ENTREPRENEURSHIP AND BUSINESS VENTURES

Introduction to Entrepreneurship

According to history, entrepreneurship has been defined as various ways of distributing resources and maximizing the processes in business through possible creative methods so as to reduce operational costs while maximizing output.  Biased is linked with entrepreneurship so as to help in coming up with new business ventures, whether micro or macro business ventures.  It is a venture that is related to the issue of taking risks and involves a lot of challenges that are associated with the operation of the business.  According to Drucker, 1986, its profile incorporates features such as the search for development, opportunity vision, innovativeness, creativity, and being ready to accept all the risks and uncertainties associated with the proposed/operational business venture.  This paper will discuss all the principles of entrepreneurship, its benefits, and all the risks related to business ventures (Suarez-Villa, 1991).

Characteristics of entrepreneurship

According to the research carried out by different economists, it is argued that the definition of entrepreneurship concept has recently experienced a lot of changes as a result of influences from fields such as anthropology, psychology, and other studies concerning business that present different theories and assist in the creation of new entrepreneurs.  Following the hypothesis by various scholars, the process of entrepreneurship starts in organizations that have cultural and social implications. The big puzzle lies in the risks that an entrepreneur experiences so as to come up with a plan and implement a new business venture.  There is a very close correlation between the prospect theory that is concerned with the behavior and link to the risk and the process of entrepreneurship.  The entrepreneur should be ready to assume all the financial risks and strategic and operational standards that are associated with establishing a new business venture (Markman & Baron, 2003). 

Making decisions in entrepreneurship in relation to the associated risks was the field of research that was tackled by both Amos and Kahneman whose findings were considered by the other scholars as a theory of prospect.  The early research was based on the idea that entrepreneurs have an average performance according to the level of the average return.  These practices have displayed structures of behavior determined by two main shortcomings of a human being. These drawbacks are the emotions that act as barriers to self-control which is quite crucial when it comes to decision-making. Besides, there are also cognitive challenges that inhibit the complete understanding of the challenge experience, specifically when it comes to the problems in drawing correct decisions concerning the available samples resulting in the employment of subjective techniques referred to as degrees of belief. According to Schumpeter, all entrepreneurs possess the profile of innovativeness and acceptance of all forms of risks and not all results end up being successful. He further argues that the functionality of entrepreneurship has the task of the relationship between the venture and the sociocultural parameters that are operating within the business structure (Markman & Baron, 2003). 

Entrepreneurial culture

Research by Burns, P shows that since the start of the time of entrepreneurship, there was an assumption that the cultural concept had a significant effect on entrepreneurship development. The idea of entrepreneurship depends on the social setting because of the different cultures that moderate the feature of entrepreneurs and make them change from one place to the other.  People are not born as entrepreneurs but the character trait of being an entrepreneur is developed within the living environment, and this is to mean that both time and place impact the trend of entrepreneurship either in a positive or a negative way.  The culture of entrepreneurship is based on different categories of entrepreneurship that are essential and crucial in the determination of the culture.  According to Kent C, there exist numerous initiatives and forms of entrepreneurship such as entrepreneurship management, collective entrepreneurship, entrepreneurial profile, and intrapreneurship.  The scholar argues that the process of entrepreneurship needs to have two or three of the above forms (Caliendo & Kritikos, 2012). 

Entrepreneurial culture always stresses the emergence of new business ventures, ways of maximizing much on them, and also the formulation of enough infrastructure to exploit such opportunities.  The fundamentals of the entrepreneurial culture involve strategizing and planning so as to be in a position to reduce uncertainties in the business ventures which is in tandem with the beliefs of the entrepreneurs of evaluating the risks in a premeditated way.   Having the idea of entrepreneurial culture, a person can conclude that entrepreneurship education is the concept whose primary goal is to assist in human development in identifying the potential market gaps and taking advantage of them in order to contribute to increased financial values and hence improvement in the societal economy(Caliendo & Kritikos, 2012).

Entrepreneurship process

The missions of entrepreneurship are entirely different and depend on the goals set by each entrepreneur. Business ventures i8s accompanied by so a lot of benefits and consequences that are directly linked to the daily operations of the firm. The process of entrepreneurship should be analyzed following the global standards in the market because it helps in the provision of new ideas and ways of providing business ventures and opportunities.  Also, entrepreneurship provides enough knowledge concerning the concept of mapping and carrying out analysis of innovative activities. Wickham stresses entrepreneurial approach should be based on four main interactive contingencies. The business owner is responsible for organizing all the factors and combining them so as to come up with an innovative value.  These four contingencies include:

1.    Entrepreneur

2.    Opportunity

3.    Organization

4.    Resources

Entrepreneur

According to the definitions given by different economists, the success of any business venture is based on the ability of the business venture to meet economic, development, and social needs.  It is to mean that the achievement of any business is a result of personal skills, attitude, character, and knowledge that lead to the analysis and evaluation of entrepreneurial success (Knight, 1996).  

An entrepreneur is anyone who owns and operates a business and therefore he is responsible for the implementation of all the entrepreneurial process. He decides on behave of the firm so as to pursue the set objectives within the business organization.  The definition does not only touch those who own business ideas and practice entrepreneurial processes, but it also involves the people who help in the implementation of the ideas as they lead a group of individuals in selling their idea.  It is not easy to find an individual who poses all the characteristics that are needed in entrepreneurship, but the whole process becomes a success once different people come together and combine their abilities. Working as a team is quite crucial in the realization of the set goals within the organization (Knight, 1996).

Opportunity

It is the existence of an opportunity in the market that has not been occupied by either the distributors or the competitors.  It can also be termed as a gap concerning the supply of a particular commodity in the market.  It is the duty of an entrepreneur to identify such a gap and make proper use of all the entrepreneurial processes to evaluate its viability and the level of profitability.  The primary responsibility of any entrepreneur is to identify any available market opportunity.  The most efficient way of achieving any market gap is through the approach of innovation that the entrepreneur displays in the market which is filled with competitors (Knight, 1996). 

Organization

An organization is the next step that follows after the identification of a business opportunity in the market.  Aiming at investing in the idea or innovation in the business environment calls for the coordination of the employees so that the firm can realize the set target.  As time goes by, the business can be transformed according to the operations and strategies set such as its size, structure, aspects, and the culture that will see the achievement of the set goals.  According to Wickham, entrepreneurial businesses are evaluated through the style of leadership, the manner in which it is operated, and the style, and the spirit that was ignited by the founder. The business may be having a hierarchy that is unstructured and policies that make it stagnate regarding development.  A well-structured hierarchy makes the business more strong concerning innovation, development, and implementation of new ideas (Knight, 1996). 

Also, entrepreneurial business ventures have been set as a series of relations that brings employees, suppliers, and all the business stakeholders together under the leadership of the entrepreneur.  The idea of uniting all the stakeholders who participate in a business venture helps in promoting formal and mixed institutions making the business operations more favorable. Some of the relationships are categorized by formal, informal, and signing of contracts which are assumed to be long term.

Resources required in a business venture

For a business venture to pick and remain competitive in the market, there is a need for the resources that help in its efficient operation. These resources include investors who assist in raising the startup and operational capital, skills of process, experience, and knowledge concerning the chosen business venture. Some of the elements that contribute to the development of a business are intangible and include loyalty, brand, and business goodwill.  The duty of every entrepreneur is to raise business capital and invest in the business and keep focusing on it so that the business can develop as it struggles to deliver quality commodities and services to the consumers.  There are some of essential resources that an entrepreneur should have such as sources of human personnel, financial resources, and the resources that help in the business operation (Kuratko, 2014). 

Financial resources

It is the resource that is used by the entrepreneur to raise business capital that is used for investment. The most common economic resource that is used by almost all entrepreneurs is money because it can be used to acquire all the other resources that are required to start and keep the business operational. Financial resources are available to the entrepreneur change depending on the sector, strategy, and the situation that is assumed by the business (Kuratko, 2014).

Human resources

These kinds of resources play a fundamental role in the business venture. They bring about innovation, and skills and are part of the company. They also provide a competitive advantage in the business venture. Human resources include all the stakeholders ranging from customers, business owners, suppliers, and employees (Kuratko, 2014). 

Entrepreneurial Risks

It is quite obvious that every business faces risks regardless of its location, the founder, size, and even the level of profitability it realizes every fiscal year.  In the event of the occurrence of any risk, the business may incur a lot of losses concerning investments, brand image, and even loss of market share. The following are the potential hazards that can face an entrepreneur;

Strategic risk

It is the most complicated risk that a business can encounter. These risks can be controlled and manipulated based on the current market, potential competitors, and external transitions, and coming up with new commodities that can hit the high notch in the market. These risks can also occur in business due to operational challenges that are beyond its control such as climatic conditions.  Business ventures that thrive well in the market and have control over these kinds of risks can identify their threats in the market and start looking for possible solutions before the situation worsens (Kuratko, 2014). 

Operational risks

Operation risks affect the operation and rating of the business venture in the market. These are referred to as the risks of loss of processes, stakeholders, and all the systems that facilitate the success of the business. Operational risks which may involve breaking down of the IT systems, shortage in material supply, and go-slows demonstrated by the working staff may have a lot of impact on the profitability and continuity of the business.  Evaluation of this kind of risk involves more than operational mistakes and an increased probability of failure to meet the business objectives (Eckel & Wilson, 2004).

Financial Risk

It is the kind of risk that is not understood by most of the clients who fail to pay the business debts making it prone to financial losses. This kind of risk affects the business operations because the business will be unable to meet the desired standards in the market, unable to pay its staff, and even makes it not comply with the government policies of tax payment.  When the business is undergoing financial constraints, the price of its products tends to increase and leading to the loss of potential customers to its competitors (Kuratko, 2014).

Conclusion

When a person decides to venture in entrepreneurship, he/she should be ready to identify the current market gap, have access to financial resources and also be able to consolidate human personnel.  A business decision is based on the past idea of the market gap and the potential competitors who might be planning to start offering the same commodities or services. The entrepreneur is supposed to make decisions by factoring in all the possible risks, ignorance, and certainties/uncertainties associated with the market gap. The fundamental parameter in the entrepreneurship process is the issue of taking risks and decision-making during the time of business formulation

References

Brownson, C. (2016). Exposure to Entrepreneurial Activities and the Development of Entrepreneurial Culture. Archives Of Business Research, 4(6). http://dx.doi.org/10.14738/abr.46.2257

Caliendo, M. & Kritikos, A. (2012). Searching for the entrepreneurial personality: New evidence and avenues for further research. Journal Of Economic Psychology, 33(2), 319-324. http://dx.doi.org/10.1016/j.joep.2011.06.001

Eckel, C. & Wilson, R. (2004). Is trust a risky decision?. Journal Of Economic Behavior & Organization, 55(4), 447-465. http://dx.doi.org/10.1016/j.jebo.2003.11.003

Knight, R. (1996). THE PROCESS OF ENTREPRENEURSHIP. Journal Of Small Business & Entrepreneurship, 13(2), 3-13. http://dx.doi.org/10.1080/08276331.1996.10600517 

Kuratko, D. (2014). Entrepreneurship (9th ed.). Boston (Mass.): Cengage Learning.

Lekhanya, L. & Visser, K. (2016). RISKS AND FACTORS CONTRIBUTING TOWARDS RURAL ENTREPRENEURIAL ORIENTATION GROWTH OF BUSINESS IN AN EMERGING ECONOMY. Risk Governance And Control: Financial Markets & Institutions, 6(4). http://dx.doi.org/10.22495/rcgv6i4art10

Markman, G. & Baron, R. (2003). Person–entrepreneurship fit: why some people are more successful as entrepreneurs than others. Human Resource Management Review, 13(2), 281-301. http://dx.doi.org/10.1016/s1053-4822(03)00018-4

Suarez-Villa, L. (1991). Regional evolution and entrepreneurship: roles, eras and the space economy. Entrepreneurship & Regional Development, 3(4), 335-347. http://dx.doi.org/10.1080/08985629100000022