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Importance of Entrepreneurship
importance and benefits of small businesses today
Many businesses start as one person's idea. The creator is often an entrepreneur who spots a gap in the market or a
commercial opportunity. S/he turns the idea into a marketable product or service. There are four main types of business:
manufacturing, wholesale, retail and service.
Some characteristics found in successful entrepreneurs, show they are:
* prepared to take risks
* driven by achievement
* not put off by failure
* self motivated
* determined to stay ahead of the competition.
For example, Simon Woodroffe opened up his first Yo Sushi restaurant by copying an idea he saw in Japan. The
business grew into a chain of successful restaurants with a novel approach to serving Japanese food and drink.
Henry John Heinz's first product in 1869 was horse-radish, followed by pickles, sauerkraut, and vinegar. All were
delivered by horse-drawn wagons to grocers in and around Pittsburgh. Heinz developed many of the world's best known
branded products e.g. tomato ketchup, baked beans, and baby foods. Today's small business sector creates many of
the new ideas and innovations future generations will take for granted e.g. ingenious website designs, clockwork radios.
Small businesses are vital to the success of the economy. Not only as they provide the success stories of the future, but
also because they meet local needs (e.g. hairdresser, financial consultant, emergency plumber). They serve the
requirements of larger businesses e.g. for photography services, printed stationery, catering and routine maintenance.
Of course, you don't have to set up your own enterprise to be enterprising. Being entrepreneurial simply means
developing the right skills, attitudes and initiatives to make an innovative contribution to an organisation. This case study
gives you some idea of what is involved and how exciting it can be.
The number of small businesses Most UK businesses today are small. Two thirds are owned and run by one person.
Nearly 90% employ less than 6 people. They are also an important source of employment. Just over 2.5 million UK
workers are self employed; one in eight of all workers. It is from these small companies that tomorrow's big names will
Small businesses survive and prosper for many different reasons:
* Developing personal relationships
Small businesses are well placed to build personal relationships with customers, employees, and suppliers. With a small
business you know who you are dealing with; you can 'put a face' to the person you are in contact with.
Person-to-person interaction is as important as ever in building strong relationships.
* Responding flexibly to problems and challenges
In a small business there is little hierarchy or chain of command. Large businesses may have set ways of operating and
establish procedures that are hard to change. Small businesses are often far more flexible. It can also reach a quick
decision on whether or not it can do what is required.
* Inventiveness and innovation
Small businesses are well positioned to introduce and develop new ideas. This is due to their owners not having to
report or seek approval from anyone else. For example, when Anita Roddick set up The Body Shop, she developed a
range of environmentally friendly cosmetics in unsophisticated packaging. This would have been frowned on in a
conventional cosmetics company.
* Low overheads
Due to the small scale of operation, small businesses have lower overhead costs. They operate in small premises with
low heating and lighting costs, and limited rent and rates to pay. Low costs result in lower prices for consumers.
* Catering for limited or niche markets
Large firms with high overheads must produce high levels of output to spread costs. By contrast, small firms are able to
make a profit on much lower sales figures. They can therefore sell into much smaller markets: e.g. a local window
cleaner serving a few hundred houses, a specialist jewellery maker with personal clients.
The main reason many people choose to set up a small business, is because it gives them independence. They also
reap the rewards for themselves; these are two powerful incentives.