Small business

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Entrepreneurial Dilemmas

Published March 29, 2013 by Mayrbear's Lair

entrepreneur-dilemma

Not every individual is cut out for entrepreneurship. Although to many it sounds quite exciting, others may describe it as nerve-wrecking, challenging, time-consuming, unpredictable, and overpowering. Entrepreneurs will face dilemmas in many aspects of the business problem-solving process including: maintaining inventory and cash flow; hiring and firing employees; establishing exemplary customer service; and managing technology (Strauss, 2012).  For example, one challenge we recently faced in our organization was upgrading our creative design software to keep current in the competitive market. Based on the current funds available as a young startup, this presented an opportunity to develop a creative solution. Rather than make a costly investment, the strategy applied was to lease the software at a monthly rate from a new streaming technology the software company makes available through their IT services.

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Every decision an entrepreneur is required to make will give the founder an opportunity to assess multiple options, especially when making critical decisions. Because of this, Wasserman (2012) suggests creating a disaster plan. By putting in writing a plan of action for worse-case scenarios, like irresolvable business conflicts or the dissolution of an organization, helps entrepreneurs define who has the final decision in an impasse (Wasserman, 2012). For example, an organization whose two founding members discover are no longer an organizational fit and want to separate will have to find a way to do so amicably. Having created a disaster plan will serve to make the transition a smoother one with guidance set forth in clear terms.

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Also at some time, an entrepreneur will need to engage in sensitive discussions to resolve issues. It is a good idea to induct a policy of being open and honest about every challenge that is presented in the workplace. This gives employees access to the founder for assistance, helps increase the likelihood of discussing sensitive issues, and establishes precedence which in the long term helps reduce conflicts. Most people resist confronting a difficult issue and would rather avoid a discussion hoping it will somehow resolve itself. When necessary, a referee can help with professional disagreements to help prevent them from getting personal.  Finally, whenever a dilemma arises, it is a good idea to create a paper trail, either by memo, letter, or another communication outlet to keep a record of the conflict and how it was resolved for future reference. One thing is definite, an entrepreneur will face many dilemmas that will require some kind of strategy to resolve. The better prepared an entrepreneur is to handle them, the quicker the resolution (Wasserman, 2012).

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References:

Strauss, S. (2012). The small business bible (3rd ed.). Hoboken NJ: John Wiley and Sons, Inc.

Wasserman, N. (2012). The founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton, NJ: Princeton University Press.

Stages of Business Development

Published March 22, 2013 by Mayrbear's Lair

Stages of Business Development

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Introduction

There are a variety of business development models that entrepreneurs implement to foster or augment an organization.  Each stage of the development process is equally significant in the creation of a successful endeavor.  Osterwalder and Pigneur (2010) describe a business model as the rationale of how a company creates, delivers and captures value (Osterwalder & Pigneur, 2010).  They suggest that professional goal setting and planning are essential in developing a new venture and that an entrepreneur should foster high levels of thinking skills and an understanding in psychology in order to spearhead a successful organization.  Zaharuddin (2008) established a simple business model that reduces risks in launching a new enterprise which is comprised of four stages: (1) conceptualize an idea and vision, (2) conduct extensive research to screen the idea, (3) write a detailed business plan from the data gathered in the feasibility examination, and (4) launch the business (Zaharuddin, 2008).

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Stage One – Identify the Vision

The first stage in the development process of creating an enterprise is coming up with an idea and choosing a business.  There are generally two kinds of individuals that choose to become entrepreneurs: (a) a person who is absolutely in love with the idea of starting a very specific kind of enterprise and (b) the individual who is enamored with the concept of becoming his or her own boss.  The first class of business owner has a specific thought in mind, like a chef employed in a restaurant that wants to create a dining establishment, or a woman employed as a caretaker that believes she can do a better job at running a caregiving organization based on her experience and skills.  The other class of entrepreneur is driven to become the leader of a venture they are passionate about with a deep-rooted desire to spend all their time engaged in doing what they love.  For example, a woman who enjoys decorating cakes may decide to open her own bakery shop, or a man who just wants an excuse to spend his time loitering at the beach may create a boat rental business for tourists.  The first stage and assignment of any individual who contemplates an entrepreneurship is to decide which of their passions they love enough to build their livelihood around (Strauss, 2012).

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Stage Two – Conduct a Feasibility Study

Without research and preplanning, an entrepreneur risks a higher potential to fail.  The second stage in the development of a business is thorough examination of the enterprise.  An individual must comprehend their potential market by conducting research to ascertain whether it is a feasible idea and if there is a need their business can solve.  Creating a feasibility study provides preliminary data that defines whether a business opportunity is practical and likely to succeed in the marketplace (Campbell, 2013).  This screening stage will help identify the obstacles a business may encounter and also presents a variety of solutions that will help deliver the outcomes an owner desires.  Components of the analysis should include the history of the target industry, identifying the competitors and existing customers, determining costs, examination of pitfalls and risks, what the market share is, and whether it is practical as a business (Reilly & Milikin, 1996).

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Stage Three – Write a Business Plan

After conducting the research on their business idea, the third and most significant stage is composing a winning business plan.  The purpose of a business plan is to create a map that outlines the details of how a business will operate which includes: (a) the revenue required to begin the venture and stay afloat, (b) identifies projected costs and sales, (c) elaborates on marketing strategies, and (d) schedules future goals.  Investors and financial institutions will not consider funding a new venture unless they receive a well-written business plan.  In addition, a business plan captures the organization’s culture and displays a purpose that is focused on revenue growth, bookings (leads, clients and customers), stock appreciating and internally focused metrics that are intended to drive behavior and achieve desired results (Scheessele, Scheessele, & Coppings, 2012).  This displays to investors the entrepreneur’s belief and devotion to succeed.  Individuals interested in getting a new venture off the ground understand that a well-researched and persuasively-executed business plan will reduce their risk of failure and helps garner support.

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Stage Four – Launch the Operating the Business

The fourth stage is customarily the most enjoyable.  After drafting a structurally sound business plan, ascertaining the funds, and realizing the prerequisites of starting a small business, launching and operating the business is the next stage.  This phase requires establishing an optimum location for the business and the process of physically creating the organization.  The location of the business is contingent upon the amount of foot traffic required.  Businesses like warehouses or the wholesale industry for example, may have different location requirements.  It is also in this stage where the entrepreneur creates their brand, products, and inventory; engages in buying; establishes the right suppliers; meets representatives; and hires staff members.  For individuals that establish home-based businesses, this stage consists of implementing strategies for operation and growth, as well as determining their own compensation.  Operating a business also entails decisions as whether or not to include globalization; the implementation of Green strategies; the maintenance and disbursement of revenue; bookkeeping and tax filing requirements; the hiring and firing of employees; setting up their payments, benefits, and stock options; and training, maintaining, and monitoring staff performance.  Other significant aspects of running the business are: (a) establishing quality customer service, (b) growing the customer base, (c) incorporating the right technology, and (d) coming up with the best advertising plans to help build the company brand (Strauss, 2012).

Conclusion

Although there are a variety of business-development models that entrepreneurs implement to cultivate or enhance a company, each stage of the developmental process contributes to the success of the endeavor.  Without extensive research, preplanning, and developing a sound business model that includes a business plan to outline the navigation of the enterprise, an entrepreneur faces higher risks of organizational failure.

 

References

Campbell, J. (2013, February 25). Feasibility study and you: A dynamic duo by June Campbell. Retrieved from WebSiteMarketingPlan.com: http://www.websitemarketingplan.com/techniques/feasibility.htm/

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers and challengers. Hoboken, NJ: John Wiley and Sons, Inc.

Reilly, M., & Milikin, M. (1996, August). Starting a small business: The feasibility analysis. Retrieved February 25, 2013, from Montguide MT0510: http://msuextension.org/publications/BusinessandCommunities/MT199510HR.pdf

Scheessele, W., Scheessele, K., & Coppings, N. (2012). 60 Insights for mastering business development. Charlotte, NC: Mastering Business Development, Inc.

Strauss, S. (2012). The small business bible (3rd ed.). Hoboken NJ: John Wiley and Sons, Inc.

Zaharuddin, H. (2008). A to Z entrepreneur in practice: Business Feasibility Study. West Java, Indonesia: Dian Anugerah Prakasa Publishing.

Feasibility Study

Published March 11, 2013 by Mayrbear's Lair

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A feasibility study helps an entrepreneur structure a new venture with preliminary data that defines a business opportunity and helps determine whether it is practical and likely to succeed in the marketplace (Campbell, 2013). The purpose of a feasibility study is to identify the likelihood of challenges a business may encounter and present a variety of solutions that will help deliver outcomes the proprietor envisions. For example, one aspect of a feasibility study focuses on handling risks and uncertainties by examining statistics and probability concepts that identify issues a business owner may face in a particular industry. This can help an individual assess variables to help predict the best path for productivity. Other components of the analysis may include: (a) the history practice of an industry, (b) typical industry risks; (c) exploration of economics; and (d) the identification of weaknesses and strengths (Mian, 2011). Research can also include feedback from surveys and questionnaires to help develop a detailed sustainable business plan based on the data collected.

Driven Entrepreneurs

Driven Entrepreneurs

Entrepreneurs are a unique group of individuals that do not accept the world as it is and often become game changers from ambitious ideas and innovations. They possess an unbridled drive and passion, but often fail to take into consideration all the components required to make a venture successful. A feasibility analysis provides research that helps entrepreneurs confront the truth about a variety of aspects of a venture by examining uncertain parameters that can hinder an enterprise, taking into consideration long term goals and past experiences that can affect the process (Edmond, 2007). It can also be used as part of a greater venture capitalization plan because it provides a comprehensive detailed analysis that displays a psychological commitment to the enterprise from the entrepreneur which is an integral component to attract funding from investors, shareholders, and banks.

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A feasibility study can also help frame the venture opportunity and assess risks by identifying some of the following components: (a) who the competitors are; (b) is it a practical business; (c) what is the market share; (d) what is the location of similar businesses; (e) who the existing customers are; (f) determination of costs and break-evens; and (g) identifying potential pitfalls (Reilly & Milikin, 1996). In addition, a feasibility study can help business owners evaluate the basic financial requirements of a business, potential revenues, fixed and variable costs, and the working capital required to finance inventory, material, labor, marketing, shipping, and manufacturing costs. Zaharuddin (2008) developed a simple four step plan for reducing the risk involved with launching a new business: 1) identify the idea and vision; 2) create a feasibility plan to screen and test the idea to determine if its viable; 3) write a business plan; and 4) launch the business (Zaharuddin, 2008). These easy steps that include a feasibility study as part of the process can help entrepreneurs succeed in their entrepreneurial ventures.

References:

Campbell, J. (2013, February 25). Feasibility study and you: A dynamic duo by June Campbell. Retrieved from WebSiteMarketingPlan.com: http://www.websitemarketingplan.com/techniques/feasibility.htm/

Edmond, J. (2007, February 5). Planning your new business: Feasibility analysis. Retrieved February 25, 2013, from articlesbase.com: http://www.articlesbase.com/home-business-articles/planning-your-new-business-feasibility-analysis-part-one-100572.html#ixzz1U1ZGAPdD

Mian, M. A. (2011). Project economic and decision analysis. Tulsa, OK: PennWell Corp.

Reilly, M., & Milikin, M. (1996, August). Starting a small business: The feasibility analysis. Retrieved February 25, 2013, from Montguide MT0510: http://msuextension.org/publications/BusinessandCommunities/MT199510HR.pdf

Zaharuddin, H. (2008). A to Z entrepreneur in practice: Business Feasibility Study. West Java, Indonesia: Dian Anugerah Prakasa Publishing.

Entrepreneurial Climate Analysis

Published March 8, 2013 by Mayrbear's Lair

Entrepreneurial Climate Analysis

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Introduction

We are in the midst of a global entrepreneurial revolution in every nation, industry and market.  According to Morris, et al. (2011) startups are at an all-time high with new products and services also at record levels in most industries (Morris, Kuratko, & Covin, 2011). In the meantime many of these new startups fail as quickly as they emerge. In order for a venture to have the best chance of survival experts concur that an analysis of the culture, climate and environment of an entrepreneurial organization is required in creating a successful establishment.

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Environment

To create a successful entrepreneurial environment an individual needs to identify opportunities and generate new growth (Hisrich & Kearney, 2012). An analysis of the following components can help ascertain whether a venture is worth considering: (a) the technology incorporated; (b) the ability to nurture new ideas; (c) the establishment of systems and strategies to cope with failure; (d) the determination, accessibility and availability of resources; and (e) the channels available that support management. For example, challenges from high unemployment rates, sparked new ideas for some individuals to seek innovative employment solutions. For one individual, the joblessness condition presented an opportunity to employ their media production experience to provide social media services specifically targeted at corporate executives and businesses. To create a constructive entrepreneurial environment, conducting a critical organizational assessment can help foster solutions that harness support including access to additional resources. In the meantime armed with a positive attitude, their organization continues to grow with an openness that incorporates new innovations and technologies to encourage creativity in addition to the support from cohesive plans and strategies.

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Climate

An entrepreneurial climate must adhere to innovation and change. For example, the culture of virtual organizations is really taking off and has transformed the work place. Virtual mediums enable leaders to accept, expect, and encourage innovations that include the staff in the co-creation process, make adjustments and adaptations based on user feedback, and coalesce from remote locations.  Badal (2013) postulates that to create a successful environment, leaders should be: (a) driven; (b) display effective communication skills; (c) are able to motivate and inspire others; (d) can identify strengths and weaknesses in themselves as well as others; and (e) turn challenges into opportunities  (Badal, 2013). An essential component to success in an evolving a young start-up organization is creating an entrepreneurial climate that implements a daily ritual that can include for instance, various exercises to strengthen the body, mind, and spirit. It is important to focus intention and attention on self-disciplinary actions to achieve and maintain an effective leadership role, especially in the early stages where a venture consists of very few individuals to motivate each other. This disciplinary component nurtures individuality, confidence, and provides stamina that drives the internal engines to achieve success.

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Culture

Corporate entrepreneurs are mavericks, innovators, and the pioneers that spark new enterprises, products, and services by developing, growing and designing a culture that incorporates strategies, structure and policies that support their ventures (Hisrich & Kearney, 2012). When creating an entrepreneurial culture, leaders assess the following components: (a) the technologies available required to operate effectively;  (b) the fluctuation in cost of goods, exchange rates, interest rates, tax incentives and a price for services; (c) marketplace competition; (d) labor force requirements; (e) resource availability; (f) who the target market and customers are; (g) an understanding of law, restrictions and regulations for operation; (h) and the global environment that includes real-time communication, productivity, distributors, suppliers and other strategic alliances (Morris, Kuratko, & Covin, 2011). In the early stages of an operation, nurturing a creative culture environment that utilizes state of the art technology in a cost effective manner is a good strategy to keep costs down for a new start-up. For example, one young organization decided to employ an innovative strategy to upgrade their Adobe Creative Suite software to remain a contender in the competitive marketplace. The organization saved thousands of dollars by joining the Adobe Cloud group that offers professionals the use of the latest versions of Adobe’s creative design programs from remote locations at a low monthly rate. This is a strategic, cost effective decision, that supports production creativity and levels the playing field against competitors with access to more resources.

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Conclusion

Without analysis and support in their venture, entrepreneurs can give up and quit. In addition, visionary leaders who recognize talented corporate entrepreneurs can help their company benefit further by facilitating a platform that nurtures creativity and new innovations that includes a comprehensive business plan to optimize chances of success and help manage internal politics (Hisrich & Kearney, 2012). In conclusion, an analysis of the culture, climate and environment of an entrepreneurial organization is essential for creating a successful business establishment.

References

Badal, S. (2013). Building corporate entrepreneurship is hard work. Retrieved February 13, 2013, from Gallup Business Journal: http://businessjournal.gallup.com/content/157604/building-corporate-entrepreneurship-hard-work.aspx

Hisrich, R., & Kearney, C. (2012). Corporate entrepreneurship: How to create a thriving entrepreneurial spirit throughout your company. New York, NY: McGraw-Hill Publishing.

Morris, M., Kuratko, D., & Covin, J. (2011). Corporate entrepreneurship and innovation (3rd ed.). Mason, OH: South-Western College Publishing.

Creative Disruption

Published February 25, 2013 by Mayrbear's Lair

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There are many things that can impact creativity in the entrepreneurial process within the workforce of an organization. Echeverria (2012) postulates that there is nothing more challenging for a leader than managing creativity effectively to assist with breakthroughs and the delivery process of new innovations. Idea agents require support and freedom in the creative process. Effective leaders support innovators by: (a) providing authentic leadership that inspires and motivates individuals to perform at optimum levels, (b) understanding and identifying the idiosyncrasies, strengths and weaknesses of creative personalities, (c) letting innovative individuals take flight, encouraging them to keep in alignment with the organization’s interests, and (d) creating a clear configuration of structure that liberates the creative spirit and nurtures a culture of empowerment (Echeverria, 2012).

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Simon (2010) contends that another component that can disrupt the creative process are the entrepreneurs who have concerns about technological innovations that may eliminate the need for certain skills; replace workers; and require training on new systems. For example, because of technological advances a small restaurant can attract new clients without a marketing budget through the internet; an iPad case manufacturer can generate over $1 million in profits in just a few months with only a handful of employees; or a voice over company can connect artists with opportunities without expensive hardware and software (Simon, 2010). These are new frontiers that can prohibit adaptation to change.

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Although new innovations may be disruptive and cause alarm for some entrepreneurs, the most successful ones recognize new challenges as opportunities for growth.  This is the mindset and focus of an effective entrepreneurially managed firm. A trailblazing entrepreneur uses opportunity: (a) as a stimulating agent to address challenges, (b) to find resourceful adaptations and solutions, and (c) to discover the best way to capitalize on it (Bygrave & Zacharakis, 2010). This entrepreneurial philosophy is in alignment with the kind of corporate entrepreneurship that encourages associates with innovative ideas like Apple’s Steve Wozniack and Disney’s Don Bluth to remain within an organization rather than branch out to create competition. Corporate entrepreneurship support is fundamental.  With the aid of incentives and rewards, trailblazers are encouraged to pursue innovative ideas as well as participate in the creative and decision making process. This strategy can be beneficial and a profitable experience for both the entrepreneurial innovator and the organization.

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References:

Bygrave, W., & Zacharakis, A. (2010). Entrepreneurship. Hoboken, NJ: John Wiley & Sons, Inc.

Echeverria, L. (2012). Idea agent: Leadership that liberates creativity. New York, NY: AMACOM Publishing.

Simon, P. (2010). The new small: How a new breed of small businesses is harnessing the power of emerging technologies. Henderson, NV: Motion Publishing.