Integrating Elements of Entrepreneurship Theory into Business Plan - Coursework Example

RUNNING HEAD: INTEGRATING ELEMENTS OF ENTREPRENEURSHIP THEORY INTO BUSINESS PLAN NAME INSTITUTION Introduction The innovative competitive landscape developed by various organizations in the market characterizes the 21st business environment (Kuratko and Audretsch, 2008). This business atmosphere comprise of a lot of risks, reduced ability for planning, new structural frameworks, marketing strategies and advanced managerial mindset of the mangers in the organizations. Four forces that include change, disorder, inconsistency and complexity sets a base of integration of entrepreneurship elements into the strategic management domain. Meyer and Heppard (2000) stated that no institution is immune to the pressures put forth by the four forces in the business environment. Apparently, the forces mentioned are the motivating factors that make the owner of the business to hunt for a new product to its customers in the market. Therefore, this essay will use SMEs plan in discussing a typical business plan that integrates elements of entrepreneurship. Executive Summary The statement to the financial lenders and stakeholders of the SME discloses the proposal made by the strategic management team. The purpose of the plan is to set a reasonable business goals as well as eliminating any probable challenges that would affect the business venture. Some of the entrepreneurs camouflage the risks that at the end of the day affect the implementation process of business plan. The business is definitive and it uses validated financial models that will enhance realistic projections. This accomplishment of this is through: 1. The financial model is entrenched in comprehensive market research and analysis, not optimism. The cost of developing this plan based on the practical experience of the business in the industry instead of developing from preconceived concepts. The concept is build around customers needs. Therefore an entrepreneur collectively looks at all dimensions within the industry in order to make a firm business estimates to be achieved. 2. A buffered marketing plan that guaranteed sufficient capitalization: The buffer is included at the initial stages of the plan to make sure that at some point during implementation there will be no cases of lack of finance. 3. Deep management plan/experience: A part from the experience, the management team needs to be deep rooted to the industry in which the business operates. SMEs are normally small at the beginning and therefore its management experience needs to be a subset of the former. The mission of the enterprise would comprise of not only of specific great products, but also of also superior services that are paramount to the customers. Employees’ motivation through provision of essential welfare, training and involvement in the success of the business would employees to be part of the institution. Keys to success The keys to success of the plan would depend on the uniqueness, innovativeness, focus on cost control (operation plan and action plan) and focus on employee retention. The establishment of a unique business atmosphere would definitely differentiate the business from its competitors. Also offering the services through new experience would enhance success for the plan. Cost control needs integrated functions of the business from the onset and it is all about managing in numbers. Therefore, the plan tracks the actual cost besides the forecasts in enterprise management. Development and training programs of employees enhances a success platform for the business. Through employee development, the institution is able to contain elite professionals who are committed to their work force responsibilities for the success of the business. Business Goals According to Kuratko and Audretsch (2008), the goal of a business is to meet a particular need of customers in the market. Entrepreneur theorists say that business goals are are the future conditions articulated. Therefore, setting business goals merely depends on the entrepreneurial skills whereby the future accomplishment to be made is conceptualized through establishment of action plans. The business goal should be SMART in a logic that customers are able to easily understand, has a period of achieving it and relevant. Generally, establishment of business goal needs a creative approach in order to re-invent the status of the business at that moment. Practical aspects of the business goals Staying competitive in the market implies thinking far ahead than the competitors and providing effective imaginative marketing efforts that would take the industry by storm. Apparently, these are the best ideas that derive the business goal especially when the parties concerned harmonize their thoughts. Humanistic theory of motivation is more associated with the development of business goals. Cognitive actions drive a person to perform a certain function. Therefore, market report perhaps leads the concern parties in business to come up with the goal of the business (Shane et al, 2000, 223). Management plan There are two aspects of management plan to consider when working out the business plan. The management plan states; Who runs the enterprise? How is the structure of the business? The management plan explains who will run the business, the skills and credentials of people in the organization structure. The management plan has two sections; professional support section and human resources section. The professional support section used boosts the business endeavours while the human resource section derives skills necessary to boost profitability of the business as well as the credentials needed for this boost to be effective and efficient. Normally if the business has more than ten employees, it is recommendable to have an organizational chart that shows the hierarchy of leadership and the responsibilities of every individual in the business. The chart above points out the key departments responsible for making the business plan successful From the above management chart, one person can have a set of responsibilities depending on the size of the business. For instance, in SMEs, one can serve two departments without any difficulty as long as he or she competent in both areas. Once there is a clear definition of responsibilities, it very important to check on the salary scale of the various in different positions as well as other compensatory information for instance benefits and profit sharing. Marketing research and analysis New business practices in the industry are the domains of entrepreneurship theory concept whereby the business identifies and scans the environment for opportunity. First, entrepreneurship commence with actions, creation of new organization through development of a plan, environmental scanning and identification of feasible opportunity (Carton et al, 1998:2). Secondly, entrepreneurship concept is a venture performance. The growth of business in most cases is because of features of entrepreneurship ventures. Shareholder value and profitability (turnover) of the company characterizes the qualitative growth of the business in the industry. On the other side, competitive position, customer service and the quality of the product defines the qualitative position of the organization. Strategic objectives in the market research when it comes to entrepreneurship concept relates to; Growth targets: It entails increase in financial targets for instance sales and profits, Market development: Forming and stimulating the market of the company, Market share: enlarging market proportion that the business provides, and Market position: It entails adopting and implementing new ideas in order to improve the business position relative to the competitors in the market. Marketing research and analysis integrate both entrepreneurship concepts and strategic management to give entrepreneurship orientation. Entrepreneurship orientation entails creation of autonomy whereby the business work through the plans developed to the completion. Entrepreneurship concepts lead to innovativeness in a manner that it supports creation and testing of new products and new processes in the market. Risks’ taking is also an entrepreneurship orientation concept that leads to taking courageous actions especially when venturing into indefinite new markets. Pro-activeness and competitive aggressiveness in the market makes up entrepreneurship orientation as well. Pro-activeness entails opportunity seeking and perceptiveness of new product introduction to the market while competitive aggressiveness involves capability of the business to outperform the rivals in the market (Carton et al, 1998). Entrepreneurship concept guides the development of the units of analysis in the market. These units include; 1) Venture creation: The concept enhances the bridging of factors of production mutually and managing it in a proper way (For instance, the endorsement of training and development of marketing team in the organization to reach the goal and objectives of the plan). 2) Opportunity exploitation: It entails looking for potentials in terms of commercializing and exploitation of new products, market and processes in order to make new customers accept these provisions. 3) Venture development maximization: Shane et al (2000) states that entrepreneurial culture constantly hunts for development, innovation and business’s plan goals and objectives. Therefore, during analysis, the plan would focus on prime goal of profitability, innovation and change within the business venture so to the environment in which the business is placed. Marketing and Operation Plan A good business plan needs to analyse the business situation now. Internal audit used tend to on the success rate of the past objectives, precedent marketing mix, past budget, positioning, segmentation and past targets of the business (Carton et al, 1998). After the internal audit, an external audit involves researching on the industry the business operates, competitors and strength, weaknesses, opportunities and threats within the industry comes to action. Marketing plan needs the entrepreneurs to perform the following functions: a) Customer orientation VS innovation orientation: The philosophy of the marketing plan of an organization normally starts with market needs assessment before the introduction of the new products to the customers. Creativity and innovation are the main aspects that seal successful entrepreneurship. The development of new ideas, which is regarded as ‘innovative orientation’, enhances the development of the two aspects. b) Top-down VS bottom-up strategies: This involves the process of segmentation, positioning and targeting in order to place the products to the appropriate buyer groups. First in this section, the outline of market segment is developed using demographic, income, geographic and psychographics variables. Secondly, an assessment of the pleasant appearance of various segments concludes with the choice of the target segment. Thirdly, choice of communication of the current market position that will aid in product differentiation earns the business new approach that will push the competitive advantage. Financial plan and action plan Financial plan plays an integral role when it comes to assessment of business venture. This can become an operating plan as well since it deals with the financial management of the venture. Therefore, the forecast of the product demand, expense and revenues merely depends on the quality of the market research conducted prior to the development of the business plan. Planning assumptions is risk taking aspects and it focuses on the following protections; 1) Forecasted income (may be quarterly), 2) Monthly forecasted cash flow, 3) Estimated balance sheet for all years, and 4) Breakeven analysis. Action plan involve effective decision-making process since an entrepreneur has to undertake uncertainty to take actions with unpredictable results. Action plan needs managerial skills in order to handle tactful situations during implementation process. Risk bearing capacity is part of the action plan since the business exists in the environment defined by unpredictability policies, technology and customers tests. Why entrepreneurship is important in business Entrepreneurship creates job opportunities to a large number of people and this makes the business produce real goods and services. People often jump into entrepreneurship especially when thy lack employment opportunities. Therefore, businesses are generated out of new ideas, which will significantly boost the economy. Entrepreneurship enables a business to engage into comprehensive research and development in the market. Feasible outcomes of these researches lead to innovations that enhance better ways of getting things done. Entrepreneurship boosts the elevated heights of apparent business projection. Businesses in this case not only earn profitability out of the inputs but also learn and acquire opportunities for growth. New knowledge and skills adopted are the assets of the business and this boosts the business ventures (Stevenson & Sahlman, 1986). Entrepreneurship is all about changing from within and Jeff (2004) found it to be vital aspect in business growth. The business never pays people first, but it uses the same people within to get money and pay them out of this money. This entrepreneurial element enhances different thinking and enlightens the business on how to use people effectively to gain a mutual benefit. Reference Audretsch, D. B & Kuratko, D. F. (2008). Strategic Entrepreneurship: Exploring Different Perspectives of an Emerging Concept: Entrepreneurship Theory and Practice. vol 33, Iss. 2, pp. 1-17. Carton, R. B., Hofer, C. W. & Meeks M. D. (1998). The entrepreneur and entrepreneurship: Operational definitions of their role in society, viewed August 2006, www.sbear.uac.edc/research/1998/ICSB/k004.htm. Meyer, G. D., & Heppard, K. A. (2000). Entrepreneurship as strategy: competing on the entrepreneurial edge. Thousand Oaks, Calif.: Sage Publications. Shane, Scott & Venkataraman. (2000). The promise of entrepreneurship as a field of research. Academic journal of Management review, 25(1), 217-226. Stevenson, H. H., & Sahlman, W. A. (1986). The importance of entrepreneurship. Boston, Mass.] (Soldiers Field, Boston 02163): Division of Research, Harvard Business School. Read More