The Entrepreneurial Management

Business planning

As it is stated in Evnas (2000) Business planning and business market analysis are regarded as the key aspects of successful business performance, as the former helps to plan business development and provide a brief forecast of company’s performance within the nearest time period, the latter helps to define the business environment for outlining the key tendencies of market development. This is required for proper analysis of the business principles performed by the company, as well as the study of the environmental factors. The aim of this paper is to analyze the business-planning process, encompassing such issues as idea generation, strategic objectives, market analysis, and research, understanding the competition, cash flow, profit and loss forecasts, balance sheet projections, competitive strategy, and scenario analysis. Critical analysis of these aspects involves the understanding of forces and vectors that define the market development within a particular location and circumstances. Considering the fact that the opportunity of creating a suitable idea is critical for proper business planning, the planning process may be also analyzed from the perspective of idea generation. (Johnston and Bate, 2003)

Idea Generation

The creation of a successful idea is the start of successful business performance. As a rule, it is regarded as the origin of any business campaign, and it is generally stated that any business can not b started without an original idea. Regardless of the origin of the idea, whether it is an iPod killer or an idea of earning million dollars for a week, it requires thorough reasoning and thinking over. Such a reasoning process may be standard or associated with creative thinking. Anyway, any thinker needs to overcome at least three problems of idea generation:

1. Problem Identification
2. Idea generation
3. Idea selection (Aiken, Sloan, et.al., 2007)

Regardless of the seeming simplicity of these three steps, the difficulty of applying correct reasoning is generally associated with the necessity to solve the most important problem, as if the case is associated with finding a business idea, the problem may be associated with finding the sphere and niche, defining the target audience, and how this audience should be addressed. Selecting a way of product or service delivery, etc. If the business project has been already launched, the problem is associated with the values of customer care strategy, selecting the most effective advertisement approach, etc.

Once the problem is identified, idea generation is started. Actually, this is the most important. Techniques are numerous, and most of them have the brainstorming principle as a basis. This may be combined with mind mapping. The key steps of idea-generating are defined by Aiken, Sloan, et. al. (2007)

• Set aims and directions (in distinction with problem definition, this presupposes precise statement of solution directions).
• Involve everyone, regardless of whether a person is related to the selected sphere.
• Stimulate discussion of the offered ideas
• Avoid obvious and banal solutions, as well as the critical judgment of the ideas
• Do not avoid possible repetitions
• Select the most significant ideas using 80 / 20 Pareto rule.

Stefan Persson defined the significance of idea generation as the key aspect of successful business development, as even the tiniest thing may attract the target audience. Hence, he emphasizes that clothes design requires a thorough study of the target audience, however, some innovative idea comes when the accent is not made on the final product required (H&M Facts, 2008)

Amazon.com may be regarded as the instance of the most effective idea generation process: the very principle of the company’s performance is simple, while the effectiveness of such an idea is high enough.

Strategic Objectives

Strategic planning is the basis of defining the strategic objectives of any company. This involves outlining the key principles of resource allocation, including human, time, and financial for the most effective business performance within the given business circumstances. In general, there are three key questions of the strategic planning approaches, and it should be stated that these aspects of planning are closely associated with setting the key aims of business performance:

• What does the company do?
• For whom does the company works (target audience)
• What are the key difference points of the company (how customers can differentiate the company from competitors) (Elkin, 2008)

Considering the importance of business strategic planning, it should be emphasized that strategic objectives are defined in accordance with several key factors, given in the chart (Johnston and Bate, 2003)

Market Analysis and Research

Market analysis presupposes the study of the environment which is regarded as the ground for business development as well as the strategic evolution of the company. Regardless of the company’s origin, as well as the “playground”, market analysis is required for analyzing the circumstances of the market situation. This involves:

• The attitude of the audience towards the trademark. This is helpful for further changing/defining the advertising strategy, as well as customer care principles.
• Competitive analysis. Strengths and weaknesses of the company in comparison with the competitors should be defined for proper study of the business environment.
• Appearing of new market entrants. If the new entrants have an opportunity to develop rapidly, this means that the market is not filled entirely, and some demands of the target audience are not satisfied.
• Market tendencies and principles. Studying the marketing background helps to realize the rules of market development. (Pittman and Thrall, 2002)

The origin of the research may be quantitative or qualitative; however, both aspects of marketing research require a thorough approach towards the initial research data, as this is closely linked with the values of traditional business study.

Understanding Competition

In general, this aspect of marketing research is aimed at understanding the customer’s choice: which forces and factors make customers give preference to the products or services offered by competitors, and what do products or services of the analyzed company lack for attracting audience. (Economic Organization and Competition Policy, 2002) The general aspects of the understanding competition involves a thorough study of the following spheres of business performance:

• Key business objectives, aims and strategies of the company. How do they differ from the aims and strategies of the competitors?
• Sales growth, profitability, market share
• Brand analysis
• Pricing strategy and distribution of the product offered
• Target audience, and the percentage of active consumers
• The corporate culture of the company, and how it influences the business performance of the organization
• Key competitors and their SWOT analysis (Udvari and Schneider, 2000)

These aspects presuppose that the company performs a thorough and all-round diagnosis of its performance for defining all the possible difficulties, as well as strengths for defining how the company should resist the competitive struggle by removing weaknesses, and improving strong points. Additionally, understanding competency may presuppose studying the competitors’ business performance on the market, as this may be regarded as the key aspect of successful competitive struggle. (Carlin, Haskel and Seabright, 2002)

Competitive Strategy and Scenario Analysis

These aspects of business planning are aimed at creating strategies that are more resilient and adaptive. This is closely linked with the fact that most business strategies do not presuppose the opportunity of changing the business environment. However, it changes constantly, and competitors do everything possible for changing this environment. Hence, the scenarios analysis presupposes developing resilient strategies for the company. Competitive strategy, as a part of scenario analysis, is associated with creating effective principles of resisting the competitive struggle. Two general aspects of competitive strategy are Cost and Differentiation. Considering the preference of either aspect, a company has an opportunity to define further steps of the competitive strategy development. (Artz, Grover, Shaffer, 2006)

In general, the directions of the scenario analysis, as well as the foundations of the competitive strategy are defined by the goals of the company:

• Target Markets
• Marketing
• Sales volumes
• Distribution
• Manufacturing
• Labor
• Purchasing
• R & D
• Finance and control
• Product Line

Rivalry, in general, is defined by four key components:

Financial Planning

Planning the budget is the defining moment of the company’s performance, as financial resources should be allocated precisely in accordance with the company’s needs, strengths and weaknesses, as shortage may cause degradation of a strategic branch, while unreasonably extended financing may cause unreasonable losses. In general, this is explained by the fact that financial planning and budgeting is the blood system of the company.

Cash flow presupposes monitoring all the movements of cash within an organization. The measures associated with this principle are based on report systems, as well as automatic accounting systems. Cash flow is generally shaped by sales, inventory and equipment services, salaries, leases, rents and leases, interests, etc. These aspects should be analyzed and monitored properly in order to consider them in financial strategy, planning and control. (Evnas, 2000)

Balance sheet projections are needed for analyzing all the losses and incomes of the company. These sheets are required for comparing the incomes and losses, and defining the weak points in the financial strategy, while the traditional values of the economic performance presuppose evaluating and projecting future losses and incomes, as the balance sheet helps to see the financial development tendency.

As a rule, financial planning becomes more complex if a company is involved in highly diversified business performance, or if the company is engaged in several markets in various states. The brightest instance of such an organization is Procter & Gamble Company. (Elkin, 2008)

Entrepreneurial Features

Another aspect of the paper is the analysis of entrepreneur personality. In fact, it is impossible to create/found a successful business company without possessing all the necessary features of a successful entrepreneur. Academic literature instances will be regarded as the traditional values of entrepreneur features regarded for successful business running. Entrepreneurial characteristics presuppose possessing the particular skill set that is required for adequate, proper and effective business performance. (Ensley, Carland et.al., 2007)

One of the brightest instances of a successful entrepreneur is Bernard Arnault – founder of Louis Vuitton Company, and owner of Dior, Fendi and Louis Vuitton conglomerate. He possesses all the necessary features of an effective businessman, and is the world’s 7th richest person, in accordance with the 2010 Forbes rating.

In accordance with Karl Hans Albrecht (In Ascigil and Magner 2009) the key feature that is required for effective business activity is associated with knowledge acquiring and multiplying. Knowledge transfer should be managed properly in order to provide a proper theory/experience balance:

Entrepreneurs are Self-Confident

Actually, this may be regarded as the key feature of every successful person, be he/she an entrepreneur, artist, doctor, engineer, etc. Self-confidence is the moving force of business activity, as it makes people act and never stop. As for the matters of business activity, self-confidence gives people courage and originates the thirst for rivalry. This may be supported by the wish to move forward regardless of the surrounding obstacles, and the most well-known entrepreneurs are featured with such a striving. The most self-confident entrepreneur of nowadays is Steve Jobs. Regardless of the immense amounts of critics as well as envious persons, he manages to maintain sales of the most demanded, and criticized products. Regardless of the negative forecasts of Apple production sales, he preserves the highest self-confidence level. (Romero and Gray, 2002)

Entrepreneur is Ambitious

Ambitions are the logical continuation of self-confidence. Some researchers (Serumaga-Zake, Kotze, 2005) even consider that ambitions are hypertrophied self-confidence. Anyway, the history of business companies shows that ambitious leaders and employees achieve higher results in business, management, competitive rivalry, etc. In general, the basic economic principle is based on personal ambitions that serve the common good. Nevertheless, regardless of the importance of ambitions, they should be supported by experience, knowledge, reason, and the ability to risk. Considering the example of Bernard Arnault, it should be emphasized that reasonable, and properly measured level of his ambitions helps him to keep the conglomerate among the most popular brands in the world, while smaller amount of ambitions could prevent him from achieving these results, and more ambitions could make him too risky. Hence, a balance between ambitions and reasonable fear is needed for avoiding unreasonable and unrealistic business solutions. (Viswanathan, Fontenot, 2004)

Entrepreneurs are Hard Working

In fact, this feature must be listed first in the list of required features. Hardworking entrepreneurs are able to achieve high results, while lazy entrepreneurs stay unknown for the business world. As it is stated in Welsch (2003, p. 196):

An entrepreneur is “someone who organizes, manages and assumes the risks of a company or a company.” I agree, but this definition does not tell the whole story, i.e. the ownership of their business success and, above all, the internal drive it takes to achieve success. There are five business characteristics that are common to anyone trying to start and manage his own Business. These properties are on the market at any age, in every industry and at every socio-economic level.

Hence, the key features of any entrepreneur are:

• Engagement. A person who runs a business should be deeply involved in the process. Otherwise, the efforts will not be applied with full power.
• Trust. This presupposes trust for the companions. A company where workers do not trust each other is doomed for failure. Hence, entrepreneurs should apply all the efforts possible for developing the atmosphere of trust and reliability of the workers.
• Creativity. Actually, this does not require any comments, as creativity is the key aspect for successful idea generation. This is the ability to view problems from a non-standard view. This helps to find unexpected solutions and original decisions for various problems and issues in the business sphere.
• Courage. Fortune likes courageous people, and this explains everything
• Collaboration. The ability to collaborate is one of the most critical. As a rule, act-alone rarely succeeds, while their inability to collaborate should be supported by the extreme development of some other feature. (Ripudaman, 2010)

These are the key features that are required for successful entrepreneurship, however, they are not significant without workability and hard-working that may be regarded as the necessary fuel for the entire entrepreneurial engine.

Entrepreneurs are Committed

Commitment has been already described, however, it should be stated that the commitment level should correspond to the actual importance of the practices and strategies performed. As a rule, commitment presupposes that a person is aiming at creating a committed team as well. (Mitchell and Skinner, 2010) This requires high workability and collaboration. Commitment is inevitable without the ability to sacrifice, and it is inseparable from the necessity to range priorities. Developing a commitment to the business, entrepreneur emphasizes his/her values in life, and inexperienced entrepreneurs, with sufficient commitment level often have to refuse things they like, and people they need. Hence, it also requires a strong ability to heal soul wounds, or restore spoilt relations.

Entrepreneurs Have Strong Ego

An entrepreneur is a charismatic, self-confident, attractive and energetic personality. Hence, it is impossible to imagine an entrepreneur without a strong ego. A person should be wilful, pragmatic, and cynical to some measure. There is no time for sentiments; there is no opportunity of sympathizing with a competitor; there is no possibility to show weaknesses. Business often reminds war; though the theory of blue ocean strategy is becoming more and more popular, few have an opportunity to perform in blue oceans, while most business operations are performed in highly competitive red oceans. Hence, strong ego is the logical continuation of self-confidence, ambitions and hard work. (Kent, 2003)

Considering the fact that entrepreneurs often have to communicate and convene with other representatives of the business world, their communications and negotiations often become the struggle of egos, as priority is often attributed to those who felt more self confidently, and who are featured with stronger character. (Kent, 2003)

Entrepreneurs are Autonomous

Autonomy is a highly arguable feature of entrepreneur activity. Moreover, it depends on the point of view, from which it may be analyzed. Considering the fact that entrepreneurs are highly dependent on the business environment, they can not be regarded as autonomous: entrepreneurship requires a reliable supply chain, retail network, committed personnel. Hence, an entrepreneur can not be autonomous and independent, however, the key aim of any organizational management is to achieve the highest autonomy level: find reliable suppliers, and substitutes within the measures of risk management principles; arrange alternative supplies to retail networks, employ highly committed and effective personnel for effective business performance with minimized risks.

In general, autonomy may be associated with the opportunity to arrange autonomous organizations with the cycled manufacturing processes, however, it is impossible to state that autonomy is attributed to every entrepreneur.

The extent of Entrepreneurial Skills

In general, all the aspects and features of successful entrepreneurship are closely interconnected, though, some specific spheres require various balances of these features. Hence, business practices based on communication require a higher collaboration level, while industrial manufacturing often requires high courage level. Creativity is the universal feature, however, blue ocean strategies that have been mentioned above require the highest creativity level. As a rule, it is impossible to develop all these features equally, while proper balance should be observed.

Reference List

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