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The late Steve Jobs will definitely be an apt example of a successful entrepreneur on several levels. Many would agree that he had much more than just money. 'Money makes the world go round' is a controversial phrase that has been around for years, yet no one can truly deny the importance of money. It is undeniable that financial capability does aid one in becoming an entrepreneur, be it to use it as a motivational force towards innovation or to restructure the strategies and policies in place. While capital (money) is required and important to run a business, it is argued in this paper that it is not the most important determinant in becoming an entrepreneur. To pinpoint money as the single factor to being an entrepreneur is too far-fetched and unconvincing as there are numerous other factors involved, at least to being a successful entrepreneur.
2.0 Overview of factors for entrepreneurship
2.1 Definition of Entrepreneurship
To answer the question: All you need is money to be an entrepreneur, requires a definition of what entrepreneurship and the role of an entrepreneur is. Entrepreneurship is defined as 'the process of creating value by bringing together a unique combination of resources to exploit an opportunity'(Stevenson and Jarrillo-Mossi, 1986). The distinction between an entrepreneur, business owner and professional manager should also be stressed. While business owners also assume the risks of a business venture, an entrepreneur is one who is 'actively involved in organizing or operating (a business)' (Cardon et al., 2009) The professional manager on the other hand is usually hired by the business owner and runs the business on behalf of the owner. As such, the manager's role is more operational and process based as compared to an entrepreneur's role where decision making and strategizing is an essential component. The entrepreneur is hence required to put his 'own resources on the line and have a personal stake in the success or failure'(Clare and Breda, 2012) of the chosen enterprise. Therefore besides the direct concern of money for starting any enterprise, many other factors determine the making of an entrepreneur and set an entrepreneur apart from a business owner or a professional manager.
2.2 Internal factors
Innovation has great importance as it provides a form of competitive advantage at various levels, which will determine the sustainability of the business. Hence, this capability has to be present in an entrepreneur, evidently. Ethics, on the other hand, should be the foundation of the entrepreneur and company's actions since the 'exploitation' of opportunities could potentially lead to numerous repercussions and effects (Iraklis and Nikos, 2012). Therefore, ethical behavior should also be present in an entrepreneur. An entrepreneur's personal integrity and ethical codes would undoubtedly determine the nature of the company and their employees' ethical performance. These two important qualities would also need to be substantiated with a strong strategy and operational effectiveness. This includes other soft skills such as the ability of discernment, good human resource management and the ability to weigh the opportunity costs of risk taking which often comes with experience.
2.2.1 Innovation & gaining a competitive advantage: Core of an entrepreneur
One aspect that is closely linked to every entrepreneur is innovation as it greatly influences his own success and his ability to be a corporate entrepreneur. This can be clearly seen in the success of Google. A corporate entrepreneur has to create a culture of innovation in the business to ensure that the entire company is on the same track and hence, he is also an intrapreneur.
In congruence with an individual entrepreneur's innovative nature is the need for the spirit of innovation to permeate the work culture and attitude of the workers. This is related to the entrepreneur's leadership and management abilities known as corporate entrepreneurship. There are four approaches to corporate entrepreneurship as seen in the models in Fig. 1. There are definitely pros and cons to each model, and may be applicable under different circumstances. Hence the entrepreneur has to be able to select the most suitable approach and cater it to the needs of the company.
Figure : Four models of corporate entrepreneurship (Robert C. Wolcott, 2007)
One example of the enabler would be Google. It has a work environment with a willingness to accept change and the use of techniques that encourage ideas such as brainstorming, suggestion systems etc (Maija et al., 2012). 'One of the key reasons for Google's success is a belief that good ideas can and should come from anywhere.'(Elgin, 2005) Google offices are well known as innovation incubators, the office structure and management urges Google engineers to spend one working day each week dedicated to the brainstorming of new ideas and their personal creative pet projects. Staffs are also encouraged to share ideas through various portals such as the ideas mailing lists and through physical doodle walls within the office. More importantly, this culture is greatly encouraged and propelled by the co-founders Larry E Page and Sergey Brin (Product Arts, 2009). Therefore, this has served Google well in surpassing the older market players like Yahoo! and Microsoft to rank as the number one search engine. Hence, the innovation, coupled with corporate entrepreneurship has allowed Google to be able to gain a competitive edge on a global level.
With the use of new forms of social media and the increasingly globalized business landscape, the inventiveness and innovativeness of a person is crucial in tackling international competition.
An innovative entrepreneur does not only have an extensive knowledge research but is also opportunistic and able to identify gaps in the market. Apple is one such example. Although a late entrance into an already existing and saturated mp3 market, the iPod was able to create a competitive advantage through innovation. Apple successfully leveraged time in 'an improvement in disk technology to a smaller form factor'(Product Arts, 2009) hence becoming the first firm to develop and sell mp3 players that had the largest storage capacity for a given size. The fine-tuning of a typical user interface common to mp3 players of that time, facilitated the convenience of potential users hence transforming the iPod into the dominant market player within 2 years. Apart from work attitude, there is the need of managerial, human, time and inevitably financial resources for realizing any innovative idea (Jeffrey, 2002). This ensures the sustainability and realization of an idea beyond its conceptual phase.
2.2.3 Entrepreneurial strategy and processes: Building blocks of an entrepreneur
Entrepreneurial strategy provides the overall picture of the approach to be taken, hence it has to be thought over carefully as it determines the direction that the entrepreneurial processes will move towards. Hence, the ability to see the big picture and to foresee the desired result to be achieved will definitely help an entrepreneur to succeed. Entrepreneurial processes encompasses the following: idea generation, idea screening, procuring necessary resources, proving the business model, rollout, maturity, renewal and growth, and decline (DeTienne, 2010) Without specific processes in place to ensure that such activities within a company can be properly carried out and monitored, plans will hardly succeed. Therefore, it is vital that an entrepreneur is able to put thoughts into actions and ensure that there is a structure in place, with sufficient flexibility, to ensure a smooth delivery of the desired plans. There must also be the awareness that these processes have to be improved upon continually to keep up with the changes internally and externally. As mentioned, these processes not only involve a new venture, hence an entrepreneur has to consider multiple aspects.
2.2.4 Ethics: Foundation of an entrepreneur
Increasingly, there is greater emphasis placed on ethics especially in the corporate world where it is seen that cases involving dishonesty can essentially bring the company to its end. Therefore, an entrepreneur has to take business ethics into consideration in order for the business to be sustainable in the long run. This can be proven important as seen in the downfall of numerous CEOs who could be wonderful entrepreneurs as the lack of ethics has caused them to lose sight of themselves (Porter et al., 2006). The Enron Scandal is an apt example of unethical entrepreneurship which led to a collapse (Saravanamuthu and Tinker, 2008).
An unethical entrepreneurship would result in a distrust and decrease in consumer confidence for the enterprise hence affecting its market value. Worse still, some unethical decisions might lead to the suffering of innocent members of the public such as cases of sales of tainted milk powder in China (Lyu, 2012), or factories causing arsenic poisoning in India (Bhattacharya et al., 2011).
To understand the importance of ethics in entrepreneurship requires an entrepreneur to look beyond the immediate goal of achieving one's own success to consider the implications of one's decisions to the larger context such as to the environment, labour force, members of the public etc (Miller, 2011). The Body Shop for instance is a good example of an established business founded on ethics. The company ethos went beyond its firm stand against animal testing and labour exploitation to generate successful campaigns in raising awareness of prevalent social issues and putting forth interesting solutions.
The late Anita Roddick, founder of The Body Shop was quoted saying, " For me, campaigning and good business is also about putting forward solutions, not just opposing destructive practices or human rights abuses.'(Roddick, 2012)
In keeping to her activist principles, "Trade not aid" the ingredients of The Body Shop's products are supplied by smaller tribal farming collectives and by fair trade standards(Roddick, 2012). This social consciousness adds value to the firm and has coincidentally filled a niche gap in the market where consumers are increasingly socially conscious and have higher demands for all-natural products. Hence the ethical approach became a win-win situation for the firm as with other ethical companies.
2.3 External factors
Apart from considering internal factors, external factors can influence the possibility of becoming an entrepreneur. For example, political and social conditions affect the possibility of being an entrepreneur as well as the development of entrepreneurs. As business enterprises become increasingly collaborative, the extent of social networks one engages in can also provide an invaluable source of support for an aspiring entrepreneur (Geho and Dangelo, 2012). These social networks help in marketing efforts and also provide an opportunity for collaboration and support from complementary industries. This aids the idea of resource sharing, which is particularly important in having a holistic understanding of the market and would thus possibly affect the success of the entrepreneur.
One's awareness and adaptability to current market trends and practices also ensures the relevance of the company in an ever-changing economic market. An entrepreneur hence has to place himself in the context of the company, to be able to devise strategies and implement entrepreneurial processes to ensure that the company progresses in the right direction.
Other external factors which might affect the success of an entrepreneur but yet of which we might have little control of our economic climates and sudden disasters such as acts of terrorism or natural calamities. These incidents by sheer scale and complexity play a significant role in affecting industries. Therefore the timing in which an entrepreneur chooses to start a business and the external influences present in that particular season would also have a bearing on the success or failure of the aspiring entrepreneur.
In conclusion, there are numerous considerations both internal and external that could lead to the creation of an entrepreneur. In particular, the spirit of an entrepreneur should be one filled with passion and innovation as well as the relevant skill-set to follow through with ideas. The list of factors is almost non-exhaustive although the main points have been covered in this paper.
It is conceded also that at times, external unpredictable factors might get in the way of becoming an entrepreneur.
However, with the right attitude and perseverance, it is still argued that an aspiring entrepreneur can shape his or her situation in favor of entrepreneurial success. These factors and strategies go beyond the initial advantage that money might bring.
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