Entrepreneurship is the process of identifying an opportunity, gathering required resources to start and run a business. The entrepreneur is the person that identifies the opportunity and gets the required resources to start and run a business (Amel and Mach, 2017). In order for an entrepreneur to run a business, they have to think and adopt a specific entrepreneurial venture that will enable raise resources and determine control of the business. An entrepreneurial venture refers to a form of business that enables an entrepreneur implement innovation or exploits an opportunity that has been identified. The venture enables the entrepreneur to raise capital, manage risk, make decisions, and take control of the idea. The following section will examine different type of entrepreneurial venture, their similarities, and differences and how they relate to typology of entrepreneurship. The section will also examine the scope, development, and growth of entrepreneurial ventures.
There are two types of entrepreneurial ventures for starting and running a venture. They include; a sole proprietorship and partnership. These ventures are defined differently because of their ability to raise capital, ownership, and sharing of profits.
A sole proprietorship is a one person owned venture that raise required capital to start and run the business. A sole trader identifies the idea and gathers all resources required for the venture to start. The sole proprietor starts a small business that has a mission of implementing an idea to create a new invention or innovation to exploit the opportunity identified. Sole proprietorship is basic and therefore simple to manage. Sole proprietors are lead by self concept with great need for achievement and recognition of their venture through independent success.
Partnership: A partnership is venture formed by two or more partners who come together to raise resources required to start and run a business. Partnership ventures have shared ownership. Partnership increase the ability of the venture to raise resources required for the business s to exploit the opportunity. Entrepreneurs’ partners have skills that complement one another in the process of implementing an invention or innovation. Partnership entrepreneurial venture are driven delegation of roles and responsibilities with right attitude in interpersonal relations. Entrepreneurs forming partnership also reduce risk by sharing losses. Partnership entrepreneurial venture are based on common vision that create focus for the venture toward it achievement.
Sole proprietorship and partnership ventures have several differences. First, sole proprietorship is only owned by one person while partnership is owned by two or more individuals. Secondly, sole proprietorship has a limited source of capital compared to partnership. Sole proprietorship is limited to self saving, limited loans, and family support to raise capital for the venture while partnership has a wider sourcing of capital due to more participants. Third, partnership share profits and losses while sole proprietors enjoy and suffer profits and losses respectively on their own. Lastly, partnership formation involves an agreement of involvement as required by law which is not a requirement in sole proprietorship.
Sole proprietorship and partnership entrepreneurship venture have the following similarities; first, both have unlimited liabilities. The entrepreneurs have unlimited liabilities with their venture. In case the venture is not able to settle all it debt, personal assets can be taken to settle the obligation. Secondly, both entrepreneurial ventures do not exist as separate entities to the owners. The ventures are not legally recognized as artificial individual by law. This leads to these ventures being not taxed but rather the owners are the ones who are taxed. Lastly, both entrepreneurial ventures are easy to start and manage. The ventures have little startup requirements from the authority. Sole proprietorship only requires a business license to start while partnership requires an agreement document to start.
Entrepreneurs also have an opportunity to start large ventures to implement their invention or innovation. These ventures include either private or public corporations. These corporations are owned by shareholders. The entrepreneurs sell shares of the venture in exchange of capital. The entrepreneurs use this capital they raise to fund the idea and generate returns to the shareholders. Corporations have an obligation to increase the wealth of the shareholders through increasing profits for the business. The entrepreneur starting a corporation has to bid shares from willing shareholders who become part of the ownership of the venture. Corporations exist as legal entities and have rights and can be sued or sue. Corporations require registration fro the register of companies and signing of memorandum of association. Corporations have limited liability and entrepreneur’s or shareholders personal wealth cannot be used to settle the debts if the company is unable or is liquidated. Corporate have advantage of having ability to raise a lot of capital, have limited liability and has perpetual life. On the other side, corporation have disadvantage of less control from the entrepreneur and complex to start and manage.
The entrepreneurial venture development and growth involves several steps. These stages include; growth. The first step involves the development of the business idea. The entrepreneur gathers all the required resources to start and run the business. Secondly, the entrepreneur starts up a venture that involves the starting point of meeting the gap that exists in the market. Third is the growth stage that involves modification of the strategies and positioning to increase the venture performance. This stage involves expansion of the venture to meet the demand in the market. The fourth stage is the stabilization stage that is characterized with saturation of the customers and strengthening competition. This is the maturity stage and the venture enjoys maximum profits. Lastly is the decline stage that involve introduction of another ideas. This stage makes the existing idea absolute due to new ideas and modification that are more appropriate. This stage requires the entrepreneur to redesign the product in order to survive in the market.
Small businesses are venture that employ less than 250 employees. Micro businesses have less than 10 employees. UK has 5.4million Small and medium businesses in 2016 and 5.3million micro businesses. SMEs and Micro businesses employ 32% of the total labour in UK. These ventures are 97% spread to all businesses in UK. SMEs accounted for 99% while micro businesses accounted for 96% of the total businesses. UK had a total of 5.5 million businesses in 2016. London alone has 1464 businesses for 10000 residents. The UK economy recorded 383000 businesses being started in 2015 of which 252000 failed in 2015.Lastly, 20% of the small businesses in the UK were led by females for 2015 and the number is expected to increase to 35% to 2018.
Importance of small business and Business Startups to social economic growth
Small businesses and startups are important to social economic growth. The following are importance of small and startups business in growing social economy;
Creation of employment: Small business creates job opportunities for UK labour that account for 30% of the available labour. Business startups provide an opportunity to reduce unemployment in the economy. Creating and employing citizen help the social economy to grow.
Wealth creation to the economy: Micro businesses account for 96% of the total businesses in UK. These businesses create wealth for the society that enables social economic development through utilization of available resources and production of goods. Startups increase wealth for the owners and the economy at large.
Raising standards of living: Small business provides the public with products and services that improve standards of living. The business transport goods from where they are surplus to places where they have high demand. Startups in the economy help bridge the existing gap in the market that need to be satisfied. These factors help improve standards of living of the public growing the social economy.
Generating income: Small business and startups generate income for owners and the government. The small business gain profits from their operations which they pay a certain amount to the government. Generation of income enables the government provides essential commodities and services to the public and increase purchasing power of the public to access primary needs.
The size of the business determines its ability to produce and sell in the market. Small businesses are ventures that have less than 99 employees. Medium businesses are venture that have less than 250 employees. Large businesses have more than 250 employees (Arogundade, 2011). Small businesses are capable to availing their products locally while medium businesses are able to sell products regionally. Large businesses are capable of selling products nationally and internationally. Small and medium businesses are 99% present in every industry in UK. Only 5% of small and medium businesses operate in the construction industry. Only 1% of the small and medium businesses are involved in mining and utility sector. Large businesses have a big impact on the construction, quarrying, mining, and utility industry. Large businesses account for 45% of the employees registered under PAYE or VAT.
Small businesses have a big impact on the local public. Small businesses are started up in relation to location and population of the residences. For instance there was 1464 small business in London for 10000 residents compared to North East where there were 679 per 10000 residents. The small business also employs more females in the leadership role of 20% compared to 4% of the large businesses. Medium businesses have a high impact regionally and nationally (Fsb.org.uk, 2016). The medium businesses have capacity to serve customer both regionally and nationally. Lastly, the large organizations have impact nationally and internationally. Large businesses are able to produce with economics of scale and thereby presenting competitive prices in the market. Large businesses therefore, are able to practice price discriminations and even create monopolies in the economy.
Commercialization is the process of launching an invention or product to the market. It involves activities that are aimed at succeeding in the market by creating high demand and effectively meeting consumers’ needs (Altinay et al., 2012). Commercialization process requires evaluation of the market in order to successfully launch an invention or product. Commercialization is a delicate process and if an entrepreneur does not involve certain key steps, the product can encounter market failure. The following are important step when commercializing a product; first is protecting the idea or taking a patent for the invention. It is important in the process of commercialization for entrepreneurs to protect their ideas before commencing full commercialization of the products in the market. Protecting the invention or taking a patent enables the entrepreneur idea or innovation is not counterfeited or exposed to unnecessary competition (Barnes and Haskel, n.d.). Secondly is a process of making business plan to allocate resources for activities aimed to commercializing new product. Creating a business plan for the activities to be involved in the commercialization ensures the there is effectively in the process. This step also involves evaluating of the product prices of the innovation to manage competition and enter the market. Third is launching the new product in the market. This step involves evaluation of the process to ensure there activities are in line with the plan. Lastly is the full commercialization step. This step involves full selling of the product in the market. The commercialization process ensures that the entry of the new invented product or idea is protected, supported by a good budget and market research and evaluation are carried out to ensure market success (Megicks, 2007).
Risk takers: Entrepreneurs are risk taker and are not afraid of the risks involved in the process of starting or working on an invention or new idea. They are always ready to take opportunities despite the risk associated with the venture (Robinson and more, 2014).
Self believe: Entrepreneurs have a strong believe in themselves. They have self confidence and believe that their venture will be successful no matter the factors limiting actualization of the invention or idea.
Knowledgeable: Entrepreneurs have knowhow about the ideas or invention that they pursue. Knowledge enables entrepreneurs create new products or put forward new processes.
Flexible: Entrepreneurs are adaptable to different situations in the processing of creating new products and process. They are able to change to accommodate changes in order to start and run their ventures (Altinay et al., 2012).
Visionary: entrepreneurs have vision about the desirable product or condition to satisfy human want. The entrepreneur envisions desirable condition and works towards achieving it.
Networking skill: Entrepreneurs have ability to network and have several partners on board to assist in making or selling of the product. Networking skill help entrepreneurs get best deals in the industry boosting the product or idea performance either by adoption or profits (Job, 2017).
Passionate: Entrepreneurs are passionate and obsessed individuals about their idea. They have great desire for achieving (Cohen, Smith, and Mitchell, 2008).
The entrepreneur personality is the key determine between a successful entrepreneurs and hose that fail. First, entrepreneurs are passionate and obsessed with their idea of invention and therefore are intrinsically motivated in their actions. Secondly, entrepreneurs are risk taker and it helps them to have a mindset of not fearing (Miner, 2000). They are able to engage in activities that are risky and in most cases emerge victorious. Third, being visionary and this enables them to have a great desire to achieve. This desire motivates them to work hard toward achieving their visions. Fourth, entrepreneurs are self confident that enable them to have self belief. This motivates entrepreneurs to work hard towards achievement their dreams (Wang and Altinay, 2012).Lastly, entrepreneurs are knowledgeable that give the right mindset to pursue their dreams. Being knowledgeable helps an entrepreneur to be aggressive, tolerant, focused and dedicated to work on their invention.
There are different arguments of entrepreneurial characteristic that enable entrepreneurs to pursue and achieve starting and managing their venture. These arguments are as follows;
The first argument of entrepreneur character is achievement motivation. The argument suggests that individuals are motivated by challenging goals and strive to achieve. Entrepreneurs strive to achieve through own efforts to get recognition.
Secondly, there is an argument of need for autonomy. This argument states people are driven by high need for autonomy where individuals consider freedom and individualism important. This desire for independence leads to individuals working hard to invent new products and process. This argument holds that entrepreneurs are motivated by need for control in their life thereby identifying opportunities that they gather resources to start and manage their own ventures (McAdam, 2013).
Third is creativity argument that holds on peoples’ ability to create new methods to use instead of adopting the old or existing standard procedures in their field of work. The creativity argument states that an individual’s ability to be creativity is paramount to entrepreneurship. This argument for entrepreneurial character is dependent on people’s ability to generate a new invention for distinction or making things easier in their field of working or learning (Gilbert, 2010).
The characteristics of an entrepreneur are important to motivating and giving right mindset to an entrepreneur. Charateristic traits enable the entrepreneur to be dedicated to pursue inventing a new product. Entrepreneurs should be motivated by certain drivers in order to achieve their dream (Burnett and Danson, 2017). For instance, Bill Gate the CEO Microsoft was visionary to see the future of computer software programming. He was passionate to pursue his idea with great desire to achieve. Therefore, the entrepreneur characteristic trait is important to creating motivation in using one’s skills for success in entrepreneurship.
Entrepreneurship is affected by the following environmental factor;
Economic factors: These are factors that enable new products or ideas economical viability. These are factors that enable the demand and supply of the products.
Financial factor: These are factors that allow entrepreneurs start and finance inventions. Access to funding is a factor that determines the ability of an entrepreneur to raise required resources to run and manage a venture.
Legal factors: This refers to factors that must be fulfilled before setting of a venture.
Social and cultural factors: These refer to factors that include demographic of the people where an entrepreneur comes from. They influence inventions and ideas that entrepreneur do.
Developmental and institutional: This environmental refers to support system in a country or state that encourages entrepreneurship. This can be either governmental or non government institutions (Zahra et al., 2009).
The above environmental background influences the entrepreneurship practice in certain environment. A good conductive environment fosters entrepreneurship in the country or state.
The entrepreneurial characteristics are shaped by the background of the entrepreneur. The background of the entrepreneurs determines the motivation and mindset that individual have towards entrepreneurship (Malecki, 2009). The link between entrepreneur’s background and entrepreneurial characteristic is as follows; first, personal background determines the culture that an individual has towards entrepreneurship. The culture that promotes independent, individualism, and freedom lead to individuals having entrepreneurial characteristics. This personal background encourages entrepreneurship. Secondly, personal supporting background motivates an individual to venture into entrepreneurship. The supporting institution encourages individuals to strive for recognition by applying creativity. Third, personal background determines availability of resource. Enrollment of resource enables feasibility of an invention (Zhao, Seibert, and Lumpkin, 2010). Individuals from rich backgrounds are able to pursue entrepreneurship as compared to individuals from less financial backgrounds. Lastly, personal background determines level of education and exposure. Level of knowhow and exposure increase the chances of identifying an opportunity to pursue. Having knowledge also enables an individual to understand the current situation and the desired state to satisfy human need.
Experiences and background increase knowledge, skills, and change attitude towards entrepreneurship. Background and experience can influence entrepreneurs either positively or negatively as follows; A conducive background and experience in a particular field positively influence an individual’s character towards entrepreneurship (Koveos, 2015). A conductive background encourages an entrepreneur by motivating and providing right mindset to entrepreneurship. Experience provides an entrepreneur with knowledge and skill that are required for starting and managing a venture. Experience also changes an individual attitude towards entrepreneurship. On the other side, lack of a good background environment and inexperience hinder individuals from entrepreneurship. They lead to individuals not seeing the opportunities that exist in the society thereby failing to take up entrepreneurship. Poor background does not encourage individuals to be entrepreneurs. Inexperience leads to inadequate knowledge and skills to start and manage a venture. Therefore experience and enabling background are important factors to an entrepreneur identifying, starting, and running a venture.
References:
Amel, D. and Mach, T. (2017). The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses. Economic Notes.
Awogbenle, A.C. and Iwuamadi, K.C., 2010. Youth unemployment: Entrepreneurship development programme as an intervention mechanism. African Journal of Business Management, 4(6), p.831.
Altinay, L., Madanoglu, M., Daniele, R. and Lashley, C., (2012). The influence of family tradition and psychological traits on entrepreneurial intention. International Journal of Hospitality Management, 31(2), pp.489-499.
Arogundade, B.B., (2011). Entrepreneurship education: An imperative for sustainable development in Nigeria. Journal of emerging trends in educational research and policy studies (JETERAPS), 2(1), pp.26-29.
Barnes, M. and Haskel, J. (n.d.). Job Creation, Job Destruction and the Contribution of Small Businesses: Evidence for UK Manufacturing. SSRN Electronic Journal.
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Cohen, B., Smith, B. and Mitchell, R., (2008). Toward a sustainable conceptualization of dependent variables in entrepreneurship research. Business Strategy and the Environment, 17(2), pp.107-119.
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Gilbert, N. (2010). Experts will assess UK research ‘impact’ to award funding. Nature.
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Malecki, E. (2009). Geographical environments for entrepreneurship. International Journal of Entrepreneurship and Small Business, 7(2), p.175.
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