Chapter 3 Small Business Entrepreneurs: Characteristics and Competencies

1. Chapter 3Small Business Entrepreneurs: Characteristics and Competencies Small Business Management 4660

2. 1. Individual Personality

3. 2. Entrepreneurial Personality • Idea person • Small business owner • Contemporary classic • Salesperson • Managerial entrepreneur

4. 3-4

5. 3. Entrepreneurial Operational Competencies • Competencies • forms of business-related expertise • Pg. 61 level of competency assessment • Role model • 4 levels - needs development, needs refinement, competent, excellent

6. Five competencies appear repeatedly in successful entrepreneurs • KIRDO • Key Business Functions • Industry-Specific Knowledge • Resource Competencies • Determination Competencies • Opportunity Competencies

7. Key business functions • activities common to all businesses • sales, operations/production, accounting, finance, and human resources • Delegate / outsource

8. Industry-specific knowledge • activities, knowledge, and skills specific to businesses in a particular industry • industry expertise, industry skill, market knowledge, ability to diagnose the business’s health, ability to see opportunities

9. Resource competencies • the ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business • Time, information, location, financing, raw materials, support people (e.g. founders, advisors, partners, customers) • E.g. gocell2u.com

10. Determination competencies • skill identified with the energy and focus needed to bring a business into existence • Willingness to take action • Stick with the business • E.g. The spirit of Samurai knight

11. Opportunity competencies • skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business • Ideally distinctive, hard for others to copy • E.g. mbg.com

12. 4. Professionalization • The extent to which a company meets or exceeds standard businesses practices for its industry • Standard business practice • a business action that has been widely adopted within an industry or occupation • E.g. a professional design website

13. Professionalization • Three levels: • Expert, specialized, minimalized

14. Expert businesses • A situation that occurs when all the major functions of a company are conducted according to the standard business practices of its industry • A pool of talented management team

15. Everything seems to be done in the best way possible • Exceeds the standard business practices of the industry • E.g. ESQ 165 leadership training regarded as ‘the best’ • Why? ISO certification, CS Survey, ‘Kaizen’ philosophy

16. Specialized • The middle level • A situation that occurs when businesses have founders or owners who passionate about one or two of the key business functions such as sales, operations, accounting, finance or human resources

17. E.g PR consultant, SEO, Interior Designer, lawyer, accountant • Satisfied if other activities are no worse than other companies in the market • Dr. FadhilahKamsah, training consultancy • Trainers, facilitators, owns training centre

18. Minimalized • A situation that occurs when the entrepreneur does nearly everything in the simplest way possible

19. Entrepreneur figures that “good enough” - to keep the business going • No systematic accounting • Little recordkeeping • E.g. Dr. RobiahHamzah • Individual-based Motivational Speaker

20. 5. Entrepreneurial Careers • Combine personality characteristics, competencies, and professionalization levels. • Actual types of ‘entrepreneurial careers’: • Habitual entrepreneurs • Growth entrepreneurs • Harvest entrepreneurs • Spiral or helical • Occasional entrepreneurs

21. Habitual entrepreneurs • Owners for a lifetime • Businesses may vary, 1 or more • Primary goal = personal satisfaction • Secondary goal = income • No succession plan • keep working until they can no longer continue • E.g. Steve Jobs - Apple, NEXT Computers, Pixar, and Apple

22. Growth entrepreneurs • Also owners of a lifetime • Goal = major success • As soon as success is achieved - enter into the next venture – high growth-oriented • Keep working until they can no longer work • When they retire, they tend to micromanage their successors • E.g. Bill Gates

23. Harvest entrepreneurs • With an exit plan • Work first, play later • Interested – strong balance sheets, sizable market shares and capable management team • Build one company at a time, sell it, enjoy the proceeds, and then start another • Very wealthy but largely unknown • E.g. Valueclick, Bluelithium

24. Spiral (helical) entrepreneurs • Alternate periods of growth and stability which are driven by personal or family needs • A typical spiral strategy – slow down when children are young – push for growth when the children are older • The endgame strategy is scaling down the business • Advantage Advertising – Laura Tidwell

25. Occasional entrepreneurs • Generally have another primary job • Fascinated by entrepreneurship and pursue it periodically • Classic part-time entrepreneur • Seasonal basis • E.g. event organiser, or making EidulFitri’s cookies

26. Which form of the various entrepreneurial careers appeals to you most? • Why?

27. 6. Family Businesses • Family business • a company in which one family owns a majority stake • Involved in the daily management of the business

28. Interesting Facts: • 1/3 of the Standard & Poor’s 500 companies are family owned and managed • Family businesses make up over 1/2 of the businesses in the United States. • 39%of businesses in the United States are small family businesses. • They employ 58%of America’s workforce.

29. Its Advantages • Communication can be more effective • Decision making may be easier and quicker • Strong family bonds may lead to strong corporate culture

30. Pre-established family relationship carries over into the workplace • Families are often the first source for business capital • Entrepreneurial parents often serve as the first entrepreneurship teachers for their children

31. 7. Family Business Challenges • Role conflict • Problem arises when people have multiple responsibilities such as parent and boss, and different responsibilities make different demands on them. • Occurs when family issues bleed into the workplace and vice versa • At worst, when people fail to recognise it. • A boss – daughter to work – a parent – e.g. to ask her to be with own children

32. Solutions • To keep family issues out of the business • Whenever possible, make decisions based on business necessities. • When making decision from a family perspective, broaden it to apply equally to nonfamily as well as family members.

33. Role conflict breeds another unending problem-the shortage of time. • Time management skills can help meet the overload • organizing process to help make the most efficient use of the day • List, 123 Prioritize, Delegate, Repeat, Strategize

34. Succession • Process of intergenerational transfer of a business. • Only 1/3 survive beyond the first generation • Reality - founders get ill / incapacitated / die

35. Challenges • Refusing to let go, or appointing a new manager • Interfering and undermining him/her – consciously and unconsciously • No clear cut succession plan and a family member is thrust into the position with little or no preparation

36. Loss of the founder causes dissension between family members competing for the top position • Or taking side on who they’d like to see in that position

37. Taking a Professional Approach • Creates a family council – immediate interests • An advisory board – board of directors – strategic direction • Set boundarybetween a family council and a board of directors • To keep family involved - focused on running the business

38. Identifies who will take over – roles, support • Sets up the necessarytrainingfor the successor • Provides a schedule for the changeover or trigger a point at which the changeover is affected • A good plan will also handle the assets to minimize the tax burden on the family and company

39. Revision