Entrepreneurship and Small Business Management
An entrepreneur refers to the person who initiates an idea by identifying an opportunity in the marketplace and runs a business venture for profit realisation. They identify an opportunity in the marketplace of a certain customer need which is not being met and invest to meet this customer need at a profit. Entrepreneurs are risk takers; this is because the ventures they engage in doesn’t have any guarantee of good returns, but they anticipate that everything will work out right and they will receive a return on the investment made. The entrepreneur sought out for the resources required for meeting the specified need and utilise these resources to ensure that maximum profit is realised from the resource use.
Entrepreneurship
This can be defined as the art of starting and running a business with a goal of profit maximisation. It’s the capacity and the will of the entrepreneur to organise and utilise the available resources to meet the profit maximisation goal. The activity usually involves start-up of small businesses which don’t require a high financial resource to implement and run. For the entrepreneurship process to be a success, there are various issues which must come to play. First, the entrepreneur must be able to identify investment opportunities; this can be facilitated due to information available about the opportunity (Dees, 2017 p 34). The information available will help the entrepreneur in organising the available resources to exploit the available opportunity fully. The investors must be able to evaluate the idea generated to identify whether the idea has any economic value or not. Some ideas may appear great but have low economic returns thus making them unviable to be exploited. Entrepreneurship must be creative; their creativity enables them to derive ways of becoming competitively relevant in the marketplace.
There are certain factors which influence entrepreneurship development within the operating environment. Various motivation driver can be said to influence the entrepreneur into starting their own business. These drivers may include; need to be financially independent-under this entrepreneur engages in business to achieve financial stability. Many entrepreneurs engage in businesses to attain financial stability. The hunger for money makes the entrepreneur take the risk of investing their resources with the hope of acquiring better returns on their invested resources. Many factors influence the entrepreneurs in venturing into the businesses these factors include- capital availability; the financial resource base possible influences the running of the venture. Financial resources are required to access the raw material and gather other resources such as the machinery required in the new business venture. Financial resources to gather other factors of production such as land in which the business will be based. Another way in which financial resource influence the entrepreneurship idea is through facilitating the acquisition of skilled labour. The labour acquired have the necessary skills required to run the business and maximise the profits, the tactical skills, for instance, might enable the business to have a competitive advantage over its competitors (Wynarczyk, Watson, Storey, Short and Keasey, 2016). Before a business can start supporting its operations for growth and expansion, it requires the initial running capital. The operating capital enables the business to finance its daily activities to facilitate profit realisation. Target market availability also promotes entrepreneurship development; any business exists to make profits by serving a prior identified market. Market characteristics such as market size and the nature of the market will determine the rate at which the new venture grows. A large market share for the new venture will translate to more sales and thus promote growth and expansion of the new venture (Tasnim & Singh 2016 p 6). The nature of the marketplace regarding competition determines whether the organisation will survive or fall.
Stable operating environment also influences entrepreneurship practices. When the operating environment is politically stable for instance, the entrepreneur will have ample operating environment and also make more money. The infrastructural support such as good roads facilitates transportation of raw materials as well the finished goods to the firm and the marketplace respectively. Poor infrastructure will increase the operating costs to the new firm and thus end up reducing the profit margins of the new venture.
Entrepreneurship in both the corporate and the public sector
Investment in these sectors requires innovativeness and readiness to change on the part of the entrepreneurs. Entrepreneurs have to remain competitive in the market to ensure that their operational objectives are met. Dyson vacuum cleaners in the UK, for instance, had to shift from traditional vacuum cleaners to advanced vacuum cleaners to ensure that they serve the market needs effectively. Despite the sector of investment, the key to success is understanding the customer’s needs and serving them better than your competitors. The firms should also seek to expand their profit margins by engaging in cost-effective practices; this approach ensures that the organisation engages in competitive pricing.
Social entrepreneurs and entrepreneurship
Social entrepreneurship is the act of coming up with business ventures which not only maximises profits but also provide a solution to the existing social problems. These ventures may include engaging in practices such as creating banking facilities which will not only make profits but also solve the societies financial issues. An entrepreneur may also venture in creating schools which provide education to the society and also profit for the organization.
Scope, Development and Growth of Entrepreneurial Ventures.
The scope of entrepreneurship starts with idea generation under this the entrepreneur identifies an opportunity in the marketplace and identifies the most profitable way to execute the idea. The entrepreneur then organises the necessary resources to facilitate the execution of the idea. These resources include; financial resource, labour resource, land resource and also the raw material required to facilitate profit maximisation (Mahadalle & Kaplan, 2017 p 243). Proper organisation and usage of the available resources fuel the growth and expansion of the of the entrepreneurial ventures. When an idea has been successfully implemented in the marketplace and starts making the anticipated profits the firm hosting the idea starts to develop (Chan, Chernyshenko, Ho & Sam 2015 p. 161). Development of an entrepreneurial venture maybe regarding the infrastructural base; such as technological advancement is also an indicator of entrepreneurial development. Increase in the entrepreneurial worthiness, this refers to the increase in the value attached to the venture. The increased worthiness maybe due to the expansion of the asset base of the initial investment. Goodwill value of a business venture is also an indicator of entrepreneurial expansion
Small Businesses Impact on the Economy.
The small businesses hold a large part of the trading economy of any economy. Due to this, the small business has much influence on the economy on which they are based than the larger businesses within the same economy. The impacts of these ventures include; income to the government through taxation (Storey, 2016). The government receives income from the small business through taxation. In the process of regulating the operations of these businesses, the government imposes taxes and also the licensing to ensure that these businesses engage in ethical business practices. The organisations are also the source of lively hood for many families; this is because they provide these families with employment opportunities to these families. Through this, the families can acquire the basic needs required for survival (Brunswicker and Vanhaverbeke 2015, p 1241). The business may benefit the local directly or indirectly either employing them directly or creating markets for their productions. The small firms also provide returns to their owners who have invested their resources into the businesses.
Social-economic benefits
Social entrepreneurial approaches have social, economic benefits to society. The social problem solved helps society in coming up with more economical solutions in the future. Creation of a school, for instance, will impact the society with relevant knowledge required for solving future economic needs.
The ventures provide profits for the entrepreneurs, the investors in these small businesses receive a return on their investments which increase the money flow in the economy. The business ventures promote the lifestyle of the society members, the income generated from the small business enables the members of the society to change their lifestyles (Epstein, 2018). The small business also reduces the rate of unemployment in the society, through the establishment of these small business many get employment either directly or indirectly thus reducing the unemployment levels in the society.
Social entrepreneurship enables the locals to get market for their produce as the small businesses search for raw materials for their products. Due to this the social, economic status at the society level is highly influenced by the small businesses. When the social ventures expand, they can reach the national and also the international standards this, therefore, enables the expansion of the local products markets from local to national and also international standards. They also expand the social solutions into other areas which haven’t been tackled in the past and therefore boosting economic growth.
Comparison between small, medium and large organisation.
The UK business community mainly comprises of the small business with the businesses containing over 80% of the business community while the medium and the large facilities are left to share on the remaining percentage. Due to this, the impact of the small business to the economy cannot be ignored since the forces behind the small businesses highly influence on the economy (Mukherjee ,2016 p25). The benefits accrued from small businesses include; income generation for the investors. The entrepreneurs receive a return on the invested capital. These organisations highly influence the employment rates in the country. The small firms provide income to the government through the taxes imposed by the government. Even though the medium and large organisations are fewer in number, their economic impacts cannot be ignored when compared to the small firms.
These firms’ economic benefits include; job creation. The firm’s large sizes enable them to accommodate more employees than the small businesses and thus adding to the reduction of unemployment. The large firms are mainly multinational brands, due to this, they earn the government foreign income. These large firms also contribute to the income of the government through taxations; this is because their tax returns are of larger margins as compared to the small business.
References
Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium‐sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators. Journal of Small Business Management, 53(4), pp.1241-1263.
Chan, K. Y., Uy, M. A., Chernyshenko, O. S., Ho, M. H. R., & Sam, Y. L. (2015). Personality and entrepreneurial, professional and leadership motivations. Personality and individual differences, 77, 161-166.
Dees, J. G. (2017). The Meaning of Social Entrepreneurship. In Case Studies in Social Entrepreneurship and Sustainability (pp. 34-42). Routledge.
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.
Mahadalle, A., & Kaplan, B. (2017). Entrepreneurial characteristics and competencies as determinants of corporate performance: A study on small enterprises In Mogadishu, Somalia. International Journal of Research-Granthaalayah, 5(5), 243-254.
Mukherjee, K. (2016). The psychology of the successful entrepreneur. International Journal of Advanced Engineering and Management, 1(1), 25-32.
Storey, D.J., 2016. Understanding the small business sector. Routledge.
Tasnim, R., & Singh, H. (2016). ” What, Exactly, is Entrepreneurial Commitment?”: Modeling the Commitment of Successful Entrepreneurs. Journal of Applied Management and Entrepreneurship, 21(3), 6.
Tasnim, R., Yahya, S., & Zainuddin, M. N. (2014). ” I’m Loving It!” What Makes the Successful Entrepreneur Affectively Committed to Entrepreneurial Performance? Journal of Applied Management and Entrepreneurship, 19(2), 27.
Wynarczyk, P., Watson, R., Storey, D.J., Short, H. and Keasey, K., 2016. Managerial labour markets in small and medium-sized enterprises. Routledge.
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