"WHERE KNOWLEDGE IS WEALTH"

Friday, November 21, 2008

ARE ENTREPRENEURS BORN OR MADE?

ABSTRACT

The article highlights about the role of entrepreneurs and the science of entrepreneurship. It focuses on the case study of RedBus Company where the problem has been converted as a business opportunity by Phanindra Sama, CEO of the company. It also focuses on the case study of Skype where new technology concept was created and sold for good amount. The article justifies from research findings that an entrepreneur with experience of business background can fare better than that of an entrepreneur without any experience of business background. It successfully differentiates between entrepreneurs and managers. It dwells at length about the essential ingredients that are essential for effective entrepreneurs. At the end it concludes that entrepreneurs are not born but made.

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KEY WORDS: Introduction, Entrepreneurship, Role of Entrepreneur, Case Study of redBus and Skype, Business Plan Processing, Entrepreneurs with Experience, Entrepreneurs vs. Managers, Essential Ingredients for Entrepreneurial Success & Conclusion.

INTRODUCTION:

Anything about entrepreneurship excites all. Everyone would like to be his own boss and nobody would like to work under somebody. But there are certain challenges and constraints in becoming boss of his own business. There are elements of risks involved by being boss of an enterprise. Anybody can become the boss of an enterprise but everybody can not become. Why? Is entrepreneurship a skill or a talent? Are entrepreneurs born or made? What differentiates between wheat and chaff? What differentiates between an employer and an employee? Let us look at the same.

ENTREPRENEURSHIP:

Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. In yet another definition of entrepreneurship, it is the assumption of risk and responsibility in designing and implementing a business strategy or starting a business .

From the above definitions it becomes clear that entrepreneurship is the art and science of setting up an enterprise right from conceptualization to completion with an intention to bring profitable returns. It also offers ample of other advantages and opportunities for the entrepreneur and to the society as a whole. The person or the persons who are involved in initiating this process are known as entrepreneurs. The word entrepreneur originates from the French word “entreprendre” which means “to undertake”. An entrepreneur is a person who has possession over a company, enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome.

Entrepreneurship is a discipline and a process. It not only involves entrepreneurs but may also involve others like angel investors, or venture capitalists and mentors. If we compare entrepreneurs as actors then entrepreneurship is the process of acting. And we can also compare angel investors as producers and mentors as directors. Entrepreneur is a catalyst who will bring out changes. The discipline of entrepreneurship can be taught. It is more of a skill than talent and can be cultivated by way of education like any other discipline.

ROLE OF ENTREPRENEUR:

"Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets." - Victor Kiam

The role of entrepreneur is crucial and critical in the context of building the enterprise. He plays many roles linking human resources, finance, production, marketing, operations, research and development and overseeing the same with a broad and big picture. He networks with bankers, major clients, suppliers and others thereby ensuring smooth functioning of the enterprise. Besides, he identifies the opportunity, builds the base and leads the organization by attracting and retaining the precious human resources. He usually looks at the niche areas and goes by the road less traveled. In the sense, he looks for novel and innovative methods so as to try and work out his idea. In a nutshell, he is an innovator, creator, risk taker and leader. A successful entrepreneur is one who senses the opportunities constantly, manages the risk, collaborates effectively for building strong teams, raises the bar, learns from mistakes and failures and constantly innovates and pursues the project with passion till the end.

CASE STUDY OF REDBUS:

The entrepreneur in us sees opportunities everywhere we look, but many people see only problems everywhere they look. The entrepreneur in us is more concerned with discriminating between opportunities than he or she is with failing to see the opportunities - Michael Gerber, author, entrepreneur

Entrepreneurs are optimists and they always convert problems into prospects. They have uncanny ability to convert threats into opportunities. For instance, let us take the case of Phanindra Sama, CEO, redBus who set up www.redBus.in.

When he wanted to travel from Bangalore to his home town for celebrating Diwali he found the tickets being sold with in minutes before he reached the travel agent. Because he was not sure of getting his leave granted during his tenure at Texas Instruments, Bangalore, he planned to go by bus as it was easy to get ticket to travel. But he noticed the problem of tickets being sold with in no time. And unfortunately he did not get the ticket to travel. It was indeed a painful experience for him. Then he realized the need to provide information to all travelers about the buses leaving from one point to another. He conceptualized redBus and provided solutions for the problems. With this, the customers can get information through the website, over the phone; they can book and pay for a bus ticket using GPRS on their mobiles or through sms or they can just walk in to any of the ITZ cash, Done Card, Sify or Oxygen outlets to collect the tickets. From this case study it becomes very obvious that how problems are converted into opportunities by the entrepreneurs.

CASE STUDY OF SKYPE:

Now let us look at the case study of Skype. Skype allows people to make free voice and video calls over the internet. It was a new concept and became an instant hit. It was founded with small capital by the founders Niklas Zennstrom and Janus Friis. Anything new and novel will see the light of the day. The technology has provided so many opportunities to think out of the box and start business ventures. They minted good amount of money by selling it off. With the rapid growing technology many novel concepts are coming up and giving scope for entrepreneurship. Orkut is another example of instant idea which is a runaway hit. Sabeer Bhatia’s Hotmail and Deshpande’s Cascade Communications went on well and all that is an indication of entrepreneurial successes in the arena of growing internet and other technologies.

BUSINESS PLAN PROCESSING:

The entrepreneur who has plans to try his idea need to prepare his draft well with both pros and cons with details related to the requirement of investments, risks involved, period of break even point and other relevant details. Once it is prepared he can send it to venture capitalists that would look at the feasibility of the project and once they are convinced they will call for interview after short listing. It is the first sign of having entry. At this time the entrepreneur has to explain everything with merits and demerits with a practical approach. If the venture capitalists are convinced then they come out with their terms and conditions and if the same are acceptable to both sides the business venture will take off. The entire procedure can be compared with that of employment interview where the CV would be prepared, and then short listed, then called for interview and at the end employment offer would be made.

ENTREPRENEURS WITH EXPERIENCE:

According to the research findings, entrepreneurs with past business experience are more successful than the entrepreneurs without any business experience. It is basically because they learn the things in a hard way. Perhaps they might have failed in some areas and learnt lessons or may be the confidence they gained when they actually worked under various conditions and constraints. For instance, there are entrepreneurs who are successful such as CEO of redBus, Phanindra Sama and Subroto Bagchi, the cofounder of Mind Tree Consulting whose previous business experience helped them evolve as entrepreneurs. Therefore, it is advisable to have business experience before you start your enterprise. At the same time it can not be said that the entrepreneurs without business experience will not succeed. What is needed is the business acumen, right plan right resources, right execution and so as to make the enterprise tick. Research reveals that the children of entrepreneurs also do well probably they have been brought up in business environment and that makes them more sensitive and successful in their venture.

Again when we find from the research it is obvious that the entrepreneurs with educational qualifications are more successful than the ones without educational qualifications. The percentage of success is higher in the case of educationally qualified entrepreneurs as they have knowledge, managerial skills and are well versed with technology. Again in this we find a few great exceptions like Bill Gates who is a college drop out, then Michel Dell, Steve Jobs and Sir Richard Branson who is a high school drop out.

ENTREPRENEURS VS MANAGERS:

Entrepreneurs take risks while the managers are risk averse. Entrepreneurs lead while the managers execute, entrepreneurs inspire while managers administrate, entrepreneurs believe in innovation while managers believe in execution,. If managers see problems the entrepreneurs see the opportunities. Entrepreneurs are revolutionaries while managers are evolutionaries. Entrepreneurs are business focused while the managers are systems focused. Entrepreneurs enjoy the thrill of uncertainty and risk while the managers like to be certain and safe. Entrepreneurs are employers while managers are employees. Entrepreneurs are creators while managers are only generators.

Managers live in the present where as the entrepreneurs always stay ahead of time and think of future. The managers just execute the stipulated and given tasks and the entrepreneurs know the implications and complications involved and the fall out of executing such tasks. The managers often look for survival where as the entrepreneurs always look for success. The ability to look at big picture is the core philosophy of the entrepreneurs and the managers mostly focus on small and narrow picture.

Imagination is the key to entrepreneurship while knowledge is the key to management. Peter F Drucker rightly said, “A manager is responsible for the application and performance of knowledge”. When the managers work hard and climb the ladder of organization, the entrepreneurs work smart and place the ladder on the right side of the wall. It is the entrepreneurs who envision ‘where to go’. On the other hand, it is the managers who come out with possible and feasible plans for entrepreneurs by telling ‘how to go’. To put it succinctly the entrepreneurs are visionaries and managers are missionaries. by telling ‘how to go’. To put it succinctly the leaders are visionaries and managers are missionaries.
ESSENTIAL INGREDIENTS FOR ENTREPRENEURIAL SUCCESS:

"Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you're generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don't make." - Donald Trump , real estate and entertainment mogul

Be passionate in what you are doing. Do what you love to do rather than loving what you do. Most of the entrepreneurs do not start their ventures to make mere money. They start because they have fire in their bellies and they are achievement oriented. They want to create history and they want to leave their mark behind.

Find out the existing gaps in the business, products and services and try to focus on those areas. And ensure that the idea is unique and has longevity. Having niche areas will help you keeping you apart from the crowd. And also there is higher possibility of success as there is a need for it and the marketing would become easier.

Don’t be a copy cat. And don’t get into the rat race. Never follow the crowd. Always be different and stand distinguished from crowd. Follow the road less traveled and become a trailblazer.

Cash is king. Always keep sufficient capital ready to avoid default in payments and losing good will. Reinvest the capital for further growth and expansion. Or else try to diversify with your reinvestments out of your earnings. Don’t just spend money lavishly just because you began earning. Don’t go for fancy cars or become a spendthrift. Keep cash ready and if surplus is there invest in other related or unrelated diversifications.

If possible try to work in the similar area for sometime so as to understand the practical problems. It will help to have better experience in the same field for some time and also it will help in having better contacts with customers, suppliers and other officials.

Don’t get dejected by failures as each failure is a lesson and in fact a boon in disguise. Many inventions are the result of repeated failures. Perseverance is the key. Once faced with failures the next task is to find out where you went wrong and take remedial action immediately and proceed further.

Learn to live with uncertainty and learn to change fast as per the changing times. In this complex and technology world there is an element of uncertainty everywhere. Always be prepared for challenges and have the mindset for uncertainty.

Always try to look at low cost alternatives without compromising the quality of products or services. This helps in offering the products or services at a cheaper rate than that of your competitors and enhances your business volumes and returns.

Always think fast and act fast as it helps in checkmating your competitors. This is a technology dominated world. Innovate regularly and think out of the box to find out the ways and means to stay ahead of your competition.

Be ready to work round the clock. Becoming an entrepreneur is not a time bound job as it involves constant attention round the clock and wholehearted involvement to face challenges in both internal and external business environment.

CONCLUSION:

Encouraging the entrepreneurs is essential for the development of the industry and the overall prosperity of the country. Only when entrepreneurship is encouraged then there will be more generation of employment, more opportunities, more production and ultimately having better standard of living.

Research reveals that many of the entrepreneurs are self-made excluding the few who are blessed to take the charge of entrepreneurs by their parents. The majority of the successful entrepreneurs are the first generation and a few successful entrepreneurs are second generation which proves beyond doubt that entrepreneurs are made rather born. Over and above entrepreneurship is a skill rather a talent. Talents are innate while skills are cultivated by way of observation, education, experience and training. Therefore we can comfortably conclude that entrepreneurs are not born but made.


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1 comment:

mahasiswa teladan said...

hi..Im college student, this article is very informative, thanks for sharing :)