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Explain each of the personality characteristics mentioned in the following statement and give an explanation of why they are typically
important characteristics for a person to have if they hope to become a successful entrepreneur.
Entrepreneurs typically have a tolerance for ambiguity, are calculated risk takers, have an internal locus of control, and have a high regard for integrity and reliability.
- Tolerance for ambiguity:
- is the willingness of an entrepreneur to define a set course and move ahead with that course while remaining conscious of the fact the correction may need to be made to that course in light of new information gained along the way.
- These corrections will likely mitigate risks. The tolerance of ambiguity and the ability to continue on a path in the face of uncertainty sets entrepreneurs apart from others.
- Calculated risk takers:
- will allow entrepreneurs to adequately assess opportunities in a logical manner and ensure that the risks that they are taking are likely to result in a return of profit.
- Internal locus of control:
- allows entrepreneurs to take control of their businesses and its position, not relying on ‘faith’ or ‘good luck’ will allow them to do everything within their means to achieve the highest quality in any task undertaken.
- High regard for integrity and reliability:
- will allow potential buying, investors, suppliers and financiers to build a repour with the entrepreneur and the business, allowing for a basis of trust and good will to be built (valuable to any business).
Two particular abilities that are common to many successful entrepreneurs are:
-the ability to build a strong team, and the ability to develop strong networks
Why are these two abilities
important in realising success as an entrepreneur?
Ability to build a strong team: this ability can provide expertise that the entrepreneur does not possess, ideas, solutions and different perspectives, additional minds and hands (because typically its impossible for one person to do it all), the potential for growth (without additional minds and hands it’s impossible to realise growth) and emotional and general support (especially in the start-up phase)
Ability to develop strong networks: this ability can provide useful insights into industries, can be a source of resources (for realising a business idea) and further contacts, can help identify new business ideas or extend an existing client base.
The social and business networks that entrepreneurs build are typically
quite distinctive from the networks that most other people build.
In what ways are they distinctive?
- Entrepreneurs typically build networks that marry
- both social and business aspects. Business networks are built around friendship
- (so they are genuinely personal) and social networks are seen as a source of
- potential resources (ideas and support) for the business.
There networks are nearly always relevant to their business interests.
- The networks to which and entrepreneur belongs to usually varies over time (as their business support needs change) e.g. as the
- business grows or the individual seeks to realise a new opportunity.
Identify and explain the various types of risk that exist at the personal level and which should be considered as part of the process of determining whether or not to start and pursue a particular entrepreneurial venture.
Note that a fully explained answer is required.
There are 4 types of risk to consider when determining whether or not to pursue an opportunity:
Financial: may include start up contribution to business (in terms of money) or potential for loss of financial assets such as home, car or savings if the business fails or becomes liable.
Career: is the risk of forgoing current career opportunities to pursue the opportunity, will it pay as much as the individuals current job? If the business is unsuccessful will return to the previous career be possible?
Social: given that the start-up period of any business is generally highly demanding on the individuals time will it affect their social situation? Missed time with family (partner, children) or friends?
Health: also given that the start-up period of any business is generally highly demanding on the individual, loss of sleep, high stress situation. Is that something that the individual is comfortable with? Or ready for at this stage?
Throughout this topic we have focused on identifying and analysing what is involved in becoming a successful entrepreneur. But what constitutes “success”?
Note that a fully explained and exact answer is required.
The definition of success in an entrepreneurial sense varies because the goal wanting to be achieved by perusing entrepreneurial activities varies among individuals.
- Success may be defined as realising a new
- life style or a sense of achievement, becoming your own boss, achieving social
- status or realising a financial profit (most common). If the goal is to be financial successful then the profit realised must be enough to cover the opportunity cost, compensate for time and effort invested, compensate for financial risk taken and compensate for uncertainty of the future.