entrepreneurial characteristics

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© 2008 – 09 M. A. Roomi, University of Bedfordshir e, UK MAR015-6 Entrepreneurship and Small Business Management Lecture 2 Entrepreneurial Characteristics Bedfordshire Business School University of Bedfordshire

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Page 1: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

MAR015-6

Entrepreneurship and Small Business

Management

Lecture 2Entrepreneurial Characteristics

Bedfordshire Business School

University of Bedfordshire

Page 2: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurship: A Definition

The pursuit of opportunity beyond the resources currently

controlled.

Howard Stevenson (1985) “The Heart of Entrepreneurship”

Harvard Business Review, March-April

Page 3: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

The Entrepreneur as an individual

“The individual entrepreneur is a person who perceives opportunity, finds the pursuit of opportunity desirable in the context of his or her life situation, and believes that success is possible, and these three elements distinguish the individual entrepreneur from the vast majority of the population.”

Stevenson (as cited in B&D 2nd ed.(1996))

“Entrepreneurship is behaviour rather than personality trait. The entrepreneur always searches for change, responds to it , and exploits it as an opportunity”.

Drucker(1985)

Page 4: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

New Venture CreationFounders

Lead Entrepreneur

Founding Team

Relevant Experience

Education

OpportunityIdea v Opportunity

Now v Later

Risk v Reward

Assessing Fit

Identifying Gaps

BUSINESS PLAN

Acquiring ResourcesFinance / Deal Structure

Recruiting

Utilisation v Ownership

Page 5: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Different Stages of Enterprise Building

REALIZATION OFOPPORTUNITY

CONSOLIDATION OFRESOURCES

IMPLEMENTATION ANDCREATION OF VENTURE

RUNNING OF AN ENTER-PRISE SUCCESSFULLY

When the entrepreneur scan the environmentand select the product.

After finalization of the product, the entrepreneur needs to consolidate the resources like finance, land,building, machineries, raw materials and otherinfrastructure.

As this stage all the resources are put together andthe entrepreneur starts an enterprise.

The entrepreneur manages the enterprise by looking after production, marketing and administration of the unit.

Page 6: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurial Functions

Accounts & Record Keeping

Money Management

Selling

Marketing Management

Costing & Pricing

Production

Establishmentof the Unit

Procurement of Finance, LandBuilding & Machinery

Applying for Loans

Business PlanPreparation

Resource Mobilisation

Market Survey &Feasibility Study

Selection of Product

Page 7: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurial Skills

High Capacity to:Tolerate uncertainty

Build a team

Provide leadership

Deal with failure

Seek and use feedback

Persist at problem solving

Take a long-term view

Not look back (except to learn)

Page 8: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Entrepreneurial Characteristics• Sees and acts on opportunity• Initiative• Persistence• Information seeking• Systematic planning• Concern for quality and innovation• Goal Setting• Influencing and networking• Risk taking• Problem-solving• Self-confidence

Page 9: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Sees and Acts on Opportunities

• Sees and acts on new or unusual business opportunities.

• Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance.

Page 10: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Initiatives

• Does things before being asked or forced to by events.

• Takes action that goes beyond job requirements or the demands of the situation.

• Acts to extend the business into new areas, products or services.

Page 11: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Persistence

• Takes repeated actions to meet a challenge or overcome an obstacle.

• Switches to an alternative strategy to reach a goal.

Page 12: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Information Seeking

• Takes action on own to get information to help achieve objectives or clarify problems.

• Personally seeks information about clients, suppliers, competitors.

• Uses personal and business contacts or information network to obtain useful information.

Page 13: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Systematic Planning

• Develops and uses logical, step-by-step plans to reach goals.

• Plans by breaking a large task down into sub-tasks.

• Keeps financial records and uses them to make business decisions.

Page 14: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Concern for Quality, Innovation and Efficiency

• Looks for or finds ways to do things better, faster or cheaper.

• Acts to do things that meet or extend standards of excellence or improve on past performance.

Page 15: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Goal Setting

• Articulates long range vision and goals.• Continuously sets and revises short range

objectives.

Page 16: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Persuasion

• Uses deliberate strategies to influence or persuade others.

• Uses business and personal contacts or agents to accomplish objectives.

• Asserts strong confidence in one’s own companys’ or organizations’ products or services.

Page 17: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Persuasion and Influencing Strategies

• Uses deliberate strategies to influence or persuade others.

• Uses business and personal contacts or agents to accomplish objectives.

• Asserts strong confidence in one’s own products or services.

• Uses a variety or strategies to influence or persuade others to accomplish own objectives.

• Acts to develop business contracts.

Page 18: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Commitment to Work Contract

• Places the highest priority on getting a job completed.

• Accepts full responsibility for problems in completing a job.

• Makes a personal sacrifice or expends extraordinary effort to complete a job.

• Pitches in with workers or work in their place to get a job done.

Page 19: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Risk Taking

• States a preference for situations involving a challenge or moderate risk.

• Deliberately calculates risks.• Takes action to reduce risks or control

outcomes.

Page 20: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Problem-Solving

• Generates new and potentially unique ideas or innovative solutions to reach goals.

• Switches to an alternative strategy to reach a goal.

Page 21: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Self-Confidence

• Has a strong belief in one’s own abilities.• Sticks with own judgements in the face of

opposition or early lack of success.• Expresses confidence in one’s own ability to

complete a difficult task or meet a challenge.

Page 22: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Six Dimensions of Entrepreneurship

• Strategic Orientation

• Commitment to Opportunity

• Commitment of Resources

• Control of Resources

• Management Structure

• Reward Philosophy (Stevenson,

2000)

Page 23: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Strategic Orientation

Entrepreneurial

- Diminishing opportunity streams

- Rapid changes in - technology, consumer economics, social values, and political roles

Administrative

- The social contract

- Performance criteria

- Planning systems and cycles (Stevenson, 2000)

Page 24: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Commitment to OpportunityEntrepreneurial

- Action orientation

- Short decision windows

- Risk management

- Limited decision constituencies

Administrative

- Negotiation of strategy

- Management of fit

- Risk reduction

- Multiple decision constituencies(Stevenson, 2000)

Page 25: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Commitment of ResourcesEntrepreneurial

- Lack of predictable resource needs

- Lack of long-term control

- Social needs

- International demands

Administrative

- Personal risk reduction

- Incentive compensation

- Managerial turnover

- Capital allocation & formal planning systems (Stevenson, 2000)

Page 26: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Control of ResourcesEntrepreneurial

- Increased resource specialization

- Risk of obsolescence

- Increased flexibility

Administrative

- Power, status and financial rewards

- Co-ordination

- Efficiency

- Inertia and cost of change

- Industry structures(Stevenson, 2000)

Page 27: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Management Structure

Entrepreneurial

- Need for coordination of key resources

- Flexibility

- Challenge to owner’s control

- Employees’ desire for independence

Administrative

- Need for clearly defined authority and control

- Organizational culture

- Reward systems(Stevenson, 2000)

Page 28: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Reward Philosophy

Entrepreneurial

- Individual expectations

- Investor demands

- Competition

Administrative

- Social norms

- Impacted information

- Demands of public shareholders(Stevenson, 2000)

Page 29: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Commitment and Determination

• Tenacity and decisiveness• Able to commit/decommit quickly• Discipline• Persistence in solving problems• Willingness to undertake personal sacrifice• Total immersion

Page 30: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Leadership

• Self-starter• High standards but not perfectionist• Team builder and hero maker; inspire others • Treat others as you want to be treated• Sharing of wealth• Integrity and reliability; builder of trust• Not a lone wolf• Superior learner and teacher• Patience and urgency

Page 31: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Opportunity Obsession

• Having intimate knowledge of customers’ needs• Market driven• Obsessed with value creation and enhancement

Page 32: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Tolerance of Risk, Ambiguity and Uncertainty

• Calculated risk taker• Risk minimiser• Risk sharer• Manages paradoxes and contradictions• Tolerance of stress and conflict• Ability to resolve problems and integrate

solutions

Page 33: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Creativity, Self-Reliance and Adaptability• Non-conventional, open-minded• Lateral thinker• Restlessness with status quo• Ability to adapt and change• Creative problem solver• Ability to learn quickly• Lack of fear of failure• Ability to conceptualize and ‘sweat details’

(helicopter mind)

Page 34: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Motivation to Excel

• Goal and results orientation• High but realistic goals• Drive to achieve and grow• Low need for status and power• Interpersonally supporting (vs. competitive)• Aware of weaknesses and strengths• Having perspective and sense of humour

Page 35: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

Social learning (cont.)• …and behaviours that are non-entrepreneurial by

definition (NB relationship to de Vries)– Invulnerability– Being macho– Dominating– Impulsive– Outer control– Perfectionist– Know-it-all– Counter dependency

Unnecessary risk takingIrrational battling to prove oneselfNot listening to advisersRefusal to analyseRefusal of personal responsibilityParalysis, missing opportunityTurning people & teams off; de-motivating

Page 36: Entrepreneurial Characteristics

© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK

From tiny acorns,

mighty oaks do grow….