EI 214: chapter 6: resources

Types of resources needed to start a business

Resources
o Things entrepreneurs use to pursue business opportunities
o Include:
o Personal attributes and skills of the entrepreneur
o Money that is invested in the business
o People who contribute their efforts, knowledge and skills
o Physical assets such as equipment and machinery, buildings and vehicle
o Information used to make decisions
o Resources are limited, therefore entrepreneurs should make the right choice in which
resources to invest in
o Entrepreneurs should determine which resource contributes greater value to the business
to pursue goals and strategies
o Entrepreneurs should consider the right mix of resources as one resource is sometimes
needed for another resource to be used

Personal resources
o Successful entrepreneurs are dedicated and are willing to work hard, long hours to get
others to believe in their product or service
o Entrepreneurs should be a ‘type D’ person:
o Possess desire, drive strong discipline and determination
o Have business ideas & are able to execute them
o Are tenacious, obstacles are only temporary barriers
o Can take ‘no’ for an answer for as long as it takes them to reframe the question from
another angle and ask again
o Knowledge, skills and research are key for new businesses
o A support team is vital to entrepreneurs for inspiration, guidance and motivation

Financial resources
o Take the form of or can be converted into cash
o Are valuable as it can be used to acquire other resources
Human resources
o Refers to people, efforts, skills, knowledge and insights they contribute to the success of
the business
o Consists of 4 groups:
o Top management
o Middle management & professional staff
o Supervisory management
o Non-managerial workers
o Groups with complimentary skills solve problems more effectively than individuals –
teamwork
o Involving other people as co-founders or partners is not only a financial decision but can
improve chances of success stories
o To obtain expertise, entrepreneurs can employ people
o Challenges when employing people:
o Accurately forecasting human resource needs
o Recruiting candidates and selecting the best person for the job
o Entrepreneurs should promote training, developing and encouragement of high
performance from employees
Steps to forecast, recruit and select employees for a new business

Physical resources
o Fixed assets: buildings and equipment
o Raw materials used to create the business’s products
o General supplies used in the operation of the business
o Planning is important in obtaining all 5 types of resources
o Careful planning is crucial for scheduling (the process of arranging, controlling and
optimising work and workloads in a production process or manufacturing process)
o Fixed assets are an expensive resource a new business has to acquire, the decision on
where to locate it is crucial
o Factors when deciding a suitable location for fixed assets:
o Accessibility to the market
o Availability of raw materials
o Availability of labour and skills
o Infrastructure – transport, water, electricity, existing business environment
o Climate
o Sources of raw materials/general supplies have benefits, which require a different type of
coordination and arrangement
o Suppliers of raw materials include:
o Independent contractors
o Regional producers
o National or international producers
o Foreign producers

Information resources
o Entrepreneurs need sufficient information of their business’s external & internal
environment to make decisions