Entrepreneurial Types and Economic Growth - Coursework Example

What have I learned during the programme and how can I apply this in my future career? A critical reflection. entrepreneurship Name Abstract Entrepreneurs thinks about great ideas and put forward in front of their customers and clients in order to capture the target audience and to have their name in the market which already have so many products and services and new comers or new entrepreneurs needs to work really hard in order to take part in this tough competition and to sustain in the market. An entrepreneur always sees the opportunities and avail that opportunity by making a business plan, implementing that plan by starting a new business and then manages that business in order get profits. In todays environment which is rich with information and technologies, companies cannot afford to depend completely on just their own suggestions or ideas in order to advance or expand their business. They can neither restrict their modernization and innovation to one single path to market. This results in the removal of traditional model of innovation in which people focused more internally within the organization and close all doors for outside environment, technologies and ideas, this is now becoming obsolete. Since this traditional model is getting obsolete a new concept or paradigm has taken its place which is known as open innovation. This approach strategically leverages all sources whether internal or external to share their ideas and then with the use of various multiple paths the ideas are floated in the market. The path-breaking study is basically based on broad field research, some work experience and academic study (Chesbrough, 2003). There are many well known companies who have adopted this approach and got facilitated from it. This open innovation is creating great opportunity for all the entrepreneurs so that they can learn through their experience and apply all those profit making strategies in their own business so that they can expand their business and acquire maximum profit. This also led to the enhancement of entrepreneurship since it shows how one man can contribute to the industry and how one individual can show creativity on their own. Open Innovation basically show how organizations can utilize the business model in order to identify a more distinguished role of research and development in the world containing abundant information, make advancement in their existing business, enhanced management and access of intellectual property, and develop their business for future (Moren, 2010). Companies belongs to different industries must transform in a way similar to the one in which they have commercialize knowledge, and with this open innovation, entrepreneurs can unfasten the hidden economic value with respect to ideas as well as technologies. Who an entrepreneur is? An entrepreneur is actually a person who expands or creates new ideas while taking the risk of establishing a new enterprise in order to produce products and services which satisfy the need of the customers.(Pett, 2006). Every entrepreneur is a business person however; every business persons are not at all entrepreneurs. Let take a look at why every business person cannot be or are not an entrepreneur. Take an example from our daily life, an old woman who sits near your home and sells the same kind of food with same taste and quantity, even the quality remains the same. Her so called stall remains unchanged which does not at all bring any change in her living standard not even for some appreciable extent. This woman might be termed as business person but she will not be called an entrepreneur. On the other hand an entrepreneur is a businessman who is never satisfied with their performance which led him towards searching new and better ways of improvement and growth. Entrepreneurs should complete their homework before coming in the market they must have better understanding about their products and their competitors. They need to find out what their customers are looking for and must be able to alter or modify their products with respect to the requirements of the clients. An entrepreneur must have good ideas in order to stay long in the market and to be on the top when it comes to competition. (Carsrud and Brannback 2007). Characteristics or qualities of entrepreneur Following are some vital characteristics or qualities or strength which differentiates an entrepreneur from a businessman. 1. Innovators An entrepreneur is the one who takes initiatives which exceed the expectation and go beyond the demand of customers or situation. Their ideas are creative which turns out into phenomenal changes (Abrugar, 2011). 2. Opportunist An entrepreneur doe not miss any opportunity. He never left behind when it comes to grabbing an opportunity which helps in pursuing the business. They do not wait for orders by people or wait for favoured situation they take the initiative and complete the task (Nandan, 2011). 3. Determinant Entrepreneurs are not affected by negative forces, they ignore the difficulties and let go outside forces which create negative impact on their life. Once they set a goal they will always achieve it by hook or crook (Laidre). 4. Investigator Entrepreneurs are self starters they usually conduct researches on their own and come up with a solution in order to satisfy their clients and customers. They do not wait for a complaint to launch rather the acquire result from their findings and put forward a solution which not only benefits the customers also it beneficial for them. They always try to come up with a win-win situation. 5. Superiority Entrepreneurs are always in a competition with their opponents. According to them it is a better and faster thing to do so that excellence is achieved. 6. Risk takers Everyone is afraid of doubts and uncertainties but there are some people who are not they are known to be as entrepreneurs. Entrepreneurs are well planned they calculate their risk before moving forward. They cannot be considered as the one who take high risk or are gamblers. They put themselves in scenarios which involves moderate risk Centre. (NCDC, 2002). 7. Setting goals It is always said that it is a healthy sign to dream but to turn the dream in actual or real cannot be done by everyone. An entrepreneur however is capable of turning their dreams into realities by setting meaningful goals and challenges for themselves. They are quite certain about their future. 8. Commitment to work An entrepreneur is always willing to work long hours even at night since he wants to keep his promise which he made with his client. These people do not even for once want to let them down in front of their customers. They know very well how to get the job done (Mutyaba, 2007). 9. Systematic approach for planning and checking An entrepreneur does proper planning for the target they set and how to achieve it. They do not believe in luck thus plan accordingly and cross check them from time to time. 10. Influential An entrepreneur establishes good professional relationship with their partners or clients in order to expand and sustain business contacts. They use deliberate strategies so that other are attracted. 11. Independence and self confidence Entrepreneurs start their business because they do not like taking orders from others or to wait for other go-ahead. They like to be authoritative and feel good to be boss themselves. They do not have any regret about their decisions.(Greene,2008). Start up new business In order to start a new venture or business, an entrepreneur must follow some important steps. First, they need to come up with new ideas and products in order to capture the market. If the product is new people will get attracted towards it otherwise there is a lot of competition going in the market and people would not be interested in testing new brand when the product they are looking for is already available in their favorite brand. Entrepreneurs needs to conduct a thorough research in order to make sure whether people are interested in the product or not. If, for instance they are they need to make sure that what special feature the customer is looking for in that specific product. After getting the desired result entrepreneur should be flexible enough to mould the product in the desired way. They also need to investigate properly whether there are some barriers or hurdle which may affect the business or which may halt the establishment of it. It will be a wise decision to look up with a lawyer in order to make sure that the business complies with all legal requirements. One must also need to raise finance to pursue their business. How should an entrepreneur raise finance? For every business capital is quite essential in order to run the industry and to operate. However there are different ways in order to obtain long-term capital. First, the entrepreneur or the owner himself invest the money and saving he own, which is not a favourable thing for most of the people. Second option is to attract investors by offering them shares in the new venture. It is also a bit difficult since investors are not ready or willing to invest in new enterprise. Another option is from banks or other financial institutions, which can be obtained in the form of grants and loans. Businesses mostly can raise considerable amount of money by following this process. Nevertheless, investors will definitely look forward for some share in the profit along with their name to be shown in the list of investors who contribute in running the business. Banks will definitely expect businesses to pay percentage of interest on every loan they offer or grant. The entrepreneurs must have to show their asset may be their home and hand it over to the bank as a proof of security against the amount of loan they have acquired from bank (Frederick, Kuratko & Hodgetts, 2007). On the other hand, the businesses or entrepreneurs also need to have short-term capital. However, entrepreneurs can raise short-term finance with the help of using credit cards or by withdrawal a bank overdraft or by using credit cards. This is quite easy to acquire, but financial institutions charge high interest rates on overdrafts. Types of business An entrepreneur should decide to establish what sort of business to initiate. Small businesses are classified in to three types with a structure and distinct form respectively. (Cross, 1928). Sole-traders Sole trader business is generally owned by one person. Several, electricians, plumbers, window cleaners and people related to different trades work exactly this way. Sole Trader might hire different people to take phone calls or do the recordkeeping. Sole trader business can easily be set up by fulfilling few legal formalities. Sole-traders take all the profit, make their own decisions and have complete control over their business. Conversely, things might get difficult for sole traders having liabilities for any debts sustained by the business or in raising capital. In case if their business goes into jeopardy, it means that their savings, assets, homes and everything might get on stakes either Partnership Involvement of two or more individuals is termed as “A partnership.” The profit and workload is mutually shared in the partnerships. Besides, partners not only subsidize with each other’s ideas but usually have skills that accompanied each other. Though, dispute may arise between the partners and the partnership does not last for long or does not run smoothly always. Similar to sole traders, obtaining capital can be difficult in partnerships quiet frequently. This actually means that every single partner is accountable for all debts sustained by the partnership. The company A Company is referred as a legal entity and multiple shareholders own the company. The capital is brought by the shareholders. As compare to sole traders or partnerships, shareholders face minor risk as they have a legal protection termed as limited liability. This however means that if for instance the entrepreneur fails to meet their debts then the shareholders might lose maximum sum which is restricted to their investments within the organisation. Board of directors controls the decision making process of the company. How should an entrepreneur protect his ideas? There are four ways to protect the ideas an entrepreneur have. They all serve the same purpose that is protection of idea but basically they are utilized in different scenarios for special purposes. Patents Patents are used for inventions. Entrepreneurs can obtain patents if they are launching a new product or introducing some new process which can ultimately be used in an industry. For instance, James Dyson acquired a patent to secure his product which is basically a vacuum cleaner but is bag-less. A patent helps in securing the invention and preventing other enterprises from making, importing, using, or selling products of similar kind. In order to acquire a patent, an entrepreneur must submit a specification for it. This must be a written description, usually includes drawings of invention. This also includes the details of invention, its purpose, how it is beneficial and all technical details. The age of a patent can be maximum 20 years on a condition that it is every year renewed. Designs By following the law and fulfilling all the legal requirements, a design which is registered can be secured and will not allow the competitors to copy the appearance physically of a component or a product. The product’s appearance includes shape, lines, texture, contours, materials and colours. Initially, a design which is registered can lasts for almost five years, though there is an option to renew it for maximum 25 years. For instance, registered fashion designs will prevent other designers from using the designs. This eventually helps to prevent from copying designs and putting forward or displaying the design with their name. Trade marks Trade mark is basically a sign which distinguishes one’s goods and services with other traders. A sign includes some words, pictures, logos or combination of all. In order to register for a trade mark, one needs to make sure that it must be unique for a certain group of services and goods. It must stand out and should be distinguish from other registered trade marks for the similar goods and services. A trade mark can be referred to as a marketing tool that helps in the development and distinguishing of the brand. Also, the trade mark helps to provide reassurance for customers and consumers. It will be easier for the people to recognise products easily and to retain them when they watch their advertisement on TV and billboards etc. see them advertised. For instance when people see a “tick” on any product, say it a shirt, cap or shoes people quickly associate it with the brand Nike. If Trade Marks are renewed after every ten years, they can last for indefinite time period. Entrepreneurs register trademarks, logos and designs so that they can protect as well as signify their brands. Branding delivers enormous commercial significance to an organization. It is more convenient for people to recognise brands as compare to standalone products and/or services. Copyright Copyright is associated with the expression of ideas rather than idea itself. Let’s take an example of a story which is based on a superhero, anyone can write about it however; they do have any right to copy the material of the book, the name, or illustrations from any other books containing the same material. Copyright protects films, sound recordings, photographs, music, broadcasts, dramas as well as literary works. Contrast to patents, trademarks and designs, copyright is not a registered right. As soon as any product is created it is applied. It does not include any fee or registration process. Web-based and printed materials are covered under it. At times one or more type of protection can be used for a single product. For instance if we take an example of Harry Porter, copyrights are used for the movie and books, trademarks are used for Harry porter’s toys range and its games and designs are used for clothes carrying Harry Porter pictures. Affects of entrepreneurship on society Entrepreneurship plays an important role on activities which are socially conscious with respect to profit. First, the profits To change the world is not a part of a business plan when it comes to entrepreneurship. It may appear as a misconception in terms of thinking that how a social entrepreneur makes money, but in order to attain a long lasting and extensive impact, it is imperative. An entrepreneur making an impact cannot last on only one leg. It should be based on an efficient business model, the operating team should be competent and more importantly it should have a sound financial statistics. Involving in philanthropic activities like feeding poor children or providing water bottles (made of plastic) might attract an altruistic investor, but such an impact would not assist in selling the business. Take an example of a website that serves as a children’s clothing reseller, avoided their collaborative-utilization idea from being caught on by ironing few wrinkles. All the clothes were owned by the business, and the customers can rent them for as long as they needed by paying a rental fee. Parents were pretty satisfied with this service as they don’t have to face the out sizing clothing issues of their kids. Only few subscribers were found regardless of trying different tactics i.e. Google ads with all types of keywords. Market analysis shows that the subscription model commitment was too much for the customers, pressurizing them to keep good shape baby clothes they did not owned.(Kariv, 2011) Customers were requesting to sell them new clothes every month. But that was not the intentions of the business. The business model is inspired by the social impact. The intention is to do it in way that makes you feel content by no stopping the used clothing and make a lot of money by running the same business. Recently they re-launched the kids’ clothing reseller online on their own term with no subscription needed. Parents can exchange their mildly used items on credit or cash or they can purchase clothing off the site. So before moving on and starting the new business an entrepreneur must have to look at the need and demand of the customers since the competition is getting tough day by day and one must not be able to sell their product and prevail and sustain in market if they do not come up with attractive deals and products. Money involves a Mission As for any profitable enterprise, it is imperative to connect with the right group of individuals. The team becomes even more important since your business has a social mission as an element. Heading where the money is, is not enough when seeking an investor. The intentions should be right and strong behind the money too. Or let’s just say that the right investor should be the one who share goals and mission for the company exactly as yours. Taking “Burn Manufacturing’s quest for equity investors” in account, they need a partner who is not planning to leave for at least three years whilst understanding their mission and staying happy on 8 percent return on their investments. But at times, finding investors with the same wavelength can be complicated. Wearing name tags doesn’t describe their style. Relatively, it is better to sit with your potential investors and inquire what changes they might bring in practically. They might not be the right click if they claim that they compete with Facebook starting from the beginning. So it will be wise enough to start with a road map, think for an alternative and also jot down the pros and cons of the proposal made so that the entrepreneur have a better idea whether to go with the proposal is a wise decision or is the current fashion or need of the market or not. Bury the Lead It is only half the battle to select which investors and partners to persuade and understanding how to pitch them is imperative equally. Primarily, focus should be on selling the business model, ability to reach market and operating team when pitching. Secondarily, focus the business design and its impact on the targeted market along with some updated and convincing statistics and metrics. The more updated and convincing statistics the better chance at getting funded. References CHESBROUGH, H. W. (2003). Open innovation: the new imperative for creating and profiting from technology. Boston, Mass, Harvard Business School Press. MINNITI, M., & LÉVESQUE, M. (2010). Entrepreneurial types and economic growth. Journal of Business Venturing. 25, 305-314. FREDERICK, H., KURATKO, D. F., & HODGETTS, R. M. (2007). Entrepreneurship: theory, process and practice. South Melbourne, Thomson Learning. CARSRUD, A. L., & BRÄNNBACK, M. (2007). Entrepreneurship. Westport, Conn, Greenwood Press. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=224830. GREENE, C. L. (2008). Entrepreneurship: ideas in action. Mason, OH, South-Western Cengage Learning. KARIV, D. (2011). Entrepreneurship an international introduction. Abingdon, Oxon, Routledge. http://site.ebrary.com/id/10462758. CROSS, M. C. (1928). Types of business enterprise, structure and control. New York, Prentice-Hall, inc. LONGENECKER, J. G. (2006). Small business management: launching and managing new ventures. Toronto, Nelson. NANDAN, H. (2011). Fundamentals of entrepreneurship. New Delhi, Prentice-Hall of India. National Curriculum Development Centre (NCDC) (2002). Entrepreneurship for Secondary Schools. Book 1. National Curriculum Development Centre, Kampala, Uganda. p.14-17. Kabatire, S. and Mutyaba, S.V. (2007). Entrepreneurship Skills. Netsoft Publishers. Kampala, Uganda. p.1 LAIDRE, A. (n.d.). Top 5 Characteristics of a Successful Entrepreneur. Retrieved from http://www.iplanner.net/business-financial/online/how-to-articles.aspx?article_id=entrepreneur-characteristics ABRUGAR, V. (2011, June 23). Top 10 Qualities and Characteristics of an Entrepreneur | Business Tips Philippines. Retrieved from http://businesstips.ph/top-10-qualities-and-characteristics-of-an-entrepreneur/ Read More