Entrepreneur, Enterprise, and Entrepreneurship - Essay Example

An Entrepreneur is a person who accounts for turning an idea into a business opportunity. He is also responsible for the inherent risks and the outcome of the venture. Typically, an entrepreneur starts with an idea and builds an enterprise with the idea as the base. Eventually, it is the task of the entrepreneur to manage the enterprise or venture. First and foremost, funding is one of the major concerns for an entrepreneur and it is often difficult for a budding entrepreneur to account for finances. Venture Capitalists, Angel Investors and friends and family are potentially some for the resources that an entrepreneur can approach. Also, the theoretical evaluations and research the entrepreneur has done before setting up the enterprise are bound to differ. Thus, many enterprise fail and this has made entrepreneurship often a difficult and tricky. Many theories abound Entrepreneurship, Entrepreneur and Enterprise and a lot of events in the industry complement these theories. Specifically, the Enterprise in Events is one of the fastest growing in the serviced sector and much of the growth is accelerated by the growth of small and medium sized enterprises. There are several kinds of event planning. The list includes celebrations such as fairs, parades, weddings, reunions, birthdays and education related events such as conferences, meetings, graduations and also product launches, political rallies, fashion shows, memorials and civic events. Sometimes events might be purely business related or social or sometimes a mix of both. To manage these events, it is imperative to identify new areas of development and induce creativity into the workings. Therefore, to sustain growth and to maintain profits in the service industry, and entrepreneurial mindset is essential. Moreover, to tackle problems in targeting the right audience, analyzing the business growth and raising funds for the enterprise a disciplined set of principles are definitely required. One of the principles of Classic Economic Theory projects the ways in which an Entrepreneur should make investments. It supports stating that if an entrepreneur should make investments then even a one percent rise is sufficient. Certainly, in theory a one percent increase is profitable. For instance, if an entrepreneur has $100 and if $1 is the profit per month, then Classic theory states that this is a viable investment. Nevertheless, as theory does not take into consideration, the practical constraints into consideration, this might not be a competent idea to run the enterprise. Many risk factors such as market situation, economical vagaries should be taken into account. For example, if the $1 return is affected by changes in choice by the customers, then losing half of the customers would significantly push the enterprise into loss i.e. keeping in view 50 cents is the operational cost of the enterprise. Thus, it would be wise to understand that a $10 profit is competent to enter the market with a $100 investment. The point that is important in this context is that risk is one of the major concerns that impacts the small businesses. In order to survive in the business, the entrepreneur should be prepared to take fixed costs, variable costs and also certain unforeseen costs which might pop up due to unhandled conditions. This implies, if $100 is the investment, 50 cents is fixed and variable costs, then another 50 cents should not be counted as profit. Thus, $1 should be accounted for costs and any increase above this is a competent return. To be on the safe side, the entrepreneur should venture out into the market only if the return is at least $10 to sustain in the market for a long term. Another contemporary view of the Joseph A. Schumpeter’s theory points out the transition of the work place from the late 1700’ till date. He was one of the first persons to define an entrepreneur. Schumpeter stated that the entrepreneur is primarily pecuniary i.e. demanding money for the efforts. For example, if a worker works for additional hours and demands money then it is imperative that the worker quits the job if he is not paid for the additional hours. This should be taken into consideration by the entrepreneur. If the work demands additional working hours, then the additional investment is also taken into account. Hence, this reduces the profits and it could be one of the concerns to the entrepreneur. Specifically, by taking this theory into consideration, in the event management service, any additional working hours need to be paid and disturbances by the nature can be alarming. For instance, a rain could cause the outdoor event planning to increase its efforts and thereby increase the time taken. Hence, additional investment is needed and this is one area of concern. Sometimes entrepreneurship theories explain the motivation and actions of the entrepreneurs. Every day, we see different people with different eyes, ears and color. It is the unique features of every one that make them different. Similarly, for the question why are some people entrepreneurs and why some are not it is the unique quality of that particular person that makes them so. Moreover, it’s the debate Nature Vs Nurture that can explain the entrepreneurial success. By focusing the research on different areas such as Economics, Psychology, Sociology, Management and Intrapreneurship one can verify the entrepreneurial success. According to the Economic Theory, “An economic agent” is one “who perceives market opportunities and assembles the factors of production to exploit them…” http://en.wikipedia.org/wiki/Nature_versus_nurture [Accessed on 02 Nov 2005]. By nature, Entrepreneurs see opportunities in the environment or the market and put efforts to fill the gap they see. To accomplish this task, they pool in resources, finances and also the means. Also, they have the tendency to take risks and responsibilities and also have a vision of short term and long term. This vision helps them lay a foundation to success. On the other hand, Nurture enables or adjusts the entrepreneurs to identify or access their strengths and weakness and also to spot their working culture. It is this experience that enables them to exploit any opportunities that they might encounter. Also, this exercise helps them in forming meaningful teams. In short, they identify the strengths and weakness of the team members and delegate work that moves towards successful completion. Of course, natural or unforeseen forces might sometimes act against the success. Liavan Millin on Entrepreneurs: “I think you have to have initiative and be solution and goal focused. You have to be inquisitive with a desire to learn. Above all you have to be a good communicator!”  Morrissey M, Irish Entrepreneur Business and Life, Blazing Strength, Volume 3, Issue 6, Page 29 According to the Theory of Psychology, people are born with two different kinds of mentality: those with their own unique personality and those with personality developing through their life i.e. they acquire skills throughout their life. It sometimes means that people are genetically born with certain temperament. This also means that a person is born with entrepreneur mind set and this makes him unique. Nevertheless, for some they teach entrepreneurial skills to themselves and that is how they manage to succeed. For instance, job satisfaction is fairly stable over the time and across different jobs. Therefore, since satisfaction is related to the genetic component, life’s experiences do not change this perspective. However, a change in the job design may cause the job satisfaction. “I don’t think people are born entrepreneurs, I think that they are taught to be entrepreneurs. You are born with a set of skills and courses teach you how to use them”. Mr. Morgan O’Flaherty, Supreme Ceramics and Pottery Studios, Entrepreneur on the Year Munster region, [interview on 03-11-05] But according to another bunch of psychologists, human traits are greatly shaped by the environmental, social, cultural and physical experiences. It is the environment that decides the thinking patterns of the individual and shapes his or her nature. Also, the way one thinks in a situation is determined by the environment one lives in. In a nut shell, the feelings and the behavior are learned and life’s experience plays great role in this exercise. “We learn new behavior through observing and imitating others”. Huczynski A. and Buchanan D., Organizational Behavior, Prentice Hall, 2001, page144 To elaborate, every society or community has different social and cultural standards that set apart the people in that society. This implies that every community has different way of doing things and every individual is born with this local knowledge. “Your personality is flexible; it can be changed with experience. It may be that psychological well being depends on such adaptability”. Huczynski A. and Buchanan D., Organizational Behavior, Prentice Hall, 2001, page144 The above is known as Nature Vs Nurture debate. Moreover, entrepreneurs are ambitious, creative, adventurous and often very big risk takers. To illustrate, entrepreneurs take the pain to identify problem areas and also spot the necessary resources to give a solution. Nevertheless, in this process the practical constraints play the soil sport and this is where the real capability to encounter problems comes into picture. Now the question arises whether these entrepreneurs are born to succeed or are they adapted to the constant changes in their lives. Thus, the Nurture theory makes more sense here. This theory clearly supports that entrepreneurs are the same as anyone else when they are born. But they pay attention to their matter of interest, develop affinity to problem solving and improve their thoughts and skills in life through experience. It also states that nobody is born a winner or loser in life but that modest of the creative and talented people have learned to be stimulated and inspired in life. That is all the time, entrepreneurs stand out when there is an opportunity. However, entrepreneurs experience the pain and fear in their business ideas and in every idea, they might not succeed. When Mr Morgan O’Flaherty was asked if he thinks about failure, he said, “I did but I put it aside…you can’t go around worrying about what will go wrong…you deal with things as they come along and focus on the positive”. Mr Morgan O’Flaherty, Supreme Ceramics and Pottery Studios, Entrepreneur on the Year Munster region, [Interview on 03 Nov 2005] Another theory of Socoiologial Perspective throws light on the socio cultural and family background of the individual. This shows that an individual’s behavior is highly influenced by the community that the individual grew up i.e. the values of the society or the social position of twithin that society. One statement illustrates this principle : Mr. Farris Bukhataw, one of the greatest entrepreneurs when asked about his entrepreneurial back ground commented saying Yes my mother had her own B&B business and my stepfather ran an event management business…I am always seeking opportunities that come along and where none exist seeking ways to create them”. Mr Farris Bukhatwa, Deasy Photography, [Interviewed 04 Nov 2005]  This also reinforces that Entrepreneurial heritage or inheritance is an important parameter in the growth of an entrepreneur. The individual’s family, the education received, the work experience the entrepreneur gained are all some of the promising factors that determine the success of the entrepreneur. Moreover, this also inspires the goals and objectives of the entrepreneur. For instance, if a son of a businessman who is into Event management grows up, he typically develops a mindset of setting up a business in the event management. The atmosphere he endures is the basic reason for this kind of development. Also, the skills he develops as a result of the affinity towards his father’s work may also act as a catalyst for him to start a business in the same arena. Also, other sociological factors such as losing a job or any challenging situation can provoke the dormant entrepreneurial skills in a person. This theory of sociological perspective also states that losing a job can be seen in two different ways; one as a disaster or another as one of the greatest things. It’s a disaster for people who cannot find another opportunity in their field of choice. On the other hand, it is as boon for people who can spot opportunities and work towards accomplishing them successfully. For example, a person with entrepreneurial skills may not be able to start his dream venture when he is working for a company. He might not be able to find the time and also put in efforts to inspire his thoughts. However, if he loses or quits his job, then the motivation to do something big fuels his passion and thoughts. In this way, a person with entrepreneurial skills can motivate himself from within or from outside factors and create an entrepreneurial opportunity. “When asked about his fear of possible failure and what he did to overcome it, Mr Farris Bulhatwa said, “By failing and having to work harder” to succeed in his current endeavor. Mr Farris Bukhatwa, Deasy Photography, [Interviewed 04 Nov 2005] Thus, experience in the kind of work or any influences from family can possibly accelerate ones desire to start a venture and move towards success. The expertise and knowledge one gains from this experience greatly helps him in shaping his entrepreneurial skills. A relatively new view or theory of Intrapreneurship is of an advantage to any firm or individual. This theory states or supports that every employee in a firm should be given the same opportunities as that of their entrepreneur counter parts. This imbibes in them the feeling of freedom and ownership, thereby improving satisfaction levels in them. This in turn is beneficial to the company itself because the growth of the employees implies the growth of the company. Especially, if this is practiced in large organizations, this could be of great advantage. “An intrapreneur is an employee of a large organization who has the entrepreneurial qualities of drive, creativity, vision and ambition, but who prefers, if possible, to remain within the security of an established company”. www.cilip.org.uk/groups/cofhe/presentations/Dylan%20Jones%20Evans.ppt In shaping the intrapreneurial behavior, a variety of factors show their influence. For instance, certain social and cultural factors play an important role in not only launching the role of entrepreneurship but also in nurturing the characteristics of that role. Also some factors such as non - contextual factors also inspire the thoughts and actions of an intrapreneur. Thus, with the set of intrapreneurial qualities such as the motivation and inspiration, the organization has a good probability to succeed. This is because these characterizes eventually transform into entrepreneurial behavior and action. Moreover, the intrapreneurs need not wait to act. They have the ownership of the work and unless they do no contradict with each other, the work of the intrapreneurs seamlessly transforms into success. The Intrapreneurship theory also supports that this mindset diverts them from any family problems and the dedication they show towards the enterprise helps them in achieving personal as well as professional success. For example, if the management in a large organization consisting of distinct business units has managers for those specific business units. If the business unit managers are given the freedom and responsibility to manage their individual business units, this develops a healthy competition in them. Also, this freedom helps them in identifying problem areas and work towards solving them without waiting for any green signal from the top management. Eventually, the extra meetings and discussions by the top management can be bypassed. This saves a lot of valuable time of the employees and also helps them in achieving their desired task, thereby improving work satisfaction levels. Thus, the environment in which the intrapreneur works must be creative, thereby fostering innovation and collaboration. Raia and Moya Joe, owners of Joe Designer Inc., said of their office, Its, “very casual, very hip…with atypical office accessories that encourages the all-work, and all-play attitude. Blackboards, bulletin boards and erasable drawing boards are scattered along the walls, just in case someone is struck by and an idea mid-stroll. Even if it’s hangman, those are still ideas; you’re still using your mind”. Chun J. 1997, Entrepreneur, [Online] Available from: http://www.findarticles.com/p/articles/mi_modti/is_n11_v25/ai_20172809#continue, [Accessed 13/10/05 14:37] Another important view in accessing Nature Vs Nurture is the Management view. This view has a slight bonding with the Intrapreneurship view but it differs in the way that this view is concerned with managing the growth of the company. To elaborate, this view is concerned with managing the company in its growth state rather than in the starting stage. For example, hiring a person after the company’s inception of one year and defining the person’ s role in the company as primarily responsible to accelerate towards growth is entrepreneurial. More importantly, the employee’s role is to identify potential opportunities and work towards a successful completion is what is demanded. Practically, many skills are required to manage a business: communication, leadership, managing, maintaining, presentation are some of the many skills required. In his book Daft states that management is the, “attainment of organizational goals in an effective and efficient manner through planning, organizing, leading and controlling organizational resources”. Daft Richard L., 1995, Understanding Management, Fort Worth: Dryden Press According to the debate of Nature Vs Nurture all these traits are either learned or inborn. Either thorough academic knowledge or from professional experience, these qualities are imbibed in one self; or else through genetic heritage. Thus, skills such as those needed in management, finance, operation and marketing are essential in managing the growth of the company. Empirically, these skills can be acquired through trainings. There are a lot many institutions that can help the students or individuals unleash their management capacity. MBA colleges play an important role in garnishing these skills thought specified set of courses and also through clubs and faculty. Many of the schools of course look for proved leader ship or managerial skills in order to take the students. Thus, they act as intermediate factors in order to prune those skills. “The statistics speak for themselves. Of the students that go through the program, they are thirty times more likely to become entrepreneurs and are twenty times more knowledgeable about entrepreneurship and basic business concepts”. Morrissey M, Irish Entrepreneur Business and Life, Blazing Strength, Volume 3, Issue 6, Page 26-27 However, history has shown many examples where many good entrepreneurs who are good at starting a business are not very comfortable managing the ever growing company. This difference is because entrepreneurs who manage to identify opportunities work towards successfully transforming those opportunities into business prospects. Nevertheless, in order to manage growth an change, the entrepreneurs must take into account various factors such as managing people, resolving conflicts, listening to employee concerns and so on. This entirely takes upon those individuals who are unable to maintain change and hence a management perspective is essential for an entrepreneur. But main factors or parameters that motivate managerial entrepreneurs are same as those that drive the start up entrepreneurs i.e. the ability or the need to take upon risks and manage the responsibility bestowed by the ever growing company. Also, whether they are acquired or inborn, or a mix of both, it is the drive to manage that inspires the entrepreneurs. Thus, a managerial view is essential to either start a company or to grow the company to the higher levels. Hence, this theory supports that a managerial view is essential for the success of an enterprise and thereby the entrepreneur. In summary to the debate of Nature Vs Nurture, the theories of Economic, Sociological, Management, and Intrapreneurship and psychological play a vital role in justifying the concepts. A close examination of the theories presented shows that a mixture of both nature and nurture is essential for making a successful entrepreneur. More importantly, nurture stands out as an ever important factor in determining the success of the entrepreneur. On one side, the Intrapreneurship and managerial theories reinforce that all the needed skills can be trained. But on the other side, sociological theory believes that all the skills are influenced greatly by ones environment and living conditions. Also, the psychological view reassures that the entrepreneurial traits are largely determined by genetics and biochemistry. Moreover, the psychological view is simple analysis of nature bestowing its traits onto the individual. Mr. O’Flaherty said “I don’t think people are born entrepreneurs, I think that they are taught to be entrepreneurs. You are born with a set of skills and courses teach you how to use them”. Gallagher W. and Gergen D., Nature Vs Nurture, [Online]. Available from: http://www.pbs.org/newshour/gergen/gallagher_5-14.html, [Accessed 02/11/05, 13:05] One more interesting theory related to the research of entrepreneurship theory is the Poverty of Historicism. This method discusses Entrepreneurship from the perspective of history and notes some of the implications of entrepreneurship. It also applies the previous experiences to contemporary entrepreneurs. For example, the rise and fall of the Entrepreneur Steve Jobs is one challenging topic. He was thrown out of his own company and later on he regained his position in the company. Such scenarios are typical and have no general theories that explain the phenomenon. Also, by applying such historical data into the life of another entrepreneur with similar situations, one can probably access or suggest ways to handle the situation. But that necessarily does not mean that the person can regain the power same as Steve Jobs did. Only thing that is under control is the application of history but most often with new results popping out each time, it has become difficult to predict such scenarios. Also, Entrepreneurial processes involve a high amount of discovery and fulfillment of opportunity and desire. In addition to the boldness, resourcefulness and the constant learning involved, successful entrepreneurship requires the acquisition of knowledge and skills that are essential to compete in the market. Moreover, the theory of entrepreneurship is one of the creative and exciting area which demands high amount of creative thinking. Also, an entrepreneur needs to keep in mind the difference between the theory and practice. Perfection is a dream, perception is a reality. The challenge is to ensure that the dream had to be real in sense. So while in theory if the entrepreneur considers n factors, practice presents him or her with more than just n factors. Hence, it is imperative that an entrepreneur is creative enough to access the impending obstacles. Moreover, he must also relish the dangers and chalk out variety of plans to overcome such danger scenarios. Learning is one important and non ignorable aspect in an entrepreneur’s life. Everyone gets hurt once or twice, but it is the self defensive plan that one develops is challenging. Planning is the key area. An entrepreneur needs to have a concrete plan in order to access his capabilities and also in order to predict the outcomes. Moreover, devising a mechanism so that the entrepreneur is prepared to take the surprises is essential. For example, if an entrepreneur in even management tries to bid for an event. In order to win the bid, he must quote the best price. Also if he wins the bid, to sustain the customer he must definitely present with certain add on or free service that can make the customer satisfied. These additional services can be offered by knowing the choice of the customer; sometimes the choices are expensive and sometimes they are reasonable. Hence the entrepreneur must be prepared to take this investment also into consideration. Of course, the entrepreneur in his or her budding stage cannot evaluate such strategies. Only by learning from experience, the entrepreneur can access such possibilities and go on for a successful profit making event management. Thus, various theories exist that describe the Entrepreneur, Enterprise and Entrepreneurship. Most of the theories are based on observation and history and all the theories have certain limitations on the scope defined. The step to actually implement what the entrepreneur has been learning is the master stroke that had to be played to make it big or make something unique. It’s the realization that it is always small when the venture is started. A challenge to Plan an entrepreneurial venture, implement and execute is what is essentially needed. Thus, visualizing a dream and devising a plan to implement what is dreamt and eventually achieve success through motivation is what defines a successful Entrepreneur. Biblography : http://jonjayray.tripod.com/entre.html http://www.questia.com/googleScholar.qst;jsessionid=LgxPMWp1Lw4LD4hmNMVphdskJDG6Gw9DLqTdVyxhFhQ1qhLHQrLg!1099363101!226308462?docId=5009748846 http://www.dceb.ie/knowledge-centre/general-business-issues/entrepreneurship http://w4.stern.nyu.edu/berkley/ http://www.entrepreneur.com/startingabusiness/businessideas/startupkits/article37892-6.html Read More