahnait, 2009, p.85). This phase helps the entrepreneurs to realize the recent market penetration. Growth stage of a venture also focuses on the marketing of products for a new entry market. The entrepreneurs need to understand several aspects of business growth. They need to examine manufacturing and logistics capacity before implementing growth process. Product differentiation strategy, product diversification strategy and new product introduction can be considered under growth strategy. The entrepreneurs should focus on the customization of products and services in order to achieve success in this competitive global business environment. It is important for an entrepreneur to identify potential opportunities to start up new venture. In order to impress the investors, an entrepreneur should present a business plan model in the standard and appropriate business plan format. The business plan should start off with an executive summary. This part should provide a gist of whole business plan. Executive summary should be followed by the company background. This part should provide the overview of the organization. An entrepreneur should provide all effective information and facts about the organization in this part. A separate part of product and service background should be the next part of business plan. This part needs to provide the details of product and services. Moreover, quality and competencies of these products and services need to be incorporated. This part of the business plan will help to attract the investors to make investment. Then the entrepreneur has to provide a detailed market analysis summary for that specific product or service. Positive market characteristic will motivate the investors to make investments. Organizational hierarchy and management summary is the next important element of a business plan model. The entrepreneur should provide the names, positions and qualification background of key management members (Pinson, 2008, p.64). A full length bio-data should be added to the business plan. Financial plan is the most important plan of a business plan model. The entrepreneur should include cash flow, balance sheet, income statement, business ratios, sales forecast and break-even analysis. Effective financial projection will motivate the investors to make investments. Implementation and control is the last stage of a business plan. The investors can identify the action plan, time of those action plans and implementation strategy through this part. An overall effective presentation of business plan model will help the entrepreneurs to motivate the investors and venture capitalists. Conclusion It is clear from above discussion that sheer dedication, determination, innovation and passion can drive an entrepreneur towards success. Entrepreneurs play a significant role in social and economic development of a country. Entrepreneurs are key contributors to the growth of employment and technological innovation. Effective risk management and identification of potential venture opportunity are the characteristics of a successful entrepreneur. Moreover, the entrepreneurs need to have effective leadership quality in order to guide whole business towards success. Due to these aspects, several successful entrepreneurs can achieve effective future goals and objectives. Through effective leadership strategy and continuous innovation and determination, the entrepreneurs create effective value for themselves and others. Start up stage of a new venture is very much important for the entrepreneurs. It is important for the entrepreneurs to accomplish starting, executing and penetrating phase. Appropriate financial projection, managing capital, developing effective business plan model and significant product or service marketing strategy will help the entrepreneurs to achieve business growth. Effective market penetration and target marketing strategy will help them to achieve business success. Entrepreneurs can achieve breakeven point through effective strategy implementation and control plan. References Allen, K., 2011. New Venture Creation. Stamford: Cengage Learning. Block, Z., and MacMillan, I., 2003. Corporate Venturing. London: Sage. Byers, T., Dorf, R., and Nelson, A., 2012. Technology Ventures: From Idea to Enterprise. [Online]. Available at: . [Accessed on July 13, 2013]. Lahnait, F., 2009. The Role of Binational Entrepreneurship as Financial and Economic Bridge Builders Between Europe and North Africa. London: IOS Press. Minniti, M., 2006. Entrepreneurship. London: Routledge. Pinson, L., 2008. Anatomy of a Business Plan. New York: AKA Associates. Sahay, A., 2009. Entrepreneurship and New Venture Creation. New Jersey: Pearson. Strauss, S., 2012. The Small Business Bible. New Jersey: John Wiley & Sons. Bibliography Crane, F., 2009. Marketing for Entrepreneurship: Concepts and Applications for New Ventures. London: Sage. Morse, E., and Mitchell, R., 2006. Cases in Entrepreneurship. London: Sage. Stevenson, H., 1999. New Business Ventures and the Entrepreneur. New York: McGraw-Hill. Tommons, J., and Spinelli, S., 2008. New Venture Creation. New York: McGraw-Hill. Appendices Figure 1: Leadership Style Read More