Why a Person Chooses to Start a Small Business - Essay Example

Andy’s Parties and Learning Organizations May 28 With at least two references, provide reasons on why a person chooses to start a small business despite having no past experience, no business model, and without a large capital over a stable career. People choose to start a small business, despite the absence of entrepreneurial experience, business model, and large capital, because they want to take risks in applying their strengths in skills and knowledge to new passions and business opportunities; starting a business is more challenging than being an employee; they believe that autonomy as a business owner is better than the stability of being a paid employee; and they expect higher financial returns from being a small business owner than being an employee. People start a small business, despite having a stable career, because they have the willingness to take risks and they want to pursue their dreams. They also believe that there are business opportunities that are related to their dreams and passions. Amaral and Baprista (2007) studied the factors involved for people choosing to be entrepreneurs. They noted that entrepreneurs believe in their dreams of opening their own businesses because of business opportunities and because they are willing to take risks (Amaral & Baprista, 2007, p.26). Levine and Rubinstein (2013) agreed that employed people who want to open small businesses are more willing to take risks than paid employees. In addition, those who open new businesses believe that being business owners is more challenging than being paid employees. Girouard (2013) mentioned that many employees open their own businesses because they think that they are maximizing their strengths more in challenging entrepreneurial environments. Professional development may actually be better attained as entrepreneurs than as paid employees where there are constraints to continued learning and growth. Apart from being willing risk-takers, finding business opportunities, and boosting professional development, employees who open small businesses also believe that they have more autonomy and are happier and that they can earn more. Girouard (2013) underscored that many employees want greater autonomy over decision-making. They want to be their own managers, so they start their own businesses. Autonomy as owners can also make them feel happier and more fulfilled in life. Moreover, starting a business can increase income levels. Girouard (2013) and Levine and Rubinstein (2013) provided studies that showed that self-employed individuals usually earn more per hour or have higher median incomes than paid employees. Some of these entrepreneurs work more hours than paid employees, but this is usually during the start-up stages. Hence, people are more willing to forego stable careers to take risks when business opportunities are present and when they know that they have the right knowledge and skills to pursue their dreams in business and because they want to gain autonomy and higher incomes. 2. Give at least three reasons why Andy’s Parties became successful rapidly and why it has been able to maintain its success for 8 years, while many other small businesses failed in their first few years. Andy’s Parties became successful rapidly because they have a lucrative business concept that must be well in demand in the communities where they operate; Andy may not have a small business experience but he has an excellent education and employment background that have provided him the skills, knowledge, attitudes, and networks that can make his business work; and he has his wife and staff to support the needed human capital for his business. First, Andy’s Parties is a market-centered business concept. It is based on an existing need of middle and upper-class parents who have kids, but who do not have the time to plan and execute themed parties. Andy’s Parties offers everything, including the clean-up, which is a dream party for many parents. In addition, the company offers many different themes that can appeal to different kids who have diverse ideas of dream parties. By offering numerous theme options, it sure knows how to make children happy. Second, Andy’s Parties is the brainchild of an intelligent entrepreneur. Andy has a master’s degree and has worked for several prestigious firms. He knows what makes businesses work and he already has existing contacts for potential clients and suppliers. He must also already have superior management skills, which is important in starting a small business. Other business owners do not have this distinct advantage in management competencies and networks. Finally, Andy has his wife and staff to support the needed human capital for his business. He has a supportive wife who can help him operate the business. He also has employees, who, being high school students, can be paid lower salaries. Still, he trains them well enough to help grow the business consistently. Hence, Andy’s Parties has the core advantages of management expertise and networks, customer-centered business concept, and reliable human resources. 3. What should the owners’ plans be for their business to further develop? Andy’s Parties is truly a successful business model. In order for their business to develop further, they must expand their business portfolio. They should offer not only birthday parties, but also themed social events for weddings, reunions, conferences, baptisms, debut parties, and other social events. They can rent houses where owners no longer live daily, so that they can also easily expand location options. These houses must be easy to design or must have unique designs and facilities, such as swimming pools and sculptures. Andy’s Parties can offer the same set-up-to-clean-up model that has worked so well for children’s parties. Furthermore, to improve management over these parties, operations and records must all be automated and accessible through the Internet. This way, Andy and his wife can monitor any event online. For instance, every party has a live coverage where they can view the events as they unfold and end. Andy must also have direct communication with key personnel through company-owned communication tools. The company can have tablets that have an integrated system for entering and monitoring party activities and results. In addition, the company must also get feedback from every customer about different aspects of their events, such as customer service, food quality, and fun quality. It must also regularly collect feedback from employees to measure employee satisfaction and to identify their employee concerns and suggestions for the company. These surveys will constantly improve services to internal and external customers. Lastly, the company must also have an integrated information system that contains all customer information and purchases, as well as other important information about the staff who prepared these parties. The system will help in monitoring events and collecting customer and employee insight, so that proper rewards can be provided to productive employees. Hence, to further boost company growth, Andy’s Parties needs to offer more services and integrate technology and customer feedback to the continued improvement of company operation. Synopsis “Why Aren’t We All Working for Learning Organisations?” In “Why Aren’t We All Working for Learning Organisations?” Seddon and O’Donovan (2010) examined why twenty years after Peter Senge’s work, The Fifth Discipline, learning organizations are still not prevalent in modern society. Senge (2006) defined a learning organization as an organization that continuously develops its ability to generate its future through a change in mindset, from mere adaptive learning (survival learning) to generative learning (learning to create) (p.14 as cited in Seddon & O’Donovan, 2010, p. 5.02). Seddon and O’Donovan believed that W. Edwards Deming, one of Senge’s original reviewers of his book, provided important insight on why learning organizations are not widespread. Deming’s review asserted that the dominant management system has destroyed people’s ability for generative learning (Seddon & O’Donovan, 2010, p. 5.02). Deming shows that Senge has not offered practical resolutions on how to remove these innermost connections that impair generative thinking. Seddon and O’Donovan (2010) recommended using systems thinking, which is based on double-loop learning, to create learning organizations. Seddon called Deming’s dominant management thinking as command-and-control management. Command-and-control management uses a top-down management approach where managers make decisions using budgets, targets, and standards, while they control workers through policies and rules (Seddon & O’Donovan, 2010, p. 5.03). Seddon’s work with service organization shows that they also use command-and-control management through their “Core Paradigm” because of their emphasis on resource management (Seddon & O’Donovan, 2010, pp. 5.03-5.04). Command-and-control management uses “single-loop learning,” after the concepts of Argyris and Schön. Single-loop learning is incremental learning of new skills without challenging underlying assumptions and beliefs about problems. The article recommended systems thinking to replace command-and-control thinking. Deming suggested that managers should focus on work flow throughout the whole system than supervising and measuring work in functional units. The article argued that Deming’s insight is that assuming that activities are equal to costs only drives up costs. It explained the role of double-loop learning in changing the Core Paradigm of command-and-control thinking. It asserted that double-loop learning is critical to generative learning, and is, consequently, fundamental to creating learning organizations. Double-loop learning adds the examination of underlying problems to add governing variables analysis to the learning cycle. In addition, the article underlined that demand is important as a lever for improvement, and demand should include failure demand. Failure demand refers to the failure to do something or do something right for customers. Examining value demands enables managers to design systems around actual customer demands. Another finding is that it is the system that affects performance. Variety is also important to reduce costs. Finally, the article suggested systems thinking through Figure 6 systems archetype for service organizations. Figure 6 reflects the impact of management thinking on system and performance, where double loop learning drives the formation of learning organizations. Thus, the article showed that double loop learning in systems thinking is fundamental to creating learning organizations. References Amaral, A.M., & Baprista, R. (2007). Transitions from paid employment into entrepreneurship: an empirical study. In M.J. Dowling & J. Schmude (Eds.), Empirical entrepreneurship in Europe (pp.10-30). Cheltenham: Edward Elgard Publishing. Girouard, D. (2013, January 3). Does it pay to become an entrepreneur? Forbes.com. Retrieved from http://www.forbes.com/sites/groupthink/2013/01/03/does-it-pay-to-become-an-entrepreneur/ Levine, R., & Rubinstein, Y. (2013). Does entrepreneurship pay? The Michael Bloombergs, the hot dog vendors, and the returns to self-employment. Retrieved from http://faculty.haas.berkeley.edu/ross_levine/Papers/2012_7SEP_entrepreneurship.pdf Seddon, J., & O’Donovan, B. (2010). Why aren’t we all working for learning organisations? E-Organizations and People, 17, 5.01-5.14. Read More