"Seven essential entrepreneurial traits and skills in setting up businesses" – an Asian perspective
By KC Chia, KC Chia & Noor
Over 130 participants attended the Second Mutiara Community Forum conducted in Mandarin, which was held at the Menara Mutiara, Kuala Lumpur, Malaysia. The topic of the forum was "Seven essential entrepreneurial traits and skills in setting up businesses – small companies can also achieve considerable success". The speaker was Lin Gu Ye, a renowned Taiwanese consultant who graduated from Hosei University, Tokyo, Japan. His speech can be summarised as follows: Against the backdrop of the current global economic downturn as well as continuing deterioration of the European sovereign debt crisis and resultant market retraction, there has been a significant dip in export demand coupled with an escalating rate of unemployment. As a result many who have started to risk venturing into businesses opt for new business opportunities and pursue lifetime goals with a view to achieving prosperity in the future.
A. Pitfalls of start-up businesses
Most start-up businesses are small enterprises with basic managerial, financial and marketing skills. Generally, they are less cost-effective and lack modern management techniques and the necessary resources. The pitfalls of these enterprises could generally be categorised as follows.
1. Inadequate financial planning
Start-up businesses, if not properly monitored, will end up like black holes that are always perceived to be financially inadequate. In most cases, despite good business ideas or products, these start-ups underperform and experience poor cash flow generation, principally due to a failure in understanding the business environment and customer needs.
2. Myopia on "the cheaper, the better" policy
In order to minimise costs, these entrepreneurs tend to emphasise short-term benefits by ignoring expert advice for long-term business growth and instead source for low cost, but in essence short term solutions, which have knock-on effects on in-house product or service quality.
3. Undertaking entire gamut of operations
In their initial efforts to build up the business, these entrepreneurs tend to take on more than they can handle, such as all business and administrative activities including establishing customer relationships, closing sales, issuing invoices and accounts receivable reminders; replying to emails, dealing with office administration matters and doing business planning at night. This exhaustive micro-management prevents any meaningful evaluation on the cost-effectiveness and efficiency of each of the processes undertaken.
4. Neglecting corporate image
As most of these start-up businesses have limited resources, they do not possess the brand distinction and will lack corporate identity, culture and image. In building a distinct and strong corporate image, customer trust and confidence are further enhanced and in time these would lead to the generation of new businesses.
5. Insufficient employee training and development
These enterprises usually lack employee training programmes, as they are usually more concerned with other seemingly more pressing matters first, without realising that effective employee training and development will have a major impact on the productivity of a company and its overall efficiency in the long run.
6. Poor business planning and management
As these enterprises are only equipped with basic or rudimentary business managerial tools, there is inadequate proper business planning. As a result, these enterprises underperform and often find that their business situation is far from the ideal.
B. Seven essential entrepreneurial traits and skills
Mr. Lim summarised that for start-up businesses to be successful in achieving favourable results, the entrepreneurs must possess some, if not all, of the following seven essential traits and skills:
1. Positive business attitude
A positive business attitude is necessary with a strong emphasis on professionalism, dedication, trust, perseverance, time prioritisation management, acute and thorough analysis, timely and expeditious work execution and perseverance when facing obstacles.
2. Management is an ongoing learning process
Management is an ongoing learning process, with operations management, marketing and customer services having equally important roles, and hence should be treated as a lifelong pursuit of improvement and progress.
3. Strong business network
Entrepreneurs must learn how to establish strong communication skills when starting up, as well as having a good network of personal contacts and relationships so that help will always be at hand when required.
4. Strong focus on targets and objectives
From the start, it is necessary to focus on objectives and targets and have in place an organised and systematic managerial function. Ideally this function should be as fully computerised as possible.
5. Well-versed in the management process
Entrepreneurs must be well-versed in the entire management process including planning, directing, execution, control, coordination and quick acting to seize prime opportunities and optimise profits. Business planning in particular is therefore the key to preparing the roadmap devised to ensure business success.
6. Continuous talent and human resource development
Employee training is vital to a company's success. Continuous and rigorous management training is a necessary investment in order to give employees different skill sets and perspectives. Furthermore, through succession planning these specifically groomed talents can be allowed to work hand-in-hand so that in the entrepreneur's absence, there is a continuity of good management.
7. Manage wholeheartedly with passion and love
It is necessary to have an understanding of the constraints of limited resources when embarking on a new business venture. However, managing the business wholeheartedly with passion and love, and always striving for further improvement despite the odds and obstacles, is absolutely essential to achieve success.
Mr. Lin concluded by pointing out that all businesses starting small should not be expected to grow large instantly.
Every large company comes from humble beginnings and that includes companies such as Apple, Whole Foods Market, Mattel, Amazon.com and Starbucks Coffee. All of them started as small companies working out of their garages to gradually become among the 500 most lucrative corporations on earth.
As such, starting and managing a business requires passion, patience, dedication and hard work, and for those driven to succeed, the rewards can be bountiful and unlimited. Starting a business is an exciting proposition, but it's also an incredibly challenging undertaking. With easy access to a wealth of information on the internet, free flow of market intelligence, plentiful new technology and business opportunities available to entrepreneurs, there has never been a better or easier time to start a business than now.
KC Chia & Noor, Chartered Accountants; Kuala Lumpur, Cheras, Kluang, Melaka, Malaysia, Kwong Chow Chia