Small and medium-sized enterprises are important components in the economic growth of both developed and developing economies. Longernecker (2006) argues that SMEs contribute to the growth of diverse economic sectors. The growth in SMEs has arisen from the high rate at which individuals appreciate the concept of entrepreneurship as compared to formal employment. Blanchard and Miller (2012) argue that the nature of entrepreneurship varies between developed and emerging economies. Entrepreneurship leads to the establishment of growth-oriented entities, which have the capacity to stimulate sustainable development (William & Andrew 2010). In the developing economies, entrepreneurship is a key pillar to the governments’ poverty alleviation efforts.
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SMEs progress through diverse life cycles with diverse challenges and threats. Previous studies indicate that approximately 5% of SMEs fail in the first five years of their operation. Some of the factors that pose a threat to the success of SMEs relate to financing challenges and stiff competition due to the high rate of globalisation. Furthermore, most SMEs do not have an adequate financial base, and thus they experience financial constraints in their operations.
In addition to the above challenges, entrepreneurs face threats emanating from political, economic, technological, and social uncertainties. Entrepreneurs take into account the prevailing market opportunities, which provide them with an opportunity to integrate a comprehensive product portfolio approach. Ricketts and Ricketts (2011, p.33) assert that entrepreneurs in ‘developing countries face a different set of circumstances as opposed to their counterparts in developed economies’. Considering the above challenges, it is imperative for entrepreneurs to nurture optimal leadership abilities. This paper is a critical analysis of the characteristics and qualities that individuals require in order to become successful entrepreneurs.
Qualities of an entrepreneur
Creativity and innovative
The business environment is characterised by a high rate of dynamism, as evidenced by the high rate of new product development. In order to survive in such an environment, it is imperative for a firm to scan the environment in a bid to identify the prevailing market opportunities. One of the aspects that entrepreneurs should take into account in their environment scanning effort relates to identifying the problems in society (Siraj-Blatchford & Manni 2007). One of the ways through which entrepreneurs can scan the business environment is by conducting comprehensive market research. The market research should take into account two main variables, which include competitor and consumer market research. The market research gives the entrepreneurs insight into the prevailing market gaps.
In a bid to identify the prevailing business opportunity successfully, it is imperative for entrepreneurs to be creative, which plays a creative role in nurturing a firm’s competitive advantage. For example, creativity promotes the effectiveness with which the products developed to solve the prevailing market problems. Furthermore, creativity improves the long-term survival of SMEs by enhancing the effectiveness with which they engage in new product development. A high level of creativity enables entrepreneurs to develop products that create value to the target customers. Siraj-Blatchford and Manni (2007) argue that creativity enables entrepreneurs to adjust their firms’ operations to the changing business environment.
The ideas generated by entrepreneurs through their creativity cannot be beneficial unless they are transformed into real products and services. This assertion highlights the importance of entrepreneurs being innovative. Siraj-Blatchford and Manni (2007, p.64) assert that creativity ‘is the generation of new ideas that are novel, useful and appropriate, and is a precursor to innovation’. For one to be creative, it is imperative to take into account various factors such as openness to experience, non-conformity to traditions, intellectual curiosity, and preference for variety.
Entrepreneurs should be effective communicators. The importance of communication arises from the recognition of the role of the human element in businesses success. Furthermore, communication is also essential in undertaking the leadership role as a leader is in a position to nurture an effective relationship with strategic partners, clients, and employees. In a bid to be effective communicators, leaders and entrepreneurs should focus on a number of elements, which include listening, interpreting, speaking, debating, acknowledging, verifying, translating, and consulting. Siraj-Blatchford and Manni (2010) argue that communication enables entrepreneurs and leaders to communicate their vision and their desired values to their followers. This aspect improves the effectiveness with which an organisation attains its goals and objectives.
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Warren Buffet is an example of one of the most successful business leaders and entrepreneurs. His success in entrepreneurship has been motivated by the adoption of effective communication skills. One of the aspects that Buffet takes into account in his communication efforts is developing a comprehensive understanding of his target audience. This element enhances the effectiveness with which he communicates his intended message. Entrepreneurs should possess sufficient skills with regard to written and spoken forms of communication as such accomplishments improve the effectiveness with which they understand various forms of business communication such as contracts.
Managerial and organisational skills
Small and medium-sized enterprises face numerous challenges originating from external and internal business environments. In a bid to survive in such an environment, entrepreneurs should have sufficient organisational and managerial skills. Some of the most important organisational skills that an entrepreneur should develop relate to planning, coordination, scheduling, and time management (Silber & Kearny 2010). The planning skills enable entrepreneurs to ensure that various projects are completed within the set period. Currently, entrepreneurs are adopting project approach in an effort to attain operational efficiency. However, the success with which the various tasks are completed is dependent on the entrepreneurs’ ability to plan tasks effectively. This assertion underscores the importance of possessing effective planning skills. For example, entrepreneurs can adopt the concept of teamwork in order to ensure that their projects are completed successfully (Kerzner 2006).
The success of the teams formed is dependent on the entrepreneurs’ skills with regard to scheduling, motivation, and team formation. It is essential for entrepreneurs to possess adequate scheduling skills as it improves the effectiveness with which tasks are completed within the set period. Scheduling enables entrepreneurs to exploit market opportunities, which have a short window. Secondly, entrepreneurs should have the ability to form successful teams. In order to achieve this goal, they should ensure that the team members have skills that complement those of their colleagues. For example, an entrepreneur can form a team comprised of members from different departments in his or her business. It is also essential for an entrepreneur to ensure that the team members understand their respective roles. Subsequently, the integration of effective internal communication channels is paramount.
Entrepreneurs should focus on building confidence amongst team members by delegating tasks to employees and providing them with the support that they require to complete the assigned duties successfully. Furthermore, entrepreneurs should nurture a high level of collaboration amongst team members by fostering effective communication within the team. Communication leads to the establishment of an enabling environment for sharing knowledge and ideas, hence increasing the effectiveness with which tasks are completed.
In addition to the above skills, it is imperative for entrepreneurs to possess sufficient motivational skills. Nelson and Quick (2011, p.23) define motivation as ‘the process of stirring and maintaining goal-directed behaviour amongst the followers’. In order to be effective in their motivation efforts, entrepreneurs should listen to their employees’ complains and compliments. Moreover, it is vital for entrepreneurs to respect the ideas of their followers, such as employees and lower-level managers. In addition to the above managerial and organisational skills, it is essential for entrepreneurs to be frugal with regard to the utilisation of their businesses’ financial resources. The need to be frugal arises from the recognition of the prevailing uncertainty in the business environment (Griffin 2007). For example, businesses may be adversely affected by economic changes such as a financial crisis (Biech 2007). In order to survive such instances, it is imperative for entrepreneurs and business leaders to ensure a high degree of prudence in their financial management process. Entrepreneurs should have effective cost-saving skills to ensure that the businesses’ earnings are invested in areas that enhance the enterprises’ long-term survival, for example, expansion of business operations.
Entrepreneurs and business leaders face diverse emotional situations, which require them to possess adequate emotional intelligence in order to navigate through such situations. Nelson and Quick (2011, p.53) assert that emotional intelligence ‘plays a critical role in improving an individual’s communication skills because one develops a high level of self-awareness hence improving his or her ability to monitor their feelings’. Business leaders and entrepreneurs should possess effective social awareness skills in order to improve their ability to deal with conflict situations. Entrepreneurs should be conscious of the likelihood of conflicts amongst employees. In a bid to deal with such situations, employees should possess effective mediation skills. One of the ways through which entrepreneurs can deal with such situations is by being conscious of their personal vision. Subsequently, entrepreneurs or business leaders are safeguarded against deviations from their goals and objectives.
Entrepreneurs should possess knowledge and experience on diverse issues. This aspect improves the effectiveness with which one is in a position to deal with different situations. For example, entrepreneurs should have the capacity to project market trends in order to formulate effective operational strategies. Subsequently, entrepreneurs should be in a position to steer their organisations towards long-term success.
Leading by example
It is imperative for entrepreneurs to ensure that they lead by example. In order to achieve this goal, business leaders and entrepreneurs should ensure that they adhere to the values that they proclaim. However, this aspect is not a simple virtue as it sounds. Entrepreneurs should understand that they are role models for their followers. Therefore, they should adhere to acceptable conducts and behaviours in order to influence their followers positively (Ewen 2003).
The above analysis identifies leadership as one of the most important aspects of the success of both large and small enterprises. Governments in both developed and developing economies recognise the importance of entrepreneurship in a country’s ability to achieve its economic growth objective. Subsequently, they are advocating for entrepreneurship as a strategy to create employment opportunities, hence stimulating their countries’ economic growth. The emphasis on entrepreneurship has led to the establishment of numerous small and medium-sized enterprises across diverse economic sectors. However, most SMEs face challenges that affect their long-term survival. These challenges emanate from internal and the external business environment. In a bid to survive in such situations, it is imperative for business leaders and entrepreneurs to possess adequate skills and characteristics. Some of the core characteristics that entrepreneurs should take into account include creativity, innovation, effective communication, managerial and organisational skills, emotional intelligence, foresight, and leading by example.
Creativity and innovation improve the effectiveness with which entrepreneurs can identify prevailing market opportunities. Subsequently, they can develop unique products that align with the customers’ needs and wants, thus improving the competitiveness of the business’ products and services.
Effective communication is also critical in nurturing a high level of collaboration and interaction amongst the various stakeholders. Furthermore, foresight and effective managerial and organisational skills are critical in an organisation’s efforts to cope with internal and external issues. Other characteristics that entrepreneurs should take into account include emotional intelligence, foresight, and leading by example. Emotional intelligence improves the entrepreneurs’ ability to deal with various situations such as conflict amongst employees. On the other hand, foresight enables entrepreneurs to understand market trends, which improves the effectiveness with which they align their businesses to the prevailing market changes. Developing the aforementioned skills improves the effectiveness with which entrepreneurs steer their businesses to attain the set goals.
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