Entrepreneurship - Personality and Venture Management - Essay Example

?Entrepreneurship: Personality and Venture Management This report discusses the profile of a young entrepreneur who runs a retail business of corporate and casual shirts for men. The business has been running since 2008. It was started as an online business but has grown into two retail locations today. The business is run as a sole proprietorship. This report discusses the factors behind the decision to become an entrepreneur. The role of the personal background including early childhood and family characteristics is discussed. The main triggers inspiring the entrepreneur to make a definite career choice is also identified. This is followed by the factors contributing to the planned start-up business and the subsequent running and management of the venture. Influence of Personal Background The interview with the entrepreneur revealed that he is the only child of his parents. As a result, his parents were very attentive to his upbringing. According to Veciana (2007, p. 55), family context and childhood are among the basic factors affecting the decision to create a firm. As he belongs to a developing country, his parents gave utmost importance to his education. He was home-schooled for a year before joining kindergarten. The entrepreneur believes that during this time, he was taught by his parents as well as a home tutor. His father, in particular, often took him along to several parts of the city that he had to visit in the course of business. In this way, he got exposed to various trades from a very early age. His father is probably the very first role model that inspired him to become an entrepreneur. He owned a textile business and the entrepreneur would spend a few hours in the day with his father at the shop. This fits in with Shane’s (2010, p. 149) statement that children of entrepreneurs are more likely to become entrepreneurs themselves. The entrepreneur also reported that his parents did not place many restrictions on him as a child and allowed him to pursue his interests. This encouraged him to be bold and take up challenges. Although the entrepreneur’s parents were affectionate towards him, they also encouraged him to be independent and assume responsibility for his actions. He stated that from the age of three, he began to sleep in a separate room and was responsible for keeping it organized from the age of seven. Even at school, his parents did not interfere when he was punished or scolded by his teachers for not following instructions. He recollects that these influences played a great role in shaping his personality to take up entrepreneurship as a career choice. As stated by Ginbcus, Vermeulen, and Radulova (2008, p. 23), entrepreneurs tend to be independent and do not have high needs for conformity. This tendency is reflected in the personality of the entrepreneur interviewed. As mentioned earlier, family influences played an important part in shaping the entrepreneur’s eventual career choice. The father being an entrepreneur himself, there was a role model readily available within the immediate environment of the entrepreneur. As a child and even while growing up, the entrepreneur observed his father making business decisions and responding to challenges. During the interview, the entrepreneur stated that observing his father made him aware of the benefits as well as the risks of being an entrepreneur. Sometimes, his father had to make decisions that put the financial future of the family at risk. Sometimes, the risk paid off. But the family also had to face financial difficulties during some periods. The entrepreneur stated that the determination of his father to persevere and the support of his mother helped them to overcome temporary setbacks. At any rate, the challenges did not deter the entrepreneur from following in his father’s footsteps. In fact, the entrepreneur said that often he felt that his father was not making the right decision. He then resolved that he would not make the same mistakes if he were to run his own business someday. Douglas (2009, p. 7) describes this capacity as the entrepreneurial clear-lens that allows entrepreneurs to view entrepreneurial issues more lucidly compared to non-entrepreneurs. When his father became aware of his inclination towards owning his own business, he sent him to a leading business university to pursue a professional business qualification. As revealed during the interview, the triggering event that sealed his decision to become an entrepreneur occurred while he was studying at university. It was during this time, that his country was experiencing economic growth at an encouraging pace. Encouraged by the emerging economy, a number of foreign brands began to establish operations in the country. Students at his university, in particular, were impressed by the opportunity to pursue a better lifestyle. He thus realize that by the time he graduated from the university, it would be an appropriate time to start his own business to cater to the needs of the emerging economic class in the country. The main stimulus that motivated the entrepreneur to enter the textile industry was when he read the book The Polyester Prince: The Rise of Dhirubhai Ambani by Hamish McDonald as part of his semester required reading. He states that he was greatly impressed by the intelligence and success of Dhirubhai Ambani who had virtually established the polyester textile industry in India. Because his own father also ran a garment business and had contacts in the industry, the entrepreneur decided to set up a corporate menswear line. This shows that the entrepreneur took a calculated risk by ensuring that maximum odds were in his favour to succeed in his new venture. This has been identified as calculated risk taking by Karutko (2012, p. 37). The Start-Up Decision The entrepreneurship decision was taken while he was pursuing his masters degree in business management. According to the entrepreneur, while other students were planning to enter the financial sector or join multinational FMCG companies, he was determined to create his own business. The entrepreneur stated during the interview that he was more interested in directing his energies at creating something new rather than making incremental contributions to established companies. According to Gustafsson (2006, p. 3), opportunity identification is the most important decision an entrepreneur has to take. The entrepreneur had identified an attractive opportunity before he had graduated from university. Thus, he had demonstrated the capacity to make important entrepreneurial decisions. According to Iaquinto and Spinelli (2010, p. 61), entrepreneurs should move cautiously and not pursue a “go-fast philosophy.” The entrepreneur demonstrated this sensibility when he first tested the quality of his product by first designing a shirt for a banker friend. As the feedback was positive, he concluded that he had the talent for developing interesting products. Mitchellette (2008, p. 84) also recommends that entrepreneurs spend considerable time in information gathering before making decisions. Following positive feedback from his friend, the entrepreneur conducted market research about the various brands available. He found that international brands offering high-quality products catered to experienced professionals who could afford high prices. He thus determined to offer similar quality to professionals who had just started their careers and could be attracted by lower prices. Crane (2009, p. 125) urges entrepreneurs to pay great attention to determine their brand positioning. This includes selecting the market segment and the positioning strategy for the segment. It can be seen that the entrepreneur had made a clear choice about which segment he wanted to target and how he would position the brand, i.e. as an affordable high-quality brand for young executives. The entrepreneur then prepared a business plan for his venture. He stated that his university courses helped him to realize the importance of a detailed business plan for starting any new venture. While a business plan increases the attractiveness of ventures to financers and investors (Shane, 2003, p. 188), the entrepreneur stated that his primary motivation was to use the business plan to help him organize the venture and implement his plans smoothly. According to Parker (2007, p. 87), families play an important role in entrepreneurial decision-making as they provide resources, networks and tacit knowledge about the industry. The entrepreneur stated that consulting with his father was the final factor that gave him the confidence to launch his start-up soon after he graduated. His father offered him valuable advice about the key factors to consider, such as where to import fabric from, how to set up a workshop and how to promote the business. Once the entrepreneur was confident that he would be able to secure the needed resources, he decided that he would launch his own venture. Management and Development of the Venture Several aspects of the management and subsequent development of the venture are discussed in this section. Among the most important decisions about starting the business was the question of financing. The entrepreneur stated that the seed capital for the venture was provided entirely from his savings. The entrepreneur had collected some savings from his pocket money and had also earned a reasonable amount during the mandatory internship program while studying at the university. He invested these amounts in setting up a workshop and hiring craftsmen to work on the shirts. This act reflects the confidence and determination the entrepreneur had in his decision. Vinturella and Erickson (2013, p. 14) recommend that entrepreneurs should first invest their own capital before seeking external funding. In this regard, the entrepreneur was following a practice recommended in theory. In addition to providing the seed capital from personal sources, the entrepreneur also devoted himself entirely to the venture during the first year. While other graduates were pursuing jobs in various sectors, the entrepreneur passed up those opportunities despite an excellent GPA. Rather than hire a manager for the venture, the entrepreneur managed all aspects of the business, from developing contacts with suppliers in Egypt and Italy to developing distribution channels with local courier companies. He also developed the website and Facebook page for the business. By directly managing all the affairs of the venture, the entrepreneur gained much needed insight into the risks and challenges facing the business. Hisrich, Peters, and Shepherd (2011, p. 42) explain the importance of commitment in entrepreneurship. They distinguish between the entrepreneurial aspect of commitment and administrative aspect of commitment. Each poses its own unique challenges and requires specific skills such as the need to take quick action and mechanisms for evaluating decisions over the long term. The entrepreneur in question has demonstrated the capacity for the entrepreneurial as well as the administrative aspects of commitment to the venture. After managing the new venture for a year and having made a number of important decisions the entrepreneur decided to hand over the day-to-day managerial responsibilities to a professional manager. Hatten (2009, p. 442) explains that businesses need to transfer from an entrepreneurial style of management to a professional managerial approach, which requires skills that are different from those required to establish a new venture. While the manager oversaw the running of the business, the entrepreneur pursued career opportunities in the corporate sector. He was able to secure a job at a leading multinational FMCG company. He was able to successfully manage his job responsibilities while looking after his own business. His job allowed him to establish links with professionals in the corporate sector. This helped him to build up a network of potential customers. He observed the tastes and fashion sensibilities of his colleagues and advised his manager to develop products accordingly. Overall, this strategy proved to be a successful and effective one. Initially, the business was conducted through an online portal. This consisted of a website and a Facebook page. Products were displayed and orders for bespoke shirts were taken online. The completed orders were then dispatched to the customer. Initially, the distribution was restricted to within the country. After two years, as the professionals migrated to other countries, demand was subsequently created in those markets. The business then developed distribution channels for delivering products to foreign clients. At the same time, as sales increased and the business raised subsequent capital, it opened up two retail outlets in the city. Both retail outlets were established in popular downtown locations. The entrepreneur appointed and trained managers and sales staff for both these stores. He visits both the stores on weekends when he does not have to attend to his day job. The entrepreneur also looked after the product management aspect of the business during the initial phase. While initially the business offered only bespoke products, after around 10 months, accessories such as ties and cufflinks were introduced. Similarly, readymade shirts in various sizes were also introduced. Designs were introduced in limited ranges and popular ones were repeated on a seasonal basis. The analysis of the above factors and management practices shows that the entrepreneur is more of an opportunistic entrepreneur than an artisan entrepreneur. While an artisan entrepreneur primarily possesses technical skills, an opportunistic entrepreneur is one who supplements technical skills with sophisticated business management skills (Longenecker, 2011, p. 18). Even so, the entrepreneur in this case shows a different tendency. In the typical sense, an opportunistic entrepreneur is primarily a technical expert who acquires business skills through professional training. However, in this case, the entrepreneur first acquired business skills and then acquired technical skills through practical involvement in the business. This report detailed the profile of a young entrepreneur in the light of facts and statements provided by the entrepreneur. These findings were discussed in the light of concepts and theories of entrepreneurship. It was found that the actual experiences of the entrepreneur are supported by established theory, in particular the role of childhood and family factors as well as the outcomes of management decisions. References Crane, F. G. 2009. Marketing for Entrepreneurs: Concepts and Applications for New Ventures. Sage Publishing. Douglas, E. 2009. Perceptions: Looking at the World through Entrepreneurial Lenses. In Carsrud, A. L., and Brannback, M. (eds.). Understanding the Entrepreneurial Mind: Opening the Black Box. Springer Publishing. Ginbcus, P., Vermeulen, P. A. M., and Radulova, E. 2008. The Decision-Making Entrepreneur: A Literature Review. In Vermeulen, P. A. M., and CurSeu, P. L. (eds.). Entrepreneurial Strategic Decision-Making: A Cognitive Perspective. Edward Elgar Publishing. Gustafsson, V. 2006. Entrepreneurial Decision-making: Individuals, Tasks and Cognitions. Edward Elgar Publishing. Hatten, T. S. 2009. Small Business Management: Entrepreneurship and Beyond. Cengage Learning. Hisrich, R. D., Peters, M. P., and Shepherd, D. A. 2011. Entrepreneurship, 6th ed. Tata McGraw-Hill Education. Iaquinto, A., and Spinelli, S. 2010. Never Bet the Farm: How Entrepreneurs Take Risks, Make Decisions—and How You Can, Too. John Wiley & Sons. Kuratko, D. F. 2012. Entrepreneurship: Theory, Process, Practice. Cengage Learning. Longenecker, Petty, J. W., Palich, L. E., and Hoy, F. 2011. Small Business Management: Launching and Growing Entrepreneurial Ventures, 16th ed. Cengage Learning. Mitchellette, R. J. 2008. Entrepreneurial Decision Making: A Must-Read for Every Aspiring Entrepreneur. Xlibris Corporation. Parker, S. C., 2007. Entrepreneurship as an Occupational Choice. In Minniti, M. (ed.). Entrepreneurship: The Engine of Growth. Praeger Publishers. Shane, S. 2010. Born Entrepreneurs, Born Leaders: How Your Genes Affect Your Work Life. Oxford University Press Shane, S. A. 2003. A General Theory of Entrepreneurship: The Individual-Opportunity Nexus . Edward Elgar Publishing. Veciana, J. M. 2007. Entrepreneurship as a Scientific Research Program. In Cuervo, A., Ribeiro, D., and Roig, S. (eds.). Entrepreneurship: Concepts, Theory and Perspective. Springer. Vinturella, J. B., and Erickson, S. M. 2013. Raising Entrepreneurial Capital. Newnes. Read More