MAR015-6

Entrepreneurship and Small Business Management

Lecture 2 Entrepreneurial Characteristics Bedfordshire Business School University of Bedfordshire
2008 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurship: A Definition

The pursuit of opportunity beyond the resources currently controlled.

Howard Stevenson (1985) The Heart of Entrepreneurship Harvard Business Review, March-April
2008 09 M. A. Roomi, University of Bedfordshire, UK

The Entrepreneur as an individual

The individual entrepreneur is a person who perceives opportunity, finds the pursuit of opportunity desirable in the context of his or her life situation, and believes that success is possible, and these three elements distinguish the individual entrepreneur from the vast majority of the population. Stevenson (as cited in B&D 2nd ed.(1996)) Entrepreneurship is behaviour rather than personality trait. The entrepreneur always searches for change, responds to it , and exploits it as an opportunity. 2008 09 M. A. Drucker(1985) Roomi, University of Bedfordshire, UK

Characteristics

2008 09 M. A. Roomi, University of Bedfordshire, UK

Dreaming big and taking calculated risks to achieve high success in business makes me an entrepreneur.

In pursuit of opportunities

2008 09 M. A. Roomi, University of Bedfordshire, UK

New Venture Creation

Founders
Lead Entrepreneur Founding Team Experience EducationRelevant Assessing Fit Identifying Gaps

Opportunity
Idea v Opportunity Now v Later Risk v Reward

BUSINESS PLAN Acquiring Resources

Finance / Deal Structure Recruiting 2008 Utilisationv09 M. A. Roomi, Ownership

University of Bedfordshire, UK

Different Stages of Enterprise Building

REALIZATION OF OPPORTUNITY When the entrepreneur scan the environment and select the product. CONSOLIDATION OF RESOURCES After finalization of the product, the entrepreneur needs to consolidate the resources like finance, land, building, machineries, raw materials and other infrastructure. IMPLEMENTATION AND CREATION OF VENTURE As this stage all the resources are put together and the entrepreneur starts an enterprise. RUNNING OF AN ENTERPRISE SUCCESSFULLY The entrepreneur manages the enterprise by looking after production, marketing and administration of the unit. 2008 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurial Functions
Crisis Management
Accounts & Record Keeping Money Management Selling Marketing Management Selection of Product Market Survey & Feasibility Study Resource Mobilisation Business Plan Preparation Applying for Loans Procurement of Finance, Land Building & Machinery

Costing & Pricing Production

Establishment of the Unit 2008 09 M. A. Roomi,

University of Bedfordshire, UK

Entrepreneurial Skills
High Capacity to:
Tolerate uncertainty Build a team Provide leadership Deal with failure Seek and use feedback Persist at problem solving Take a long-term view Not look back (except to learn)
2008 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurial Characteristics
Sees and acts on opportunity Initiative Persistence Information seeking Systematic planning Concern for quality and innovation Goal Setting Influencing and networking Risk taking Problem-solving Self-confidence 2008 of09 M. A. Roomi, University Bedfordshire, UK

Sees and Acts on Opportunities

Sees and acts on new or unusual business opportunities. Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Initiatives
Does things before being asked or forced to by events. Takes action that goes beyond job requirements or the demands of the situation. Acts to extend the business into new areas, products or services. Self-motivation to excel in business and achieve target
2008 09 M. A. Roomi, University of Bedfordshire, UK

Persistence
Takes repeated actions to meet a challenge or overcome an obstacle. Switches to an alternative strategy to reach a goal.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Information Seeking
Takes action on own to get information to help achieve objectives or clarify problems. Personally seeks information about clients, suppliers, competitors. Uses personal and business contacts or information network to obtain useful information.
2008 09 M. A. Roomi, University of Bedfordshire, UK

Systematic Planning
Develops and uses logical, step-by-step plans to reach goals. Plans by breaking a large task down into sub-tasks. Keeps financial records and uses them to make business decisions.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Concern for Quality, Innovation and Efficiency

Looks for or finds ways to do things better, faster or cheaper. Acts to do things that meet or extend standards of excellence or improve on past performance.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Goal Setting
Articulates long range vision and goals. Continuously sets and revises short range objectives.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Persuasion
Uses deliberate strategies to influence or persuade others. Uses business and personal contacts or agents to accomplish objectives. Asserts strong confidence in ones own companys or organizations products or services.
2008 09 M. A. Roomi, University of Bedfordshire, UK

Persuasion and Influencing Strategies

Uses deliberate strategies to influence or persuade others. Uses business and personal contacts or agents to accomplish objectives. Asserts strong confidence in ones own products or services. Uses a variety or strategies to influence or persuade others to accomplish own objectives. Acts to develop business contracts.
2008 09 M. A. Roomi, University of Bedfordshire, UK

Commitment to Work Contract

Places the highest priority on getting a job completed. Accepts full responsibility for problems in completing a job. Makes a personal sacrifice or expends extraordinary effort to complete a job. Pitches in with workers or work in their place to get a job done.
2008 09 M. A. Roomi, University of Bedfordshire, UK

Risk Taking
States a preference for situations involving a challenge or moderate risk. Deliberately calculates risks. Takes action to reduce risks or control outcomes. Willingness to take greater risks and live with greater uncertainty of losing entire business investment
2008 09 M. A. Roomi, University of Bedfordshire, UK

Problem-Solving
Generates new and potentially unique ideas or innovative solutions to reach goals. Switches to an alternative strategy to reach a goal.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Self-Confidence
Has a strong belief in ones own abilities. Sticks with own judgements in the face of opposition or early lack of success. Expresses confidence in ones own ability to complete a difficult task or meet a challenge.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Six Dimensions of Entrepreneurship

Strategic Orientation Commitment to Opportunity Commitment of Resources Control of Resources Management Structure Reward Philosophy
(Stevenson, 2000)
2008 09 M. A. Roomi, University of Bedfordshire, UK

Strategic Orientation
Entrepreneurial
- Diminishing opportunity streams - Rapid changes in - technology, consumer
economics, social values, and political roles

Administrative
- The social contract - Performance criteria - Planning systems and cycles
2008 09 M. A. Roomi, University of Bedfordshire, UK

(Stevenson, 2000)

Commitment to Opportunity
Entrepreneurial
- Action orientation - Short decision windows - Risk management - Limited decision constituencies

Administrative
- Negotiation of strategy - Management of fit - Risk reduction - Multiple decision constituencies
2008 09 M. A. Roomi, University of Bedfordshire, UK

(Stevenson, 2000)

Commitment of Resources
Entrepreneurial
- Lack of predictable resource needs - Lack of long-term control - Social needs - International demands

Administrative
- Personal risk reduction - Incentive compensation - Managerial turnover - Capital allocation M. A.formal planning systems 2008 09 & Roomi,
University of Bedfordshire, UK

(Stevenson, 2000)

Control of Resources
Entrepreneurial
- Increased resource specialization - Risk of obsolescence - Increased flexibility

Administrative
- Power, status and financial rewards - Co-ordination - Efficiency - Inertia and cost of change - Industry structuresRoomi, 2008 09 M. A.
University of Bedfordshire, UK

(Stevenson, 2000)

Management Structure
Entrepreneurial
- Need for coordination of key resources - Flexibility - Challenge to owners control - Employees desire for independence

Administrative
- Need for clearly defined authority and control - Organizational culture - Reward systems A. Roomi, 2008 09 M.
University of Bedfordshire, UK

(Stevenson, 2000)

Reward Philosophy
Entrepreneurial
- Individual expectations - Investor demands - Competition

Administrative
- Social norms - Impacted information - Demands of public shareholders
(Stevenson, 2000)
2008 09 M. A. Roomi, University of Bedfordshire, UK

Commitment and Determination

Tenacity and decisiveness Able to commit/decommit quickly Discipline Persistence in solving problems Willingness to undertake personal sacrifice Total immersion

2008 09 M. A. Roomi, University of Bedfordshire, UK

Leadership
Self-starter High standards but not perfectionist Team builder and hero maker; inspire others Treat others as you want to be treated Sharing of wealth Integrity and reliability; builder of trust Not a lone wolf Superior learner and teacher Patience and urgency Excellent motivator 09 M. A. Roomi, 2008
University of Bedfordshire, UK

Opportunity Obsession
Having intimate knowledge of customers needs Market driven Obsessed with value creation and enhancement

2008 09 M. A. Roomi, University of Bedfordshire, UK

Tolerance of Risk, Ambiguity and Uncertainty

Calculated risk taker Risk minimiser Risk sharer Manages paradoxes and contradictions Tolerance of stress and conflict Ability to resolve problems and integrate solutions

2008 09 M. A. Roomi, University of Bedfordshire, UK

Creativity, Self-Reliance and Adaptability

Non-conventional, open-minded Lateral thinker Restlessness with status quo Ability to adapt and change Creative problem solver Ability to learn quickly Lack of fear of failure Ability to conceptualize and sweat details (helicopter mind)
2008 09 M. A. Roomi, University of Bedfordshire, UK

Motivation to Excel
Goal and results orientation High but realistic goals Drive to achieve and grow Low need for status and power Interpersonally supporting (vs. competitive) Aware of weaknesses and strengths Having perspective and sense of humour

2008 09 M. A. Roomi, University of Bedfordshire, UK

Vision and Flair

Vision Know what is needed to be accomplished and the ability to bring others such as employees together in achieving it Flair- To be in the right place at the right time or producing valuable products or services when needed
2008 09 M. A. Roomi, University of Bedfordshire, UK

Social learning (cont.)

and behaviours that are nonentrepreneurial by definition (NB relationship to de Vries)
Invulnerability Being macho Dominating Impulsive Outer control Perfectionist Know-it-all Counter dependency
Unnecessary risk taking Irrational battling to prove oneself Not listening to advisers Refusal to analyse Refusal of personal responsibility Paralysis, missing opportunity Turning people & teams off; de-motivating

2008 09 M. A. Roomi, University of Bedfordshire, UK

From tiny acorns, mighty oaks do grow.

2008 09 M. A. Roomi, University of Bedfordshire, UK

Reasons for success and failure in entrepreneurs

Low Experience Poor Financial control Weak marketing Uncontrolled growth Poor location Bad inventory control Incorrect Pricing Risk-taking Leadership Self motivation Vision and Flair