ST.

AUGUSTINE INTERNATIONAL UNIVERSITY

ENTREPRENEURSHIP NOTES

Introduction

Welcome To Permanent Beta

We are all works in progress. It doesn’t matter whether you are a recent
graduate, a seasoned professional, or a reinventing yourself mid-career. Great
people, like great companies, are always evolving. They’re never finished and
never fully developed. Each day presents an opportunity to learn more, do more,
and grow more. Permanent beta is a lifelong commitment to continuous personal
growth. It is the mindset of every entrepreneur of life.

Entrepreneurship is the act of setting out on your own and starting a business
instead of working for someone else in his business. While entrepreneurs must
deal with a larger number of obstacles and fears than hourly or salaried
employees, the payoff may be far greater as well.

Being an entrepreneur isn’t really about starting a business.  It’s a way of looking
at the world: seeing opportunity where others see obstacles, taking risks when
others take refuge. Entrepreneurship has always driven innovation in the private
sector, but increasingly it’s essential to progress in government and the nonprofit
sector, too.

What Are the Basic Concepts & Characteristics of

Entrepreneurship?
Interest and Vision
The first factor for entrepreneurial success is interest. Since entrepreneurship pays
off according to performance rather than time spent on a particular effort, an
entrepreneur must work in an area that interests her. Otherwise, she will not be
able to maintain a high level of work ethic, and she will most likely fail. This
interest must also translate into a vision for the company's growth. Even if the day-
to-day activities of a business are interesting to an entrepreneur, this is not enough
for success unless she can turn this interest into a vision of growth and expansion.
This vision must be strong enough that she can communicate it to investors and
employees.
Skill
All of the interest and vision cannot make up for a total lack of applicable skill. As
the head of a company, whether he has employees or not, an entrepreneur must be
able to wear many hats and do so effectively. For instance, if he wants to start a
business that creates mobile games, he should have specialized knowledge in
mobile technology, the gaming industry, game design, mobile app marketing or
programming.

Investment
An entrepreneur must invest in her company. This investment may be something
less tangible, such as the time she spends or the skills or reputation she brings with
her, but it also tends to involve a significant investment of assets with a clear value,
whether they be cash, real estate or intellectual property. An entrepreneur who will
not or cannot invest in her company cannot expect others to do so and cannot
expect it to succeed.

Organization and Delegation

While many new businesses start as a one-man show, successful entrepreneurship
is characterized by quick and stable growth. This means hiring other people to do
specialized jobs. For this reason, entrepreneurship requires extensive organization
and delegation of tasks. It is important for entrepreneurs to pay close attention to
everything that goes on in their companies, but if they want their companies to
succeed, they must learn to hire the right people for the right jobs and let them do
their jobs with minimal interference from management.

Risk and Rewards

Entrepreneurship requires risk. The measurement of this risk equates to the amount
of time and money you invest into your business. However, this risk also tends to
relate directly to the rewards involved. An entrepreneur who invests in a franchise
pays for someone else's business plan and receives a respectable income, while an
entrepreneur who undertakes groundbreaking innovations risks everything on an
assumption that something revolutionary will work in the market. If such a
revolutionary is wrong, she can lose everything. However, if she is right, she can
suddenly become extremely wealthy.

CONCEPT OF CREATIVITY AND INNOVATION

The key concepts of creativity and entrepreneurship, the linkages between the
two, and association with innovation. What is the relationship between creativity
and innovation? Creativity can be described as a combination of elements:
intellectual abilities, knowledge, styles of thinking, personality, motivation, and
environment. Creativity has also been regarded as a four stage process of
preparation, incubation, illumination and verification. There are techniques for
Creativity, one of which is the Creative Problem Solving (CPS) program which
consists of mess finding, problem finding, idea finding, solution finding, and action
planning. In summary, creativity has been characterized as a concept being about
person, process, product, press (situation), persuasion and potential. Recent work
on Entrepreneurship Research confirms that it is not possible to profile the typical
entrepreneur and that no psychological or sociological characteristics can be used
to predict with high accuracy that a person will become an entrepreneur.
Entrepreneurship can also be viewed as a process which includes the cognitive
and behavioral steps from the inception of a rough business idea up to the
realization of the business activity with regular sales.

Comparing entrepreneurship and creativity, both require skills of persuasion to

influence others in order to support or invest in new ideas. Small firms were
considered as the nurseries of creativity in business. Entrepreneurship can be
defined as management of radical change. Creativity and Entrepreneurship is also
not anew linkage. Problem finding or problem definition in the creativity
literature has similarities with that of opportunity finding or opportunity
recognition in the entrepreneurship literature. Contrasting entrepreneurship and
creativity, we could view creativity as an input while entrepreneurship is largely
a process and an outcome. In conclusion, a comparative overview of research on
creativity and entrepreneurship has identified some potential areas of
commonality. Both literatures demonstrate the importance of attitudes, mindset,
motivation, and orientation; and they both play big roles for the successful firms.

Strategies for Increasing your Creativity and Innovation

You can implement some strategies that will boost your company’s ability to
create and innovate.

Truly creative people have developed their ability to observe and to use all of
their senses, which can get dull over time. Take time to “sharpen the blade” and
take everything in.

Innovation is based on knowledge. Therefore, you need to continually expand

your knowledge base. Read things you don’t normally read.

Your perceptions may limit your reasoning. Be careful about how you’re
perceiving things. In other words, defer judgment.

Practice guided imagery so you can “see” a concept come to life.

Let your ideas “incubate” by taking a break from them. For example, when I’m
working on a big business project, one of the best things I can do to take a break
from it is play my guitar or the flute for a few minutes, or take a ride on my
motorcycle. It shifts my brain into another place and helps me be more innovative
and creative.

Experience as much as you can. Exposure puts more ideas into your subconscious.
Actively seek out new experiences to broaden your experience portfolio.

Treat patterns as part of the problem. Recognizing a new pattern is very useful,
but be careful not to become part of it.

Redefine the problem completely. One of the lines I’ve been sharing for the past
few decades is: “Your problem is not the problem; there is another problem.
When you define the real problem, you can solve it and move on.” After all, if you
had correctly defined the real problem, you would have solved it long ago
because all problems have solutions.

Look where others aren’t looking to see what others aren’t seeing.

Come up with ideas at the beginning of the innovation process ... and then stop.
Many times we come up with several ideas and start innovating, and then we
come up with more ideas and never get a single idea done. At some point you
have to turn off the idea generation part of the process and really work on the
innovation and execution part in order to bring a project to life.

Create Your Own Success

The more creative and innovative you and your team members are, the more
long-term success you’ll achieve. So rather than constantly chase “the next big
idea” in your industry, bring creativity and innovation to what you’re currently
doing. When you do, you’ll be regarded as an industry innovator—the one your
competitors are trying to copy.

How Entrepreneurs Identify New Business Opportunities

A key question that all would-be entrepreneurs face is finding the business
opportunity that is right for them. Should the new startup focus on introducing a
new product or service based on an unmet need? Should the venture select an
existing product or service from one market and offer it in another where it may
not be available? Or should the firm bank on a tried and tested formula that has
worked elsewhere, such as a franchise operation? In the first of a series of podcasts
for the Wharton-CERT Business Plan Competition, Raffi Amit, a professor of
management at Wharton, discusses these questions and more with
Knowledge@Wharton. In the process, he offers insights into how entrepreneurs
can identify new business opportunities and evaluate their potential and their
risks.

Many sources of ideas come from existing businesses, such as franchises. You could
license the right to provide a business idea. You could work on a concept with an
employer who, for some reason, has no interest in developing that business. You
could have an arrangement with that employer to leave the company and start that
business. You can tap numerous sources for new ideas for businesses. Perhaps the
most promising source of ideas for new business comes from customers — listening
to customers. That is something we ought to do continuously, in order to understand
what customers want, where they want it, how they want a product or service
supplied, when they want it supplied, and at what price.

Venture Opportunity and Strategy

Entrepreneurs create new businesses that fuel progress in societies worldwide.
They use innovation and technology to foster positive impact and activity in all
facets of life. Entrepreneurs identify, develop, and communicate the essence of
an opportunity that has attractive potential to become a successful venture. They
describe the valuable contributions of the venture, and they design a business
model that can adapt to changing circumstances. The venture team creates a
road map (strategy) that can, with good chance, effectively lead to the
commercialization of the new product or service in the marketplace with a
sustainable competitive advantage.

Forms of Business Organization

One of the first decisions that you will have to make as a business owner is how
the business should be structured.  All businesses must adopt some legal
configuration that defines the rights and liabilities of participants in the business’s
ownership, control, personal liability, life span, and financial structure.  This
decision will have long-term implications, so you may want to consult with an
accountant and attorney to help you select the form of ownership that is right for
you.  In making a choice, you will want to take into account the following:

•Your vision regarding the size and nature of your business.

•The level of control you wish to have.
•The level of “structure” you are willing to deal with.
•The business’s vulnerability to lawsuits.
•Tax implications of the different organizational structures.
•Expected profit (or loss) of the business.
•Whether or not you need to re-invest earnings into the business.
•Your need for access to cash out of the business for yourself.
An overview of the four basic legal forms of organization: Sole Proprietorship;
Partnerships; Corporations and Limited Liability Company follows.

Sole Proprietorship
The vast majority of small businesses start out as sole proprietorships.  These
firms are owned by one person, usually the individual who has day-to-day
responsibility for running the business.  Sole proprietorships own all the assets of
the business and the profits generated by it.  They also assume complete
responsibility for any of its liabilities or debts.  In the eyes of the law and the
public, you are one in the same with the business.

Advantages of a Sole Proprietorship

• Easiest and least expensive form of ownership to organize.
• Sole proprietors are in complete control, and within the parameters of the law,
may make decisions as they see fit.
• Profits from the business flow-through directly to the owner’s personal tax return.
• The business is easy to dissolve, if desired.
Disadvantages of a Sole Proprietorship
• Sole proprietors have unlimited liability and are legally responsible for all debts
against the business.  Their business and personal assets are at risk.
• May be at a disadvantage in raising funds and are often limited to using funds
from personal savings or consumer loans.
• May have a hard time attracting high-caliber employees, or those that are
motivated by the opportunity to own a part of the business.
• Some employee benefits such as owner’s medical insurance premiums are not
directly deductible from business income (only partially as an adjustment to
income).
Partnerships
In a Partnership, two or more people share ownership of a single business.  Like
proprietorships, the law does not distinguish between the business and its
owners.  The Partners should have a legal agreement that sets forth how
decisions will be made, profits will be shared, disputes will be resolved, how
future partners will be admitted to the partnership, how partners can be bought
out, or what steps will be taken to dissolve the partnership when needed; Yes, it’s
hard to think about a “break-up” when the business is just getting started, but
many partnerships split up at crisis times and unless there is a defined process,
there will be even greater problems.  They also must decide up front how much
time and capital each will contribute, etc.

Advantages of a Partnership
• Partnerships are relatively easy to establish; however time should be
invested in developing the partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners’
personal tax return.
• Prospective employees may be attracted to the business if given the
incentive to become a partner.
• The business usually will benefit from partners who have
complementary skills.

Disadvantages of a Partnership

• Partners are jointly and individually liable for the actions of the other
partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on
tax returns.
• The partnership may have a limited life; it may end upon the
withdrawal or death of a partner.
Types of Partnerships that should be considered:

1. General Partnership
Partners divide responsibility for management and liability, as well as
the shares of profit or loss according to their internal agreement.  Equal
shares are assumed unless there is a written agreement that states
differently.

2. Limited Partnership and Partnership with limited liability

“Limited” means that most of the partners have limited liability (to the
extent of their investment) as well as limited input regarding
management decision, which generally encourages investors for short
term projects, or for investing in capital assets.  This form of ownership
is not often used for operating retail or service businesses.  Forming a
limited partnership is more complex and formal than that of a general
partnership.

3. Joint Venture
Acts like a general partnership, but is clearly for a limited period of time
or a single project.  If the partners in a joint venture repeat the activity,
they will be recognized as an ongoing partnership and will have to file as
such, and distribute accumulated partnership assets upon dissolution of
the entity.
 
Corporations

A Corporation, chartered by the state in which it is headquartered, is

considered by law to be a unique entity, separate and apart from those
who own it.  A Corporation can be taxed; it can be sued; it can enter
into contractual agreements.  The owners of a corporation are its
shareholders.  The shareholders elect a board of directors to oversee
the major policies and decisions.  The corporation has a life of its own
and does not dissolve when ownership changes.

Advantages of a Corporation
• Shareholders have limited liability for the corporation’s debts or
judgments against the corporation.
• Generally, shareholders can only be held accountable for their
investment in stock of the company.  (Note however, that officers can be
held personally liable for their actions, such as the failure to withhold
and pay employment taxes.
• Corporations can raise additional funds through the sale of stock.
• A Corporation may deduct the cost of benefits it provides to officers
and employees.
• Can elect S Corporation status if certain requirements are met.  This
election enables company to be taxed similar to a partnership.

Disadvantages of a Corporation
• The process of incorporation requires more time and money than other
forms of organization.
• Corporations are monitored by federal, state and some local agencies,
and as a result may have more paperwork to comply with regulations.
• Incorporating may result in higher overall taxes.  Dividends paid to
shareholders are not deductible from business income; thus this income
can be taxed twice.

Subchapter S Corporation
A tax election only; this election enables the shareholder to treat the earnings and
profits as distributions, and have them pass through directly to their personal tax
return.  The catch here is that the shareholder, if working for the company, and if
there is a profit, mus---t pay his/herself wages, and it must meet standards of
“reasonable compensation”.  This can vary by geographical region as well as
occupation, but the basic rule is to pay yourself what you would have to pay
someone to do your job, as long as there is enough profit.  If you do not do this,
the IRS(Internal Revenue Service) can reclassify all of the earnings and profit as
wages, and you will be liable for all of the payroll taxes on the total amount.

Limited Liability Company (LLC)

The LLC is a relatively new type of hybrid business structure that is now
permissible in most states.  It is designed to provide limited liability features of a
corporation and the tax efficiencies and operational flexibility of a partnership. 
Formation is more complex and formal than that of a general partnership.

The owners are members, and the duration of the LLC is usually determined when
the organization papers are filed.  The time limit can be continued if desired by a
vote of the members at the time of expiration.  LLC’s must not have more than
two of the four characteristics that define corporations:  Limited liability to the
extent of assets; continuity of life; centralization of management; and free
transferability of ownership interests.

Entrepreneur Vs. Small Business Owner, Defined

An Entrepreneur is an individual who starts and runs a business with
limited resources and planning, taking account of all the risks and
rewards of his or her business venture. The business idea is usually a
new innovation, product or service, rather than an existing business
model.

Such entrepreneurial ventures target high-returns, with high level of

uncertainty. The entrepreneur is willing to put his or her financial
security and career at stake to take risks on an idea, spending time as well as
capital on an uncertain venture
 Entrepreneurial ventures require the enterprising individual to arrange for
capital, raw materials, manufacturing locations and skilled employees necessary
to produce a good or offer a service. Marketing, sales and distribution are other
important aspects which are controlled by the entrepreneur.

Today’s technological advancements (like online ventures) have allowed the

entrepreneurs to skip a few mandatory needs (like procuring manufacturing
facilities, door-to-door marketing) or outsourcing selected functions (like
marketing, sales & distribution), but the risk is still borne by the entrepreneur.

Entrepreneurship is different from:

 Inheriting and/or running an existing businesses (family owned, co-owned)

 Working for other businesses or entrepreneurs for a salary
 Being a commission agent
 Selling already available goods or services as a franchisee or dealership

There is a very fine line between running a small business (SB) and an

entrepreneurial venture (EV) as they have a lot in common. Initial stages of both
SB and EV need significant hard work and dedication, but over a period of time
very few SBs become EV. The following guidelines help to differentiate between
the two.

What are the primary difference between Small Businesses and Entrepreneurial
Ventures?

 Small Business usually deal with known and established products &
services, Entrepreneurial Ventures are for new innovative offerings
 SBs aim for limited growth and continued profitability while EVs target
rapid growth and high productivity returns
 Small Businesses deal with known risks; Entrepreneurial Ventures take
deep dive with lots of unknown risks

EVs generally impact economies & communities in a significant manner, which

also results in a cascading effect on other sectors like job creation. Small
businesses are more limited in this perspective and remain confined to their own
domain and group.

A few myths which exist about entrepreneurs:

 Entrepreneurs take uncalculated and unknown risks without any plans –

Partially True; entrepreneurs do take uncalculated and unknown risks but
they do keep limited resources, plans as well as bandwidth for dealing with
the unknowns to a limited extent
 Entrepreneurs start business with a revolutionary invention – Partially True;
not all entrepreneurial ventures are true breakthroughs. Most are
identifying and capitalizing on a mix-n-match approach. 

 Entrepreneurs venture out only after significant experience in the

industry – Most entrepreneurs are young, inexperienced individuals, who
follow their passion.
 Entrepreneurs complete extensive research before taking the first step –
Unless an existing business dis setting up a new business line on a new
concept, entrepreneurs start with very limited or no research. However,
they do have good awareness about the potential of their offering, which
gives them the confidence to go ahead with the venture and risks.
 Entrepreneurs start with sufficient capital and sound business plans –
Capital is the foremost requirement of any entrepreneurial venture. Most
entrepreneurs fail to secure capital from outside sources, unless they
already proven themselves with a running prototype. Hence, most
entrepreneurs start out with insufficient capital and a risky and
uncertain business plan, with an aim to secure capital along the way with a
working model or prototype to impress capital providers.

A few simple examples of Entrepreneurs and Entrepreneurship:

  Products Space:

Trading goods - like buying wholesale lots of branded shampoo at wholesale rates
and selling them at retail rates at your retail shop or online (through sites like
ebay.com) - does not constitute entrepreneurship.

However, manufacturing your own innovative distinct homemade herbal

shampoo, getting a patent of the same and marketing it for business using the
same sales channels will qualify as entrepreneurship.
So what does it take for being a successful entrepreneur?

There are several theories put forward by researchers at leading institutes about
entrepreneurship. There is no “one size fits all” model defined for
entrepreneurship. Depending upon the nature of business idea/ market/ products
or services offered for sale, the success stories vary a lot.

Broadly speaking, entrepreneurship either originates from passion or from

identifying suitable business opportunity.

A person who is very passionate about developing electronic circuits may

(accidently) develop a great appliance. Such an individual may not necessarily
have the business thoughts in mind, but he is driven by pure passion. He doesn’t
listen to anyone, goes by his gut feeling and one day develops a great product
which can be well marketed to offer extremely high returns. He fits the first
category of “passionate” entrepreneurs.

A businessman with sharp business acumen sensing a profit opportunity with a

mix-n-match approach will fit in the latter category.

Irrespective of the originating category, an entrepreneurial idea, if well nurtured

and correctly driven, can transform into a very profitable business venture.
The Bottom Line

There is no single definition or standard case study to define an entrepreneur. The

entrepreneurial ventures come with a lot of variety depending upon the personal
characteristics, local and regional issues and external factors. Embarking on an
entrepreneurial career path for “Being Your Own Boss” is exciting – just make
sure to do your homework about yourself, the offering as well as other external
factors.

Corporate Entrepreneurship and its Importance in Large

Companies
Though its definition is somewhat contentious, the concept of corporate
entrepreneurship is generally believed to refer to the development of new ideas
and opportunities within large or established businesses, directly leading to the
improvement of organizational profitability and an enhancement of competitive
position or the strategic renewal of an existing business.
Within that system, the notion of innovation is at the very core of corporate
entrepreneurship - the two inseparably bound together and responsible for driving
calculated and beneficial risk-taking. Taking it one step further, corporate
entrepreneurship may even significantly alter the balance of competition within an
industry or create entirely new industries through this act of internal innovation.

Why should established organizations consider corporate

entrepreneurship?
Corporate entrepreneurship is especially crucial for large companies, enabling these
organizations - that are traditionally averse to risk-taking - to innovate, driving
leaders and teams toward an increased level of corporate enterprising. In addition to
the obvious benefits obtained through innovation, this approach also provides the
organizational benefit of setting the stage for leadership continuity.
In a simpler view, corporate entrepreneurship can also be considered a means of
organizational renewal. For in addition to its focus on innovation, there also exists an
equal drive toward venturing. These two work in unison as the company undertakes
innovations across the entire organizational spectrum, from product and process to
technology and administration. In addition, venturing is a primary component in the
process, pushing larger companies to enhance their overall competitiveness in the
marketplace by taking bigger risks. Examples of these risks, as seen in a large-scale
organization, may include: redefinition of the business concept, reorganization, and
the introduction of system-wide changes for innovation.

Setting up the corporate entrepreneurship environment

In modern business, one of the primary tasks of the business leader is to foster an
environment in which entrepreneurial thinking is encouraged and readily takes
places. Promoting this culture by freely encouraging creativity (and thereby
innovation), business leaders motivated toward corporate entrepreneurship must
continuously strive to exude and build trust, embracing the risk to fail and
inspiring those around them to take similar calculated risks.
But there is more to an environment of corporate entrepreneurship than simply
inciting inspiration. It also relies heavily on a system of continuous analysis and
feedback, potentially including the following two steps:

Step 1
Set a broad direction for achievement, reevaluating it periodically for any new
information that may have surfaced in regard to changes in the business
environment, including competitive products and markets in which the firm is
operating. Constant evaluation is essential at this stage as even the most finely-
tuned direction can still lead to catastrophic failure if the approach is no longer
working.

Step 2
Reinforce efforts across the entire organization that coincide with the current
plan for achievement. The task of a leader or senior manager is often that of the
analyst, continuously promoting strategy while making adjustments based on
their beliefs related to organizational goals and the feedback they receive from
business units. As these business units continue to experiment with existing
products and services, as well as innovate and develop new ones, senior
executives can magnify the stated goals to reinforce those business unit initiatives
and thereby achieve the highest degree of success.

Meeting the challenges of corporate entrepreneurship

For large companies, creating new businesses is the challenge of the day. After
years of downsizing and cost cutting, corporations have realized that they can’t
shrink their way to success. They’ve also found that they can’t grow rapidly by
tweaking existing offerings, taking over rivals, or moving into developing
countries. Because of maturing technologies and aging product portfolios, a new
imperative is clear: Companies must create, develop, and sustain innovative new
businesses. They must become Janus-like, looking in two directions at once, with
one face focused on the old and the other seeking out the new.

Corporate entrepreneurship is, however, a risky proposition. New ventures set up

by existing companies face innumerable barriers, and research shows that most of
them fail. Emerging businesses seldom mesh smoothly with well-established
systems, processes, and cultures. Yet success requires a blend of old and new
organizational traits, a subtle mix of characteristics achieved through what we call
balancing acts. Unless companies keep those opposing forces in equilibrium,
emerging businesses will flounder.

The Two-Cultures Problem

It’s no secret that corporations are designed to ensure the success of their
established businesses. Existing operations, after all, account for the bulk of their
revenues. Finely tuned organizational systems support current customers and
technologies. The operating environments are predictable, and executives’ goals
are stability, efficiency, and making the most of incremental growth.

New businesses are quite different, with cultures all their own. Many are born on
the periphery of companies’ established divisions; at times, they exist in the spaces
in between. Their financial and operating models are seldom the same as those of
existing businesses. In fact, most new business models aren’t fully defined in the
beginning; they become clearer as executives try new strategies, develop new
applications, and pursue new customers. Because of the high levels of uncertainty
associated with new ventures, they need adaptive organizational environments to
succeed.
The distinctive features of new businesses present three challenges. First, emerging
businesses usually lack hard data. That’s particularly true when they offer cutting-
edge products or when their technologies aren’t widely diffused in the
marketplace. The difficulty, as one technology strategist told us, is that “it’s hard to
find marketplace insights for markets that don’t exist.” Financial forecasts are also
undependable. Large errors are common, a fact that led one printing and publishing
company to call its early-stage financial numbers SWAGs, short for “scientific
wild-assed guesses.”

Second, new businesses require innovation, innovation requires fresh ideas, and
fresh ideas require mavericks. We’ve heard too many stories of leaders trapped by
conventional thinking: Microsoft’s wariness of open-source software, Polaroid’s
grudging move into digital cameras, GM’s and Ford’s reluctance to embrace
hybrid cars, media companies’ distaste for blogs, and so on. Some degree of
unconventional thinking is essential for new businesses to take hold, but many
radical ideas are foolish or unfounded. Most mavericks, sadly, can’t tell the
difference between good and bad ideas. They persist in defending pet themes,
demand repeated hearings, and refuse to take no for an answer. The dilemma, says
Home Depot CEO Robert Nardelli, is that “there’s only a fine line between
entrepreneurship and insubordination.”

The third challenge is the poor fit between new businesses and old systems. That’s
particularly true of systems for budgeting and for human resource management.
Corporate budgeting systems favor established businesses because incremental
dollars usually provide higher financial returns when invested in known markets
rather than unknown ones. New businesses are therefore difficult to finance for
long periods, and in times of austerity, they are the first to face funding cuts. In a
similar spirit, companies design HR systems to develop executives whose
operational skills match the needs of mature businesses—not the strategic,
conceptual, and entrepreneurial skills that start-ups require. In both cases, the
answer isn’t to proceed haphazardly but, as we shall explain later in this article, to
modify systems so they are less biased against new businesses.
BUSINESS PLANING

What is a 'Business Plan'

A business plan is a written document that describes in detail how a business,
usually a new one, is going to achieve its goals. A business plan lays out a written
plan from a marketing, financial and operational viewpoint. Sometimes, a
business plan is prepared for an established business that is moving in a new
direction.

BREAKING DOWN 'Business Plan'

A business plan is a fundamental tool that any startup business needs to have in
place prior to beginning its operations. Usually, banks and venture capital firms
make the existence of a viable business plan a prerequisite to the investment of
funds in a business. A good business plan starts with an executive summary of the
business; includes a detailed description of the business, its services and/or
products; and states how the business intends to achieve its goals. It should also
provide at least an overview of the industry of which the business will be a part,
and how it will distinguish itself from its potential competitors.

Financial Projections
A complete business plan must also include a set of financial projections for the
business. These forward-looking projected financial statements are often called
pro-forma financial statements or simply the "pro-formas." They include
the overall budget, current and projected financing, a market analysis, and its
marketing strategy approach. In a business plan, a business owner projects
revenues and expenses for a certain period of time, and describes operational
activity and costs related to the business.

Practical Considerations
The idea behind putting together a business plan is to enable owners to have a
more defined picture of potential costs and drawbacks to certain business
decisions and to help them modify their structures accordingly before
implementing these ideas. It also allows owners to project what type of financing
will be required to get the businesses up and running.
The length of the business plan will vary greatly from business-to-business, but in
general, all of the required information should fit into a 15- to 20-page document.
If there are crucial elements of the business plan that take up a lot of space, such
as applications for patents, they should be referenced in the main plan and
included as appendices.

If there are any especially interesting aspects of the business, they should be
highlighted, and used to attract financing. For example, Tesla Motors Inc.'s
electric car business essentially began as only a business plan.

A business plan is not meant to be a static document. As the business grows and
evolves, so should its business plan. An annual review of the plan allows an
entrepreneur to update it when taking evolving involving markets into
consideration, and it also provides an opportunity to look back and see what has
been achieved and what has not.

ENTREPRENEURSHIP CASE STUDY

Uganda is a land of entrepreneurs, but how many startups survive?

Despite being ranked the world’s most entrepreneurial country, few Ugandan
businesses hit the big time. How can they leap from surviving to thriving?

Ugandans were proud – though not too surprised – to hear their nation had
topped a ranking last summer of the world’s most entrepreneurial countries.
According to the Global Entrepreneurship Monitor (GEM), 28% of adults own or
co-own a new business.

“Ugandans are opportunists by nature,” says Daniel Joloba, a program manager

at Enterprise Uganda, a public-private body that supports small and medium
enterprises (SMEs). But the main reason for this high figure, he says, is a dearth of
other options: 400,000 young people enter the job market annually, for a mere
9,000 new jobs each year.
Survival versus growth

But Uganda isn’t over-populated with self-made business leaders. “Only a few of

our businesses go the whole distance,” says Joloba. Most ventures in the east
African nation remain small-scale and informal. It’s partly intentional, he says.
Staying informal means avoiding taxes and registration costs – but it also means
missing opportunities, like bidding for government contracts, which could offer
financial security and a path for growth.

While almost 10% of Ugandans started a business last year, a fifth of individuals

aged 18-64 have also discontinued a business in the past year, GEM found. Young
entrepreneurs in particular have “generally low” growth expectations; few
innovate or vary product lines. Creating an additional business is more common
than expanding an existing one, adds Rebecca Namatovu, from Makerere
University Business School and coordinator of GEM-Uganda.

What of those with ambitions to grow? Orator Twesiime runs a horticulture

business called Natural Basket Uganda that has expanded from supplying eight
supermarkets in 2012, to 60 at present. But concerns about her cash flow still
gives her sleepless nights. Loans are difficult, she says: her only collateral is her
father’s or husband’s property, and interest rates are well over 20% at banks,
twice as high from other lenders.

Her solution? Using cooperatives, and putting aside 20% of sales revenue each
month to invest in the company. “It’s a slow process, but it’s sure,” she says.

The Ugandan gover0nment’s Youth Venture Capital Fund offers another route for
those seeking cap0ital to grow their business, offering loans at 15% on up to 25
million Ugandan shillings (around £5000). But Rebecca Kaduru, a co-founder
of KadAfrica, a commercial passion fruit farm that trains and equips out-of-school
girls as growers, is unconvinced. “This is a very high interest rate and a relatively
low cap – neither is particularly sustainable for growing a business.”

Social enterprise Tugende thinks there could be another option for loans. It is

among the first to lend affordably to motorcycle taxi drivers, an occupation that
employs an estimated 400,000 Ugandans, enabling them to buy their bikes after
19 months.

“Most people thought it was too risky,” says founder Michael Wilkerson, when he
started lending his own money in 2009 to just three clients. Drivers are
considered untrustworthy, and accidents assumed commonplace, he says. Nearly
2,000 loans later, though, Tugende employs over 30 staff – and has a waiting list
of 500 drivers. Wilkerson believes the model could work for any cash-generating
asset, from sewing machines to welding equipment.

Money’s not everything

Entrepreneurs across Africa often cite access to capital as the biggest barrier to

growth. But money alone is unlikely to produce significant results. 

It is financial discipline, says Paul Mugambwa, that has enabled him to grow and
diversify the landscaping and maintenance company Motion Gardeners he started
in 2010. Today, he has seven employees.

Mugambwa is a graduate of Educate!, which helps secondary level pupils set up

and run their own businesses, also training them in financial literacy, saving, and
business planning. The program has seen demand from schools exceed
expectations: when charges were introduced in 2014, 248 schools agreed to pay
up.

Without the type of guidance that Mugambwa received, says Joloba,

businesspeople will be held back by poor record-keeping, mixing business capital
and personal money, or spending profits on themselves instead of on the
company. This short-term thinking is damaging.

In 2013 GEM identified nearly a dozen entrepreneurship promotion schemes –

but found that young Ugandans were “woefully” unaware of them. 89% of young
entrepreneurs had never accessed the programmes, and a third of those who had
been dissatisfied with them.

The country’s first ever national policy on SMEs was agreed last year – aiming to
offer a more structured framework for support. But Namatovu, from GEM
Uganda, worries it won’t go far enough: “Many training programmes highlight
starting up, but ignore growth or crucial activities that can sustain firms.”

Changing mindsets

Often it is an entrepreneur’s surrounding network that has the biggest potential

to impact their future. For Tugende, a big achievement has been convincing
insurance companies to take on motorcycle taxi drivers.

For Kaduru, the main factor affecting the ability of girls to develop their
businesses is their circle of influencers: “Girls are often seen as more valuable at
home than out earning an income, leading to reduced attendance and dropouts,
so Kad Africa provides their families with passion fruit seedlings too and invites
them to family days to see their daughters’ progress.”

They also employ a full time community engagement manager to explain the
value of investing in skills and inputs. After years of NGO and government
giveaways, says Kaduru, one of the biggest challenges is helping people
understand that ultimately they will only earn what they put into it.

Getting people to understand that the responsibility is theirs, rather than waiting
for conditions to be perfect, is the key, agrees Joloba. “If you crack that, you’re
80% of the way there.”

(Extracted from global development professionals network)

New product concept development and screening
Carefully plan the steps involved in testing your new product development (NPD)
ideas. For every 7 new product ideas developed, becomes successful. Defining
your new product concept and testing it with your market will help you determine
whether your new product idea will be a success.

The concept development and testing stage of NPD can be time-intensive, but it
will help you avoid unnecessary costs later by ensuring you pursue the best new
product concept in your market.

Create a product concept

A product concept is a detailed description of an idea, which you describe from
the perspective of your customer. Taking your customers' viewpoint when
describing your product concept will help you test and evaluate how responsive
your market will be to your product.

Do your sums carefully

Make sure your idea can be designed, manufactured and delivered within your
financial, resource and time constraints.

Talk to the people who will buy it

Take your idea to your target audience to determine what they think and where any
gaps might lie. Market researchers can help you run focus groups and surveys to
determine how customers will respond to your product.

Refine your target market

Detail your customer targets as accurately as you can. Your focus groups or

conversations with your target audiences will help you determine whether you're
targeting the right market segments.
Examine intellectual property (IP) issues

Find out whether another business or individual has already patented your idea
by searching for a patent.

If your idea was the combined result of several members of your team, consider
how you will recognize their contributions to the intellectual property when
you protect your idea.

Identify the features

Based on the information you have gathered to date, list the features and benefits
of your proposed product from highest market importance to least.

Take your time

Define your product concept clearly, test it with your audience and don't make
any assumptions. Many NPD ventures fail because businesses rush through
concept development and testing.

Concepts of Marketing
There are 5 different concepts of marketing, each of which vary in the function
that they deal with. For example – production concept deals with production and
selling concept deals with selling. Each of the concepts was developed as per
the need of the market. As the market changed, so did the concepts of
marketing. And today, we have an opportunity to look at all 5 concepts of
marketing and what they represent.

1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
 5. Societal marketing concept

The article lists out the concepts of marketing in a very brief manner. You can
click on each link to know more about each individual concept of marketing.

Production Concept – Consumers prefer products that are widely available and
inexpensive. The production concept is more operations oriented than any other
concept.

Product Concept – Consumers favor products that offer the most quality,
performance, or innovative features. The product concept believes in the
consumer and it says the consumers are more likely to be loyal if they have more
options of products or they get more benefits from the product of the company.
Click here to read more about the Product Concept

Selling Concept – Consumers will buy products only if the company

aggressively promotes or sells these products. Off course, in this era of
marketing, we know that selling is not the only tactic to sell your product. You
have to focus on marketing as well.

Marketing Concept – Focuses on needs/wants of target markets & delivering

value better than competitors. The marketing concept believes in the pull strategy
and says that you need to make your brand so strong that customers themselves
prefer your brand over every other competitor. This can be achieved through
marketing.

Reading materials
Raid Hoffman (2012).The start up of you. Adapt to the future, invest in yourself, and
transform your career.

David S. Kidder, Raid Hoffman (2012).The startup play book. Secrets of the fastest
growing startups from their founding entrepreneurs.

Clayton M. Christensen (2011). The Innovator`s dilemma. The revolutionary book that
will change the way you do business.

Shaan Patel (2016). Self made success. Ivy League shark tank entrepreneur reveals 48
secret strategies to live happier, healthier, and wealthier.
End