Mind of an entrepreneur

Case study on a small business owner


Term Paper, 2010
14 Pages, Grade: 1,3

Excerpt

Table of Content

Page

Part 1 Research and evidence

Part 2 Theoretical framework

Part 3 Analysis - Application of theory to evidence
Environment
Personality
Action
Owner Manager versus Entrepreneur
Innovation

Part 4 Conclusion

Part 5 References

Part 6 Appendices

1) Interview questions - Mind of an entrepreneur

List of Images and Tables

Chart 1: Share of enterprises, employment and turnover by size of business, UK private sector, start

Chart 2: Percentage of enterprises surviving one year and three years after registration, UK, 1995-

Table 1: Key financial figures of Company X 2006-2009

Illustration 1: Present understanding of entrepreneurs

Part 1 Research and evidence

At the start of 2008 there were an estimated 4,749,802 VAT registered small-sized enterprises in the UK, which is equivalent to 99.3% of all private sector enterprises. Small-sized enterprises are, according to DTI definition, firms with 1-49 employees. Small enterprises provided approximately 47.9% of jobs and generated more than one third of total taxable turnover in the UK at the start of 2008 (BIS, 2009). The key figures are shown in the following diagram.

Chart 1: Share of enterprises, employment and turnover by size of business, UK private sector, start 2008

illustration not visible in this excerpt

(Source: Graph designed by author, data from BIS, 2009)

These facts are an indicator for the significant importance of small enterprises for the UK economy, as they provide jobs, are a driver for trade and are extremely efficient in most sectors. Bolton (1971) provides a summary of important roles small firms fulfil, among others he says, they are “innovators of new products, services and processes” and they are the “seedbed for tomorrow’s larger companies; [an] entry for entrepreneurs who will become industry chiefs of the future”.

Out of those 4.75 million small businesses in the UK, some 160,000 are enterprises operating in the hotel and restaurant industry (BIS, 2009). One firm is Company X, a UK based Mexican fast food restaurant. With nine employees the firm falls under the DTI’s definition of micro enterprises (DTI, n.d.). Their strategy is to offer true fresh Mexican fast food of high quality at competitive prices, especially targeted at students and young professionals, in order to comply with current consumer trends, such as healthy living, convenience and quality (Appendix 1, p13).

In the UK’s fast food industry Company X can be categorized into the ethnic restaurants and takeaway sector, which is a very fragmented market with many independent operators. The Chinese and Indian cuisine is most popular among the British; however Thai and Mexican food are growing rapidly in popularity (Mintel, 2008).

Due to high competition many small businesses have to exit the market already within the first three years after start-up, as the DTI (2007) statistic below shows.

Chart 2: Percentage of enterprises surviving one year and three years after registration, UK, 1995-2004

illustration not visible in this excerpt

(Source: DTI, 2007)

Company X has been trading for more than four years now. The business was started by selling Mexican fast food from a van. The initial investment for the van and equipment was £ 27,000, which was funded through owner’s equity. For the store opening in 2007 a loan had to be taken up, which increased total liabilities to £ 20,000. In the years 2006-2008 the company generated losses, as a result of compensation for the investment. The prospects for 2009 are positive. The firm forecasts revenue growth of 50% to the previous year and a net profit of £ 29,000 (Company internal information, 2008). The next table shows a summary of key financial figures.

Table 1: Key financial figures of Company X 2006-2009

illustration not visible in this excerpt

(Constructed by the author of this study from company-internal information, 2008)

This implies that Company X is in the survival stage of growth. According to Churchill’s (cited in Deakins, 1999) stage model of growth, successful firms move along a known growth trajectory through six stages. At each stage the firm undergoes change in managerial style and organizational structure, degree of formality of systems, strategy and the owner’s involvement in the business.

Company X has only a marginal market share and they are operating in a very limited geographic region. As a player in an unexploited niche (Mexican fast food), they are able to address specific consumer needs and managed to stay in business over the last 4 years. The owner has demonstrated that the business works and was able to build up a stable customer base. The organization is still simple and final decisions are taken by the owner. The evidence of key financial figures showed that the main issue is being profitable. The firm generates enough cash to continue their business; however, currently Company X would struggles to bring up the finance for major repairs or investment for future growth projects.

According to Churchill (2000) businesses in the survival stage will either remain in this stage for a long time, where the owner simply enjoys managing the firm and has no intention or is unable to grow, or the company will become profitable and move on to the next stages through increased business size and changes in management and organizational practices, leading to profitability. The latter scenario can be achieved by an owner who is willing to take risks, implement changes through the introduction of new processes, spot new opportunities and act on them, who is confident and flexible. These are all attributes of entrepreneurial, innovative business owners.

The objective of this study will be to get an insight into the mind of the owner of Company X, and examine if he is an owner manager or an entrepreneur, besides finding an answer to the quintessential question: What makes an entrepreneur? To achieve this aim, primary research findings from an interview with the owner that address topics referring to his background, his motivation to start the business, his attitude toward risk, success, failure and decision making, as well as his vision for the future, will be drawn upon and related to a theoretical framework, as presented in the following.

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Excerpt out of 14 pages

Details

Title
Mind of an entrepreneur
Subtitle
Case study on a small business owner
College
Anglia Ruskin University
Course
Entrepreneurship and Innovation
Grade
1,3
Author
Year
2010
Pages
14
Catalog Number
V160554
ISBN (eBook)
9783640738816
ISBN (Book)
9783640738793
File size
607 KB
Language
English
Tags
Case Study, Small Business, UK, Innovation, Owner Manager, Entrepreneur
Quote paper
Jenny Haberer (Author), 2010, Mind of an entrepreneur , Munich, GRIN Verlag, https://www.grin.com/document/160554

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