What are the six key elements of entrepreneurship and what is the importance of each?

Motivation & Commitment: It’s important to get the basic ingredients of start-up right. People who are lending money look at the person first and foremost, so motivation is the most critical. You need to convince your bank manger you can make your business work because you’ve researched your market, you’ve costed out the business and you know where you want the business to be in 5 or 10 years time. A means of showing your commitment to the business would be to save and invest money. Abilities & skill: The second element is one of ability and skills. The individual has to have skills appropriate to the kind of business they’re proposing to run. And if they don’t have them, they should have a reliable person who can. It could be that one person knows how to run a business from an operational and management perspective, whereas another person has the technical skills to develop the product or service. Resources: The third element is resources. That’s not purely about money and equipment; it’s also about intellectual capability. (The ability to persuade others is important. Many entrepreneurs have been able to negotiate very favourable deals against the odds, when establishing their business). Strategy & vision: The fourth element is strategy and vision in terms of thinking four or five years ahead and having some idea of where that business might be in the future and putting in place a plan to achieve that goal. Planning & organisation: The fifth element is planning and organisation. Without planning, organisation, coordination and administration, the product won’t get to market nor will it satisfactorily meet demand. You need to think about systems, job roles, and quality issues, which if handed effectively, will ensure you, can satisfy the market by delivering on time and to the right place.

The idea in relation to the market:

at the right place. the idea in relation to the market place. How does the motivation of an owner affect the business? The motivation of the entrepreneur is driven by their type. The third area is one of a “manager” entrepreneur. How do (‘push and pull’) factors affect motivation to start a business? Motivations to start a business “push or pull” • • • • • • Be my own boss Control over my life/independence Better financial prospects Spotted a market opportunity To make a lot of money 6% To have a more balanced lifestyle 25% 17% 13% 14% 5% . What we are trying to do is to make certain that we are customer focussed. But what you cannot have is a really good product with a de-motivated individual. They are strongly orientated and have a personal need to prove their worth through business success. (where they can succeed. When we look at the six elements it becomes evident that you can have a bad product with a highly motivated individual. of which there are three.) 2. ensuring that the individual is satisfied in their requirements. The “classical” entrepreneur is driven by profit. A mature market is one where the customers know the product or service offering and do not need to be educated about. The “craftsman” entrepreneurs are focused on quality of life and are therefore seeking to satisfy themselves and to satisfy just one or two customers. or at the right price. Their main driving force is to maximise returns from the market place. Motivation & commitment 1. They are likely to be in a mature market. which will produce an acceptable business.The sixth element is the idea and more specifically. The business will not succeed because the product will not reach the market at the right time.

There are both positive and negative features of setting up a business. What are the three main factors to consider when setting-up in business? There are three factors that have to come into play when offering advice to people setting up and running a business. Even now when culture is changing it is still a different culture that exists compared to that of the American culture. 1) Risk: The risk may be too great in a volatile. 2) reward and 3) timing. They recognise that they want to do something different and that they are more highly motivated in satisfying their own aspirations and also those of the market place. 3. What can put an individual off starting? Reasons for not starting a business are often surrounded by elements of fear. Those who are pushed are reluctant entrepreneurs who may be running their business as well as being employed. In the UK we have a negative view of what it’s like to run a business. they feel they have no choice. The most successful entrepreneur is more likely to be the person who is pulled into it by the market place.g. The fear of failure. fear of failure. where the product requires constant changes and . perhaps involuntarily at first e. changing market place.• No real alternative • To do what I enjoy Source: Barclays Bank Survey (1992) 12% 5% Push: factors are those that propel one into their own business. In America. liquidation. and bankruptcy isn’t seen as a major inhibitor in terms of starting a business. market opportunity and the drive to succeed. Those of 1) risk. an individual may have been made redundant or be unhappy in their current role. Alternatively.g. of not having enough cash to be able to continue their quality of life and what other people will think about them. redundancy. 4. From a negative perspective. Pull: factors are positive factors in the marketplace and in an individual’s character which makes them want to succeed e. On the positive side an individual has found an idea.

Do they think there is a gap on the marketplace and that the product could be serviced? It is also a good idea to use the internet. the return or reward might not be adequate. together with areas for development. Never enter a saturated market unless you have powerful point of difference or unique selling point. to see if the idea has been done anywhere else in the world before. To validate the idea it is a good idea to check with people who know about that particular industry. One way to work out whether you have the appropriate skills or attributes to set up and run a business is to undertake a quiz. The quiz will identify individual strengths and weaknesses. along with the ability to be able to identify target markets and customers are all required when setting up and running a business. satisfying initial demand and getting established as a recognised provider for future demand. businesses require technical skills.updates and where ownership of intellectual property rights (IPR) may cause problems. If you don’t have the resources in place to cover these problems. not all. you risk will be higher. Negotiating skills. Abilities and skills Can anyone set up in business or do you have any special skills and characteristics? The requirement for specialist skills and characteristics will depend on the industry. 3) Timing: Timing is crucial to the success of a business. The idea in relation to the market How do you choose a profit making idea? The business idea is key to success. . Timing applies equally to resources. Some. Management skills are critical to all business. If you set up a market proposition but cannot produce the goods in time you will rapidly lose credibility and hence market share. The idea itself might come about by friends and so forth. administrative skills. Early entrance to market should be the most successful strategy. The individual should be looking for a reasonable return for efforts in running that business. selling skills. 2) Reward: Whilst the risk might be acceptable.

Planning and Organisation 1. How do you identify your resources and which is the most important one? What is my starting point? • • • • Contacts. to walk yourself through the business.cash and realisable assets Equipment. you must consider profitability.land? Hobbies? Spare time? Family & friends? Ohp 2/1/8 If you have got the motivation. the jobs that are going to be undertaken. By doing this you will identify the type of people you require.Following discovery and validation of the idea. resources is the next issue. What kind of planning and organisation is required when setting-up and running a business? . Can the product be sold at a profit and therefore generate the income stream that is required to run a successful business. the customers and other resources particular to your business. the finance. Resources 1.who do you know? In what way might they help you? Money. You need to develop the networks and the contacts which enable access to the appropriate resources at the right time. the equipment. In this way you will continually add value to the business. You need to think through how that business is going to operate. the skill. the idea and the market place. The resources have to be used in the most effective manner to be able to maximise the returns from the business.car? Computer? Spare room? Etc Other resources.

For instance. If it hasn’t been thought through in advance then the business will start in a mess and it may never recover. your plan. at the beginning. will the business need to be registered for VAT? A whole series of developments are now taking place. What kind of business are you going to run? Is the organisation going to be a sole trader. . its 80% preparation and 20% application. How is the individual going to be able cope with the suppliers? How will the negotiation with the suppliers be done? What are the legal requirements behind that when it comes to the customers? What are the payment dates and terms? How has the business’s bank account been organised? The planning and organisation related to the setting up and running of the business is crucial.When you are planning and organising the business it’s like painting a house. a partnership or is it going to be a limited company? How many people are going to be needed? At what stages will these individuals come into place? What systems will be required? Equally as important as the form of the business is the type of tax structure the individual is proposing to have. There is never enough time when you are running a business to be able to plan and organise that particular business. so you must do your preparation.

How should one plan? The Classic Planning Cycle Define problem/issue Measure results Collect relevant data Implement chosen solution Develop alternative solutions Select optimum solution Assess consequences The ‘Non-Planning’ Cycle No time Unpredictable consequences S T R E S S Unplanned development Fire fighting .

developing. Strategy and vision What is the importance of strategy and vision. collecting information. Equally you should be able to anticipate how you are likely to retain that position. selecting and implementing the solution through to measuring outputs. Stress is the direct result of a lack of business planning. It is through: • • • Developing the existing market or product New products or markets Developing a particular aim of the business. interests overseas . e. when starting a business? You should be able to envisage what the business will look like in3. 5 and 10 years time. that person will end up fighting and fending off problems rather than making meaningful responses.g.The classical planning cycle is a logical flow of information from defining the problem or issue. If an individual is unclear where he or she is going.

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