ENTREPRENURSHIP & NEGOTIATION

ENTREPRENURSHIP & NEGOTIATION • Lecture: 2 • YOU AND YOUR IDEAS • This lecture will focus on two aspects of attempting self employment which will require thorough analysis and evaluation: • Aspect 1: Personal Characteristics • Aspect 2: Generating and Selecting an Appropriate Business Idea

ENTREPRENURSHIP & NEGOTIATION • ASPECT 1: • PERSONAL CHARACTERISTICS • . WHO AM I • . WHAT DO I WANT • . WHAT WILL IT BE LIKE • . WHY WILL I SUCCEED • . WHY WILL I FAIL • . HOW BIG A BUSINESS

ENTREPRENURSHIP & NEGOTIATION • . WHO AM I: • Do I have the right personal make up, background and attitude to launch my own business • Conventional image of the entrepreneur: strong willed, positive risk taker with a sense of destiny who seizes opportunities before others

ENTREPRENURSHIP & NEGOTIATION • What are the drivers to tempt one in to self employment: • Plans/Ideas being rejected • Change of Management • Transfer to a different job or location • Loss of job • Ignored for promotion • Bored in retirement. Need to supplement pension • No particular sense of achievement • Lack of security • Friends/Colleagues who work for themselves

ENTREPRENURSHIP & NEGOTIATION • WHAT DO I WANT: • An important part of your self analysis is what do I hope to achieve by working for myself, what are my objectives: • . Money • . Working Hours • . Risk • . Stress • . Type of Work • . Independence • . Achievement • . Power • . Personal Relations

ENTREPRENURSHIP & NEGOTIATION • WHAT WILL IT BE LIKE: • Money: Early days of operating, money will be tight and there could be a need to re-invest more than you hope to take out • Working Hours: Early days of operation long, unsociable hours need to be worked in and on the business • Risks: Risk averse individuals will not succeed. Calculated risk taker will reduce the odds of failure • Stress: Responsibility of business ownership can be very stressful. Need to seek assistance and support

ENTREPRENURSHIP & NEGOTIATION • WHAT WILL IT BE LIKE: • Type of work: Individual ownership requires multi- tasking abilities. Seek help or training • Independence: This is limited in respect of no bosses to worry about, replaced by dependence maybe on financiers, lawyers, accountants

ENTREPRENURSHIP & NEGOTIATION • Achievement: Business success identified by monetary gain or mutual respect by colleagues, societies and competitors • Power: Being an owner/employer an awareness of positive (praising) /negative (chastising) power is essential • Personal Relationships: Being the owner you can be selective on employees recruited. Personalities should not negate the benefits the an employee brings to the business

ENTREPRENURSHIP & NEGOTIATION • WHY WILL I SUCCEED: • Conventional wisdom suggests that new businesses will succeed if they fulfil 3 criteria: • Owner managers need to assess their strengths and weaknesses and try to overcome their shortcomings by careful recruitment and training where necessary • Identifying the correct market, its growth potential and the expertise to exploit the opportunity • Appropriate financing to cover cash flow and capital purchases

ENTREPRENURSHIP & NEGOTIATION • WHY WILL I FAIL: • Your business will fail if your business does not match up to the 3 criteria mentioned previously the causes will be systematic of more fundamental issues such as: • Over estimating sales and underestimating how long to achieve them • Underestimating costs • Failing to control costs • .Losing control over cash, that is tied up in excessive stocks and allowing excessive customer payment deadlines and paying creditors promptly.

ENTREPRENURSHIP & NEGOTIATION • WHY WIL I FAIL Cont: • Failure to identify your market due to inadequate market research • Failing to adapt to customer needs and failing to retain customers • .Lacking the skills in vital business activities, such as marketing, finance etc • Taking unnecessary risks • .Incorrect pricing • .Incompatible and complementary business team

ENTREPRENURSHIP & NEGOTIATION • HOW BIG A BUSINESS: • At the earliest opportunity you as the business manager must identify if your business is a niche in an industry with fast or slow growth potential. This will determine the resources necessary to fulfil the opportunity.

ENTREPRENURSHIP & NEGOTIATION • ASPECT 2: • GENERATING AND SELECTING BUSINESS IDEA • Often the view taken for many individuals not to take the step to start their own business is a lack of ideas on what you can produce and sell. Many believe to be successful you need to be original or revolutionary. The reality being that many new businesses rely on innovation of existing products/services or practices in attracting the buying public.

ENTREPRENURSHIP & NEGOTIATION • There are two possible ways of choosing a business idea: • 1. Using an established skill, product or knowledge • 2. Identify a market that appears ripe for development and acquiring the technique and knowledge to exploit it • In reality the two ways are interlinked, your business will not succeed if you have the skill, product and knowledge but not the market

ENTREPRENURSHIP & NEGOTIATION • WHAT ARE MY SKILLS: • The logical step in starting a business is to choose an area in which you have considerable expertise. This is probably due to the experience gained as an employee and the knowledge required from the work practice. Many professional partnerships started this way. • Others put in to practice an hobby or interest that they have pursued in their spare time, examples being craft type businesses such as pottery or woodworking. The problem with this type of idea is the lack of business knowledge needed to turn an hobby into a living You will be unaware of suppliers and distribution networks.

ENTREPRENURSHIP & NEGOTIATION • WHICH IS THE BEST MARKET: • The alternative to dependence on skills and hobbies is to identify markets that have opportunities for development such as? • The market is growing or is large • Existing suppliers are inefficient of products are dated • As a niche sector ripe for exploitation • Market is not heavily dependent on price

ENTREPRENURSHIP & NEGOTIATION • WHICH IS THE BEST MARKET Cont: • An absence of branding or considerable customer loyalty • Market is not dominated by a small number of large suppliers, hence a competitive environment is in operation • Such markets are few and far between and where they can be identified, to be successful may need the skills techniques and knowledge mentioned earlier

ENTREPRENURSHIP & NEGOTIATION • NO IDEAS AT ALL: • Do not despair, try organising a brain storming session. With two or three colleagues hold a proper meeting in quiet surroundings. Spend a couple of minutes outlining the sort of idea that appeals to you and explain why you dismissed other ideas. Ask for your colleagues reactions noting their views and hope that some positive ideas will emerge.

ENTREPRENURSHIP & NEGOTIATION • DEFINING/REFINING YOUR IDEAS: • A number of ideas may still be up for consideration when this stage has been reached. For those ideas still being considered a pen portrait for each idea must be carried out. At this stage additional research may be needed to eliminate some ideas before any business plan is being considered for formulation. On completion of this exercise the remaining ideas will have taken consideration of the potential and reality of it being successful and the following points addressed. • .

ENTREPRENURSHIP & NEGOTIATION • DESCRIPTION OF THE PRODUCT OR/SERVICE: • . The reasoning behind why you believe it will sell • . A description of the intended market • . An estimate of the pricing policy • . How the item will be sold • . An estimate of current and future sales • . How it will be made (product) or serviced • . Approximate cost of final offering • . What time scale allowed for revenues exceeding costs

ENTREPRENURSHIP & NEGOTIATION