What is Entrepreneurship Business Vs Small Business?
Small business is engaged in production and marketing. The various types of activities can be manufacturing construction, transport, and trade. It is everywhere.
The small business owner establishes and manages the business to attain personal objectives. The business is an extension of the owner’s needs, objectives, and personality. The business growth is not a primary objective. The main aim to continue operations over a long period of the tine.
We should understand the main characteristics of a small business:
- Independent Management: Managers are owners. One or a few persons make all management decisions. They are free from outside control.
- Closely Held Ownership: One or a few individuals supply the capital. Ownership is held by them. They contribute to capital. So, this is private ownership.
- Local Operations: Operations are locally based. It has a relatively small share of its market. It is allocated near the market. Nut market need not be locally based. It can be engaged in retailing or production.
- Small Size: Its size is small. Smallness is relative to the size of large firms in the industry. The measure for small size can be one or a combination of:
– Number of employees
– Total fixed assets
– Annual sales volume
– Capital investment
Small business management focuses on running a business over a long period of time. It is small in terms of size, capital base, and employees but it is bee-hive for entrepreneurship.
The following points indicate differences between entrepreneurship and small business.
Point of Difference
Achievement, profitability, and rapid growth.
Personal goals, Normal profits, and growth; Financial independence.
New and innovative practices, strategic management.
Normal management practices.
Grow from small to large size through rapid growth.
Generally, stay small in size, not dominant in its field.
Motivation is a psychological process. It gives purpose and direction to the behavior of an entrepreneur to put a higher level of efforts.
It includes entrepreneur to use skills and abilities to perform effectively. It is an inner state within the entrepreneur that energizes. Directs and sustains behavior toward goal achievement.
There are three primary reasons for people to become entrepreneurs and start their own business. They are:
- Be their own Boss: Entrepreneurs want to be own boss. The reasons are:
– Ambition to own their business to achieve professional goals.
– Frustration working in traditional jobs.
- Pursue their own Ideas: Established firms tend to resist innovation. Employees with new ideas desire to see them realized when ideas go unfulfilled, employees leave the firm to start their own business.
- Pursue Financial Rewards: People start their own firm to pursue financial rewards. The future potential for getting such rewards can be high.
How to do Managerial and Entrepreneurial Decision Making?
Managerial Decision Making:
Managerial decision making follows a rational process for problem-solving. The steps in this process are:
- The decision problem is clearly defined by the manager. The focus is on problem-solving.
- Appropriate alternatives are identified for solving the problem.
- The selected alternatives are evaluated in terms of feasibility, satisfactorily and affordability.
- The best alternative is selected.
- The selected alternative is implemented to solve the problem. Its effectiveness in solving the problem is evaluated.
Entrepreneurship Decision Making:
Entrepreneurial decisions are made by entrepreneurs. They possess entrepreneurial qualities of vision, inspiration, creativity, and risk-taking. They are strategic orientation with commitment to opportunity.
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The main features of entrepreneurial decision making are:
- The entrepreneur exploits opportunities for the benefits of the business venture by committing and controlling resources.
- Decision making is guided by the vision and insight of the entrepreneur.
- The decision-maker makes bold decisions and is able to convince others to implement them.
- The goal of decision making is the growth of the business venture.
Corporate vs. Entrepreneurial Culture:
Corporate culture is concerned with the overall work atmosphere of an organization. It refers to a system of shared meaning held by members. It is customs, traditions, and ways of doing things. It is transmitted through stories, rituals, symbols, and languages.
There are several characteristics of Corporate Culture:
- Innovation and risk-taking by employees.
- Attention to detail by employees.
- Outcome orientation. Management focuses on results.
- People orientation. Management decisions consider the effects on employees.
- Team orientation. Work activities are organized around teams.
- Aggressiveness. Employees are aggressive and competitive.
- Stability. Organizational activities emphasize stability.
How to create Corporate Culture?
The vision of the founder of the organization is the ultimate source of the corporate culture. The process of culture creation occurs in three ways:
- Founders hire employees who think and feel the way they do.
- Founders socialize employees to their way of thinking and feeling.
- Founders behavior acts as a role model for employees.
Sustaining Corporate Culture: Sustaining is keeping the corporate culture alive. Organizational practices sustain culture. Important factors sustain culture are:
- Selection: Competent candidate who fit with the corporate culture are hired. They have values consistent with those of organization.
- Top Management Actions: They establish norms that guide employee behavior. They can be for:
– Freedom in decision making.
– Appropriate dress
– Desirable actions for reward purposes.
- Socialization: It is teaching the corporate culture. It helps employees adapt to corporate culture. It has three stages:
– Pre Arrival Stage: It is socialization before joining the organization.
– Encounter Stage: It is seeing what the organization is really like.
– Metamorphosis Stage: The new employee changes and adjusts to corporate culture.
Corporate culture tends to be stable over time.
Entrepreneurial Culture has the following characteristics:
- Achievement Oriented
- Hard work
- Desire for Responsibility
- Preference for Risk
- Good Manager and Leader
And there are Intrapreneurial Leadership Characteristics:
- Technical Competence
- Situational Adaptation
- Managerial Qualities
Entrepreneurs come from a variety of educational backgrounds, family situations, and work experiences. Entrepreneurial feelings are the outcome of an entrepreneurial mindset. They are concerned with:
- Feelings about Locus of Control: It indicates the sense of control that an entrepreneur has over life while forming a new venture, managing it and making it grow.
- Feelings about Independence: In indicates the need for being one’s own boss. It is a strong need for an entrepreneur to derive satisfaction.
- Feelings about the need for Achievement: It indicates an individual’s need to be recognized. It is concerned with:
– Individual responsibility for solving problems, setting goals and reaching the goals through their own efforts and hard work.
– Moderate risk Taking.
– Knowledge of results of task accomplishment.
- Feelings about Risk Taking: Willingness to take financial, social or physiological risk is an important part of entrepreneurial feelings. Failure is used as a tool for learning.
- Uniquely Optimistic: Entrepreneurs see the cup as half full rather than half empty. They feel confident and optimistic.
Entrepreneurs practice entrepreneurship. They are creative individuals with vision. They lunch new venture. They bear all the risks. They are motivated to take advantages of new business opportunities. They are driven by achievement orientation.
Inventors develop a totally new product, services, and process which is novel and untried. It tends to be revolutionary.