Management Skills And Entrepreneurship †Myassignmenthelp.Com

Question: Discuss About The Management Skills And Entrepreneurship? Answer: Introduction This is a report, which describes the guidelines that should be followed for the success of entrepreneurship for a start up company. The report provides in depth analysis of the reasons, which causes the failure of a start up business organization. The business model of an organization is very important for its success and the next part will analyze the importance of using a business model that is sound and innovative. A start up has to maintain its sustainability and in order to do that is essential for a company to reach breakeven point. The report will also describe the managerial skills that are required to reach the break-even volume within two years of the commencement of the organization. The report will finally end with the analysis of the risk factors that are involved within the business and plan of action that will have to be used to mitigate the risk. The report will finally conclude with the analysis of the data that will be used as a source of evidence for the report. Failure of new business start ups It is been observed that majority of the small companies who start their ventures fail to maintain their sustainability. Therefore, it is very important to identify the reasons, which lead to downfall of so many companies so that the new ventures can survive in the market and gain sustainability (Drucker 2014). The first major reason is the problem with the existing market. The starts up companies are unable to build a marketing for the products they have made. The products do not have a value proposition or an unique selling proposition which will urge the consumers to purchase the product. The product developed a new company should be compelling to the consumers, there is a difference between need and want and the products manufactured by the company have to be a necessity for the consumers. There are certain products, which are too innovative for the market, and the consumers in the market are not ready for the product (Pinkwart et al. 2015). The market size for the new product is very small and it it tough to create a market for themselves. The execution of the blue ocean strategy is quite complex and tough for the new companies; they are unable to maintain their sustainability in the market. The next significant reason is the failure of the business model of the organization. The entrepreneurs are too confident about their product and they feel that it will be easy to capture to capture the market. The company uses innovative products and selling platforms, which will grab the attention of the consumers. The company may be able to grab the attention of the first few consumers but eventually CAC (cost of acquiring the consumers) will be higher the value of customers over a lifetime (LTV) (Krishna, Agrawal and Choudhary 2016). The entrepreneurs are not aware of the realistic cost for the acquisition of the consumers. The entrepreneurs will have to analyze the cost of acquisition with the overall value of the consumers in a lifetime, which will help to identi fy the feasibility of the project. The entrepreneurs can prevent a venture form failing if they rae to identify the feasibility of the venture. When CAC will be greater that the LTV the venture is not feasible and this factor will have to be realized by the budding entrepreneurs before starting of their business. This has made it clear that there are two things an entrepreneur will have to take in to consideration before commencement of the business, one is the appropriate way of the acquiring the consumers and the second is the monetization of the consumers at a rate higher than that of the acquisition cost (Tobak 2014). The rule is quite simple and entrepreneur will have to check whether the CAC is greater than the LTV to understand the feasibility of the project. Moreover, there are other cost which are included with the CAC so the acquisition cost will have to be less than the LTV by a greater margin (Kelly 2017). The next reason for failure of a start up business is the performance of the management team. A weak management team will make multiple mistakes and making major blunders at the beginning of the organization will prove to be gruesome for the organization. A poor management team will perform poorly in various aspects of management such as the development of the product and execution of the strategic plan of action. A weak team will be unable to manage the organization with optimal efficiency, which will lead to the failure of the organization. The acquisition of capital for the investment in the project is also another major reason for the failure of the start up organizations. The start up companies generally runs out of cash, as they are unaware of the financials of the organization. The time span of a company does not increase the valuation of the organization and the start-ups will have to achieve some milestones in order to increase the valuation of their respective organizations (Giardino, Wang and Abrahamsson 2014). The company will have to overcome a major obstacle in their path to improve the net worth of the organization. The capital of an organization runs out when the management team is unable to achieve their desired goal within the particular time span. When the company is unable to meet their target, the valuation of the organization decreases and it is tough for the organization to raise the required amount of capital. The entrepreneurs should be able to make proper utilization of the available capital, as there is shortage the amount of cash available for the running of the business. The leader should be able to differentiate among the necessary and unnecessary expenses of the organization (Dehn, Webley and Cunningham 2014). The entrepreneurs should be smart about the spending of the capital as one mistake could prove to be fatal for the organization. The goal of the organization is to reach its breakeven point as soon as possible. The last major reason, which causes the failure of the start up organization, is the problem with the product. The product that has been developed should be able to fulfil the need of the market and should consist of a value proposition, which will grab the attention of the market. However, it is very difficult for a new product to mitigate the needs of the consumers at the first go and the product will have to be multiple times to suit the needs of the consumers. The minor changes are not a problem for the start up but if the product is way off the mark then it will be a problem for the sustainability of the organization (Laitinen 2016). Importance of sound business model The business model for a start up organization can be considered as bedrock as it will describe the ways in which the organization will be making money. A strong business model will help in maintaining the sustainability of the organization. The business model consist of the in depth information regarding the sources of the revenue for the organization. The business identifies all the key aspects of the organization, which will generate revenue for the organization (Lambert 2015). There are mainly two reasons, which will indicate whether the business model of the organization is any good or not. The first reason is that the parameter does not make any sense and the second is that the revenue generated will not add up to provide any profit to the organization. The most important thing for a start up organization is the revenue generation of the organization as it will be instrumental in maintaining the sustainability (Serrat 2017). Business model defines the exchange of the value betw een the consumers and the company. Development of a business model that is sustainability is a challenge for the start up organizations. Evolution of a business is a key aspect of the sustainability of an organization. The expectancy of life of any organization can be considered to be 15 years and it seen that there are lot of changes in the list of companies that are present in the fortune 500 (Martins, Rindova and Greenbaum 2015). This shows that there is constant need for innovation and changes in the business model of an organization as it is very tough to maintain sustainability in the modern era of business. Globalization has lead to the evolution of the modern business activities so the companies will have to keep evolving by the making changes to the business model so that the organizations can maintain their sustainability. The most difficult part is creating a business model, which is viable for the activities of the organization. Moreover, the organizations will have to k eep on changing the model so that they can make improvements to the existing business models. The model has to be based on the relationship with the consumers and other important aspects so start up organization will have to think differently while creating the business model (Bohnsack, Pinkse and Kolk 2014). The business model canvas can be used to define all the aspects that are included in the operations of the organizations. It consist of nine main aspects which are important fro the sustainability of the organization. These aspects are used to create, deliver and acquire value for the consumers. However, the meaning of the model changes as the time progresses, the business model activities of a start up will be different from the multinational companies. The business model is the most effective way of identifying the various aspects, which are crucial for the growth of the organization (Lehoux et al. 2014). The business model will help to understand the feasibility of the business and the requirements. The business model will help the organizations to identify the things that are needed to make the start up feasible and sustainable. The start up organizations will have to check for the CAC/LTV rule to identify whether the business will be a success or a failure. Cost of acquisition o f a customer (CAC) and lifetime value of the consumer (LTV) are the two factors, which can be used to find out the feasibility of a business plan. CAC should be comparatively much less than the LTV as the addition cost will be incurred while execution of the process. When CAC is more than that of the LTV the business is sure to fail as the organization will run out of capital and will be unable to maintain the sustainability of the organization (Kim and Min 2015). The business model is a lifeline for the start up companies as they will be able to indentify whether their business will be feasible or not. The primary aim of a start up organization is to reach the breakeven point and in order to do so the organization will have to focus on all the nine aspects that are mentioned in the business canvas model. Key resources, key partners, key activities, value proposition, customer relationship, customer segment, distribution channel, structure of cost and revenue generation streams are the factors which are included in the business model (Autio et al. 2014). Feasibility of all this factors will be essential for the development of the business model and a strong business is the only to maintain sustainability in the market. The multinational companies that have been able to maintain their sustainability in the market is due to the use of innovation in the business model and the constant evolution. Most of the multinational companies are making use of innovation to improve their business model as it helps in gaining competitive advantage in the market. Acquiring of the consumers, unique selling proposition, differentiation of the product and pricing are important aspect for creation of a sound business model (Bocken et al. 2016). The start up companies will have to make sure that these four aspects are given more importance, as it will help in revenue generation of the organization. Capital is a very essential requirement of a start up organization as it is in early phase and it is necessary for the organization to generate revenue by overcoming obstacles in their paths, which will help in creating more value for the organization. The valuation of the organization will help to acquire capital when it is required and so the organization will have to keep on increasing the valuation of the organization by adding value to the business model. Thus, it can be seen that business model is very important for the sustainability of the organization (Linder and Williander 2017). Managerial skills required to reach breakeven point Breakeven point is the key to sustainability for the start up organization and organization will be calculate and identify the time and sales required to reach the breakeven point for an organization. The start up organizations will have to be aware of the sales volume required to cover up the expenses and this helps the organization to identify the business needs of the organization, which will support in sustainability of the organization (Itoh et al. 2017). This is one of the fundamental skills, a leader should possess, it helps in gaining knowledge regarding the performance, and output required for maintaining the sustainability. The profit and loss analysis of the organization has to done to identify all the costs and revenues over a period of time. The calculation of the yearly breakeven point will help in identifying the goals and objectives for the organization. The organizations have to use this analysis to identify the monthly target for the organization (Carland and Carlan d 2015). The organizations can use this to set immediate goals and objectives and by making shorter gaols for the organization will act as a stepping-stone for long-term growth. There are two types of expenses, which are related to the organization one is fixed and other is variable. The fixed cost remains the same for the organization but the variable cost changes with the change in volume of the sales. The knowledge about the fixed and the variable costs of the company provides information about the cost in the various activities of the production chain. This helps to identify the margin of contribution for various processes, which helps to identify the strategy needed to reach the breakeven point (Anderson et al. 2015). When an organization reaches breakeven point it starts gaining profits which can be used to add value to the organization. Entrepreneurs should possess some key management skills, which will help to reach breakeven point and to sustain the start up business. Self-awareness, relationship building, motivation, enterprise basic and leading change are the major skills that are required by the leaders to reach a level of breakeven point for the organization (Hatch et al. 2017). Entrepreneurs will have to balance their selfishness and the selflessness so that they can contribute to their vision by devoting to the various activities within the organization. The leaders will have to be aware of their own positives and the negative, self-introspection of ones self helps to identify the factors that which will help the leaders to manage the organization and employees involved in it. Interpersonal skills, emotional quotient, intelligence quotient and perception are the qualities, which is essential within a leader. The leaders should use their strong suit to their advantage to make sure that the organization is in alignment with the goals of the organization (Salat 2016). Exceptional leaders are aware of their limitations, which helps them to use their drawbacks as an advantage to gain sustainability. Interpersonal skill is very important factor in management as development of relationship with the employees and the investors is very important. When a leader is able to maintain a good relationship with the employees of the organization it helps to motivate the employees. The leaders will have to be innovative so that they can make improvements to their business model. The improvement in the business model is the key to reaching the breakeven point and the organization will have to keep on improving their business models as the market trends change on a regular basis. The leader should be transformational who will be able to change the whole environment of the organization. The leaders should be more involved in the internal affairs of the organization as it is a start up (Rout et al. 2017). T he leaders should use innovation to transform the environment of the organization. Entrepreneurs will have to be aware of the various circumstances so that they will be to handle any contingencies. The leaders will have to motivate their employees and bring improvements in the workforce environment. The workforce is one of the most important aspect for an organization. The workforce is an asset, which can increase, or decrease the operational productivity of the organization depending upon the level of motivation and direction the leaders has provide to the employees. Entrepreneurs should be able to foresee and predict the changes in the markets so that the organizations are ready for any contingency within the organization (Hisrich and Ramadani 2017). Entrepreneurs will have to manage their organizations skilfully to develop a unique workforce and use innovation to make improvement in the operational efficiency of the organization. Entrepreneurs need specific skills, which will help to reach breakeven point for the organization. They should be able to manage the capital they have in its best possible way. During the commencement of an organization, the amount of capital available is minimal and so the Entrepreneurs will have to manage their resources available to them in the best possible way (Lin 2017). They should be able to manage the budget by being practical about the expenses. Entrepreneurs should make sure that unnecessary expenditure is not included in the cost structure of the organization. Entrepreneurs should have good interpersonal skills, which will help in raising funds for the organization. They should be able to add value to the organization, increasing the valuation of the organization by achieving their immediate goals will be instrumental in raising funds. Entrepreneurs should have good convincing power and for that, they need interpersonal skills, which is very essential for raising funds. E ntrepreneurs should be able to take stress in a positive way, stress can have negative impact on the entrepreneurs so they should be aware of methods that will help them to relieve stress and use it for the benefit of the organization (Eberhart, Eesley and Eisenhardt 2017). They should be able to chalk out their plan of action so that they can be more productive. Self-awareness in this scenario is very important as it helps to identify the peak times of energy, which will help to chalk out the routine. They should be able to make friendship with other entrepreneurs who will provide insights about the problems that they face on a day-to-day basis. The entrepreneurs should be aware of their weaknesses and strengths. Thus, they can divide their task to make sure that his weakness can be transformed in to strengths for the organization (Wang, Thornhill and De Castro 2017). They should be good judge of character which will ensure that they will be able to hire people who are effective an d suitable for the positions in the organization. they should be able to provide adequate training to the employees they are hiring. This will help the employees to understand the goals and objectives of the organization and at the same time give them a proper direction. Entrepreneurs will have to be good managers early on in their business so they should be able to motivate and encourage the people within the organization. Managing the workforce is an essential factor as effective workforce will be an essential factor in reaching the breakeven point. The entrepreneurs should have basic knowledge about the search engine optimization so that they promote their business in the industry. They should be aware of digital marketing, which is an effective way of gaining competitive advantage in the market. Entrepreneurs should be aware of the usability of the A/B split test, which helps in implementation of change (Vahlne, Hamberg and Schweizer 2017). New organizations will have to adapt t o the market situations so initially they will have to keep on changing lot of aspects to maintain sustainability in the market and split test will be an effective way of making the changes. Social media is one of the most powerful medium for marketing in the modern era and the entrepreneurs should be able to make usage of this medium to promote the product. They should be able to identify the actual needs of the consumers so that they are able to provide the consumers with the desired service they aspire. Entrepreneurs should be able to identify the new trends in the market, which will help to make subtle changes in the products. This will help to gain competitive advantage in the market. Innovation is the only way in which the start-ups can compete with the multinational companies in their respective fields so identification of the upcoming trend is important for the organization (Luetge and Jauernig 2014). Entrepreneurs should be able to deal with the ups and downs in the market and to learn from the failures that will help to create a better business model. Entrepreneurs should be willing to contribute to the society by providing the world with something new. They should be willing to contribute to the society by making innovative products, which will actually mitigate the needs of the organization. thus, the budding entrepreneurs if possess the above skills will be able to reach the break even with ease. Risk involved in the business The three major risk factors, which the start up companies will have to mitigate, are market risk, financial risk and management risk. The current changes in the market trends will pose a risk for the start up organizations s there is no way to accurate predict the upcoming trends. The start-ups should be prepared for the entire situation or will have to use innovation to mitigate this arising risk (Marcelino-Sdaba et al. 2014). The market conditions may be favourable or unfavourable for the organization and it is not possible to control the external environment so the organization will have to make adequate change to reduce the risk. However, analysis of the market is one of the ways of identifying the trends in the market and start-ups can use this to mitigate the risk. The availability of capital is a problem for the start-ups where the majority of the companies fail due to the scarcity of the cash. Thus, the start-ups will have to make usage of the available capital in an effecti ve way. Management of a new organization is quite tough especially for new budding entrepreneurs and they will be facing lot of problems while managing their employees (Eberhart, Eesley and Eisenhardt 2017). Thus, the companies will have to make sure that they are able to maintain the organizational structure. Sources of evidence The source of this report is form various articles and journals which has made an in depth analysis of the start up businesses. The data consist of articles that have been taken from the analysis of various authors who have specified the reason for the failure of a new business venture. The data has also been taken taken from the blogs written by famous entrepreneurs who have made their name in the market. The report consist of secondary data only which has been collected from various research papers and thesis which have portrayed the various aspects of starting a new business. Conclusion Thus, it can be concluded from the report that it is quite tough for the new organization to sustain in this intense market of competition and the report suggest that the only 10% of the all the new start businesses in the world survive. This shows that it is difficult for the new start up organizations to sustain in this market. However, there are certain measures, which can be taken by the budding entrepreneurs, which will help to reach the breakeven point and maintain sustainability. However, the entrepreneurs must have some specials skills, which will help him to manage the new organization successfully. 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