Entrepreneurial Idea

Concept: The concept of entrepreneurship refers to the idea of development and management of a business venture. It basically refers to start a new business with innovative ideas and carrying the risk factors of the market. The idea of entrepreneurship plays a significant role in economic development as it contributes to income generation as well as employment. Overall, the entrepreneurship concept signifies the ability and the readiness to accept the challenges and uncertainties of the future and to develop the innovative idea to make a profit.

Problem and solutions: There are severe problems faced by entrepreneurs while implementing their idea. The problem can be said as challenges as these problems can be solved with the help of proper solutions. One of the key problems and the most common problem faced by entrepreneurs is cash flow management and financial management (Singh, 2020). One of the keys and first challenges faced by an entrepreneur is investment-related problem because starting a business of implementing an innovative idea requires adequate investment to fulfil the initial criteria of business development. Along with the initial investment, an entrepreneur has to face continuous challenges to balance cash flow management. Sometimes, the inadequate cash flow and less investment cause huge loss for the business.

Managing such a problem is crucial for an entrepreneur, so proper financial forecasting is important to plan the expenses of business as well as investments. Break-even point is crucial for the financial stability of a business, so it needs to be identified while developing the financial forecasts. The income should be reviewed, and the expenses need to be scrutinized for better income management (Goetz, 2020). Sometimes, the business may face risks or losses; for that time cash reserve helps to mitigate the shortfalls.

Cultural context: Cultural differences exist at every place, which affects the business dimension as well as consumer preferences.  The cultural context may differ based on a situation that affected heavily to the external environment. The present situation of a pandemic can be considered as the biggest change in the traditional business environment. All the elements of the external business environment are greatly affected, and it leads to the change in the internal environment as well. Hence, an entrepreneur who is planning to implement the business idea at this time needs to focus on the impact of COVID on the market as well as consumer lifestyle, along with analyzing the market dynamics.

Ideal customer: Ideal customer of a business involves severe characteristics. Some businesses expand to a line of diversification, due to which avails a variety of products, and each type of product is developed to fulfil different customer needs. Customer profiling is based on four market segmentation- geographic, behavioural, demographic and psychographic. Based on the requirements of segmentation, the marketing of products and sales strategies are carried out (Nguyen, 2018). Along with that, age, income, need is also considered to frame the concept of ideal customers for a business.

Figure 1: Market Segmentation

Source:  (Alexa Blog, 2020)

Competition: Market competition for a new firm is dynamic and varies based on industry structure and availability of rivals. The entrepreneurs who try to implement rare ideas or want to enter in a strict industry that has more barriers may face less competition (Povertycure.org, 2020). The market competition also depends on the number of sellers in the market, and the quality of their product. Based on the market analysis and competitors’ analysis, the new business should implement their ideas.

Competitive advantage: There are many areas of competitive advantage through which a business can gain success. For an entrepreneur, the initial required competitive advantages are high killed labour and brand image recognition (Corporate Finance Institute, 2020). High skilled labour enables increased productivity, and a good brand image helps to increase the customer base.

References

Alexa Blog, 2020. 4 Types Of Market Segmentation With Examples – Alexa Blog. [online] Alexa Blog. Available at: <https://blog.alexa.com/types-of-market-segmentation/#:~:text=Market%20segmentation%20is%20the%20process,interests%2C%20needs%2C%20or%20location.> [Accessed 17 November 2020].

Corporate Finance Institute, 2020. Competitive Advantage – Learn How A Competitive Advantage Works. [online] Corporate Finance Institute. Available at: <https://corporatefinanceinstitute.com/resources/knowledge/strategy/competitive-advantage/> [Accessed 17 November 2020].

Goetz, E., 2020. How To Overcome And Prevent Cash Flow Management Problems At Your Start-Up. [online] tempCFO. Available at: <https://tempcfo.com/overcome-cash-flow-management-problems/> [Accessed 17 November 2020].

Kurode, T., Kurode, A.V. and Moitra, K., 2016. A study of critical challenges in startup management. Available at SSRN 3348534.

Nguyen, T., 2018. Customer Segmentation: A Step By Step Guide For Growth – Openview Labs. [online] OpenView. Available at: <https://openviewpartners.com/blog/customer-segmentation/#.X7NrB2gzbIU> [Accessed 17 November 2020].

Povertycure.org, 2020. Market Competition | Povertycure. [online] Povertycure.org. Available at: <https://www.povertycure.org/learn/issues/market-competition> [Accessed 17 November 2020].

Singh, A., 2020. Top 7 Problems Faced By Entrepreneurs While Starting A Startup In India. [online] myHQ Digest. Available at: <https://digest.myhq.in/problems-faced-by-entrepreneurs/> [Accessed 17 November 2020].