An Entrepreneurship Essay
By Amanda Jana Srishima, NPM: 0806358786
Listed below are the important points from what I read in chapter one to six:
Entrepreneurs and inventors differ from each other
The word entrepreneur derives from the French words entre, meaning “between”, and prendre, meaning “to take”. An inventor creates something new, while an entrepreneur assembles and then integrates all the resources needed; the money, the people, the business model, the strategy, and the risk-bearing ability: to transform the invention into a viable business.
Having passion for business is important
If we become an entrepreneur merely because we aim for financial rewards (without having any passion in doing the business), we might not get the result we want. Although entrepreneurs are not gamblers, they need to take risks (sometimes even leaving a secure job to start their own firms), and passion keeps them away from giving up too early. It is also particularly important for entrepreneurs because even though rewarding, the process of starting and building a new firm is demanding. Entrepreneurship isn’t for the person who is only partially committed. Investors watch like hawks to try to determine an entrepreneur’s passion for his or her business idea. Plus, passion will motivate extra-ordinary behavior: entrepreneurs who are passionate about their venture will often invest huge amounts of effort to ensure its healthy functioning (yet they still need to have the execution intelligence ability to develop a business model, putting together a new venture team, raising money, establishing partnerships, managing finances, leading and motivating employees, and so on.)
The two most important elements in any business are products and customers
While it’s important to think about management, marketing, finance, and the like, none of those functions makes any difference if a firm does not have good products with the capability to satisfy customers. The most successful entrepreneurs are, at heart, craftspeople. They are obsessed with making products that can satisfy a customer’s need, rather than introducing technology for its own sake.
We have to know the essential qualities of an opportunity
An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it. The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that an entrepreneur wants to sell. An opportunity has four essential qualities, it has to be attractive, durable, timely, and anchored in a product, service or business that creates or adds value for its buyer or end seller.
We have to know the ways to identify an opportunity
The most essential approach to identify opportunities is to observe emerging trends and study how they create opportunities for entrepreneurs to pursue. Economic factors, social factors, technological advances, and political action and regulatory statutes are the most important trends to follow. Another approach is to recognize problems and find ways to solve them. Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity. The third approach to identify opportunities is to recognize a need that customers have that is not being satisfied.
Ideas need to be protected from being stolen
There are three main steps that can be taken to protect ideas from being lost or stolen:
Step 1. Putting the idea into tangible form (logbook, computer)
Step 2. Securing the idea, access to the ideas should be at a minimum password protected
Step 3. Avoid making an inadvertent or voluntary disclosure of an idea in a manner that forfeits the right to claim exclusive rights to it if it falls into someone else’s hands.
Feasibility analysis is important
As a preliminary evaluation of a business idea, a feasibility analysis is completed to determine if an idea is worth pursuing and to screen ideas before spending resources on them. A positive feasibility analysis gives a green light to an entrepreneur to further pursue a business idea. Each area of the feasibility analysis must then be completely explored in anticipation of launching the new venture. The four key areas are product/service feasibility, industry/market feasibility, organizational feasibility, and financial feasibility.
Concept testing is essential to determine product/service feasibility
There are three primary purposes for a concept test. The first purpose is to validate the underlying premise of the product or service idea. This can be done by showing the concept test to potential customers and asking them to complete a short questionnaire. The second purpose of the concept test is to help develop the idea. Last but not least is to estimate the potential market share the product or service might command.
Assessing Industry/market feasibility is highly needed to evaluate the overall appeal of the market for the product or service being proposed
We need to check the industry attractiveness by conducting both primary and secondary research, consider the timeliness of the introduction of a particular product or service, and identify a niche or vertical market in which a firm can participate.
An organizational feasibility analysis can help us appraise the inner core of a business: the people
We can determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch its business. The two primary issues to consider in this are management prowess and resource sufficiency. The focus in organizational feasibility analysis should be on non-financial resources.
To know whether a business idea is prudent or not, financial feasibility analysis is needed
As the final stage of a comprehensive feasibility analysis, we should complete pro forma (or projected) financial statements that demonstrate the firm’s financial viability for the first 1 to 3 years of it s existence. We should also determine the total start-up cash needed and estimate a proposed start-up’s potential financial performances.
It is a mistake to write a full business plan too early
The business plan must be substantive enough and have sufficient details about the merits of the new venture to convince the reader that the new business is exciting and should receive support.
Understanding the guidelines for writing a business plan is very important
The business plan should give clear and concise information on all the important aspects of the proposed venture. It must be long enough to provide sufficient information yet short enough to maintain reader interest. For most plans, 25 to 35 pages are sufficient. After a business plan is completed, it should be reviewed for spelling and grammar and to make sure that no critical information has been omitted. The appearance of the plan must be carefully through out. It should look sharp but not give the impression that a lot of money was spent to produce it. Overuse of the design elements included in word-processing programs makes a business plan look amateurish rather than professional. An entrepreneur also has to know the difference between making a summary, full, or operational business plan and decide which specific elements to include in his or her business plan.
A good business plan is nothing without a good business model
A firm’s business model is its plan or diagram for how it intends to compete, use its resources, structure relationships, interface with customers, and create value to sustain itself on the basis of the profits it generates. A firm’s business model needs core strategy, strategic resources, partnership networks, and customer interface as the four major components.
Industry analysis helps the positioning of the firm
Industry analysis is business research that focuses on an industry’s potential. The knowledge gleaned from an industry analysis helps a firm decide whether to enter an industry and if it can carve out a position in the industry that will provide it a competitive advantage. This includes a competitor analysis, a detailed analysis of a firm’s competition. It helps a firm understand the position of its major competitors and the opportunities that are available to obtain a competitive advantage in one or more areas.