Current Issues in Entrepreneurship
In many ways, the issues facing modern entrepreneurs are the same issues facing any business owner: developing and marketing products, earning and sustaining profits, and managing employees and projects. However, the nature of entrepreneurship often puts a spin on these needs. In general, entrepreneurs' concerns fall into three areas: (1) ways to reduce unnecessary risks, both in the short-term and in the long-term; (2) managing the changing requirements of their organizations as their venture grows and matures; and (3) considering cultural trends that offer new opportunities for entrepreneurial innovation.
Keywords E-Commerce; Globalization; Government; Management; Social Entrepreneurship; Venture Capital
Entrepreneurship: Current Issues in Entrepreneurship
The term "entrepreneur" is difficult to precisely define. Although dictionary definitions often talk of entrepreneurship in terms of organizing and operating a business, the original French term carries with it a sense of adventure and risk for the undertaking. Various English definitions of the term include the concepts of innovation, risk taking, and undertaking a new venture. In reality, what tends to set apart the entrepreneur from other businesspersons is the degree of risk taken in the new venture. By this definition, entrepreneurs may work within established organizations (sometimes referred to as intrapreneurs), or they may be independent, starting a new venture on their own or as part of a team.
No matter which situation an entrepreneur finds him- or herself in, there are some activities that never change. Ideas and business plans must be developed, employees and projects must be managed, clients or customers must be attracted, start-up capital must be obtained, and continuing income must be generated. However, entrepreneurs also face challenges that are not typically a part of the everyday life in established organizations. The risky nature of their ventures means that marketing is often more difficult than with a proven product. Whereas established businesses can point to a proven track record of success, sometimes the entrepreneur can only try to sell an idea with the promise to work out the details in the future. A corollary of this problem is that the entrepreneur also tends to be more concerned with finding capital for running his or her business or developing a new product than the management of an organization with an established product would be. Particularly if the entrepreneur does not work for an established organization, financial backing for the new venture often must be found and won.
The nature of the entrepreneurial organization brings with it a unique set of management problems separate from those experienced in more established organizations or those involved with less risky ventures. Entrepreneurialism tends to be defined by innovation, and innovation requires creative personalities. Such persons tend to require a different management style than those doing more routine jobs. The very abilities that are necessary to be a successful innovator—the abilities to think outside the box and do things one's own way—make management of the creative individuals in an entrepreneurial organization more difficult. On the other hand, just as nature tends to move toward a steady state, so do organizations move toward financial security by taking high risks in the short term in order to become established and successful and take less risk in the long term. This means that as entrepreneurial organizations grow and become more successful, the paradigm of independent thinking and maverick tactics must change in order to promote the long-term sustainability of the organization. Since rebellion against established products and procedures is one of the defining factors of entrepreneurialism, entrepreneurs often find this transition difficult or even impossible to make.
In addition, as social concerns and culture change, so do some of the hot topics in entrepreneurship. The Internet and easy access to high-tech communications have in many ways truly made the world a village, and the marketplace no longer needs to be limited to the local community; businesses can literally market to the world. However, one must be technologically savvy in order to maximize the potential of the high-tech tools available for marketing and communication. In addition, such global marketing opportunities also require an increased sensitivity to multicultural concerns in order to attract and maintain a client base.
It is not only the rapid march of technology that impacts the lives of entrepreneurs. Social concerns of the greater culture also affect the purpose and organization of many entrepreneurial firms. For example, issues such as social entrepreneurship and the practice of being "green" are important considerations in success. In addition, researchers and entrepreneurs both continue to struggle, as does the rest of the business community, with questions about the different styles and success rates experienced by women and minorities.
Many of the issues faced by entrepreneurs are the same as those faced by conventional businesses. However, because entrepreneurial organizations tend to be small businesses, the impact of these issues often has the potential to be more serious. Whereas a larger, more diverse or established organization typically has other internal resources on which to draw when problems arise, a struggling entrepreneurial organization may not be able to recover as easily or at all.
Minimizing Risk Taking
Taking risks is at the heart of the entrepreneurial experience. However, taking unnecessary risks or risks without sufficient potential for rewards is foolish. Entrepreneurs seek to turn their talents, creativity, and insights into a successful and sustainable business. To do this, of course, the entrepreneur needs money. Some entrepreneurs are lucky enough to have sufficient funds to start their new enterprise without outside help, but many need the help of others. Therefore, one of the continuing challenges for many entrepreneurs is funding.
Once an entrepreneur has developed an idea and researched a target market, funding for marketing, prototyping, manufacture, and distribution must be obtained. If the entrepreneur is working alone and offering a service to a market that already is familiar with his or her work, it is possible that the new venture could be funded out of personal savings or loans. However, when the commodity being offered is a complex idea or product, it is often necessary to find investors. One source of funding is marketing one's new ideas directly to the potential marketplace. Traditionally, this meant networking one's contacts and trying to sell to those who were already familiar with one's work on the new idea. With the advent of the Internet, however, the potential marketplace, as well as the source of income and venture capital, has broadened to virtually include the entire globe. In fact, foreign direct investments — investment of foreign assets into US organizations — have grown faster than exports in industrialized nations.
Another source of funding, particularly for large ventures requiring a great deal of initial capital, is to work with a venture capitalist. Venture capitalists work with entrepreneurs to help them succeed in the marketplace. Along with working capital, the venture capitalist typically advises the entrepreneur on how to make the product or service more marketable and helps him or her foster relationships within the industry through networking and collaboration with other businesses. Venture capitalists may also provide training, management, help finding employees, or other skills or resources lacking in the entrepreneurial team to help make the venture a success. In return, in addition to a return on their investment, venture capitalists are typically given equity in the company.
A continuing issue for entrepreneurs is finding and attracting the right venture capitalist. Although a venture capitalist can help a new company succeed, this success does come at a price. Entrepreneurs seeking funding need to not only develop their idea to the point where it is sellable but also research the target market. Similarly, they need to research potential venture capitalists to learn more about them and their suitability for the current venture. Questions that should be considered include the venture capitalist's funding specialties, what companies he or she has helped previously and what percentage of these companies have gone public, the composition and experience of the management team, and what other companies the...
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