Entrepreneurial success is best explained by how the entrepreneurs make decisions under uncertain and ambiguous conditions. Decision making for a new business venture is difficult and challenging due to the level of research and analysis required regarding the nature of the enterprise, its viability and how well it fits into the market environment. An entrepreneur needs a high level of creative and critical thinking while undertaking the decision-making process for a new venture. Also, moral imagination and personal intuition are essential in deciding the best fit for the business.
Mr. Patrick, the Chief Executive Officer (CEO) of a tour and travel company is an economics and statistics graduate with a wealth of experience in business management and enterprise development. He also holds a Master's Degree in Business Administration. Mr. Patrick began his career in the hotel industry as a management trainee and moved up the ladder to the level of a Managing Director (MD) within 14 years before quitting employment to start his own business. His company has been in existence for six years now and is currently focused on expanding its operations by increasing the services offered and travel destinations.
The business offers services such as travel planning and organizing, corporate events management which include team and capacity building. Having been in the hotel industry, Mr. Patrick knows too well the essence of timely bookings and when to take advantage of price offers and discounts. He, therefore, set a business that caters for a person's travel needs by planning all the essential aspects such as air ticketing, hotel booking and ensures that the clients visit scenic and breathtaking tourist destinations across the world. Mr. Patrick started his company with an initial investment of $5,000 half of which was raised from his savings, and the rest was financed through a bank loan.
Decision making to venture into a new business is taxing especially for a person who has been in employment. The fear of the unknown coupled with potential risks in the business industry makes it more difficult for an entrepreneur (Frederiks et al., 2018). However, to succeed in business, a person must be willing to take risks and face the challenges head-on with a positive mindset. Every industry presents different types of risks and threats to enterprises, and as such, one must be prepared to handle them by making sound and viable decisions.
Mr. Patrick admits that decision making is a core aspect of the success of any business. The decisions adopted during the set-up of a new venture are based heavily on the goals the entrepreneur seeks to achieve, and they must be specific, measurable, attainable, relevant, and time-bound (SMART). Specificity in this context refers to what exactly a person wishes to achieve in the business (Maxwell et al., 2011). For instance, having a projected amount of revenue the company is expected to generate and identifying the time frame within which this goal should be achieved, is of the essence in influencing informed decision making. Engaging in a new business venture entails decisions regarding the type of enterprise, how much capital one intends to invest, how to ensure efficient revenue generation among others.
Deciding on the nature of business an entrepreneur wishes to venture into is influenced by various factors such as passion and career. Having prior experience in the industry which one wants to venture acts as an added advantage to the proprietor. The most important aspect when deciding on the type of business to venture into is the recognition of a need or gap in the market which you seek to fill or satisfy by providing a product or service (Saini & Moon, 2014). It is, therefore, a decision that is based on thorough market research and analysis of the current trends within various sectors. The service industry, for instance, is one which requires an entrepreneur to be highly meticulous since customers are more aware of their needs and demand impeccable service delivery.
It is essential for a business person to love and have a passion for what they do. Mr. Patrick's decision to venture into the tours and travel industry as an entrepreneur was influenced by his love for travel and the significant amount of experience he had amassed while in the hotel industry. He used his network of friends in the business environment to gain referrals which came in handy during the onset of his tour and travel company. People travel for leisure and will, therefore, seek the best service provider for their needs, and as such, an entrepreneur must ensure that customer satisfaction is maintained at high levels to succeed in the tours and travel sector. Clients rely mostly on referrals from friends and relatives and word of mouth when seeking a service provider, thus the need to ensure that the customers you are privileged to serve are satisfied with the company's service delivery (Richard et al., 2017).
Financing solutions are also part of the decisions an entrepreneur has to look into when venturing into a new business. There are various ways of raising capital for a company including, use of savings, borrow from friends and family, and bank loans among others. Financing a business venture through requesting funds from people is often not viable especially when the nature of the enterprise requires a considerable amount of capital. While the use of a person's savings is a sure bet due to the certainty of funds availability, the amount may not be sufficient thus the decision to seek funding through bank loans. The choice of the financial institution an entrepreneur considers is based on factors such as current lending rates, the amount the bank is willing to give and the type of collateral needed (Sieradzka, 2017).
Convincing a financial institution to lend an investor capital to venture into a new business is not an easy task. The decision to seek funding from a bank must, therefore, be accompanied by a well thought-out and meticulous business plan whose viability and feasibility can be ascertained by the bank. The lending policies in most banks are strict due to the increase in bad debts arising from loan defaulters which plunge the institutions into losses that take a significant amount of time to recover (Baxamusa et al., 2015). The business plan should be articulate and easy to understand. Banks are more concerned with the financial aspect of the business plan, and therefore, one must ensure that the projected figures are indeed attainable within the stipulated timeline. The lender must be convinced that the business is viable and will generate enough revenue to sustain its operations and service the loan without defaults before approving a loan request.
Ensuring efficient revenue generation is based on various decisions made both whiles setting up the business and as it progresses. An entrepreneur must be in a position to decide on the best strategies to use to maintain a steady flow of revenue. Such decisions are based on the pricing of the products or services offered to the clients. The type of pricing strategy adopted is very critical during the start of the business since it may affect the success of the enterprise in various ways (Swartz, 2018).
To maintain high profitability levels in the company, one must also consider making appropriate decisions on cost management. This is a decision that is critical since it determines the ability of the business to remain afloat. Costs incurred by the company arise from its operations such as employees' salaries, cost of service delivery or product production among others. Generating high revenue will be of no value if the company loses significant amounts of money to unnecessary expenses. Use of appropriate revenue generation strategies coupled with efficient cost management would in no doubt result in high profitability of a business (Schade, 2010). It is, therefore, essential for an entrepreneur to make sound decisions regarding the cost of operating the company against the revenue generated.
Marketing the business is an integral component of the decisions made when venturing into a new enterprise. It refers to the process of communicating with the public to create awareness of the business and the services or products offered. The decision on the type of marketing tools to use is influenced by the nature of the business and the target audience. For instance, in the case of Mr. Patrick's company, his target market was the working class and therefore, used various tools to create awareness of the enterprise such as digital marketing, and use of creative advertisements through both print and electronic media. It is imperative for an entrepreneur to make sound marketing decisions since the success of any business is highly dependent on the volume of customers served (Richard et al., 2017).
Decision making is a crucial pillar in the success of a new business venture. An entrepreneur requires creative and critical thinking skills to make managerial and strategic decisions that facilitate the smooth flow of operations in a business entity. Establishing a new enterprise is preceded by decisions on vital issues such as the nature of the business, the gap intended to be filled or the need it satisfies, how it is to be financed and to communicate to the people of its existence. If the decisions are not made from a strategic point of view and in consideration of the current trends and risks in the particular industry environment, then the success of the business may be in jeopardy.
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