Entrepreneurship Concept in Business Sphere

Introduction

In modern day business processes, various concepts have to be integrated into the system and diversified into core business process. This principal is what Theo Paphitis, a Cypriot immigrant insists on in his book ‘Enter the Dragon’ a 304 pages autobiography about developing business from scratch and turning the rags of corporate into multimillion investments. Various processes involving integration and diversification are observed in his book. These processes are projected as themes that are core business processes.

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Themes of characteristics, socialization, resources, innovation, and failure to a wider range of sources are contextualized throughout the book with an aim to explain how developing a business can be achieved promptly. Paphitis outlines his business concepts as five core rules. These are namely: cash is all, workout the what ifs, common sense is not common, do not scrimp on technology and do not let things stagnate. This paper borrows from Theo’s concepts and explores the process of integration and diversification in business development.

Characteristics of an entrepreneur from Theo Paphitis perspective

Success, just like any other word, has an array of various definitions. However, regardless of your definition, there are a multiple characteristics common in every successful entrepreneur. These characteristics are either acquired or inborn. The strongest among these characteristics are the inborn ones (Paphitis, 2009).

The following include some of the major characteristics for an entrepreneur to be successful.

  1. The home business – with the current economic crunch, it is strongly advisable for entrepreneurs to have aside some home based businesses to provide financial boost.
  2. To become a successful entrepreneur, one is advised to take on what she /he likes and enjoys doing. When working becomes a hobby, the results are generally good. A good business is one that gives personal satisfaction whilst bringing financial gain on the other hand (Colon 2010:45).
  3. Take seriousness in your work. Seriousness increases motivation and believe in success. Being your own boss does not give you the gate pass to relax.
  4. Planning. Planning is the baseline to the success of every business. A business, which starts without an effective business plan, is like a train, which sets off without a destination. It is important that a person list his/her business goals to guide in setting a working plan. Planning also helps in measuring progress and analyzing which areas/departments need to be worked on.
  5. Manage money wisely. It is important that an entrepreneur employ the services of a professional in order to succeed in business. A business livelihood is depended on cash flow. Mismanagement of funds can lead to business closure hence a good appropriation of funds is a necessity in any form of business proprietorship. A good balancing between sales and expenses is a vital aspect in management.
  6. Marketing. Sales are highly depended on marketing. An entrepreneur should not be satisfied by the walk-in clients but he/she should focus on looking for more clients. It is advisable for a business entrepreneur to carry on advertisement and promotion every now and then.
  7. Focus on customer satisfaction. The process of customer relationship management is very vital here. Unlike in the past, today’s business environment is very hard for a business to thrive on product alone (Newell 2003:45). This calls for the employment of other factors to complete the cycle. This includes the practice of business ethics, capturing and respecting customer’s preferences and setting the business focus on the individual customer. In employing marketing strategies, a business needs first to analyze the intended objectives (Romano 2001:65). Customer relationship management provides strategic advantages in organizing and personalizing relationships with the esteemed customers. Marketing fundamentals help to keep the profile of the needs of different customers. This helps in informing the employees on how to address those needs effectively while maintaining the customer. If need calls for change of the strategies, it helps the management in formulating new methods to be used.
  8. Customer feedback helps determine the level of customer satisfaction. Marketing strategies serve as a guideline in establishing sales strategies and marketing campaigns (Muther 2001:21). A company’s efforts in sales should be focused on attracting a target customer. This usually applies with firms that keep few but highly rewarding clients like consultancy firms and banks. Such companies should strategize themselves to offer that client the services she cannot get from any other service provider. The firm should always retain a competitive edge to keep ahead of their competitors. The objectives of the business may be retaining the existing clients, looking for new clients or even both. Customers purchasing decision is influenced by experiences (Janice 2002:45). This strategies if well implemented can yield effective results. Current researches carried by the international public relations body showed that in a group of ten firms both applying customer relationship management eight of them comes out successful
  9. Maintain a positive business image and conduct follow-ups and evaluations to gauge your performance amongst other competing businesses. The first image projection of a business goes along way.
  10. Maintaining a competitive edge, accessibility, investing on technology, and channeling back to the business are also vital characteristics for required for the success of a business.

Socialization

Socialization is a continuing process whereby an individual acquires a personal identity and learns the norms, values behavior and social skills appropriate to his or her social standing Dictionary.com Random house dictionary, Inc 2010

Early life experiences do not always have an impact in creating a propensity to behave in an entrepreneurial way. Nevertheless, according to researchers, early exposure to business may boost individual interests to participate fully in business in the future. Liles (1974:43) proposes, “certain kinds of experiences and situational conditions – rather than personality or ego – are the major determinants of whether or not an individual becomes an entrepreneur.” Growing up in a business environment with knowledge of business languages also boosts the likelihood of a growing interest in business.

Theo likens socialization with marketing. Though this comparison holds in principal, today, marketing fundamentally involves aggressive scientific approach to consumer behavior generically. This is most eminent in family businesses where businesses are run on inheritance. However, some people are born entrepreneurs while others are nurtured. A study carried out at the Norwegian business school revealed that students who graduate with a major in entrepreneurship have a stronger entrepreneurial advantage than others do (Knudson 2006:34).

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Socialization also is a process through which marketing succeeds. If you are selling, you need to compel and engage your customers. This process of talking, sharing and discussing issues pertaining to various aspects of the business, society and your relationship with the consumer will increase the number of people you serve. This will then translate into sales and subsequent profitability. In the event you find you are selling more than you can manage, your cash flow is larger than your business benchmarks and needs, to finance the business.

Resources

The process of establishing a business should be well planned so that it can be successfully executed. This is dependent on resources, which are an important part of the business process. Before an entrepreneur starts up a business, he/ she must have a clear outline of his/her business resources. Business resources include, labor, suppliers, finance any other form of professional service required for the smooth running of the business. These are required to be included in the business plan. Business finance resources can be obtained from:

  1. Personal savings
  2. Loans from financial institutions.
  3. Borrowing from family and friends
  4. Channeling back from an existing businesses

Theo explains in detail and through his own experience how to mobilize resources using elementary resource mobilization techniques. In his words, Theo insists that at this stage, he had worked out his business in absolute detail. He had all the answers to the questions about the profile, needs and other factors that wound directly affect the business.

Labor is an important aspect in the running of a business. The entrepreneur should indicate in the business plan his/her esteemed source of labor. This could be assistance from family members or labor for hire. Positions that require professional labor need to be granted the honors too. They include accounting and managerial positions.

A good relationship between an entrepreneur and his suppliers is very important. Therefore, an entrepreneur should insist on dealing with suppliers who are able to deliver goods on credit and on timely basis.

Innovation

Innovativeness is a strong feature in the success of a business. It is an important characteristic in the production sector and leads to continuous launching of new products hence keeping the business ahead of the rest. The finance, marketing and production sector are required to work hand in hand in promoting innovation.

For a business to succeed in a competitive environment, unique forms of innovations are required to help in maintaining a competitive edge among its competitors. Expertise, creative thinking, and motivation are the primary sources of innovation that may be copied or self initiated. Davison (March 2004) explains that the innovation process can be categorized into four basic types: Invention which are new products or service; the application of a current concept to a different application is an ‘extension’. The other type is ‘duplication’ whereby improvement is made to an already existing concept and lastly synthesis that is forming a new application from existing concepts is ‘synthesis’.

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The best form of innovation is the self-initiated one, although an individual needs to bring on-board a ray of already implemented ideas to succeed. The entrepreneur should be willing to fund innovations to keep the business growing.

Failure to widen sources

If not well managed, a business is likely to fail. Theo cites the following causes:

Lack of a profit, in Theo’s view is like a cancer. This, he insists was his mothers projection about a business and its operations. The value of a business is dependent on the profits that it makes. When starting a business, one draws his idea of a business models either from existing business platforms or borrows ideas from existing infrastructure supporting such model businesses. Looking at business development from a scholarly perspective it is the number of people you serve that brings business profitability. This will come only if with marketing, which involves using various mediums to communicate with the consumers who in turn will come to subscribe to the services.

Lack of savings. A business is required to at least save and set allocations to help survive hard times. Theo Insists on having a manageable cash flow. However, as pointed out earlier, he warns that a business without a cash flow is dangerous. He explains this, from his mother perspective ‘that lack of cash flow is like a fatal heart attack’. In business, you need to have sufficient cash to trade. You should be able to make a profit while managing a steady cash flow. Theo warns against making a profit steadily but rather doing more business than the cash flow can support.

Financial mismanagement. Entrepreneurs are cautioned not to convert finances meant for the running of business to personal finances. An example of a personal involvement in the business finances is the Skase saga in Australia and Enron saga in the United States whereby embezzlement of funds by top executives led to the failure of those giant businesses.

Lack of advertisement. Small businesses do not see the importance of advertisements but in the real sense advertisements are very important in the success of a business because it boosts the level of sales.

Sales failure. If a business cannot make a sale then there is no way it can remain in operation. A business is required to invest in sales to keep revenue flowing. Failure to serve a clientele forces a business to be in inertia. When the business is not making money, Theo refers to this situation as inertia and it is a very dangerous phase. It is a phase where there is no cash flow. From a real time perspective, business inertia is a situation where by either consumers are no longer buying from your business or they are looking elsewhere for the same stock you have. This literally means that the consumers find no value in buying from you. This is attributed to various factors that include poor marketing that leads us to the context of socialization.Lack of staff, limited budget allocation and lack of innovativeness are also other causes of business failure.

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Government Role to Support Entrepreneurship

Entrepreneurship is an important engine of growth that promotes economic growth and development. Government policy is important for Entrepreneurship because it shapes the institutional environment in which those decisions are made. ( Minniti, 2008)

Government leaders can help to dramatically speed up on crucial social issues as suggested by Public Innovation One way is by initiating public-private partnerships. According to the Financial Mirror (July 7th, 3008) Paphitis decided to set up a commission to study ways in which Private and Public Sectors can join forces to alleviate difficult challenges facing Cypriot business lack of funding. This campaign succeeded with some help from the government to address the funding problem faced by most entrepreneurs. The major challenges are raising funds for their ideas and projects and the relatively small size of Cyprus.

For any entrepreneur, the start-up period of an organization is critical. Government leaders can encourage innovation and help promote innovation.

The very nature of innovation means that entrepreneurs will encounter unexpected obstacles along the way (publicinnovation.com). To cushion this, a government can create an enabling environment for entrepreneurship, which includes making available the necessary mechanism for doing business for instance clear regulations and taxation governments seeking to stimulate their economies hence should reduce constraints on Entrepreneurship (Minniti, Bygrave& Autio, 2006. This can be done through access to reliable sources of funding for growth and sustainability of solutions that work. They can help them in looking for business partners and make readily available information that helps on entrepreneurs such as advice on business planning, marketing, accountancy, and quality control measures

Conclusion

Entrepreneurship has the potential to support economic growth and the government can demonstrate its interest in this engine by making it a priority. There is no simpler way create new jobs, increase GDP and raise standard of population than supporting and encouraging entrepreneurship ( Yuvarani, 2010) As stated earlier, Government can play a supportive role in encouraging entrepreneurship through structure and implementation of policies conducive for business.

Theo says the chances of success will diminish fast unless entrepreneurs are outward looking, ready to take risks as they carry out their homework in the right way.

Lastly, his advice is that is no magic to business, its very simple – just apply common sense. Moreover, one must remember that, “There are 3 reasons for going to work…one to make money, two to have fun and three… don’t forget to make some money”

References

Davison, Russell. “Concepts of entrepreneurship” Blogtext. Free Blog. 2004. Web.

Financial Mirror. “Theo Paphitis to help Cyprus funding needs” 2008. Xak. Web.

Liles, P. R. ‘Who are the entrepreneurs?’, MSU Business Topics, Vol. 22, No. 1 (1974) pp. 43-55. Print.

Minniti, Maria. “Entrepreneurship: Theory and Practice The role of government policy on entrepreneurial activity: productive, unproductive or destructive?” Business and Small Businesses. 2008. Web.

Paphitis Theo. Enter the Dragon. London, Orion Publishing Company, 2008. Print.

Public Innovators. “How can government strategically support social entrepreneurship?” Web.

Yuvurani, R. “Role of Government in Developing entrepreneurship”. Web.

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