Schumpter (1934) saw the definition of an entrepreneur as not only individuals who bears the risk of buying and selling at uncertain prices , but more of process by which an economy moves forward through the act of creative disruption or innovation. There are many different avenues on what defines a person as an entrepreneur, the definition itself is evolving based on the society we are in today.
The entrepreneur in this report when asked what he thinks is an entrepreneur in a small business, his opinion was “a person who takes control of his or her own destiny to become self employed either by setting up a business or taking over from someone else. ” The purpose of this report is to investigate the nature of small business-owner-managers in the Information Technology industry and their managerial environment.
The analysis comparison will be looking individually at the two entrepreneurs and their respective business as a small business owner-manager operating in Western Australia; the two companies selected are EnableTech and Hardware Zone. Choice of industry and Business-owner manager According to the Australian Department of Foreign Affairs and Trade, Information and communication technology is a key driver of Australia’s strong economic growth and innovation. The market comprises firms engaged primarily in providing computer and telecommunication services, as well as hardware and software.
It is currently the fourth largest in the Asia-Pacific region after the Chinese, Japanese and South Korean markets and the 11th largest in the world. (Australian Government, Department of Foreign Affairs and Trade 2008) “The 2008-09 statistics, 72% of Australian households had home internet access and 78% of households had access to a computer. Between 1998 to 2008-09, household access to the internet at home has more than quadrupled from 16% to 72%, while access to computers has increased from 44% to 78%. The number of households with a broadband internet connection has increased by 18% from the previous year, to an estimated 5. million households. Broadband is accessed by close to two-thirds (62%) of all households in Australia and 86% of all households with internet access. (Australian Bureau of Statistics 2009) The choice of industry was based on society insatiable appetite for information technology in and around their work and home as reflected by the Australian Statistics, demand for the internet and computers within households have grown to such levels, and without much doubt the information technology age that we live in today; the growing demands for such service has to be met with the equivalent supply.
The business owners managers are selected based on an approximately similar demographical background, both come from average income working family, similar education levels and fitted within the 30-45 year old age group, however one was a 2nd generation immigrant in Australia whilst the other was an Australian. The basis of applying a similar demographical background allows greater consistency in the analysis between the two owner business managers. We also had to ensure the interviewees had to have an approximate similar type of service operations and business size and turnover.
Both of them have to had operated the business longer than 5 years, this allowed the analysis to be viewed on the basis that the business owner managers was not bias in his interviewed question which could have been ‘skewed’ should it be a person new to the business would yet to experience the pitfalls of the business. Report and data of interviews owner-managers and the business The interview protocol was formulated on segregating the interview into four key areas; Personal motivation, Business founding methodology, Operational Management and Business future outlook.
A summary of the interview from the two owner managers are reflected below, a detail transcript is under Appendix 1a and 1b. Hardware Zone (Business Owner Manager: Andrew) Business profile: Provides technical support, hardware and software procurement and installation and prides itself in direct and personalised customer service. Hardware zone caters to predominantly 80% to businesses and 20% to walk in customers. Personal motivation – Andrew was motivated by his wants and realising that working after graduating in Information Technology would not satisfy his wants in the near term.
He was also driven from his desire to be his own boss and have a strong internal local of control. His background did not have any influence being an entrepreneur as his mum was a nurse and father an Engineer. Business founding methodology – Andrew started the business himself during the period of low barriers of entry, but spent a year working in the industry before going into it. He believes his strength in the business venture is through hard work, his technical know-how and his ability to delegate task.
His weakness that he fails have let him down is his lack of administration and financial skills as well as taking on more than he can handle. His methodology believes in having strong financial support and starting off small with a plan. Operational Management – Company currently turns over just over one million dollars per annum, been in operation for 15 years and employs 4 full time and one part time administrative staff that he plans to employ full time. His marketing strategy is predominantly successful on word of mouth however allocates 5% of turnover to advertising or promotion material.
He bench mark himself against other companies of similar size and believes that his customer service set himself apart from others and therefore reflect his 15 year relationship with some customers. Business future outlook – Andrew intention is to retire young and have sustainable income. He does not have any concrete growth strategy as he is happy with the current size which is manageable, his current short term plan is intending to hire another full time technician and further long term to acquire a partner or merge with another company.
He is believes the main threats are keeping good staff and surviving amidst growing competition. Business Advice: Start small and think big. Try to work in the industry first before going into business and having a strong passion and desire to work hard with long-term outlook. EnableTech (Business Owner Manager: Kim) Business profile: Provides hardware and software, IT technical support, repairs and maintenance. They focus on audit, design, install and maintain optimum networks.
They pride themselves in performance and measure themselves against key performance indicators established during our network design and planning phase, ensuring you know how we are performing. Personal motivation – Kim has a strong belief in being self employed and does not like the idea of being an employee. His former background was in motor vehicle and real estate however an opportunity poses itself to buy into this business. His motivation to succeed was overcome by his lack of IT technical knowledge required in the business.
His personal background did not have influence into being an entrepreneur; however his parents provided him a strong foundation of being ethical and hardworking. Business founding methodology – The Company Kim purchased has already been established and running for 10 years and when the opportunity presented itself, it took him 2 weeks to decide it was economically viable investment. His satisfaction is having good people working for him which he prides in maintaining. He believes his strengths are having hard work to understand the market and technical knowledge from not having any initially.
His difficulties accounted were the changing policies which indirectly resulted in companies withholding spending on IT services thus affecting his business and cash flow. He did not have much experience handling staff and was faced with staff management issues, there were cash flow problems , he had a strategy of his business in placed which he reviewed annually and had a five year targe he wanted to achieve. His overall intention is not about making lots of money but he believes money comes with enjoying something you want to do.
Operational Management – The Company is in operation for over 10 years and is stable; he is currently trying to engage in a growth strategy and started marketing his company to seek a larger customer base. They bench mark their performance on jobs and allows customer full transparency on their results to demonstrate their quality of service as well as compare their performance with 4 other similar companies of similar setup and services.. Staffing difficulties has always been an issue trying to keep them loyal, which is difficult due to the lucrative salaries that mining companies offer.
Business future outlook – He believes in his current growth strategy that he currently wants implement and wants grow 3-4 times his current size over the next decade. He believes due to the highly competitive nature of the industry there are fewer people wanting to enter the market therefore competition would mainly be from the existing market and not from new businesses. Business Advice – To enter this industry it is not as easy as it seems, it is better to work in the industry and acquire the technical skill and knowledge before hand and have some business financial knowledge.
Analysis and Comparisons; owner-managers and the business In analysing the entrepreneurs, I reviewed Kuratko and Hodgetts (1998); seventeen characteristics likely to be found amongst entrepreneurs. In my opinion, every entrepreneur is different having their own strengths and weaknesses but a good combination of the following attributes in a novice or at best nascent entrepreneur can build a strong foundation of integrity that customers trust and a business reputation that is on positive route to success as reflective by Kim and Andrew.
These characteristics are; Integrity and reliability, Initiative and Responsibility A successful entrepreneur isn’t only profit-oriented. He has his own defined values and beliefs that he stands up for, and he uses these as a guide when dealing with his employees, his customers and when making decisions. Both individuals showed initiative, Kim learned the technical knowledge having no previous understanding and Andrew worked for a year in the industry gaining invaluable trade knowledge.
Kim believe in having integrity and reflected that in his transparency of his KPI’s, while Andrew pride himself with responsibility providing personalized service that’s second to none where time was not a factor to get the job done. Tolerance for ambiguity, Opportunity Orientation, Seeking feedback and Tolerance for failure Both Kim and Andrew saw opportunities being in the IT industry even though Kim was in a different trade and Andrew was only an employee both respectively were opportunity orientated.
They both showed interest in getting feedback from customer as a means to improve or create a unique service (Kim’s KPI transparency and Andrew’s personalized service) Having the ability to listen well and having the willingness to learn when making mistakes, makes an entrepreneur eager to keep finding ways to improve, as demonstrated by both individuals when faced with difficulties and failures. Drive to achieve, Creativity and Innovativeness Businesses aren’t always in a good shape and usually experience periods of lull as experienced by both entrepreneurs.
An entrepreneur who loves what he does can have a “pebble in the ocean” rippling effect; employees feel the vibe and customers sense the positive aura. It shows the entrepreneur believes in their product or service. Again this strong sense to achieve is evident, in Kim and Andrew from their persistence to learn the trade and work in the industry respectively. Commitment, Determination and perseverance “Characteristics of an entrepreneur that promote excellent service and customer satisfaction are imperative to the successful growth of a business’ reputation.
Satisfied customers are more likely to be loyal, and the loyal customer is one of importance in building reputation. ” (Characteristics of an Entrepreneur, 2009) Andrew customer has been the same for 15 years due to his excellent services, and Kim commitment to his clients by utilizing transparency in his KPIs. In summary as entrepreneurs, both though different in approach and from entirely different backgrounds have shown similar qualities of strong internal locus of control, drive to succeed and believe in hard work with this said according to Filion (2006) they both strike to be “The Woodcutter”.
Interestingly both advice to those wanting to start an IT business is to have prior work experience first. The entrepreneurial approach by both individuals closely follows the three stage process of establishing their respective business. As discussed by Shane & Venkataraman, 2000; Opportunity recognition – Kim saw an opportunity when it presented a well established profitable business for him to take over whilst Andrew work experience in the IT industry made him believe it can be done. Marshalling of resources – Entering the IT industry was relative easy during the time they entered it and start up capital was easily source as it was low.
Developing capability – Kim had to learn and expose himself to the technical side whilst Andrew gain his capability from working from within the IT industry. However in the view point of strategic positioning both had according to (Mazzarol, Reboud & Olivares 2006) fell into different categorical types: Kim was “Growth focused” as he had plans for growing his business three to four folds in the next decade, while Andrew was “Exit focused” as he is seeking to retire young while having a business that is self sustainable.
It is important to point out that none have any concrete plans at this stage and is more a work in progress, it clearly highlights ‘strategic myopia’ (Mazzarol & Reboud 2009) where typically “The woodcutter” types as they are so focus on the operations but fail to stop and look at the long term. Conclusion
In conclusion, the observation found when interviewing these individuals was an indication that regardless of their background, demographics or experience, entrepreneurs in small business showed to have similar traits of strong internal locus of control, believe in hard work to attain success and had a key focus which they would like their company to represent. In this case for Kim it is his transparency of his KPIs when doing work for his customers and Andrew is his personalized service that provided him with 15 years of loyalty from customers.
It was interesting observation that both advice against going into the IT industry even though they are very passionate in what they do, but did point out the importance of having the experience first before making the move should anyone decide to enter the industry. References: Australian Bureau of Statistics 2009, 8146. 0 – Household Use of Information Technology, Australia, 2008-09. Available from :< http://www. abs. gov. u/ausstats/[email protected] nsf/mf/8146. 0>. [10 Sept 2011] Australian Government, Department of Foreign Affairs and Trade 2008, Information and Communication Technology. Available from: . [10 Sept 2011] Characteristics of an Entrepreneur The foundation for your business, 2009. Avaliable from: . [13 Sept 2011] Kuratko, D. & Hodgetts, R. (1998) Entrepreneurship: A contemporary Approach, 4th Edition, Mason Ohio, Thomson South-Western.
Mazzarol, T & Reboud, S 2009, The Strategy of Small Firms: Strategic Management and Innovation in the Small Firm, Edward Elgar, Cheltenham, UK, NorthHampton, MA. Mazzarol, T & Reboud, S 2011, Small Business Management: An Applied Approach, 2nd Edition, 1st Printing, Tilde University Press . Schumpeter, J. (1934). The Theory of Economic Development. New York, Harvard University Press Shane, S & Venkataraman S 2000, ‘The promise of entrepreneurship as a field of research’, The Academy of Management Review, 25(1): 217-226