What are the six key elements of entrepreneurship and what is the importance of each?

Motivation & Commitment: Its important to get the basic ingredients of start-up right. People who are lending money look at the person first and foremost, so motivation is the most critical. You need to convince your bank manger you can make your business work because youve researched your market, youve costed out the business and you know where you want the business to be in 5 or ! years time. " means of showing your commitment to the business would be to save and invest money. Abilities & skill: #he second element is one of ability and skills. #he individual has to have skills appropriate to the kind of business theyre proposing to run. "nd if they dont have them, they should have a reliable person who can. It could be that one person knows how to run a business from an operational and management perspective, whereas another person has the technical skills to develop the product or service. Resources: #he third element is resources. #hats not purely about money and e$uipment% its also about intellectual capability. &#he ability to persuade others is important. 'any entrepreneurs have been able to negotiate very favourable deals against the odds, when establishing their business(. trate!y & vision: #he fourth element is strategy and vision in terms of thinking four or five years ahead and having some idea of where that business might be in the future and putting in place a plan to achieve that goal. "lannin! & or!anisation: #he fifth element is planning and organisation. )ithout planning, organisation, coordination and administration, the product wont get to market nor will it satisfactorily meet demand. You need to think about systems, *ob roles, and $uality issues, which if handed effectively, will ensure you, can satisfy the market by delivering on time and to the right place.

#he idea in relation to the market: #he si+th element is the idea and more specifically, the idea in relation to the market place. )hat we are trying to do is to make certain that we are customer focussed, ensuring that the individual is satisfied in their re$uirements. )hen we look at the si+ elements it becomes evident that you can have a bad product with a highly motivated individual, which will produce an acceptable business. ,ut what you cannot have is a really good product with a de-motivated individual. #he business will not succeed because the product will not reach the market at the right time, at the right place, or at the right price. Motivation & commitment $% &ow does the motivation of an owner affect the business? #he motivation of the entrepreneur is driven by their type, of which there are three. #he -craftsman. entrepreneurs are focused on $uality of life and are therefore seeking to satisfy themselves and to satisfy *ust one or two customers. #he -classical. entrepreneur is driven by profit. #heir main driving force is to ma+imise returns from the market place. #he third area is one of a -manager. entrepreneur. #hey are strongly orientated and have a personal need to prove their worth through business success. #hey are likely to be in a mature market. " mature market is one where the customers know the product or service offering and do not need to be educated about. &where they can succeed.( '% &ow do ()push and pull*+ factors affect motivation to start a business? Motivations to start a business ,push or pull ,e my own boss 1ontrol over my life2independence ,etter financial prospects 5potted a market opportunity /50 30 40 60

#o make a lot of money 70 #o have a more balanced lifestyle 8o real alternative #o do what I en*oy 5ource9 ,arclays ,ank 5urvey & ::/(

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"ush: factors are those that propel one into their own business, perhaps involuntarily at first e.g. redundancy. "ull: factors are positive factors in the marketplace and in an individuals character which makes them want to succeed e.g. market opportunity and the drive to succeed. #here are both positive and negative features of setting up a business. ;n the positive side an individual has found an idea. <rom a negative perspective, an individual may have been made redundant or be unhappy in their current role. #he most successful entrepreneur is more likely to be the person who is pulled into it by the market place. #hey recognise that they want to do something different and that they are more highly motivated in satisfying their own aspirations and also those of the market place. #hose who are pushed are reluctant entrepreneurs who may be running their business as well as being employed. "lternatively, they feel they have no choice. .% What can put an individual off startin!? =easons for not starting a business are often surrounded by elements of fear. #he fear of failure, of not having enough cash to be able to continue their $uality of life and what other people will think about them. In the >? we have a negative view of what its like to run a business. @ven now when culture is changing it is still a different culture that e+ists compared to that of the "merican culture. In "merica, fear of failure, li$uidation, and bankruptcy isnt seen as a ma*or inhibitor in terms of starting a business. /% What are the three main factors to consider when settin!0up in business? #here are three factors that have to come into play when offering advice to people setting up and running a business. #hose of ( risk, /( reward and 4( timing.

( =isk9 #he risk may be too great in a volatile, changing market place, where the product re$uires constant changes and updates and where ownership of intellectual property rights &IP=( may cause problems. If you dont have the resources in place to cover these problems, you risk will be higher. /( =eward9 )hilst the risk might be acceptable, the return or reward might not be ade$uate. #he individual should be looking for a reasonable return for efforts in running that business. 4( #iming9 #iming is crucial to the success of a business. 8ever enter a saturated market unless you have powerful point of difference or uni$ue selling point. @arly entrance to market should be the most successful strategy% satisfying initial demand and getting established as a recognised provider for future demand. #iming applies e$ually to resources. If you set up a market proposition but cannot produce the goods in time you will rapidly lose credibility and hence market share. Abilities and skills Can anyone set up in business or do you have any special skills and characteristics? #he re$uirement for specialist skills and characteristics will depend on the industry. 5ome, not all, businesses re$uire technical skills. 'anagement skills are critical to all business. 8egotiating skills, selling skills, administrative skills, along with the ability to be able to identify target markets and customers are all re$uired when setting up and running a business. ;ne way to work out whether you have the appropriate skills or attributes to set up and run a business is to undertake a $uiA. #he $uiA will identify individual strengths and weaknesses, together with areas for development. #he idea in relation to the market &ow do you choose a profit makin! idea? #he business idea is key to success. #he idea itself might come about by friends and so forth. #o validate the idea it is a good idea to check with people who know about that particular industry. Bo they think there is a gap on the marketplace and that the product could be servicedC

It is also a good idea to use the internet, to see if the idea has been done anywhere else in the world before. <ollowing discovery and validation of the idea, you must consider profitability. 1an the product be sold at a profit and therefore generate the income stream that is re$uired to run a successful business. Resources $% &ow do you identify your resources and which is the most important one? What is my startin! point? 1ontacts- who do you knowC In what way might they help youC 'oney- cash and realisable assets @$uipment- carC 1omputerC 5pare roomC @tc ;ther resources- landC DobbiesC 5pare timeC <amily E friendsC 1hp '2$23

If you have got the motivation, the skill, the idea and the market place, resources is the ne+t issue. You need to think through how that business is going to operate, to walk yourself through the business. ,y doing this you will identify the type of people you re$uire, the *obs that are going to be undertaken, the e$uipment, the finance, the customers and other resources particular to your business. #he resources have to be used in the most effective manner to be able to ma+imise the returns from the business. You need to develop the networks and the contacts which enable access to the appropriate resources at the right time. In this way you will continually add value to the business.

"lannin! and 1r!anisation $% What kind of plannin! and or!anisation is re4uired when settin!0up and runnin! a business? )hen you are planning and organising the business its like painting a house% its F!0 preparation and /!0 application. #here is never enough time when you are running a business to be able to plan and organise that particular business, so you must do your preparation, your plan, at the beginning. )hat kind of business are you going to runC Is the organisation going to be a sole trader, a partnership or is it going to be a limited companyC Dow many people are going to be neededC "t what stages will these individuals come into placeC )hat systems will be re$uiredC @$ually as important as the form of the business is the type of ta+ structure the individual is proposing to have. <or instance, will the business need to be registered for G"#C " whole series of developments are now taking place. Dow is the individual going to be able cope with the suppliersC Dow will the negotiation with the suppliers be doneC )hat are the legal re$uirements behind that when it comes to the customersC )hat are the payment dates and termsC Dow has the businesss bank account been organisedC #he planning and organisation related to the setting up and running of the business is crucial. If it hasnt been thought through in advance then the business will start in a mess and it may never recover.

&ow should one plan? #he Classic "lannin! Cycle Define problem/issue

Measure results

Collect relevant data

Implement chosen solution

Develop alternative solutions

Select optimum solution

Assess consequences

#he )6on0"lannin!* Cycle

No time

Unpredictable consequences

S T R E S S

Unplanned development

Fire fighting

#he classical planning cycle is a logical flow of information from defining the problem or issue, collecting information, developing, selecting and implementing the solution through to measuring outputs. 5tress is the direct result of a lack of business planning. If an individual is unclear where he or she is going, that person will end up fighting and fending off problems rather than making meaningful responses. trate!y and vision What is the importance of strate!y and vision5 when startin! a business? You should be able to envisage what the business will look like in4, 5 and ! years time. @$ually you should be able to anticipate how you are likely to retain that position. It is through9 Beveloping the e+isting market or product 8ew products or markets Beveloping a particular aim of the business, e.g. interests overseas