Entrepreneurial Approach and Thinking - Essay Example

The lack of an entrepreneurial mindset is seen as a major hurdle to growth experienced by many business owners"(Tassiopoulos 2013:279) By (Name) Course Tutor: University Date Introduction Business ventures are dynamic and diverse depending on the objective of the owners, the nature of products and services they provide and the customers they target with their products and services. Globally we can identify two major types of business entities defined by their size; the large business with an international presence and the small and medium enterprises (SMEs) which mostly have a local or national presence. Each of these business entities have a common ground in the fact that they all endeavour to maintain relevance in the market, and to ensure sustainability through revenue generation. This paper will focus on both entities identifying how their growth is influenced by the entrepreneurial behaviour of the owners and management. Some businesses are designed to achieve high growth rates; others achieve a very slow rate of growth while others are bound to fail within a short time after takeoff (Drucker, 1985). Apart from being influenced by the entrepreneurial mindset and behaviour of the owners and management, we explore other factors that promote growth as well as those that inhibit the growth of a business. Most business owners if not all have an intention to grow their businesses to highest possible level depending on the reason they started the business in the first place. Therefore, we explore the different measures have been applied to define the growth of any business. These factors include the following; increase in revenue, increase in the customer base, realizing a return on its investment and a growth in its market share. In addition, a business that is realizing growth is able to increase its workforce since it requires more personnel to help in managing the expansion. This helps create employment within the economy. Globally there is a set of growth requirements that any business has to satisfy in order to achieve its expansion plan and these are; growth in its sales volume, expansion of the management team, have access to other resources for expansion and finally be able to create a wider knowledge base for its operations(Storey, 1994). However, for each of the requirements there are obstacles faced by the entrepreneur or owner. An entrepreneurial mindset as a contributor towards the growth of a business The entrepreneurial spirit is often associated with start-up companies but this should not be so, since recent research has shown that any company will perform better when it’s run by people with entrepreneurial mindset (Lichtenstein & Lyons, 2001). Companies that nurture an entrepreneurial culture register an increase in their revenues, which promotes growth. An entrepreneurial mindset allows the creation of new innovations that help the company create a new business venture or enhance their existing products and they are also able to create a niche in the market. Not only does this ensure stability, it does create space for growth and expansion for the business. Companies that have been able to survive during the weak economic periods and environments are those that have incorporated an entrepreneurial culture into their system. In fact, according to a review by the (Ewing Kauffman Foundation, 2009), almost half of the most successful companies in the United States were started during a recession period, and managed to break through. This can be translated to mean that a business can grow and thrive in any type of economic environment. To maintain this trend, companies with an entrepreneurial culture actively engage their employees in the process giving them autonomy which in turn enhances their productivity and this ensures that the business is able to maintain obtain and retain an upper hand in the market despite the economic environment. Entrepreneurial behaviour is a sure way for any business person to achieve individual fulfilment, especially when the business is able to register growth in revenue and also in the social network. With an entrepreneurial mindset a business owner should be able to strategize and motivate his/her workforce to work towards the growth of the business. An entrepreneurial business owner is able to develop many profitable points within the business and he/she will constantly look for and develop creative business opportunities (Desrochers & Sautet, 2008). In addition, a business owner with a serious entrepreneurial mindset is able to develop skills for his employees, and is determined to continuously improve personal competency which helps him/her achieve success. According to (Gibb, 1987), an entrepreneurial role is actively influenced by training and education meaning that business owners have to invest in training for their staff in a bid to continuously improve their skills in critical thinking and problem solving. In addition a business owner has to lead his team in taking worthy risks, coming up with innovations which set the business apart from others and help in giving the business an upper hand in the market share. A business owner has a central role in determining the growth of the business as well as its chances of survival. According to (O’Hara, 2011), the growth of a business is influenced by the owner’s attitude towards growth. In her study, businesses owned by people who prioritized growth achieve success as projected, while as businesses whose owners failed to prioritize growth either suffered stagnation or failed. Therefore, the lack of an entrepreneurial mindset can be a major hurdle to the growth of business regardless of its size. Other factors that inhibit the growth of a business The lack of an entrepreneurial mindset does not work in isolation to inhibit the growth of business. Other factors are involved especially for the small and medium enterprises. The key barriers to growth according to one school of thought are those influenced by psychological and motivational factors. The business owner has to have a serious commitment towards the growth and expansion of the business (Evans, 1987). However owner and employee motivation, access to and availability of resources and the market opportunities available can also work towards growth or inhibit it. In this section we explore the different factors that can inhibit the growth of a business despite the owners having very good entrepreneurial skills. These factors are as follows: Poor record keeping and management- Many small and medium enterprises owners keep very poor records or fail to keep record of their operations and as a result they are not able to keep track of their progress over time. While record keeping for a business helps to identify the strengths and weaknesses for a business, it is not surprising that business owners are ignorant of this fact. Therefore they continue running on a busy business treadmill yet they do not achieve any growth. On the contrary, people who are able to keep records of their businesses are able to refer to their records while planning for their next step of action. A lack of focus in the business activities- In this case a business owner looses focus in the initial objective and gets involved in other activities therefore neglecting the business. Starting up too many ventures at the same time, which consume too much of his/her energy and a result the different venture do not get enough attention and dedication to keep them in them in operation. Therefore, the output of these ventures becomes very minimal. Poor managerial skills and know how to run the business. Often times, many people venture into business because they want to be self employed and gain independence. However, many individuals fail to carry out enough research on the business venture, therefore start with little knowledge on a diversity of factors such as; the market forces, government policies, how to market the business and they also lack in the desired managerial skill (Bruyat & Julien, 2001). This explains why many small businesses fail to take off and fail in their first year of operation, or grow to a certain level and then stagnate. Poor marketing strategies- A new business needs to penetrate the market in order to ensure generation of revenue through profits. However business owners may be tempted to apply urgent marketing strategies such as under pricing products and services in a bid to attract customers. This may work for a while but it offers no guarantee that the customers they manage to attract will stay loyal once the prices are adjusted to match the existing market prices (Ardichvilli, Cardozo & Ray, 2003). On the other hand there are business men who get excited to deal with particular clients and in an attempt to retain the client they will under price their services or products at the expense of the business, and if this goes on for a period of time, the quality of service is compromised, which may cause the clients to pull out and in the long run, the business is likely to collapse due to the lack of sustainability. Having poor strategies or even lacking to strategize- The success of a business is heavily influenced by the plans and how they are executed. However many small and medium enterprises have in place very weak and vague strategies or even fail to strategize which is detrimental to the well being of the business (Kelley, Bosma & Amorós, 2010). On the other hand a business especially the large enterprises may have very well defined strategies but they fail in executing the plans within the business. Inability to secure finances necessary for growth – Many financial institutions shy away from lending money to businesses especially if they are in the SME category, choosing instead to lend big and established businesses and companies. Therefore small business owners are left with no choice but to run on their limited funds, or borrow from friends and relatives. Therefore people who decide to start high growth business enterprises should be able to come up with creative ways of obtaining financing externally possibly form willing investors. Getting the best and right employees for the business- Employee input is very vital for the growth of any business. However, identifying the right employee who understands, shares and works towards promoting the well being of the business is quite a challenge. Therefore many businesses spend a lot of their resources in training their staff and yet they are not sure the employees will stay (Evans, 1987). Recent times have seen an increase in employee turnover across the world forcing businesses to come up with creative incentives geared to enhancing employee loyalty. Having unproductive and incompetent employees is detrimental to the existence of any business. With this in mind, business owners despite the size of their businesses(s) should engage in employee motivation, training and education programs aimed at promoting their participation in promoting the objectives and growth of the business. Lack of understanding on the market factors- for any business venture to grow and expand, it has to penetrate the market and establish a reasonable market share (Barringer, Jones & Neubaum, 2005). What most business owners- especially the small business owners- do not understand and prioritize is how to dominate the market with their products and services. Therefore most small enterprises remain stagnant and fail to achieve the initial desired growth and in most cases they are eventually out done by the competitors who understand the importance of dominating the market. However to overcome this enterprises should focus on their immediate community and marketplace, and adopt flexibility in penetrating the market. Spending little resources on innovations- Big and well established business venture will spend a lot on research and development in a bid to come up with innovations which act as catalysts to their growth process. However there are some businesses regardless of their size that put very little effort in encouraging innovations mainly because they want to avoid risks as well as the lack of financing. Conclusion An entrepreneurial mindset is vital to the growth of any business, but it is not the only hurdle faced by business men. Entrepreneurial behaviour on the part of a business owner influences the performance of a business and therefore it is advisable that businesses regardless of their size adapt the entrepreneurial approaches unique to them since they will be able to outperform others in the market. However, as has been explored in this paper the growth of a company is also influenced by the size of a company. For small and medium enterprises, the lack of financing may be the major hurdle in attaining growth while for large and well established ventures, the lack of an entrepreneurial culture could be a major inhibitor towards growth. References Gibb, A.A. (1987) Education for Enterprise: Training for Small Business Initiation: Some Contrasts' - Journal of Small Business and Entrepreneurship. 4(3), 86-87 Drucker, P.F. (1985) Innovation and Entrepreneurship: Practice and Principles. New York: Harper & Row Kauffman Foundation (2009) The Economic Future Just Happened. 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