Entrepreneurship

Introduction

The process of designing, establishing, and running a business often a small enterprise is referred to as Entrepreneurship, while the people who run such businesses are referred to as Entrepreneurs. The people seize available opportunities through value creation and earning profits from the venture. Entrepreneurs often gather all the required materials, including competencies and resources, build their businesses into profitable enterprises. The process requires dedication and patience to turn an opportunity into profits (Curley & Formica, 2013). The paper aims to explore the process of Entrepreneurship through viewing the necessary approaches taken to create value, some of the factors that encourage the process, analyze the various sources of information for SMEs, and the necessary set of skills required by Entrepreneurs.

Approaches used in value creation

Globally, entrepreneurs are fully aware that the success of any business they start largely depends on whether consumers value the products or services created by the business. According to Carl Menger, in his book “The Principles of Economics,” the value created by entrepreneurs can only be defined in the consumer’s own terms and not that of the business owner (Menger, 1871). Menger came up with a theory that focused on consumer’s subjective value and the benefits entrepreneurs profit from fulfilling such value. Furthermore, he held that the whole economy’s driving force is entrepreneurship. It is essential for businesses to realize that value creation puts business over its competition and ensures the survival of a business. It is essential that Entrepreneurs know which stakeholders they are creating value for. Entrepreneurs use various approaches to create value in their businesses. The first approach that businesses have adopted is staying unique.

This follows as consumers are willing to pay high prices for unusual products in the market. Through creating products and services that customers cannot acquire elsewhere, the business grows its value. The second approach that businesses embrace is creating value with emotion. Entrepreneurs have learned that by creating products and services by altering the consumer’s emotional state is key. Businesses have realized that customers get attracted to products or services, which make them feel joy. Therefore, developing products that enhance emotional state in customers is the key to creating value in a business. An example is the services offered by dentists, which are often considered stressful; hence, the emotional state of consumers can be altered through adding a few pleasurable moments like massage facial or even video games to make the experience less stressful. The third approach to consider is to create value by upgrading experiences.

When a business offers services or products involving basic human needs, then creating value through elevating the fundamental need beyond the basic needs could be the best trick. An example is a fast food restaurant can add value through creating a dining zone for children or children play zone. Restriction of access is another strategy that a business can use to create value. Including certain restrictions such as VIP, areas make consumers pay more for certain pleasures (Application of customer value creation behavior, 2014). This follows as people aim at feeling special; hence, they would spend a lot to have such experiences. Value creation using aesthetics has proven effective in most businesses. Producing beautifully designed products makes consumers feel the need to have them. Consumers need products that are pieces of art in themselves. Entrepreneurs create value through conservation. Conservation helps consumers allocate their time and resources appropriately. Therefore, creating products that conserve the aspect of time, resources, and energy would lure consumers. Entrepreneurs have mustard the art of value creation as they know that it is the only thing that makes their businesses stand out from the rest. Furthermore, effective value creation means profitability for businesses; hence entrepreneurs do not take this aspect lightly.       

Factors that encourage entrepreneurship

The four factors that influence entrepreneurship include culture, education, economic development, and technology. Studies indicate that areas that have these factors have strong entrepreneurial growth.

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Economic factors

The exercises are undertaken in an economic environment often have a direct influence on Entrepreneurship. This follows as people grab the available opportunities or due to the lack of jobs in the region. Entrepreneurship is affected by the following factors

Capital

In the business world, capital is regarded as important for facilitating production in an enterprise. Availability or increase in capital investments in projects makes Entrepreneurship grow, considering that funds are readily available to design and launch an enterprise. Capital acts as a lubricant to the production process. Capital facilitates the availability of land, machines, and raw materials to produce goods and services. Furthermore, people are more inclined to pursue entrepreneurship when they have ready funds to facilitate their projects.

Labor

Entrepreneurship, just like any other business, requires labor. The right quality of labor facilitates business growth as opposed to the quantity of labor. Entrepreneurial ventures could be facilitated through the availability of quality labor since it takes the right type of labor to help develop certain businesses. Mobility and flexibility of labor can be facilitated by smooth transport modes hence making it easy for Entrepreneurship to grow.

Raw materials

The availability of raw materials is necessary for growth in entrepreneurship. When raw materials are not available, and there is no proper and smooth means of transporting them hinders entrepreneurship. The entrepreneurial environment can be negatively affected due to insufficient raw materials.

Market

Any business cannot survive without a ready market. Therefore, the market plays an integral role in facilitating the growth of entrepreneurship. Businesses must fully equip themselves with the latest marketing techniques. Furthermore, the size of the market influences the magnitude of entrepreneurship in an area.

Infrastructure

Availability of communication and transport facility aid in the entrepreneurship environment. Infrastructure is key in ensuring raw materials and ready products get to the market effectively. Communication channels play a key role in gathering information regarding market or raw materials. Therefore, entrepreneurship grows in an environment with an effective and well-established infrastructure.

Social factors

Social factors can help develop the spirit of entrepreneurship in an environment. The social setting can play a major role in facilitating entrepreneurship. The aspects of social factors include

Caste factor

Societies have various values and cultural practices that influence the actions of individuals. Over time, these practices have evolved hence shaping society. An example is India’s caste system, where there are four divisions. This factor does not permit a member of a certain division to move to another. Therefore, globally, the dominance of certain ethnic groups in entrepreneurship is the norm.

Family background

Family background also plays a role in propelling the continuity of entrepreneurship. When a family is known to engage in entrepreneurship, it continues for generations. Therefore, each member of the family involves in entrepreneurial ventures.

Education

Education plays a role in entrepreneurship as it equips people with the necessary information regarding certain aspects of entrepreneurship. Moreover, in a societal level, the education system adopted has a role in instilling valuable entrepreneurial values. When the education system embraced is based on religion, then it becomes difficult for the entrepreneurship environment to be developed.

Cultural values

Motives are key in propelling people into action. The same applies to entrepreneurship as it inspires motives like attainment of social status, profit-making, and acquisition of prestige. Therefore, if the motives are strong, then people would take risks and engage in innovations. Furthermore, these motives also depend on society’s culture since, in the event that society is money-oriented, then entrepreneurship would be appraised and applauded.

Psychological factors

Psychological factors have been attributed to propel entrepreneurship. The following features fall under psychological factors

Need achievement

According to McClelland’s psychological theories of entrepreneurship, successful entrepreneurs are characterized by a social motive to excel. McClelland believes that most entrepreneurs are driven by this factor (Zaware, 2019). Furthermore, certain communities produce more people with ‘need achievement’ features than others. Therefore, he believes that this factor was highly present in some communities than others. Additionally, such people are not afraid of taking risks, which take them to greater heights.

Status respect withdrawal

According to Hagen, the radical loss of status attributes to entrepreneurial behavior in certain groups. Loss of status makes such groups to venture heavily into entrepreneurship to ensure they get back in good social standing.

Motives

According to Cole, wealth is not the only aim of entrepreneurs as he believes they could also be after service to the society, prestige, power, and security within the society (Zaware, 2019). He believes these aspects could also inspire the actions of entrepreneurship. On the other hand, theories by Stepanek holds that entrepreneurs can also be inspired by non-monetary features such as self-esteem, autonomy, and power (Zaware, 2019).  

Analysis of sources of support for start-ups

Start-up companies are often new companies and, in most cases, are not associated with high-tech projects. These companies require proper molding into stable enterprises. Therefore, they should get access to advising on how to mitigate certain challenges and how to acquire and utilize funds. Funds sit at the top of the list in challenges associated with start-ups. This follows as these companies are new and do not have strong financial backing for their activities. According to research, financing of a start-up depends on the development stage. In terms of finance, start-ups have a wide range of options.

They can acquire financial support from bank loans, government grants and subsidies, business incubators, angels often individuals who decide to invest in SMEs, venture capital, which is often meant for businesses with high potential for growth, and personal investments. In terms of advice, SMEs have a wide range of sources, including Community colleges, small business centers, which provide advice on how to manage small businesses. The Internet is another source of help for SMEs. Government programs also act as a help for SMEs as they offer proper advice and training on how to utilize and manage these start-ups. SMEs require information and good advice to stabilize and grow. In most cases, the funds used in the operations of SMEs have often borrowed money. Therefore, it is essential that these companies properly utilize these financial resources.

Appraisal functional skills appropriate to the management of SMEs;

Small business requires certain skills for success. The following skills are essential in the management of start-ups

Multitasking– SMEs have numerous projects that must run concurrently. Therefore, the manager must develop these skills to ensure they oversee their employees while at the same time running projects effectively to keep the business afloat. The reason for this skill is due to a lack of financial muscles to hire managers for various departments and projects; hence the responsibility falls on the manager.

Decision making– small business managers, must develop the ability to effectively make crucial decisions regarding the operations of the business. SMEs have no room for mistakes; hence managers must learn to verify and scrutinize every piece of information before acting on them. It is essential that decisions be made fast to grab any opportunity that presents itself.

Leadership– leadership skills are highly needed in SMEs to help get the best out of employees as they learn various aspects of the business. This includes learning to criticize employees and not diminishing their morale. Quality leadership skills are necessary to lead employees; as such, leaders must learn to lead by example in order for the employees to follow them. Being a servant leader inspires employees to give their best to the organization. The manager must also learn to motivate employees to ensure that they approach various duties in high spirits.

Business development skills– a manager has the responsibility of thoroughly evaluating the business to learn the areas within the business that need development. The best way of enhancing development is through streamlining procedures and cost-cutting.

Effective communication skills– communication is the pillar of any organization; hence without it, it is easy for failure. Communication entails a lot of things and not just speaking as it includes body language, tonal variation, and facial expression. Effective managers also learn to listen to their subordinates.

The skills above are effective for the proper management of SMEs. A manager who possesses all the above skills can effectively acquire information from various sources, including employees and other industry leaders.   

Conclusion

 In conclusion, SMEs must navigate through the hardships to establish itself as a reliable business in an industry. Entrepreneurs grab available opportunities to design, launch, and run a business effectively. In the recent past, Entrepreneurs have learned the art of establishing effective businesses through learning the various value creation approaches. The approach of uniqueness plays a great role in enterprises acquiring and retaining customers. Moreover, Entrepreneurs know that through being unique, they stay ahead of their competition in the industry. Attaching value with emotions plays a vital role as businesses manage to sell their products by capturing the emotions of the consumers. 

The essay also explored the influence of economic factors in encouraging Entrepreneurship. Factors such as capital, labor, raw materials, and infrastructure have an important role in encouraging Entrepreneurship. Social factors also have an impact on Entrepreneurship with factors such as education, family background influencing the need for advancing the practice. Managers must also acquire various skills to ensure they effectively run the SMEs successfully. Acquisition of skills such in communication, leadership, decision making, and business development as being key. Finally, it is essential that SMEs know where to acquire various information, including where and how to access funds to run the business.  

References

Application of customer value creation behavior. (2014). Customer Value Creation Behavior, 94–106. doi: 10.4324/9781315771847-7

Curley, M., & Formica, P. (2013). The Experimental Nature of New Venture Creation. Springer International Publishing.

Menger. C (1871) Principles of Economics

Zaware, N. (2019) Entrepreneurship Development and Startups Management