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Resources:
The third element is resources. Thats not purely about money and
equipment; its also about intellectual capability. (The ability to persuade
others is important. Many entrepreneurs have been able to negotiate very
favourable deals against the odds, when establishing their business).
The craftsman entrepreneurs are focused on quality of life and are therefore
seeking to satisfy themselves and to satisfy just one or two customers.
Push: factors are those that propel one into their own business, perhaps
involuntarily at first e.g. redundancy.
There are both positive and negative features of setting up a business. On the
positive side an individual has found an idea. From a negative perspective, an
individual may have been made redundant or be unhappy in their current role.
The most successful entrepreneur is more likely to be the person who is
pulled into it by the market place. They 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.
Those who are pushed are reluctant entrepreneurs who may be running their
business as well as being employed. Alternatively, they feel they have no
choice.
Reasons for not starting a business are often surrounded by elements of fear.
The fear of failure, of not having enough cash to be able to continue their
quality of life and what other people will think about them.
In the UK we have a negative view of what its like to run a business. Even
now when culture is changing it is still a different culture that exists compared
to that of the American culture. In America, fear of failure, liquidation, and
bankruptcy isnt seen as a major inhibitor in terms of starting a business.
There are three factors that have to come into play when offering advice to
people setting up and running a business. Those of 1) risk, 2) reward and 3)
timing.
1) Risk: The risk may be too great in a volatile, changing market place,
where the product requires constant changes and updates and where
ownership of intellectual property rights (IPR) may cause problems. If
you dont have the resources in place to cover these problems, you risk
will be higher.
2) Reward: Whilst the risk might be acceptable, the return or reward might
not be adequate. The individual should be looking for a reasonable
return for efforts in running that business.
3) Timing: Timing is crucial to the success of a business. Never enter a
saturated market unless you have powerful point of difference or
unique selling point. Early entrance to market should be the most
successful strategy; satisfying initial demand and getting established as
a recognised provider for future demand. Timing applies equally 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.
Negotiating skills, selling skills, administrative skills, along with the ability to be
able to identify target markets and customers are all required when setting up
and running a business.
One way to work out whether you have the appropriate skills or attributes to
set up and run a business is to undertake a quiz. The quiz will identify
individual strengths and weaknesses, together with areas for development.
To validate the idea it is a good idea to check with people who know about
that particular industry. Do they think there is a gap on the marketplace and
that the product could be serviced?
It is also a good idea to use the internet, to see if the idea has been done
anywhere else in the world before.
Following discovery and validation of the idea, you must consider profitability.
Can the product be sold at a profit and therefore generate the income stream
that is required to run a successful business.
Resources
Contacts- who do you know? In what way might they help you?
Ohp 2/1/8
If you have got the motivation, the skill, the idea and the market place,
resources is the next issue.
You need to think through how that business is going to operate, to walk
yourself through the business. By doing this you will identify the type of people
you require, the jobs that are going to be undertaken, the equipment, the
finance, the customers and other resources particular to your business.
When you are planning and organising the business its like painting a house;
its 80% preparation and 20% application. There 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.
What kind of business are you going to run? Is the organisation going to be a
sole trader, a partnership or is it going to be a limited company? How many
people are going to be needed? At what stages will these individuals come
into place? What systems will be required?
Equally as important as the form of the business is the type of tax structure
the individual is proposing to have. For instance, will the business need to be
registered for VAT?
A whole series of developments are now taking place. How is the individual
going to be able cope with the suppliers? How will the negotiation with the
suppliers be done? What are the legal requirements behind that when it
comes to the customers? What are the payment dates and terms? How has
the businesss bank account been organised?
The 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.
How should one plan?
Define
problem/issue
Measure
results
Collect relevant
data
Implement Develop
chosen solution alternative
solutions
S
Unpredictable T Unplanned
consequences R development
E
S
S
Fire fighting
The 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. Stress 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.
You should be able to envisage what the business will look like in3, 5 and 10
years time. Equally you should be able to anticipate how you are likely to
retain that position. It is through: