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Table of Contents
Introduction ........................................................................................................................ 3
Literature Review .............................................................................................................. 3
Success Factors of Entrepreneurship ........................................................................... 5
Startup Planning.........................................................................................................................6
Managing Risk ............................................................................................................................6
Learning ......................................................................................................................................7
Networking ..................................................................................................................................7
Managing Human Resource......................................................................................................8
Managing Finances ....................................................................................................................9
Pitfalls of Entrepreneurship ............................................................................................. 9
Creating a Business without Consumer Feedback ...............................................................9
Complicating a Product or Service ........................................................................................ 10
Losing Focus Because of the Competition........................................................................... 10
Fail to Understand the Needs of Customers ........................................................................ 10
Fail to Differentiate between Cash and Profits ..................................................................... 11
Fail to Build Financial Forecasting ........................................................................................ 11
Recommendations .......................................................................................................... 11
Bibliography..................................................................................................................... 13
 Introduction

The term entrepreneur has been explained by Montanye (2006) as a person who

takes on a single project for his profit, become a businessman or set up merchandise.

Although in confident condition entrepreneurs are seen as and shown as heroic figures,

however, there are also instances where they might be reviled in the form of labor

equals value if they are non-producers. In early times people who applied to

government contracts for public works, tax collection or defense were also considered

as entrepreneurs (Hebert & Link 2009). Mahkbul and Hasun (2011) have given a

different perspective saying that entrepreneur is derived from a French word that means

“going between” which points towards the qualities of an entrepreneur such as

recognizing an opportunity and then capitalizing.

Literature Review

According to Anderson and Starnawska (2008), it is impossible to have a

universal definition for entrepreneurship because it is a very complex process that

occurs at various complex levels. There is great and broad disagreement among

researches regarding the definition of entrepreneurship which has created a conflict in

the theory and literature. The term has been there for a very long time, evolving and

thus different authors have defined it in different ways and through different approaches

in various subjects such as history, finance, anthropology, science, and sociology, etc.

There is a lack of a unified definition. However, all of the researchers are of the opinion

that an entrepreneurship a process of uniqueness and individuality.

According to several authors even if research on competencies and factors of

success in entrepreneurship has been thoroughly tested and verified, further research is
needed to confirm the findings of the previous research literature. Zachary and Mirsha

(2010) and Andersion and Starnawska (2008) are of the opinion that the complex nature

of entrepreneurship has resulted in a great range of qualitative as well as quantitative

research and however the one it suits best is the qualitative research. Furthermore, they

claim that there has been more research than entrepreneurial process.

The complex nature of entrepreneurship could be analyzed using different

subjects such sociology, finance, marketing, geography, anthropology, history, culture

and economics (Carlsson, Braunerhjelm, McKelvey, Olofsson, Persson, & Ylinenpää,

2013). The discoveries of innovative research crosswise over controls are bolstered by

Croitoru, (2013) and Hébert and Link (2009). Be that as it may, there are the individuals

who strengthen the requirement for an enterprise to be produced as an autonomous

field of research. While it is genuine the interrelationship with different orders makes

inquire about pertinent in a more extensive sense, this may clarify why independent

investigations of business have satisfactory concentration yet the field, in general, does

not.

At the focal point of the look for clarification for new pursuit, achievement is the

business visionary. Kumar (2007) built up a theoretical structure clarifying the

pioneering procedure from a psycho-social process. The structure had three essential

fragments including the eagerness to begin the new pursuit, the capacity to distinguish

openings, and building up those chances. Self-adequacy showed up in every one of the

fragments and is the wellspring of positivism that keeps the business person pushing

ahead. The eagerness to begin portion self-viability and self-efficacy is utilized to fight

the apparent risks and danger to recognize that can accompany the dangers and risks
related with beginning another endeavor. In the recognizing opportunity portion self-

adequacy interfaces with many-sided psychological quality, or, in other words, to which

the business person comprehends the field being considered for the new pursuit.

In the creating openings section self-viability interfaces with relative intellectual

many-sided quality and the synchronicity between the individual and the earth. Relative

psychological multifaceted nature includes understanding the specifics of the

components influencing the endeavor achievement, and synchronicity shows the level

of arrangement between the business visionary and the earth in which the endeavor will

begin. Entrepreneurs must act to manage the critical success factors to be successful

(Cope, 2005). To understand the complex arrangement of entrepreneurship

arrangement it is important to link how entrepreneurs think about ht critical success

factors and what are the various ways used by them to management these factors. It

has been suggested by Kor, Mahoney, and Michael (2007) that entrepreneurship is a

subjective matter and thus can only be understood by using the previous experience to

utilize future opportunities.

Success Factors of Entrepreneurship

The critical success factors of entrepreneurs are defined by Rockart (1979) as

the key areas where things must go right to ensure the success of an entrepreneur.

Different from such keys are identified which are necessary to be managed efficiently

and effectively. Some of these are related to starting up of the business, planning,

management of the company as well as risks, networking, learning and conditioning,

and managing finances and human resources, etc.

Startup Planning

According to Delmar and Shane (2003), startup planning can be defined as the

efforts made by the founders of affirming to bring in information about an opportunity of

business and then figuring out how this information shall be utilized to create a new

organization to cash the opportunity. According to various authors for the success of a

business or a venture, planning is the most necessary element. Preparation of a

company is considered as the most important step and based on it the success of a

business could be judged. The focus of researches has been more inclined towards the

entrepreneurial actions rather on the entrepreneurial cognitions when a startup is being

explored. According to the research stud of Mitchell et al. (2000), there are three

knowledge structures or cognitive scripts which are considered as similar to the notion

of scheme they are ability, willingness, and arrangements.

Managing Risk

The risk management process is characterized by determining various clear and

underlying risks in a new venture and then taking measures to rectify or cope with those

risks. The risk-taking propensity has been examined by Hui et al. (2000), and their

research has revealed that entrepreneurs take a conservative decision when it comes to

the expansion of the business or giving discounts to increase customer base.

Unpredictable and unknown factors are the ones who are important while deciding the

fate of a business. The researches suggest that a bigger problem should be subdivided

into smaller issues and then steps should be taking to take care of those divided smaller

issues as it could be difficult to deal with a big problem as a whole. Less risking

situations could be won by setting up goals and targets. According to researchers, most
of the entrepreneurs show overconfidence while taking certain decisions in the business

and thus they see complex situations as favorable ones, and they see higher chances

of success for themselves.

Learning

Learning is the experience attained by an entrepreneur when a small enterprise

is created and developed (Cope, 2005). Entrepreneurs encourage their employees to

take part in research and developed and to come up with new and innovative ideas that

could boost up the business. chStudies state that entrepreneurs easily understand

complex situation that is faced by them and then deal with such cases through trial and

error approach. Such a plan to increase their learning day by day and then

entrepreneurs are considered to be very knowledgeable. According to cognitive

research, it is said the entrepreneurs use intuitive approaches while they decided about

their business and that is how they learn. According to different studies, entrepreneurs

like to keep track of their markets, products, competitors, and suppliers. They try to grab

any opportunity that comes their way and seek experience and knowledge in every field.

Networking

It is such an activity through which business owners make their image in front of

other and try to build relationships with others that possess good for the success of their

own business (Carson et al., 1995). Using effective technology for such purpose can be

proved exponentially better than using physical means of communication. A strong

relationship with a supplier or a whole seller can only be guaranteed if the firm makes

good use of technology while establishing these relationships. Technology could ensure

faster and accurate communication among partners thus contributing to their

productivity. Beginning business visionaries' up close and personal and electronic

correspondence with their holding ties can create personal social capital and help in

anchoring more extensive business backing. Manimala (1992) inspected the choices of

business visionaries and inferred basic, dependable guideline or heuristics concerning

systems administration. The systems administration procedures incorporate supporting

open intrigue exercises, expecting a position of authority in an emergency, creating

associations with companions, relatives and expert affiliations. Interpersonal

organizations upgrade levels of fantasy of control which result in higher endeavor

execution.

Managing Human Resource

The human resources of a business can be achieved in different ways such as

management, selection, recruitment and performance measurement of the personnel.

Since it is obvious that to be successful in a business the entrepreneur has to manage

all its critical resources and no wonder human resource is one of the most vital assets of

a business. According to research among the strategies for human resource

management, the most important ones are to retain talent and attract fresh and talented

blood. The entrepreneurial team collective cognition is very important for the success of

a venture because what a team can produce can never be provided by a single person

or a group of people not working as a team. According to Bouncken (2004), diverse

teams are easily managed than an ng on a different team. The most effective teams are

the ones that are cross-cultural.

Managing Finances

One of the most important things for an entrepreneur is to manage his finances

because it is critical for the success of a business. The more a company has control

over its finances the more are the chances of its success because finances are the

bloodline of a business. Bootstrapping has been stated as one of the effective ways of

managing the finances of a business when it's yet a startup. External debt is reduced by

this technique and also the cash flows are carefully managed thus the person, and his

business relies purely on personal sources of finding. A firm is said to have invested its

funded successfully when it finds a gap in the supply and demand and invests to fill that

gap.

Pitfalls of Entrepreneurship

Even with financial, professional, or legal advice, starting a business is amongst

the hardest tasks faced by the professionals. The highly critical thing to ponder at

starting the business is how similar businessmen failed and how to learn from their

failures (Minai, Uddin and Ibrahim, 2014). Few of the identified pitfalls are given below:

Creating a Business without Consumer Feedback

One of the biggest failure faced by the businessman is launching their service or

product without having any good data on how it will work. The solution to this problem is

to check all ideas running past the targeted audience often and early. Product testing

along with market research permit entrepreneurs to improve their business model to

fulfill the expectations of consumer and enhance the success opportunities once the

corporation takes off officially (Minai, Uddin and Ibrahim, 2014).

Complicating a Product or Service

Developing idea of a new business seems to be an easy task, but real efforts are

required when the idea is put in action. It follows a series of complicated process.

Developing a product from scratch consisting of the number of components or making

many different products is likely to hinder the progress of the business and

entrepreneurs need to realize this aspect (Minai, Uddin and Ibrahim, 2014). Thus, start-

up leaders must be clear about their skills, expertise, and resources and focus on the

best they could build.

Losing Focus Because of the Competition

Competition is one of the challenges that every business has to face. It serves as

the opportunity as well as risk to start-ups that are trying to adjust in the new market. An

entrepreneur can ensure the success only if he or she retains the focus on important

things. In most of the cases, startup leaders only focus on the actions of their

competitors, thus losing focus on other important aspects of the business (Scarborough,

2016). This often leads them to lose sight of their position in the market. Competition

should never be ignored, but entrepreneurs must retain a balance and should let things

go off that are not in control.

Fail to Understand the Needs of Customers

Too many entrepreneurs fail to find proper "product/market fit." They assume

they know the needs of their customers, but don't take the time to go out and talk to

enough of them to understand what the market wants and what they will pay for

(Scarborough, 2016).
Fail to Differentiate between Cash and Profits

This may seem obvious to many, but startups that are selling to other businesses

frequently underestimate the amount of cash that they'll need to have on hand to fund

growth as their customers take time (60-90 days) to pay (Honig, 2017). Most

businesses that fail are profitable at the time of failure. They just hit a cash crunch that

they hadn't planned for.

Fail to Build Financial Forecasting

They are not building basic financial forecasts and then tracking results against

the forecast. It's unfortunately very common for startups to not run the basic numbers to

figure out if their venture will make money. Besides, basic financial projections often

don't include a true cash flow forecast that will help a startup determine how much

money they will need to not only get off the ground but survive their first year (Honig,

2017).

Recommendations

During his half-century career, the social and business analyst Peter Drucker has

constantly presented the world of business with many canny insights. After observing

the business outcomes and behaviors for many decades, four mistakes were distilled by

Drucker that undo the businessmen at growing and new businesses. According to him,

all of these are avoidable and foreseeable.

1. Knowing better than the market. The businessmen are not able to cope with this

fact that their new services or product are succeeding somewhere else other than the

target marketplace. In reality, the businessman rejects unplanned, unexpected success

because it disturbs their belief that everything is in their control (Drucker, 2014).
2. Focusing on profits. The actual name of this game is Cash flow because

continuous stoking of fresh money is need by growth-spurt organizations. Drucker

further states that businessmen must start planning for the financing of the next round of

six months before the start of crunch time. Of course, most of them do flop activities,

which are termed as financial illiteracy by Drucker (2014) amongst most entrepreneurs.

3. The management crisis. Almost after four years of healthy, normal expansion, an

organization usually outgrows its management base. The businessmen have gotten the

maximum stretch, and when everything becomes out of order, then there will be no one

invariably available who could take up offhand. Again the key is to act before a crisis.

Before the 12 -18 months of this bottleneck, the businessman must search for such

employees who possess managerial skills and then give them suitable roles. Then they

will get enough time to start learning other specialties, for a team to consolidate and for

the boss to find out and change all wrong decisions.

4. Loss of perspective. Once the corporation starts and running, various kinds of

problems may appear. Paying attention to her or his needs or desires, the businessman

ignores the need which is the highest priority of the business (Drucker, 2014). A

businessman should be honest in checking whether they possess such strengths and

skills that are required by the company at that particular time. If this is not the case, then

it’s best to adjust one’s role or step aside.

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