Author: Muhammad Shakil Naz
Most of us have heard and used the word “entrepreneurship” in the recent past but might not have exactly understood its true meaning. This article is aimed to make it simple to understand entrepreneurship and help an entrepreneur to take a decision for initiating an entrepreneurial process.
An entrepreneur is an individual who owns, organizes, and manages a business and, in so doing, assumes the risk of either making a profit or losing the investment.
As per its original understanding, entrepreneurship refers to some activity that leads to making financial profits. More specifically, it is a process of starting a new business whereas a business once started and running for some years can no more be known as entrepreneurship.
Recently entrepreneurship concept has been extended to some non-profit areas such as “social entrepreneurship” and “political entrepreneurship” etc. However, for the purpose of this article, the original concept linked with financial profit shall only be discussed.
A new business can be started by an individual or a group of individuals having common business goals. Most of the successful entrepreneurs started as part of a group and then at some stage parted ways for solo flights. After going solo not every member of the group successfully achieved the goals. This is because entrepreneurship involves a lot of innovative ideas and risk-taking initiatives and all members of the group cannot be equally convinced with regard to the importance of an idea. It is, however, interesting to note that starting as a group is always comfortable because it helps to overcome fears of the unknown. Once comfortable with the process of startup a new business, it becomes easier to face the challenges alone if that comes out to be an inevitable choice.
It will not be logical to make universal advice here whether to go solo or with a group. It is up to the individual to make the decision depending upon his personal ambitions, capacity, capabilities, and available opportunities. However, it is safe to advise that taking the tested and chartered route should be considered as the most appropriate choice. Going for an idea that does not have any precedence is extremely risky and time is taken before the results are visible. Those who opt to go for unprecedented ideas have to have strong nerves, a high level of patience, innovation, a hard and smart worker, and a lot more other qualities that an average person around does not have. If their idea works then the financial gains will rise exponentially. And if it does not work these people have a lot more to lose.
Entrepreneurship is no more a God gifted quality, ability, or skill. It can now be learned like any other subject. Success in entrepreneurship is in fact the successful exploitation of opportunities that different people would do differently. The success or failure of any business idea will remain the sole responsibility of the entrepreneur(s).
The process of entrepreneurship involves the following steps in the given sequence:
- Having a workable idea i.e. what is to be done for profit.
- Development of a business plan.
- Identification of required resources.
- Execution of business plan.
Having An Idea
The basic business idea to make a profit activates the entrepreneurship process. The idea can be the result of an innovative thought process by an individual, a result of the collective thought process by a group of individuals, or taken from government and private sector programs and services that promote entrepreneurs. Very few individuals have the required instinct, confidence, and courage to take initiative. However, due to the significant impact of entrepreneurship activities on the economy, the Governments as well as some non-Government organizations have launched formal programs and services to promote entrepreneurship. These organizations are usually known as “Business Incubators and Accelerators” introduced by Governments as well as non-Government organizations to encourage and facilitate entrepreneurs.
Business incubators are organizations that help entrepreneurs start up new businesses. They provide services such as management training, office space, sources of funds, etc. Business accelerators are organizations that help entrepreneurs to accelerate the growth and success of entrepreneurial companies. They provide services such as market networking, provision of common services, enhancing the understanding of relevant laws and government policies, etc. In most cases, the same organizations act as both incubators and accelerators.
Development of a Business Plan
A business plan is a decision-making tool in the shape of a formal statement of entrepreneurial goals, why you think these are attainable, and your plans to achieve these goals. The business plan is a reflection of your ideas, intuitions, instincts, and insights about the chosen business. It can give foresight to you as well as to any other reader about the future of the business. It helps you evaluate the feasibility of a new business idea objectively, critically, and unemotionally. A good business plan avoids costly mistakes.
While preparing a business plan you must have a clear understanding of many different business disciplines such as finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. A convincing business plan usually contains at least an executive summary, business description, market strategies, competitive analysis, design, and development plan, operations, and management plans, and financial factors. Your business plan is the only tool to convince the financiers and all those whose support is mandatory for you.
A business plan helps to safely test out the feasibility of a business idea. If you have a business idea but lack the skills required to develop this idea into a business plan then you should seek help from some expert who can do this for you.
Identification of Required Resources
Resources are tangible and intangible assets mobilized by entrepreneurs to achieve their entrepreneurial goals. Typical resources include sources of financing, knowledge of technology, laws and Government policies relevant to the chosen business, networks of contacts required for financial support, marketing, or other activities involved in developing an enterprise.
Apart from being capable of knowing how to manage and allocate resources, the entrepreneur must be able to distinguish between critical and nice to have resources. The five basic types of capital resources critical to the entrepreneurial process are human capital, opportunity capital, economic capital, financial capital, and entrepreneurial capital. Entrepreneurs must be able to clearly understand and identify these types of resources to successfully attain their entrepreneurial goals.
Execution Of Business Plan
Once the business plan is developed and requisite resources are identified, the entrepreneur is set to leave his nest and jump into the sky to take his first flight. The chances of keep floating in the air will depend upon the strength of his wings (a good business plan). The change in height of the flight above the ground will depend upon his determination, persistence, patience, confidence, capacity, and capabilities.
The first part of the execution phase is the collection of identified resources followed by their management and allocation. In parallel, he is to set up an organization and an office space. The rest of the execution phase will have to be defined in the business plan that may be modified from time to time depending upon real-time experiences.
Conclusion
The general trend to get an education to collect degrees and certificates needs to be changed to get training to learn skills. Starting as a group will lead to pooling up a large set of skills and to yield quicker results. Identification of incubators and accelerators should be done at a very early stage of developing a business plan. There is some free professional help available from the Government which must be explored and business plans should be developed remaining in line with such available free help and prevailing official policies and announced opportunities.