Owner-Management-Skills and Knowledge – Your Second Test As an Entrepreneur

The Global Entrepreneurial Monitor’s (GEM) report 2013-14 findings demonstrate the difficulty entrepreneurs face across the globe. Now in its fifteenth year, the report covers each region in the world encompassing 70 economies be they developing, semi-developed or developed (e.g. termed Factor- Driven; Efficiency-Driven and Innovation-driven in the report) old (Source- Global Entrepreneurship Monitor (GEM) 2014 by Jose Ernesto Amoros, Niels Bosma and Global Entrepreneurship Research Association [GERA].

Over the fifteen years GEM has been going, one finding repeated itself- the vast majority of nascent entrepreneurs (also known as early-stage entrepreneurs) globally – involved in setting up a business – fail. It means they never become owner-manager of a new business (up to 3.5 years old) or advance to become owner-manager of an established business, more than 3.5 years]).

The finding raises a question: What makes it so difficult to start a small business and ensure moving to the owner-manager of an established business stage?

GEM report cites reasons as per comment by the entrepreneurs themselves! Starting and discontinuing a business – in the eyes of business-owner – boils down to an unprofitable business, problems getting finance and personal reasons. Financial issues (unprofitable businesses or problems obtaining finance) remain the most important reason mentioned for business discontinuation in the majority of economies, also in other stages of economic development.

Finance – the lack thereof is understandable. The rate of business discontinuance is highest in the factor-driven economies -mainly in Sub-Saharan African economies – where high level poverty is common.

Extrapolating from GEM findings, in some – mainly-innovation-driven economies – a significant share of entrepreneurs who discontinued owning and managing their business did so for reasons such as selling the business as it had value, the opportunity to get a good job; and for some, an improvement in their personal situation.

Many entrepreneurs who managed to stay afloat will tell a prospective small business owner they are still trying as hard as they could – each and every day – to survive; let alone getting into a position to turn their business into something with a high market value ready for selling. They would also agree on the energy needed to manage a business spending many hours early mornings and late evenings.

Seasoned entrepreneurs would warn against learning as you grow along the business life cycle.

It is important to work hard and smart. Few small businesses can afford a team of specialized staff, forcing the business-owner to become multi skilled.

Discussed are key owner-management functions a prospective and going entrepreneur face from a skills and knowledge point of view.

Managing a small business warrants a holistic approach comprising at least the following.

  1. Administration

Administration is often underestimated. Main types (they exclude the often cumbersome inherent tasks to each) include: Bookkeeping and other financial administration, cost accounting and administration, finance and credit administration, payroll administration, production administration, purchasing administration, quality administration and control, sales administration, and inventory administration.

Other forms of administration: Quoting administration, costing administration, debt administration, client databases and Complaints administrations.

Some of these administrative tasks would be very relevant to your type of business and industry, others less!

Finding a way to learn more about administration skill and knowledge is advised as you prepare for a venture.

  1. Communication

You will found yourself communicating with many different types of people. Audiences will include customers, the bank manager, suppliers, creditors (those you owe money), debtors (those that owe you money) and others.

If not a natural speaker or compiling documentation, then there is need to consider how to overcome these weaknesses! Daily running of a business entails answering telephones, doing presentations to customers, negotiation with bank managers for an extended overdraft, negotiation with creditors for more time and negotiation with debtors to pay outstanding invoices! Writing, oral and presentation skills are important.

Finding a way to learn more about business communication skill and knowledge is advised as you prepare for a venture.

  1. Financial

Failure at managing a business financially could potentially mean failing before the venture had a chance to move into a growth cycle. Many business owners opt to make an accountant (given they can afford one), financial manager! While the accountant could be a valuable source of advice the entrepreneur should learn how to take financial decisions based on financial data.

Entrepreneurs, more often than not, do not have formal training in fundamental bookkeeping, or in financial management. Managing finances even at a basic level is a very challenging task.

Entrepreneurs would find yourself trying to master at least the following: Profit planning, costing of products and services, sales planning (revenue) balancing it with expenses and possible taxes, general ledger, accounts receivable ledger, accounts payable ledger, general journal, sales book, cash book (or their equivalents) and regular books of account

Accountants would at the end of the financial year consolidate all financial data and present the business owner with financial statements to enable submission of tax returns.

Entrepreneurs are advised to master basic accounting and managing finances.

  1. Human-resources

Business-owners surviving harsh times to grow later will end up with a few staff members. Once the entrepreneur gets to that stage he (or she) would have to manage people and the following: Employee contracts and role description, introduce staff to their environment (induction training), training for workers, practice of Labour legislation, fair discipline and how to address disobedience, high morale and positive attitude, production levels, recruitment and selection- getting the right people, staff benefits, staff demands and staff planning generally

By learning more about these tasks the entrepreneurs prepare itself for the day they would need the knowledge. The internet provides a wealth of information and examples of human resources management in a small business setting.

Which bring one to a crucial skill, information-technology!

  1. Info-technology

Entrepreneurs find themselves in an age of information. Tools are needed to manage waves of information from outside the business.

Each and every aspect of business is related in some way or another to information and the technology linked to it. First and foremost there is the issue of computer skill and use of software programmes (as many as one could, always relevant to your business).

If fortunate enough to afford a personal assistant to take care of tasks on the computer, this would still not exonerate entrepreneurs from being equally skilled at using this technology.

Business owners find themselves many hours behind the computer long after the assistant has gone home.

Entrepreneurs are advised to master computer skill and software to run its business more effectively!

  1. Legal

Entrepreneurs will gradually find themselves learning more about the legal side of a business as legal advice and assistance are costly.

Entrepreneur come across at least the following related to the laws of the country you find yourself in, including: Registration of your business with the relevant authorities (unless you operate as a sole proprietor), Income tax registration, company taxes and registration with relevant Labour authorities

Legal areas that have an impact on the business including (among many others potentially): Income Tax Acts, Labour legislation Acts, trade licences, product liability Acts, environmental Acts, standards for products and services, Usury Act, information Acts and consumer Acts

Regarding contracts (in addition to all of the above)! Entrepreneur should be able to read, interpret and analyse contracts. Identifying potential pitfalls is important. One could turn to a legal expert for advice, but would there be capital to cover fees for each smallish business deal?

Entrepreneurs could learn to draft elementary agreements. If a business deal is very complex then consider legal assistance.

Seasoned business owners would advise against not having agreements in place, bargaining on mutual trust and potential dire consequences!

There are templates available covering a variety of agreement types. To acquire a library of these and absorb the content is advised! Business agreements should be documented, covering all deliverables and costs in detail; and be signed!

  1. Marketing, sales and distribution

As part of business planning the entrepreneur drafted a comprehensive marketing plan to be put into action.

Some entrepreneurs are natural at sales and marketing! A potential problem is they can become overly embroiled in the marketing side of their business, neglecting the other areas of management. What happens then?

Orders fly in but no-one can invoice as the entrepreneur might be computer illiterate not taking heed of how important technology is to business.

Or, not taking stock recently, the shelves are empty.

Equally bad for business, the orders are based on prices dating back months while there was old stock. The entrepreneur will now, if he delivers, be selling at a loss.

The lesson learned is an administrative and technical one.

  1. Production or/and service and retail

Business is about manufacturing and selling a commodity, or if the entrepreneur is in services render a service at a fee.

Manufacturers would come across a number of start-up tasks when starting his (or her) business, including: Factory or office layout, product design, production planning, materials management, stock control, maintenance and upgrading, selling of product and distribution and post sale services planning.

It amounts to a lot of work considering business owners also have to take care of all other management tasks discussed thus far! Or if fortunate enough to afford staff, the business owner would ensure a handle on each management task.

Input to ensure the business work successful comes to a multitude of activities!

In conclusion, many prospective entrepreneurs might feel disillusioned after reading the article but it is better to be prepared when deciding to become an entrepreneur. Entrepreneurs knowledgeable about main challenges – when starting a venture – would have an edge over those who walk into one not knowing how important skill and knowledge are in surviving!

The 5 Senses of an Entrepreneur

If you have seen me speak you will know that I believe the word ‘entrepreneur’ is used way too much these days. People seem to wear it as a badge instead of just getting out there and doing entrepreneurial things.
Just because you run or own a successful business doesn’t necessarily mean that you an entrepreneur.

Entrepreneurs have a different mindset to others. They will go way above and beyond to complete and finish something that they have started.

I have developed what I call the 5 senses of an entrepreneur which will highlight those differences.

We all have 5 which are sight, taste, smell, hearing and touch. The entrepreneur also has those 5 senses but to them they mean something totally different. The 5 senses relay messages to your brain which makes you operate in a certain way. This is the same for the entrepreneurial sense. The entrepreneurial senses direct an entrepreneur to operate and succeed in a certain way.

Below is how an entrepreneur uses the 5 senses.

SIGHT.

Entrepreneurs can see things normal business owners can’t. By that I mean that they can see potential in the smallest of things, whether it is a new trend or a different way of doing something and in turn gaining bigger and better results from the others around them.

They also have the foresight to see past the hurdles or obstacles that most business owners would see as a full stop and press on regardless of the issues that they may face.

They aren’t really good on the stuff that is right in front of their faces, the day to day stuff as they are already thinking far in advance.
You could say that some entrepreneurs have blinkers on. Once they are focused on something, they will see it through to the end. Whatever comes their way will be quickly dealt with so as they don’t lose momentum or become distracted.

TASTE.

Entrepreneurs can taste success in everything that they do. It doesn’t really concern them with the current taste of a deal or a venture as they know what the ultimate taste of success in that deal when it is finished and completed will actually taste like.

Even when they have a taste of something bitter; whether that is a deal gone wrong or a wrong decision, they will still press on until the sweet taste of success is filling their mouths.

Just as kids when we are all made to eat those disgusting vegetables (the cauliflower and brussel sprouts) and then as we grow up we are able to make our own choice as to what is on our plates, so does the entrepreneur. They have been through the hard yards just as everyone else. They just want to have the choice as to what taste stays in their mouths for the longest period of time.

Until they taste it, they will not give up.

SMELL.

An entrepreneur can smell success from a mile away. In fact, they can smell it before they even experience it. It is that sweet smell that keeps them driving towards touching and living it.

Just as they can smell the sweetness of success, so can they smell a bad deal. Now I am not saying that everything an entrepreneur puts his or her hands to will always work, but as they go through their lives they will know quickly if something smells a bit off.

It is this sense that is the most important one to an entrepreneur. Without the whiff of something potentially huge and exciting, an entrepreneur will usually let it go.

They also have the ability to smell “manure” a mile off.

HEARING.

With the ear, it receives a whole lot of different vibrations and sound waves which in turn it processes it into something that makes sense to our brains. This in principal is what happens to an entrepreneur. All of us hear different feedback, various business opportunities and potential deals throughout our lives. What makes an entrepreneur different from the rest is that he or she will decipher that information (usually very quickly) and either act upon it or dismiss it straight away just by the sound of the information that he or she has heard. Where as most people will go down the path of that information and potentially lose out when it isn’t what was first perceived.

The entrepreneur will also have a knack of blocking out the negative information or comments that come into their ears. They will not be the type of person who will allow that negative information to pass into their thinking an in turn, into their actions.

Entrepreneurs have selective hearing. They know what they want to hear and they know what success sounds like.

TOUCH.

An entrepreneur will not give up until they have a firm grip on what they have been pursuing. For some it may take them a short time and for others a very long time. but until they have that success by the throat, they will not let it go.

You see it is this sense that is the reward stage for an entrepreneur. It is the thrill of the hunt with the catch mounted high on their walls of life.

This is not to say that everything they set their hands to will work. It is that they know the feel that they are looking for. They know how hard they need to press or how gentle they may need to be. It is the same principal with holding a baby as opposed to a hammer. One is gentle the other is forceful. The true entrepreneur will have an understanding of the touch that is needed.

So as you see, there are many facets that set an entrepreneur apart from a normal business owner.

Why not take the entrepreneur test(TM) on not only yourself but also your staff and you will see where you stand and where your strengths really are.
This is a great tool for any business owner.

Go to www.justinherald.com

How To Become A Successful Entrepreneur Today!

To become a successful entrepreneur takes failure. You have to be willing to accept it and learn to make yourself better. Through experience and knowledge you will find making a certain business entity successful, as opposed to failing, is much easier to create.

When you are an entrepreneur, you are constantly learning. You are constantly looking up new things on how to add to your business. It is important that you are logical on who feeds you information, because you can find yourself in traps that are hard to get out of.

Let me give you an example as it has happened to many people who are trying to become an entrepreneur. The internet world is often times misunderstood. This leaves a gray area for sales representatives from other companies to take advantage of you. The most important thing that any business needs is leads. People to talk to and potentially buy their product. These sales reps operating in this gray area are very aware of this concept and modify their pitch to reflect how successful you will be. This shifts the attention from the work that is actually being done to what could possibly be obtained. So to get to the example, it is not uncommon for someone to be paying $1,000 a month for search engine optimization to be done. However, some companies can put your company in severe risk if they are not following guidelines that are implemented and banned from sources like Google. There are many businesses out there who have shelled out tons of cash only to find their site banned a couple of months down the road.

So the first thing to do when you are looking to be a successful entrepreneur is to become aware of what works and what does not. There are trustworthy sites that you can go to get your information. When you are looking for information, look for sites that have a.gov attached to them or a reference to the actual business you are addressing like Google.

SBA.gov is a great source. Google Webmaster Guidelines is another place to gain the most useful information for if you are looking to create results with Google.

The list can go on and on, but look at the difference in who is feeding you information as opposed to a company who is just trying to sell you their product. This will most definitely save you time, energy, aggravation, and money in the long run. Read up on some material and pretend that you know what you are talking about. If you know more than the sales rep, then it is probably not the best solution for your business. If they can take a concept and explain it more in depth, then they are most likely a better company to work with. The companies who create results will take the time to educate their employees. The companies who are interested in only your money do not really care what the sales rep says to get the deal.

So the number one thing is to be aware that these things exist and to be precautionary moving forward with them. Even if you have everything else running perfectly, these mistakes can put you out of business.

Another important factor to mention is, “If it’s not broke, don’t fix it.” When you are first starting a business, you often times have ideas on what will work. The only problem is that you have no data to backup your statements. There is a time to try and a time to copy. Most successful entrepreneurs will start to work off of a strategy that they know creates results and then build off of that after they have money coming in. Most of the time, there is another business out there just like yours. They offer very similar products and have the same market to compete in. Take the time to look into their strategies. Find out what is working and what is not. This will be the shortest way to actually get the business rolling.

No matter what business model you decide to take on, the most important thing for any entrepreneur is to remain active. This is your lifeline and no one else’s. You cannot sit back and rely on someone to do everything for you. You need to engage yourself in the business every single day until it is operating how you need it to. At that point, you will have the opportunity to sit back and enjoy. It’s important that you are honest with yourself and what you are willing to do to achieve your success. Otherwise, you will try to cast blame unto others and be left with a failing business.

There are other articles out there that can help guide you on if becoming an entrepreneur is the right decision for you. Once again, be completely honest when you are answering the questions. Some people think they want to be an entrepreneur, but don’t have the drive or the capability of actually doing it. This leaves them in a worse position than sticking to their normal routine of 9-5 with a company.

There are certainly other factors to consider when looking to become an entrepreneur, such as legal business filing and merchant accounts, but these sources and mindset will help lead you in the right direction. We are certainly here to help guide you through the process as well. Please feel free to click on the link below and we are more than happy to work with you in creating your dreams.

CLICK HERE

In the meantime, we wish you and your business the most success in 2014.

Best,
Chris Ellis