Successful Entrepreneurs Analysis - Essay Example

1 Successful entrepreneurs are people that are able to take a vision or concept and turn it into a business reality. Leadership is an attribute that most successful entrepreneurs possess. Being a good leader is important for businessmen because the owner of a business must be able to manage the workforce of the company in order to optimize their output or production. Keeping a staff motivated is imperative in order to accomplish the organizational goals. Good entrepreneurs have superb communication skills including both written and verbal skills. Having good written language skills is important because entrepreneurs often have to prepare technical reports for different stakeholder groups. Verbal communication skills can help an entrepreneur lead and motivate his employees. A good entrepreneur is also an active listener. He is able to gain insight by listening well to what others are saying. Often the greatest ideas are hidden in the minds of the floor workers. An important skill that successful entrepreneurs must possess is the ability to deal with interpersonal relationships including being able to apply conflict resolution techniques. Businesses often face internal conflict among the staff. Five conflict resolution techniques that entrepreneurs can apply to solve conflict are accommodation, collaboration, compromise, avoidance, and authoritative command (Schermerhorn, Hunt, Osborn, 2003). Being good with mathematics and having superb analytic abilities are attributes that successful entrepreneurs possess. Entrepreneurs are often expose to vast amounts of information that must be analyzed in order to make decisions. Having a good support group and working well with others by applying sound teamwork principles is a key for success for entrepreneurs. Teamwork has become a critical success factor in the work environment of the 21st century. In todays competitive business environment being able to understand how to apply teamwork properly within a business is important. Entrepreneurs must learn how to optimize the use of the internet in order to grow a business. E-commerce is one of the fastest growing market trends in business both within the United States and abroad. In 2014 online sales in the Unites States reached $1.32 billion (Plunkettresearchonline, 2015). An entrepreneur must realizes that a product cannot penetrate a market unless the firm has a sound marketing strategy and a good public relations program. Entrepreneur must build good relationships with all stakeholder groups including suppliers, employees, lenders, governmental officials, and customers. Being able to satisfy the needs of these stakeholder groups is vital to achieve business success. 1.2 Entrepreneurial spirit is a concept that does not have a specific definitions that a person can look up in Merriam Webster. A person with an entrepreneurial spirit is an individual that has the foresight and innovation to create a new product or service. The individual once he designs the idea is then able to create a business model to penetrate a marketplace. People that have an entrepreneurial spirit often gain this insight through lifetime experiences. It is not uncommon for entrepreneurs to express their basic business instinct from a very young age by participating in activities such as opening up their own lemonade stand. People with the entrepreneurial spirit often have the desire to be their own boss. They gain fulfillment by helping others through job creation. Having creativity is a trait that most entrepreneurs possess. That creativity is then enhanced in people with entrepreneurial spirit because these individuals are able to direct their creativity to create products or services that have utility and great demand. An example of a person whose legacy include being the inventor of the most innovative cellular that created the term smartphones. Steve Jobs founder of Apple, invented the iPhone in 2007. The iPhone is currently in its 5th generation with global sales in the hundreds of millions of units so far. A person that possesses the entrepreneurial spirit is a peoples person that is able to used his charismatic personality to make others believe in him. Innovation is achieved often by people with an entrepreneurial spirit because these individuals have the foresight to create products that society needs. Despite the existence of the concept of entrepreneurial spirit in reality in order to become an entrepreneur requires a lot of hard work including making the commitment to obtain a bachelors degree in business and working several jobs to gain experience and business savvy. Entrepreneurs are to see good in people, thus they are able to select good employees that can help them grow their business. Having an entrepreneurial spirit often comes from the desire to be able to help society by being directly linked to the economical activity of a community. Creating a business provides jobs for the community, tax revenues for the government, and a way for an entrepreneur to gain self-employment that can help this individual improve the standard of living of himself and his family. The entrepreneurial spirit is a virtue that people who possess it must take advantage of. 2.1 All businesses need to obtain financing in order to start and maintain its operations. There are a variety of sources that businesses can utilize to finance its operations. A small business can establish its operations by using the personal funds of the owner to start the business. Many small businesses such as hot dog stands, ice cream vendors, and food trucks were started by the owner investing his own money to start the operations. Having cash is always the best way to start a business. When a person self finances a business he gets full control and ownership of the business venture. A second way in which a small business can obtain capital is through the sale of equity. By forming a corporation a small businesses has the ability to sell equity participation in the business through the sale of common stocks. Another equity mechanism that can be used to raise funds is preferred stocks. One of the benefits of preferred stocks is that it pays a guaranteed dividend to the stockholder each year. Small businesses that legally form their company by incorporating can also raise money by selling commercial paper in the open marketplace. The most common form of commercial paper is bonds. A bond is a debt instrument that pays an interest rate each year and upon maturity of the bond the principal is paid back to the bondholder. Small businesses can also finance their operations by using other debt instruments. Small companies without access to credit can finance their operations by obtaining several small loans from family members or friends of the owner. Once a company has credit it can use the banking system to finance its operations. Banks lend money to its by charging them a monthly payment on a loan in which each payment includes both a portion of principal and interest. Banks lend money in the short, medium, and long term. Capital projects such as expansion plans typically quality for long term financing, while loan to pay materials or other operating expenses qualify for short term financing instrument such as lines of credit. If a company has a lot of inventory it can used a short term financing solution called factoring. Factoring is an arrangement in which a company sells off its account receivables as a slightly discounted price. 2.2 It is very important for a company to create and follow a business plan. A business plan is a business document that depicts a a plan that the company plans of pursuing in the next few years. Some of the things should be included in a business plan include financial analysis, pro forma financial statements, marketing plan, human resources, sales forecast, product description, strategic plans, and market analysis. A business plan offers both historic data as well as forecast figures. The person that is responsible for the content of a business plan is the chief executive officer (CEO) of a corporation, while in smaller companies the manager or owner assumes responsibility for implementation of a business plan. For a business plan to work the entire organization must work as a cohesive unit. A business plan on a innovative product should include information regarding at which stage of the patent process is the product currently on. If a patent already exist the firm must have a strategic plan in place to determine how to exploit the product more effectively. A business plan should provide information in regards to the companies operations in the short, medium, and long term. The leader of a company has to use his communication skills effectively when presenting a business plan to one or more investors. Investors expect the presenter of a business plan to effectively communicate its content in a short period of time in order to convince them to make an investment decisions on the project. Typically the most important aspect of a business plan for an investor is the financial results of the business plan. Knowing the numbers well is important for the presenter because questions as: What is your net margin? What are projected sales next three years? What is your return on equity? should be expected in the presentation meeting. The person presenting a business plan to an investor must be confident, have great knowledge of the contents of the business plan, and the right positive attitude to persuade and convince others to invest in the company. A business plan could be presented to investors, lenders, and governmental agencies among other stakeholders. Investors are often interested in business plans in order to expand their investment portfolio. A good business plan will attract the attention of the reader by using information that can be well understood and that shows how attractive of an investment your company is. 3.1 Risk analysis involves identifying potential risks that a small businesses may be susceptible too. The executive management team of a corporation is responsible for assessing the risks that a company may be exposed too. Risk analysis involves the use of both qualitative and quantitative information. Whenever the managers do not possess the expertise to perform risk analysis the firm should hire an outside consultant to perform the function. The use of insurance is a great way to minimize the exposure of a company towards risks. Insurance can be bought for a variety of risks including property insurance, inventory insurance, and insurance against fire and other natural disasters others. The use of insurance of a form of mitigation of risk. Risk mitigation and planning strategies must be formulated as part of a risk analysis implementation. The actions of humans represent a risk. A way for companies to mitigate risk is by properly training its employees for a variety of different situations that are risky. Complying with governmental regulations can help a company minimize its risk exposure. Each business has different types of risk that they may be exposed too, thus identifying the risk associated with your industry is important. Financial risk also exists whenever a company gets involved in investing in the stock market, real estate market, or in capital projects that require a significant investment of money. The accounting department of a company can help the managerial staff of a firm assess financial risk. Properly managing risk is imperative towards the success of a corporation. To manage risk properly managers need to have good data and information available to them in order to apply strategies that often potential risks. One of the biggest issues associated with risk is that they can lead to harmful financial results. For instance a lawsuit against the corporation if the plaintiff wins can cost a firms up to millions of dollars in damages depending on the circumstances. Companies that do not invest money and time into a risk management program have a higher possibility of failure in the marketplace. Risk management knowledge can be gained by taking managerial and finance courses. The library and internet are also great sources to obtain additional knowledge on this important business subject. 3.2 Risk can have a tremendous impact on the operation of a business. There are different types of risk that companies are exposed too. Some of these risks can be prevented, while others are outside the realm and reach of the managerial staff. An example of a risk that cannot be prevented is forces of nature or natural disasters. The only thing business can do to minimize the effect of the risks associated with natural disasters is to purchased insurance for natural disasters. The actions of the company employees during a natural disaster can also be regulated. For instance company can practice with their employees evacuation simulations in the case of a fire or other natural disaster such as an earthquake. Another type of risks that small businesses are expose too is the legal risk. Companies can face legal risk from both inside and outside stakeholders. An example of an internal stakeholder that that poses legal risk for the company are employees. An employee can file a lawsuit against the company for a variety of reasons. Suppliers and customers are examples of external stakeholder that pose a legal risk for the company. A third type of risk that companies in the industry are exposed too is product risk. The product the firm sells can become defective. Businesses are liable for warranty expenses to replace products that are defective. A defective product can harm or injure a person which can lead to a lawsuit. The most common warranty industry standard is too offer one year warranty with the manufacturer and thirty days with the store that sells the product. Financial or economical risk is another type of risk that companies and its managers have to account for. Whenever the economy goes into a contraction and it stops growing it affects the activity of all businesses because sales tend to go down during downward economic spirals. Banks compensate for the risk of lending money by charging its customers an interest rate on money borrowed. Companies that have bad credit are forced to pay higher interest rate for money borrowed. Another type of risk that companies face is the risk of injury by its employees. Firms have to follow certain safety standards to prevent injuries from occurring in the workplace. Businesses also have to protect its tangible and intangible assets from theft from outsiders and even from its own employees. References Plunkettresearchonline.com (2015). Ecommerce & Internet Business Overview. Schermerhorn, J. Hunt, J. Obsorn, R. (2003). Organizational Behavior (12th ed). New York: John Wiley & Sons. Read More