How to Become an Entrepreneur in the 21st Century - Literature review Example

A Self-help Guide: How to Become an Entrepreneur in the 21st Century (Name) (Institution Affiliation) (Date) Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Significance of Entrepreneurship 3 3.0Key Characteristics that an Entrepreneur should acquire. 5 3.1An Entrepreneur must have Confidence 5 3.2Must acquire effective communication skills 6 3.3An Entrepreneur must learn to be a Team Player 7 3.4An Entrepreneur must be a Risk Taker 7 3.5Creativity and Innovation 8 4.0Significant Components of An entrepreneurial Business Plan 8 4.1Business Description 9 4.2Market Analysis 9 4.3Competitor Assessment 10 4.4Marketing Plan 11 4.5Operating Plan 12 4.6Financial Plan 12 5.0Essential components for handling rapid growth challenges 13 5.1Keeping up with the ever-changing Market 13 5.3.Controlling the Cash flow 14 5.4.Problem Solving 14 According to Kuratko, (2002) new business ventures often operate in a continuous crisis mode as each new day comes with a new challenge due to the little experience the entrepreneur has in the market environment. Thus, as the business grows the typical business solutions that the entrepreneur is used to might not work effectively. Therefore, the entrepreneur needs to develop a disciplined approach to crisis management, whereby he or she needs to consult with his or her staff members in order to come up proper solutions. For instance, an entrepreneur might consider abandoning individual marketing campaigns and focus more on devoting more resources in developing his or her brand. 14 6.0Entrepreneurial information sources 15 References 17 1.0 Introduction Interestingly, the last three decades have witnessed the most powerful emergence of activities associated with entrepreneurship globally. As Kuratko (2002) notes, entrepreneurs are aggressive catalysts for change in the global business. Accordingly, entrepreneurs are people who discover opportunities, where others see contradiction confusion and chaos. An entrepreneur can be compared to an Olympic athlete who is out to challenge himself or herself in breaking new records. An entrepreneur also faces numerous hurdles such as business capital, losses and competition in his or her venture. Many economies both in the developing and developed countries have been revitalized because of the entrepreneurs’ continuous efforts to come up with new ventures. Thus, this self-help guide aims at discussing the important aspects that an entrepreneur must have in order to be prosperous in the 21st century. 2.0 Significance of Entrepreneurship According to Morris and Schindehutte, (2005), all economies in the world are characterized by millions of small businesses. Many of these small ventures are operated as well as owned by men and women who created and developed them. Thus, individuals who own and take the risk of any business venture are referred to as entrepreneurs. Accordingly, the process of running one’s own business can be referred to as entrepreneurship. Importantly, entrepreneurs create all kinds of business ventures, and they come from all kinds of backgrounds. Tentatively, age does not affect one’s ability to become an entrepreneur so long as he or he is sane. It is said that most entrepreneurs are characterized by their ability to identify unmet needs and thus go an extra mile to find ways in which they can provide a service or product in order to meet those needs. However, as Morris and Schindehutte, (2005), affirms that being an entrepreneur is not ‘a walk in the park,’ as it involves many challenges such as losses, insecurity and other unforeseeable risks. If the business succeeds, huge profits will be earned, and the business may expand into other markets. Conversely, if the business is unsuccessful, the entrepreneur will suffer from losses in the money he or she invested. Entrepreneurship plays a significant role in the world economy today. Accordingly, various methods and techniques have been used by economists to determine the impact of entrepreneurial ventures on a country’s economy. For instance, the evaluation of full-time and part-time self-employment in terms of tax collection annually often indicates the contribution of entrepreneurship on the economy. According to Ireland et al. (2013), 670,000 new business ventures were created in 2013. Moreover, in a survey conducted by Monitor (2014), over 199 million people in America and Australia asserted that they wanted to start new ventures in the next five years. In addition, 300 million Australians and Americans plan to start a new business someday in their life (Monitor, 2014). Evidently, many states are in a position to drive their national developmental agendas largely because of the taxes they collect business ventures. As Longenecker et al. (2006) reports, entrepreneurs often pay more than 55% of all individual income taxes. Furthermore, the report indicated that 60% of all corporate tax returns come from small corporations. This indicates that entrepreneurs are the main drivers of the economy. Importantly, within the individual tax returns, 38% are often current entrepreneurs. Equally, Casson et al. (2005) observe that these ventures often employ a considerable number of people thus creating wealth and development in the country. The statistics above succinctly indicate that entrepreneurial ventures dominate the world’s economy. Seemingly, entrepreneurship has turned out to be the symbol of business achievement and tenacity. Thus, entrepreneurs contribute largely to a country’s national development, Today, the world is experiencing an entrepreneurial revolution. The revolution is said to be more powerful to the 21st century than the Industrial Revolution was to the 20th century (Casson, 2005). Through their, innovation, leadership, job creation, competitiveness, formation of industry, development effectiveness, innovation, and productivity, entrepreneurs have become critical contributors to the world’s economy (Kuratko & Hodgetts, 2007). 3.0 Key Characteristics that an Entrepreneur should acquire. In order for one to become a successful entrepreneur, he or she must learn some essential features. As it is noted in the preceding section, entrepreneurship is more than mere innovation as the business needs continuity and the tenacity to juggle between challenges in the competitive business environment. 3.1 An Entrepreneur must have Confidence As many scholars argue, confidence is a hallmark for a serious and objective entrepreneur. Whereas not everyone was born with confidence, this important feature can be acquired through the enhancement of the self-esteem. An entrepreneur should start by appreciating the little successes they have had in the life. For example, if one is employed, he or she can be proud of the efforts he or she made during an assignment or project. Moreover, he or she should gain strength and belief in him/herself whenever they are appraised or praised by others. Confidence is vital as it helps an entrepreneur to push his or her idea into the next step without fear of criticism and failure; until the idea transforms into a successful business venture. 3.2 Must acquire effective communication skills It must be noted that the most important part in a business venture is the communication element, as human beings interact through communication. Human resources involve communicating instructions as well as decoding the feedback from both employees and customers. The communication element within an organization is what breaks or makes an organization; whether in the form of strategic partners, clients or employees. An entrepreneur should note that effective communication is the key to an efficacious relationship with people, whom the business venture depend on. As such, for one to be a successful entrepreneur, he or she should work towards honing his or her communication skills associated with the non-verbal, spoken and written messages he or she relays. Similarly, the entrepreneur will be required to support his communication through the uses of various digital tools such as the computer and telecom technology as well as ‘neurolinguistic programming’. Above all, an entrepreneur must acquire listening skills as Phan (2004) posits that the best communicators are always the best listeners. This indicates that an entrepreneur should improve on his or her communication skills in order to manage his or her business well as it involves interacting with several stake holders. 3.3 An Entrepreneur must learn to be a Team Player Whereas entrepreneurship is associated with the individual creation of a business idea, that concept can fail to be transformed into a successful business if the inventor does not involve other players. An entrepreneur must learn to work with others in order to know more about his or her business venture, as well as other market openings. Moreover, an entrepreneur can benefit from dynamic relationship through employing the physics of interpersonal synergy as far as teamwork is concerned. Further, successful entrepreneurs often leverage teamwork in order to get significant amount of work done without “breaking the stride.” 3.4 An Entrepreneur must be a Risk Taker As Phan, (2004) posits all great and successful entrepreneurs such as Thomas Edison and John Rockefeller took some risks in one way or the other for their business ideas to become a success story. Accordingly, Phan (2004) asserts that Thomas Edison, for example, risked his job in order to actualize his business idea. Thus, as an entrepreneur, one should be ready to take risks if he or she desires to be prosperous in his or her business entrepreneurial activities. Research indicates that many entrepreneurs could be successful if they took risks. Moreover, studies show that many individuals who take risks thus becoming successful often retreat into a somewhat comfort zone of their small business ventures. These individuals fail to expand their businesses as they are never ready to take more risks. Typically, employed individuals’ mindsets are often preoccupied with the need for financial security and as such they would not want to take risks. Consequently, an entrepreneur must be involved in taking risks in order to succeed. However, this does not imply that entrepreneurs are immune to fear, but it means that they prioritize their approach and attitude to life. In other words, they ensure that the fear of frustration, drudgery, dissatisfaction, failure and boredom far outweighs the protracted fear of success. 3.5 Creativity and Innovation For one to be a prosperous businessperson he or she must be engaged in continuous creative activities. The consumer of the 21st century is attracted by value added services and products. For a business venture to remain competitive, it must come up with creative ideas aimed at differentiating its services and products from its competitors. Entrepreneurs in the 21st century must not be contented with their initial business idea, but mold their business concepts into providing unique services and products. According to Ireland et al. (2013), entrepreneurs should “think the unthinkable.” In effect, those who want to become entrepreneurs in the 21st must restructure their imagination continually in order to explore the external limits of alternatives. For instance, this can be associated with taking out a product line that is profitable and replacing it with a potentially more profitable one. 4.0 Significant Components of An entrepreneurial Business Plan After acquiring the important features discussed in the previous section, an entrepreneur will have to organize his or her thoughts on a potential business venture into an excellent plan. Through writing an excellent and professional entrepreneurial business plan, one begins a process of creating a successful enterprise. As such, the subsequent section aims at delineating the essential components that are associated with formulating as well as evaluating an entrepreneurial business plan. 4.1 Business Description As an Entrepreneur, one should be able to put down on paper the business idea he or she has as well as give an overview of business objectives. Importantly, this section is important in giving the third party the reason for the business existence. Equally important, the entrepreneur needs to indicate the mission statement of the new business here. It helps the business to have a focus as without a purpose the business will lack direction. Moreover, the new business’s mission statement will help the readers to know intentions as well as the motivation of the new business venture. In order to come up with a clear mission statement, the entrepreneur needs to consider what needs to be done within the context of the new business. An excellent mission statement will give the purpose as well as the principles of what the entrepreneur is doing and why he or she is doing it. Thus it should delineate the reason the business venture exists and what it aims to achieve in the world. Also under this section, the entrepreneur should highlight the business overview. Accordingly, it is of importance for the entrepreneur to give a summary of the current state of the business. For instance, if the entrepreneur has selected a legal structure such as a partnership or sole proprietorship, he or she must go ahead and delineate who the principle owners are as well as the services and products to be offered. 4.2 Market Analysis In the 21st century, a business idea is not only enough for one to establish a venture, he or she must evaluate the current market environment in which he or she wants to develop the business. Thus, in order to have a viable business, an entrepreneur must include a market analysis in his her or her entrepreneurial business plan. The market analysis helps the entrepreneur to discuss his market, as well as his or her approach to it. As such, the entrepreneur will have to analyze the current market’s characteristics with regard to the services and products he or she is to offer the market. In effect, the businessperson will need to describe the current key competitors and how he or she plans to gain an advantage over them as well as the venture’s target customer’s profile. 4.3 Competitor Assessment As mentioned earlier, an entrepreneur must ensure that he or she knows his competitors are, as they play a significant role in giving one’s business direction as far as expansion and growth are concerned. Thus, in the formulation and evaluating a business plan, one should consider giving the competitors’ assessment an extra attention and as such create a section under which the same should be discussed in detail. As such, the competitor assessment section in the entrepreneurial business plan should give a review of the venture’s specific competitors. Ideally, all businesses have competitors in at any given level. Some competitors could be offering similar products and services while others sell a different product or service that serve the same purpose. It is therefore recommended that an entrepreneur evaluates his or her competitors with a critical eye, more so when it comes to their strengths and weaknesses compared to the business venture. Further, one will need to look at the competitors’ market share, advertising plan, and financial strength/cost position, relationship with the customer as well as the product and services it offers. 4.4 Marketing Plan A business without a marketing plan can be equated with a business that is on the verge of winding up. A marketing plan within an entrepreneurial business plan is essential in promoting the business venture to potential customers as well keeping it relevant in the competitive business environment. Thus, under this section the entrepreneur must focus on the marketing mix: product, price, distribution system and the promotional efforts. Accordingly, concerning the products and services, the entrepreneur will now have the opportunity to discuss the product or services in detail thus highlighting their features as well as their benefits. Moreover, the entrepreneur will describe the product size, color shapes, qualities, capabilities and patent protection. Subsequently, the entrepreneur will need to discuss the pricing strategies based on the perceived value cost of doing business, marketing goals, products well as the entrepreneurs expected competitive actions. The entrepreneur should demonstrate that his or her price will allow him or her to create profit. Next, the entrepreneur will need to demonstrate how his or her products will be distributed, and within what geographical, area. Issues to do with how the products will be sold must be delineated. For example, the entrepreneur should indicate whether he or she will use the typical distributing channel of manufacturer, wholesaler and retailers. Above all, the entrepreneur will have to show the promotional strategies for his or her products. Through promotion, the value of the products will be communicated to the customers, ultimately making them to purchase the products. Some of these strategies could include personal selling, public relations activities and advertising. 4.5 Operating Plan For a business venture to succeed it has to have a proper operation plan, which typically deals with the internal operations of the business: the equipment’s needed, the internal organizational structure. The entrepreneur must discuss how the business will be owned, as well as managed. Moreover, this section also looks at the legal issues associated with the operation of the business. 4.6 Financial Plan No business can be started without finances as investment is associated with “using money to get more money.” Therefore, a financial plan is important for every business venture as it plays a significant role in evaluating the new investment opportunity. Consequently, an entrepreneur must incorporate a financial plan section in his or her business plan as he or she will use it to estimate the business’s profit potential. Under the financial plan, the entrepreneur is expected to describe the existing financial status, as well as the current forecasts of future financial statements. It is important to note that the financial plan plays a vital role when it comes to seeking financial support from a third party as it shows the return on investment. Moreover, the entrepreneur must pay attention to the presentation of a financial plan as potential investors often examine this section. Accordingly, the investors will want to know how the entrepreneur is going to use the invested funds to create and develop a successful business venture. The entrepreneur will have to conduct a thorough market research as the forecasts of the product demand, expenses and revenues for new ventures depend on it largely. In light of this, the financial plan should provide new venture’s projections in the future for two to four years. Some of the projections include: The forecasted monthly income for the first two years. Forecasted monthly cash flows for two year and then by quarter of a year thereafter. The forecasted balance sheet for all years. 5.0 Essential components for handling rapid growth challenges 5.1 Keeping up with the ever-changing Market It is important for entrepreneurs to do a continuous market research once they establish their ventures as the business conditions often change regularly. For instance, the entrepreneur should make sure that he or she is at par with the current business technologies such use of social media to do his or her marketing. With a continuous market research, an entrepreneur avoids making business decisions that are based on outdated inform, which can lead to venture failure (Morris and Schindehutte, 2005). In order to get updated information, the entrepreneur can depend on business published materials as well as taking the time to talk to customers. 5.2. Planning Ahead Importantly, plans that were made a year ago might not make sense to an entrepreneur now as the market conditions often change with time. As such, an entrepreneur needs to revisit his or her previous plan and update it regularly. As the business venture grows, the business strategy also needs to evolve in order to suit the business’s changed circumstances. For instance, an entrepreneur’s focus is likely to change from winning new patrons to maximizing growth and developing profitable relationships with the current customer. 5.3. Controlling the Cash flow Cash flow control is one of the most important aspects in managing a business as they determine the direction of the venture. Thus, it is vital for all business ventures to have cash flow control. More often than not, cash constraints is often the biggest challenge for small start-ups as it may limit the business’s growth thus overspending can be risky at times. The entrepreneur should focus on making the best use of the business finances such that there is no overspending. Entrepreneurs should always do a thorough evaluation of new opportunities before taking on them as the limited resources can starve the core business if used unwisely. The entrepreneur must acquire skills associated with stock control as well as effective supplier management. 5.4. Problem Solving According to Kuratko, (2002) new business ventures often operate in a continuous crisis mode as each new day comes with a new challenge due to the little experience the entrepreneur has in the market environment. Thus, as the business grows the typical business solutions that the entrepreneur is used to might not work effectively. Therefore, the entrepreneur needs to develop a disciplined approach to crisis management, whereby he or she needs to consult with his or her staff members in order to come up proper solutions. For instance, an entrepreneur might consider abandoning individual marketing campaigns and focus more on devoting more resources in developing his or her brand. 6.0 Entrepreneurial information sources There are often much useful information in journals, books, magazines and even the internet concerning entrepreneurship. One excellent start up guide can be found on the Forbes Magazine, an online business analyst and research paper, which publishes stories related to business (Forbes, 2015). The other resourceful entrepreneurial website is the “ForEntrepreneurs.com,” which was developed by David Skok. The author’s website is a holder of MBA and is known for his iconic insights in matters of entrepreneurship. “OneVest.com” is also a reputable entrepreneurial site, which offers a range of information regarding how to come up with new business ventures. Moreover, the site is known for its crowd-founding feature where one can accumulate up to five million dollars from investors depending on how a business concept is realistic and practical. The Athens-Clarke County is also a resourceful entrepreneurial source as it helps new entrepreneurs to come up with new businesses as well as how to manage the obstacles they may get (Athensbusiness.org, 2015). On the other hand, Bill Gates plays a vital role when it comes to inspiring new entrepreneurs as he is the most successful Entrepreneur alive. According to the Forbes Magazine, Bill Gates foundation is a very resourceful site when it comes learning how to be an entrepreneur as it takes care of the 21st century challenges. In regard to entrepreneurial events, the Global Entrepreneurship Week (GEW) is considered as the largest forum for innovators as well as job creators. The GEW brings together individuals with business ideas from all around the world together in order to help them launch their startups, which in turn expand the human welfare and drive the economy growth. Thus, individuals can get resourceful information from this site, 7.0 Conclusion In summary, the self-guide line has successfully identified as well as described the various significant elements, which an entrepreneur needs in the 21st century in order to be successful. In effect, the self-help guide on entrepreneurship has comprehensively highlighted the importance of entrepreneurship in the economy as well as the benefits it brings to people globally. Further, the paper pointed out the significant elements that an entrepreneur needs to include in his or her entrepreneurial business plan for his or her venture to be successful. Moreover, the paper has delineated the specific elements an entrepreneur needs to focus on managing the challenges that come with the rapid growth of businesses. Lastly, the paper has identified and described significant entrepreneurial information resources. References Athensbusiness.org,. 2015. Athens-Clarke County Economic Development Department. Retrieved 14 April 2015, from http://www.athensbusiness.org/entrepreneurship programs-and-resources.php Forbes,. 2015. Entrepreneurs Information and Entrepreneurs News. Retrieved 14 April 2015, from http://www.forbes.com/entrepreneurs/ Ireland, R.D., Covin, J.G., & Kuratko, D.F. 2013. A Model of Corporate Entrepreneurship Strategy. Best Papers: Special Conference on Strategic Entrepreneurship, Max Planck Institute, Germany. Kuratko, D. F. & Hodgetts, R. M. 2007. Entrepreneurship: Theory, Process, Practice 7th ed. (Mason, OH: Thomson/SouthWestern Publishing) Kuratko, D. F. 2002. “Entrepreneurship,” International Encyclopedia of Business and Management, 2nd ed.(London: Routledge Publishers), 168–176. Longenecker, J.G., Moore, C.W., Petty, J.W., Palich, L.E., and McKinney, J.A. 2006. Ethical Attitudes in Small Businesses and Large Corporations: Theory and Empirical Findings from a Tracking Study Spanning Three Decades. Journal of Small Business Management, 44 (2): 167-183. M. Aquilina, R. Klump and C. Pietrobelli, 2006, “Factor Substitution, Average Firm Size and Economic Growth.” Small Business Economics, in press. M. Casson, 2005. “The Individual-Opportunity Nexus: A Review of Scott Shane: The General Theory of Entrepreneurship.” Small Business Economics 24(5): 423-430 Monitor, G. E. 2014. GEM 2013 Global Report. Recuperado 16/06/2014 de http://gemconsortium. org/docs. Morris, M. H. and Schindehutte, M. 2005. Entrepreneurial Values and the Ethnic Enterprise: An Examination of Six Subcultures, Journal of Small Business Management, 43 (4): 453 497. Phan, P. H. 2004. Entrepreneurship Theory: Possibilities and Future Directions, Journal of Business Venturing 19(5): 617–620. Read More