COBENTH Lecture Notes: ENTREPRENEUR TO EMPLOYER

Lesson 3
Entrepreneur to Employer

A. Challenge of Change
○ To continue to grow, small businesses must successfully navigate a transition
from an entrepreneurial to a professionally managed system
○ Being open to change is crucial as an entrepreneur
○ Entrepreneurs must be able to:
■ Recognize a need to change their working practices
● Change structure or current business process

■ Conducting analysis on how the business currently operates

● Look into how the business can operate smoothly and adapt to
the changing environment

■ Decide on a new formal structure

● Formal structure - a fixed set of rules of procedures and
structures, usually set out in writing

■ Gradual implementation alongside training suitable managers

● Implement rules and regulations and look for managers who can
be trained and trusted

B. Icarus Paradox
○ Based on Greek mythology
○ It is important for organizations to continue to innovate even if they are already
successful as lack of change and innovation can lead to their eventual downfall

○ Organizations exist in dynamic environments and must remain dynamic to

account for changes in that environment. Simply repeating the practices
associated with prior success may reflect that a business is not seeking to adapt
to environment changes

○ Business will change their management structures when the problems caused
by existing practices are thought to outweigh the risks of adopting new practices
■ Success can lead to failures
● Pride or hubris

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
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 COBENTH Lecture Notes: ENTREPRENEUR TO EMPLOYER

● Early success can lead businesses to underestimate the

challenges of a competitive environment or new product launch
● Being overly confident and complacent about one’s success can
become a weakness
■ Actions that lead to success at one time do not always lead to success
● Make sure to be open to changes and improvements in the
business
● There are standard operating procedures mandated in each
industry, therefore it is important to pass the necessary
requirements for the business (e.g. ISO accreditation)
● Allow the business to improve, innovate, and cope to the
challenges

Note: Organizations exist in dynamic environments and must remain dynamic to

account for changes in that environment. Simply repeating the practices
associated with prior success may reflect that a business is not seeking to adapt
to environment changes

Business will change their management structures when the problems caused
by existing practices are thought to outweigh the risks of adopting new practices

C. Challenges of Shifting from Entrepreneur to Owner-Manager

○ Resources
■ Does not only refer to financial resources but also the people and the
equipment that the business has

■ Added costs; growth requires resources and for employment growth,

this creates demands on finances, time and management efforts
● Taking care of the people, having good maintenance for
equipment and maximizing financial resources are crucial

○ Delegation
■ Involves handling certain tasks over to another person so that they can
undertake the work required.
■ It is important to hire additional manpower as the business grows

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
2
 COBENTH Lecture Notes: ENTREPRENEUR TO EMPLOYER

■ Learning to delegate is difficult to those accustomed to making decisions

alone and implementing them as they see fit, or reluctant to release some
control to others; it is understandable when some entrepreneurs
conduct the management of their firm through a “key employee”,
typically because these employees are perceived as effective, reliable,
and trustworthy.

○ Skills
■ For an owner-manager whose venture is becoming an established
business with employees, this places an emphasis on a different set of
skills from those that might have proven useful in getting the venture off
the ground
● Giving clear instructions
○ Example: How food should be prepared in a restaurant
(Some are frozen and will just be heated while other
ingredients should be measured and cooked properly)
● Learning to accommodate ways of working different from their
own
○ Maintain an open communication within the employees to
gain new insights on how to improve business processes
and prevent misunderstandings
● Deal with lack of investment from employees
○ Take on opportunities available and invest in people’s
training or software that can automate manual processes
● Change in self-image
○ Maintain an open mind that there would be certain
situations wherein the business would have to adapt new
structures or changes to meet the expectations of
customers and the industry

○ Assumption of Growth
■ Caution is required when self-employed people want to take on new
employees. Self-employment is frequently driven by a desire to earn a
living rather than the first path to building a larger business
■ It should be noted that growing a business can be achieved without
additional employees.

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
3
 COBENTH Lecture Notes: ENTREPRENEUR TO EMPLOYER

■ Acorns-to-oaks thinking: most small businesses harbor ambitions to

grow.

D. Video Summary
○ FedEx Series: Small Business, Big Ideas | Part 1: Entrepreneurial Challenges
■ Aside from hiring the right person, coming up with a direction and
strategy are some of the challenges that entrepreneurs face.
■ It is important to have mentors or talk to industry experts in order to
guide you on making decisions.
■ Whenever there are conflicts and difficult decisions to make, try to
discuss it with the team to gain new ideas and perspectives.

○ 10 Challenges Every Entrepreneur Will Face

■ Being an entrepreneur means sacrificing a lot of things (e.g. 9-5 job,
current lifestyle, and etc.) and taking up risks.
■ It is important to have mentors or talk to industry experts in order to
guide you on making decisions. It is important that you know how to
manage your capital properly and hire the right people to be in your
venture.
■ Create a vision and know what is the purpose of your business.

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
4