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Entrepreneurs need for Achievement

Introduction of Entrepreneurship in terms of: 1. Opportunity, identification, evaluation and exploitation 2. The management of a new or transformed organization 3. The creation of value through the successful exploitation of a new idea The need for achievement manifests itself in a number of ways: Risk taking Confidence of success Desire for independence Energy in pursuing goals Measurement of success by wealth

Motivations for starting an independent business Some individuals are attracted towards business ownership by positive motives such as a specific idea which they are convinced will work

Opportunity-based Entrepreneurship: A. Pull influences

Desire for independence, prove that one accomplish a start-up Desire to exploit an opportunity Turning a hobby or previous work experience into a business, adventure of a start-up Financial incentive, supplementary income

Necessity-based Entrepreneurship B. Push influences

Many people are pushed into founding a new enterprise by a variety of factors, including: Redundancy Unemployment or threat thereof Disagreement with previous employer

Business Ideas
Identifying which business idea has real commercial potential is one of the most difficult challenges entrepreneurs face. Ideas do not have to be novel, original or revolutionary Being the first mover is not always advantageous. The first to offer such a product or service has to educate a market and possibly establish a marketing structure

Business Ideas
The second or third into a market can capitalize on all the efforts and marketing investment made by the predecessor. One should not stay away from an idea because it is not original or award winning One should not on the other hand offer something very identical to another business. If you do, you dont give the potential customer any choice. The choice could only be on the basis of price struggle to make a profit unless sale in volumes

Sources of Business ideas

Prior employment Universities and research institutions Franchises right to opportunity, often a proven business concept Existing businesses Hobbies Industry and trade contacts (Trade fairs) Professional contacts for licence patents or patented products

Barriers to market entry

Economies of scale Product differentiation Capital requirements Switching costs changing computer software (new training) Access to distribution Other cost advantages (learning curve, location) Government policy

Key problems faced by small business owners

Interest rates Cash flow and payments Low turnover Lack of skilled employees Total tax burden Premises, rent and rates Inflation Government regulations and paperwork Access to finance Competition from big businesses

Business Uncertainties
Uncertainty is a key feature in small business environment and a central factor in explaining entrepreneurship: Technical uncertainty the entrepreneur does not know if the product or service being produced will work, and if so, if it can be produced at a cost that is less than the price at which it will be sold

Business Uncertainties
Market uncertainty the entrepreneur does not know if demand will exist for the product Competitive uncertainty the entrepreneur does not know if they will be able to appropriate the profits from the introduction of the new product or service, or whether these will be reduced by the action of competitors

When to set up a business

Storey (1998) identified several possible factors on the timing of new businesses Levels of unemployment Government policies Profitability Interest rates Personal savings and assets Consumer expenditure Structural change

How do I start?