This paper is aimed at carrying out an analysis of the three themes namely: – resources, innovation, and failure of an entrepreneur. This analysis is carried from the existing literature from the book “Burden Charlie, 2010, Sir Alan Sugar the Biography, John Blake”. Being an entrepreneur is a challenging task. Belbin, (2004:124) says that an entrepreneur is that an individual who can identify a business opportunity, gather the required resources, and then end up establishing the business. He sets his target to meet his objectives in the long run. An entrepreneur continues with his operations, innovates, and takes care of any possible failure that may befall the business (Bolton and Bolton 1996:146).
There are unique characteristics associated with entrepreneurs. These characteristics are inborn. These kinds of abilities should never be confused with investor characteristics. Individuals who are investors have on many occasions started up businesses thinking that they are investors only to realize that the business goes down and fails. Bolton and Thompson (2004:302) in their book “Entrepreneurs: Talent, Temperament, Technique” indicates that entrepreneurial skills are not instilled in an individual rather they are inborn. Identifying such an individual’s entrepreneurial skills pose a great challenge. Some scientific ways are being devised to help identify such individuals’ entrepreneurial skills. There has been the use of the FACETS approach which can be used to monitor individuals then that peculiar characteristics can be observed.
Entrepreneurs like Alan are never satisfied with what they have achieved, when selling the beetroots, he made enough money as compared to his age mates but his desire never ended there. He restlessly started the selling of car aerials which made him save enough money but his yawning for more opportunities made him start the electronic business. He had a deep focus and ego of just taking his investments a little bit further. Burden (2010:120) notes that taking advantage of any opportunity that came from an entrepreneur’s life is their nature. Alan pulled the resources to continue expansions into more business opportunities that were not fully exploited. This indicates that the success of an individual in the business is his efforts and the inborn gift.
Alan ventured into the business world but he did not stop there. He also went into TV and become a presenter. This indicates that an entrepreneur never stops at any given point. When he has achieved one goal another opportunity knocks in his mind and starts thinking about what to do immediately.
Accepting to manage any business by Alan, and if given the opportunity he transforms them, is a unique character that is not often associated with the investors. Byars and Rue (2004:56) note; Investors on the other hand have enough financial resources but do not know where to invest them. Generally, investor qualities are very unique to be established in a person. Mostly these characteristics are witnessed after the success is seen. Alan said in his autobiography book “what you see is what you get” it is said:
An entrepreneur is not a word to be used lightly, and it’s certainly not something you call yourself. In the act of describing an individual’s capabilities as well as strong business acumen, we find ourselves talking of one as an entrepreneur.
This indicates that the opportunities for these individuals are not visible to others but only to themselves in their minds.
Business resources are the materials needed to start up a business venture. The core business resources are entrepreneurial skills and finance. Starting up the business from no base of capital is a challenging factor in any economy. When Alan comes up with simple innovation to start up the business shows how deep he has the culture of entrepreneurship. Alan is described in the book as a great entrepreneur. He starts his business from scratch and builds an empire out of it. The immediate resource is the managerial skills, unless there are excellent management skills as shown from the book as that of Alan, the business can easily crumble in its course. The other core resource is finance that is used to establish a business. Before the start-up of any venture, the entrepreneur must have the capital for the business. Finance as a business resource is the essential pillar for any business to start its operations (Davies 2009:309).
The greatest challenge in a business establishment is the marshaling of resources. In the establishment of business, the fundamental resource is finance. The sources of finance are not easy to come by. For new investors who are stressed about where to get resources, they need to follow what Alan sugar did. He set up his business through creativity rather than from a big capital. Merely 16 years old age when he left school, Alan started up by selling beetroots for the greengrocer near their apartment. This kind of innovative finance source provides a permanent source of finance to the business and increases the net worth of a business. In that case, the business does not have any financial distress.
The initial source of finance for Alan is personal invention. In the begging of establishing his business, Alan moved from selling the beetroots then to the selling of car aerials and cigarette lighters. The culture of saving that was rooted deep into his talent made him raise much money. The personal savings from his business were the first sources of his business expansion capital.
In the book it is noted that; when Alan was of the age of 21 he had saved enough capital that enabled him to start his electronic business in the UK. The capital he saved facilitated his acquisition of more capital for his business expansion. The savings that he made and invested in the electronic business was part of his initial business finance. The business continued and he used the plowed back profit to expand his capital. When the business is expanding from the internal funds, its debt to equity ratio reduces with an equivalent amount.
Due to the expansion of his business, Amstrad was listed in the stock market. The shares subscribed by the shareholders formed another part of business finance. The ordinary shares bought by the shareholders form part of equity finance. The business is not obliged to repay it back and only pays dividends when retained earnings and other operations have been factored into the accounts. This scenario placed the business in a forward trend for the new investor Alan. He acquired new capital for business and at the same time was able to make more expansions for the business.
Expansion is a technique used in managing the resource of an entrepreneur, Alan expanded into the film industry where he could get more funding. The funds got from such ventures were used o expand the business capital base. It uses the efficiency factor to reduce cost; the business only employs 85 workers while maintaining its high profits. This low number of employees shows that the company operates efficiently. When a business is operating efficiently then the cost goes down. Amstrad operates at a low cost by employing the least expenditure on employees but using the best technology. The business succeeds here by employing low-cost techniques as a unique resource.
Innovation is the invention of a new approach to an already established business operation. Innovation helps businesses in productivity improvement, cost reduction, and also in the competitive advantage of the business. Katzenbach and Smith (1993:68) say that there is also increased profitability of the business if a positive innovation is established in the business. That business that has no innovation risks losing the market share to its competitors. There will also be the possibility of a reduction in the profits that accrue since there are changing business needs that the business has to adjust.
Innovation into the business took different forms in this entrepreneurship context. The business established new products of electronic product supplies into the market from the sale of beetroots and cars antennae. This kind of innovation invests in new products that the customer desires. When any business ventures many operations or changes as per the customer’s needs; it captures the market. Alan in an attempt to make his business prosper changes his business following technology and customer’s needs. He ventured into the supplies of electrical supplies that the customers use daily and later into computers to cope up with the technological needs and changes. This kind of innovation has met the changing customer needs and the invention of new products.
Another instance of innovation is in the addition of new products to the business. When the making of new PCs was introduced the business innovation was initiated. This introduction of a new product in addition to the existing ones increased the scope of trade. When more products are traded in, customers have varieties of products to choose from, and this aid in customer attraction due to convenience. Lewis-McClear, Kyle, and Taylor (1998:302) explain that; Improvement of the existing products by venturing into the business of making the PCs helped the business to specialize. Specialization brought profound innovation and efficiency into the business. The value addition to already existing products increases sales and profits.
This is an innovation instance since such developments came from the inside business for a view of the expansion. In some instances, they emanated from the competitor’s challenges to the business. Taking charge of the business opportunities discovered and aggressiveness to act on them form part of successful innovation in business (McCoy-Pinderh 2000:405). To capture the market and shift buyers into your own business there is a need to have what others are not offering the customers. For instance, Alan made his entry by the price lead. In his advertisement, he offered affordable prices to his customers. The customers then shifted to his supplies, his sales turn out increased and as a result, his profits grew. Due to his innovation skills, he used tactics to take the market. Realizing that others might implement that idea he pushed ahead to offer premiums to his clients. His aim was not only to steal the market but also to retain and expand his customer base. By offering premiums to his customer he succeeds in expansion and customer retention.
There are risks associated with the business venture. One of these risks is business failure. Marx and Engels (1947:802) indicate that; Business failure may result from very many perspectives; either the business is not making any profit or the competition becomes too stiff. Management is another factor that leads to failure in the business world. Failure is normally experienced in the early stages of business life since market trends are not yet established. When a business fails to pick up and re-energized operations are done to re-establish it, the management ought to learn from the previous failure and avoid landing on a failing scenario for the next time (McCoy-Pinderh 2000:605).
Failure is not only associated with the negative aspects in life, those people who fail in education if gifted with entrepreneurial skills can venture into a business career and succeed in running the business. Alan sugar in his early education career drops out of school at 16 starts to sell beetroots before introducing the sale of aerials for car owners. He builds his success from his failure of continuing with his education. At the age of 22 where his peers had failed to make themselves some money, he had enough money to establish another business of selling car aerials. Taking advantage of the failed organization in electrical supply, Alan starts up his electronic shop to thrive in already established firms. An entrepreneur like sugar looks into the available opportunities, gathers the needed resources, and establishes a good venture. Alan identified the failures of the other operators in the electronic industry as they did not specialize in their product distribution. He establishes an electronic shop and then expands to the production of PCs. Alan also fails when he ventured into the business of sponsoring football, he ended up paying accumulated debts when he thought he could make prompt profits out of this innovation.
The unique character of entrepreneurs is their ability to gather resources for the establishment of a business. They gather the needed resources to establish the business within the shortest time possible. In the course of the business, they innovate for expansion. They expand to increase their profits as well as take care of the risk of failures in the business. Alan was very creative and successful in running his business. He had gifted hands in the business world.
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