The new entrants into the world of entrepreneurship belong to Generation Z. The members of this generation have become eligible for employment starting 2016. The other option for Gen-Zers is to become entrepreneurial, either by choice—because they have spotted an opportunity in the market place—after which they are called opportunity entrepreneurs, or by compulsion, becoming necessity entrepreneurs, who start businesses because they cannot find work any other way. In all cases, an entrepreneur is one who creates a new business, facing risks and uncertainties for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessary resources to capitalize on them.
The history of the word “entrepreneurship” is fascinating, and scholars have indeed analyzed its meaning.
The definition used at Harvard Business School was formulated by Professor Howard Stevenson, the godfather of entrepreneurship studies there. According to Stevenson, entrepreneurship is the pursuit of opportunity beyond resources controlled. The word “pursuit” here implies a remarkable, relentless focus. Entrepreneurs often perceive a short window of opportunity. They need to show tangible progress to attract resources with their limited cash balances. Entrepreneurs have a sense of urgency, which is of less impact at well-established companies due to the abundance of resources.
“Opportunity” is the key word in all the definitions of entrepreneurs and entrepreneurship. Opportunity, according to Harvard Business Review, implies an offering that is novel in one or more of four ways.
An opportunity may entail:
- Pioneering a truly innovative product
- Devising a new business model
- Creating a better or cheaper version of an existing product
- Targeting new sets of customers with an existing product
What is Triggering Entrepreneurship?
- Industry is becoming more information-intensive and less labor and capital-intensive, which removes the traditional barriers for start-ups.
- The nature of the prevailing industries has changed after the economic crisis that facilitated the entrance of new entrepreneurs into the market. In the days before the economy fell into recession, the construction industry was unrivalled. However, this sector kept on falling while the recession gripped many regions in the world.
- The cultural diversity of entrepreneurs: Virtually anyone can become an entrepreneur. The pool of entrepreneurs include young people, women, and minorities who used to face the glass ceiling, immigrants, part-timers, home-based businesses, copreneurs, corporate castoffs, and corporate dropouts, among others.
- Entrepreneurs are now being perceived as heroes. Business founders like Mark Zuckerberg, Bill Gates, Steve Jobs, Jeff Bezos, and Phil Knight have achieved more stardom and popularity than renowned Hollywood stars.
- Colleges and universities that offer entrepreneurial education have become very widespread and many curricula have been designed to cater for this type of education.
The Benefits and Drawbacks of Entrepreneurship
Despite the great appeal of the word “entrepreneurship” and the desire of many people to ride this wave, anyone planning to enter the world of entrepreneurship should be aware of its potential drawbacks
|The opportunity to create your own destiny||Uncertainty of income|
|The opportunity to make a difference by contributing to society and being recognized for your efforts||Risk of losing your entire investment|
|The opportunity to reach your full potential||Long hours and hard work|
|The opportunity to gain impressive profits||Lower quality of life and high level of stress until business gets established|
|The opportunity to do what you love and have fun at it|
Risks Faced by Entrepreneurs
Risks Faced by Entrepreneurs
- Demand risk relate to prospective customers’ willingness to adopt the solution envisioned by the entrepreneur
- Technology risk is high when engineering or scientific breakthroughs are required to bring a solution to fruition
- Execution risk relates to the entrepreneur’s ability to attract employees and partners who can implement the venture’s plans
- Financing risk relates to whether external capital will be available on reasonable terms
Processes and Stages of Developing a New Venture
The typical stages of developing a new venture include:
- Assessing the opportunity for new a venture—generating, evaluating, and refining the business concept
- Developing the business plan and deciding the structure of the venture
- Acquiring the resources and funding the necessary resources for implementation, including expert support and potential partnerships
- Growing and harvesting the venture by figuring out how to create and extract value from the business
Developing the Business Plan
No standard business plan exists, but there are certain components that have to be available to make the business plan representative of the start-up and its potential. The business plan usually starts with an executive summary and includes sections related to the product, technology, development, production, marketing, human resources, and financial estimates, in addition to timetables and funding requirements. A typical formal business plan, according to Kaplan Warren, will include:
- Details of the product or service
- Assessment of the market opportunity
- Identification of target customers
- Barriers to entry and competitor analysis
- Experience, expertise, and commitment of the management team
- Strategy for pricing, distribution, and sales
- Identification and planning of key risks
- Cash-flow calculation, including break-even points and sensitivity
- Financial and other resource requirements of the business
The New Product/Service Development Process
While the aim of the feasibility study and business plan is to test the practicality of a proposed project and create a roadmap, developing a product or service requires considering several factors across the four-step process:
- Concept generation: identifying opportunities for new products and services
- Project assessment and selection: screening and choosing projects that satisfy certain criteria
- Product development: translating the selected concepts into a physical product
- Product commercialization: testing, launching, and marketing the new product
In my next blog post, I will be sharing with you everything that you need to know about social entrepreneurship, appreneurship and intrapreneurship. The blog post will also feature some live examples and interviews so stay tuned! Until then, don’t forget to let me know your feedback and questions in the comment section below.