Entrepreneurship and Small Businesses - Literature review Example

Entrepreneurship and Small Businesses Student’s Name Subject Professor University/Institution Location Date An entrepreneur is an individual who is involved in organizing a new business enterprise with the aim of making (Granovetter 2000). Davidsson and Honig, 2003 defines an entrepreneur as a person with capacity to create or build something notable, from virtually nothing. In this regard, entrepreneurship is the process of acting as an entrepreneur, of gathering and allocating the actual resources such as technological, financial, managerial, or creative vital for success of a new venture. Individuals are said to engage in entrepreneurship when they indulge in planning an organization with diverse resources in order to benefit from a newly set up opportunity. Generally, entrepreneurship involves the hope of noteworthy financial returns, hard work, and long hours. More significantly, entrepreneurship is portrayed by finding creative solutions to overlooked or old problems. In other words, an entrepreneur`s stash in trade is innovation and ingenuity. This means an entrepreneur may discern an opportunity by looking at difficulty situations, where other people may be actually seeing a dead end (Davidsson & Honig 2003). Entrepreneurship is termed a foundation of more entrepreneurship. Usually, every big business started from a small dealing, when an individual came up with an idea, risked everything and worked hard. Generally, when businesses succeed they create an opportunity for development of further new ventures, leading to a dynamic economy. Essentially, for entrepreneurship to succeed, it depends on various factors. Principally, are a creative, dedicated, and a talented entrepreneur. That is, an individual with ideas, the vision, and energy is fundamental. In addition, in order to make the venture shift from the idea, a range of essential resources must be accessible Granovetter 2000). Granovetter further asserts that, an entrepreneur ought to create a plan of how to take action, road map that must move the venture from an idea to growth or institutionalization stage. In most instances, other talented and experienced individuals are involved in management of operations in the new project. Simply put, entrepreneurship involves a process that constitutes preparation and teaming up with others to utilize an opportunity for profit. While it may be hard to generalize exactly what it takes to become a successful entrepreneur, some traits make the difference. Over the years researchers have differed on various aspects in regard to personality trait, but have all agreed on one major quality essential to all entrepreneurs. This is the quality of ‘commitment’. Thus, self motivation is a key trait as it distinguishes triumphant entrepreneurs from them that fail. Indeed, this is a common line that entrepreneurs themselves term significant to the success of their enterprise (Segal et al 2005). Self-motivation as a trait depends on the entrepreneur`s capability in assuming different tasks that are not entrepreneurs` favorite and out of their control. The business requires responses in terms of sales, accounting and marketing activities that require different approaches to be effective. Self-motivation ensures that the entrepreneur meet the purpose of the business on timely and effective manner. This account for setting deadline for completion of significant activities, personal determination to work against less effective activities as expected. An entrepreneur will then require being decisive and daring to continue to push for the business objectives even in face of various challenges. It is one thing to think of ideas but it takes boldness to take action. Self-motivated entrepreneur continuously take effective actions and in the process they develop process to meet the demands as they arise whether customer services needs, managerial, production and improvements techniques. Through risk taking, different inputs are continuously tried to realize the goals of the business (Segal et al 2005). Another major characteristic trait is that, every successful entrepreneur should be very passionate. They should be willing to work more hours, willing to seek more information that is not formal or that from class work, as well as doing some researches. Entrepreneur should be quick to rectify errors and learn from such cases. They usually entertain and encourage views from other people. Simply put, to passionate is being driven distinct sense of passion and purpose (Darmer 2008). Thirdly, Waldinger and Lichter, 2003 observes that confidence is another characteristic that an entrepreneur should have. Through this, they gain their faith in tackling challenges as well as have a sense of self-esteem. Fourthly, communication is a key necessity for successive entrepreneurs. They should have both the skills on oral, written and nonverbal to communicate their views with clarity. Therefore, they should have tools that assist them demonstrate and make their listeners understand their points. In addition to this, they are skilled in leading others by motivating them. They are aware of how to support, reward, appreciate and understand others accordingly. Instead, they do not ignore the potential of their workers but works as a team. This promotes and enhances teamwork among the workers and entrepreneurs. To add on, businessperson who takes a step further by taking chances, usually emerge as winners. Entrepreneurs give chances as the first priority rather than frustration and failure (Haslam 2004). This means, they will risk at all cost to achieve their goals and dreams. Dedication is another characteristic that successful entrepreneurs hold. This is by dedicating themselves to achieve their dreams, vision and plans towards the success of their organizations. This means that, entrepreneurs becomes focused to what they want to achieve by adding more efforts regardless of challenges met along and acting beyond their working hours to have a positive outcome. As well, according to Fiet et al, 2007 unique technical knowledge and skills is a requirement every entrepreneur should have. Therefore entrepreneurs should update themselves with current information, get more additional training and education that will further their skills already achieved. Whenever skills are obtained, this opens their mind hence becoming creative and venturing in new opportunities. In addition, feeling a sense of ownership will act as key pillar towards the success of a new business. Every entrepreneur will take responsibility, as they will oversee activities carried out with much care and attention for they know the success of business is theirs too. This will make a new business to thrive as everyone finds solution and work on the chances at hand. Lack of good interpersonal skills will affect the growth of every business (Qualman 2012). Therefore interacting with employees, customers and clients will make the business understand and know what they need to do. With the above characteristics, businesspersons are entitled to thrive and become successful in the business world. On the other hand, these characteristics traits can lead to negative effects on the new ventures. To start with, being over self motivated make an entrepreneur egotistical and self-centered. They are not ready to admit a need for any help and advice from experts in specific fields. It becomes uncommon for these individuals to assess their major shortcomings. Thus, they cannot partner up with experts who can manage a problem or an area better. The idea of working alone and relying much on self motivation, and having no room for others to advice on how things ought to be done can be dangerous. Furthermore Lee and Tsang 2001, observes that an if entrepreneur is over confidence can be disastrous to any new venture. Generally, an over-confident entrepreneur is likely to overlook major challenges affecting the business. Having an unusual self confidence can make an individual to get in decisions that are bad for the business. Confident entrepreneurs can get caught up in multitasking overload which is disastrous to any business trying to do all things at once. General, by trying to spread themselves too thin, entrepreneurs may alter focus of the central goals that will lead to business to success. The shifting of focus in attempted tasks also results to a less than a hundred percent performance. For all intents and purposes, entrepreneurs should maintain a balanced confidence in whichever new venture they intend to embark on. over confidence can be managed by handling a specific or one venture at a time, and all time and energy focused on to the specific goal. Moreover, being too passionate can lead to perfectionism. According to Lee and Tsang 2001 very passionate people may have a misconception that striving for perfection is the perfection is the most important thing in the business. Darmer, 2008 points that, the worst ever characteristic an entrepreneur can contain is in the reality, the drive to be nothing but perfect. A perfectionist entrepreneur is seldom contented with own work as well as a propensity of over doing things. Indeed, a perfectionist rarely trusts others with tasks and tries to do everything by themselves. In turn, focus is taken off the important tasks and vision for the business. To ensure entrepreneurs passion does not go beyond limits, the business must create a room for making mistakes. As well, entrepreneurs should relax and accept mistake as part of their practice. Actually, Cope, 2005 posits that, entrepreneurs’ best learning opportunity is through mistakes. Moreover, entrepreneurs who have major skills in technical knowledge and feeling a sense of ownership can result to inability to compromise. Inability to compromise by some entrepreneurs is disastrous to any business in the sense that, failure to adequately handle clients and meet their needs, they go to someone else (McMullen & Shepherd 2006). Compromise means engaging others to some things better that one can do. In order to hold back this trait, managers and entrepreneurs must ensure clientele’s needs are a major consideration, because without them, an entrepreneur’s initiative will not flourish. Furthermore, as McMullen and Shepherd, 2006 affirms, despite that entrepreneurs ought to give chances as the first priority rather than frustration and failure, making sure the goal is realistic is a basic component of the new ventures success. Wasting time, energy and other resources on an idea which has no foundation in reality is not worthwhile. Generally, stakeholders and the entrepreneurs themselves must ensure a sufficient research, and talking to others in the same area to make sure the plan is achievable. Moreover, learning should be part and parcel of the whole idea. Cope, 2005 asserts that successful entrepreneurs are those who keep on learning new things. With the understanding that what might have worked well in the previous years may not mean success this time, it is vital to keep up with the relevant and new information within the specific field of operation. Listening to experienced and networking is a great idea. As matter of fact, refusal to allow criticism which leads to learning of new things leaves both the entrepreneur and business stuck behind as the rest move forward. To avoid this negative impact, entrepreneurs must at all times be learning and willing to learn (Cope 2005). In addition to good entrepreneurs characteristic traits, start up and small businesses must consider various factors that determine their success or failure in the marketplace. In this regard, small business must identify the key factors that are very vital for succeeding of the specific business type. By doing so, the business is not only able to start but have a long term success in the market (Walker & Brown 2004). To begin with, it is vital for any business to do competitor and market analysis. As new entrant or a small business research and analysis of the likely competition in the marketplace cannot be underestimated. This form of external environment research together with a general market study highlights the chances of success, and market penetration of new and small businesses within the industry. Competitor analysis is also vital for evaluating the barriers to entry and penetration in the marketplace. Mainly, the barriers come from a few competitors with large market shares in the industry. These ranges from lock on distribution channels, strong financial resources, better production capacity, and having exclusive contracts and backing from the major clients or customers. This means, unless the start up business employ resources to match the competitors strength and make realistic plans to triumph over them, making any significant progress in the market is difficult. From this perspective, being second best results to a disproportionately unpleasant loss and making the venture a resource wasting project. Importantly, competition analysis enable researchers understand what makes business succeed or fail with a given field. In such a situation, start up business may face the challenge of whether to copy the existing successful business venture or whether to embark on an innovative dealing to outperform the existing champions. In some instances, the most excellent course of action would be to adopt a share of both strategies (Bergen Peteraf 2002). Analysts argue that a competitive analysis involves four major steps. The first step is identifying the business competition. A business should recognize its competitors as businesses its customers approach in order to get services or products that serve the same purpose as it does. Secondly, strength and weaknesses of competitors must be well analyzed. Once a business has identified its competitors, determining their strengths as well as recognizing their vulnerabilities is vital. Getting to understand whether people buy from them due to value, service, price, convenience or reputation is whole important. The business analysts should focus on customer’s perceived perceptions about a product or service. Thirdly, Fleisher and Bensoussan, 2003 shows the competitive analysis must constitute investigation of opportunities and threats. Looking at how well the competitors are prepared to deal with those factors outside their control helps a business in designing better strategies in handling the same. Opportunities and threats mainly fall in a range of categories such as legal or regulatory actions, development in technologies, economic factors and in some cases, new competitors. For a better analysis, small business may list competitors in a table alongside the outside factors that affects or a likely to impact the industry. Finally, a competitive analysis constitutes determining the business position. Once competitors’ strengths and weaknesses are recognized, a business is able to position itself against the competition. Its pays to position a business at its rightful place as the management is able to work from that point. Position can be done by looking at the business strengths and weaknesses, likely threats and opportunities of the business. The business should rank itself in the same it did the competitors to give exact position in competitive environment. As a consequence the business will know the areas that need to be improved. Characteristics that the business ought to adopt are also determined. Above all, a small or start up business should look for ways to leverage it weakness and finally take advantage of it competitors weakness (Fleisher & Bensoussan 2003).  Another major success factor for start up and small businesses are employing effective marketing strategies (Zimmerer et al 2002).  Marketing objectives must be well defined in order for marketing to attain its intended purpose. Considering that some industries are highly competitive as well as being dominated by companies with big names, new entrants therefore, are demanded to develop marketing strategies that will drive customer traffic. Effective marketing structures are aimed at shaping the whole customer’s experience. Small business may engage in things such as collectibles. These are incentives which are given free of charge especially at the point of sale or they can be attached to the product. Secondly, market segmentation is vital for small and start up businesses. They must develop different segments; identify its specific consumer and business segments as part of its marketing tools. Market segmentation involves the grouping of customer as per their specific characteristics (Long & Schiffman 2000). To achieve this market surveys can be engaged in order to find out customers demographic details such as, income, household size, and age. Considering most of these variables may change over diverse geographical locations, segments can be apportioned over different states in the target market. Thirdly, effective marketing can call for loyalty programs in order to attain customer loyalty. Frequency cards where customers can fill every time a sale is made can be utilized. After reaching the predetermined number of sales, the client becomes eligible to the businesses loyalty programs which come along with numerous benefits. Moreover, customers making large scale sales can be offered rewards. Moreover, direct marketing and advertising through mainly to attract new clients, building a name, and for awareness and recognition is imperative for small businesses. It can be done making presentations or launching of the business at strategic places that are critical to the success of the business (Levinson et al 2007).  Conclusively, the stage of entrepreneurial process is termed the actual opening and establishment of a business enterprise. At this level, the entrepreneur shifts the focus from only the vision to using it in running of business. As a key figure in any venture, the entrepreneur sets that organizations philosophy, educates new staff and sets up the strategic focus. Researchers affirm that successful entrepreneurs have qualities that drive them in making the business a success. This paper has highlighted some of the common qualities in successful entrepreneurs. These include self-motivation, confidence, passion, technical skills, and sense ownership, among other traits. These are cited as major characteristics found in almost every successful entrepreneurial. Thus, as established above, entrepreneurs` characteristic traits are essential in determining the success or failure of a business. The mission of a new venture is only fulfilled and remains relevant if the entrepreneur stick to being entrepreneurial in the entire organizations life. Thus, innovation must be a primary strategy of the new venture. Thus, the venture must be receptive and open to innovation and responsibilities intrinsic in change. As a consequence change must be positively viewed for the venture to remain entrepreneurial. On the other hand, in addition to well equipped and effective entrepreneurs, small and start up businesses requires other vital success factors vital for thriving, surviving and long term success of the ventures. This paper has outline two major success factors crucial for any business. These include competitor and market analysis, and marketing strategies. Effective competitor analysis assists small business in determining what makes business succeed or fail within a given field. Successful marketing strategies on the hand shape the whole customer’s experience. References Bergen, M., & Peteraf, M. A 2002, Competitor identification and competitor analysis: a broad‐based managerial approach. Managerial and decision Economics, 23(4‐5), 157-169. Brooks, A. C 2008, Social entrepreneurship, Pearson /Prentice Hall Cope, J 2005, Toward a dynamic learning perspective of entrepreneurship. Entrepreneurship theory and practice, 29(4), 373-397. Darmer, P 2008, Entrepreneurs in music: the passion of experience creation. Creating Experiences in the Experience Economy, 111 Davidsson, P., & Honig, B 2003, The role of social and human capital among nascent entrepreneurs. Journal of business venturing, 18(3), 301-331 Fiet, J. O., Norton J, W. I., & Clouse, V. G 2007. Systematic search as a source of technical innovation: An empirical test. Journal of Engineering and Technology Management, 24(4), 329-346. Fleisher, C. S., & Bensoussan, B. E 2003, Strategic and competitive analysis: methods and techniques for analyzing business competition (p. 457). Upper Saddle River, NJ: Prentice Hall. Granovetter, M 2000, The economic sociology of firms and entrepreneurs. Entrepreneurship: The social science view, 244-275. Haslam, S. A 2004, Psychology in organizations. SAGE Publications Limited. Long, M. M., & Schiffman, L. G 2000, Consumption values and relationships: segmenting the market for frequency programs. Journal of Consumer Marketing, 17(3), 214-232. McMullen, J. S., & Shepherd, D. A 2006, Entrepreneurial action and the role of uncertainty in the theory of the entrepreneur, Academy of Management Review, 31(1), 132-152 Qualman, E 2012, Socialnomics: How social media transforms the way we live and do business. Wiley Segal, G., Borgia, D., & Schoenfeld, J 2005, The motivation to become an entrepreneur. International Journal of Entrepreneurial Behaviour & Research, 11(1), 42-57. Waldinger, R., & Lichter, M. I 2003, How the other half works Immigration and the social organization of labor, University of California Press Zimmerer, T., Scarborough, N. M., & Wilson, D 2002, Essentials of entrepreneurship and small business management, Upper Saddle River, NJ: Prentice Hall Read More