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3. Entrepreneurial Operational CompetenciesCompetenciesforms of business-related expertisePg. 61 level of competency assessmentRole model4 levels - needs development, needs refinement, competent, excellent

3-55Competencies are very important for small business ownersA competency is something you do well.Our competency is your strength in business. Many times it takes the form of a hobby which later becomes a small business.Five competencies appear repeatedly in successful entrepreneurs KIRDOKey Business FunctionsIndustry-Specific KnowledgeResource CompetenciesDetermination CompetenciesOpportunity Competencies

3-66Competencies are very important for small business ownersA competency is something you do well.Our competency is your strength in business. Many times it takes the form of a hobby which later becomes a small business.Key business functionsactivities common to all businesses sales, operations/production, accounting, finance, and human resourcesDelegate / outsource3-77Some functions are common to businesses.But every industry has its own set of skills necessary to be successful. A doctors office and a car mechanic both involve scheduling, selling a service, both have accounting and billing needs, both require employees. But the skills to be a successful doctor or successful mechanic are very different.Industry-specific knowledgeactivities, knowledge, and skills specific to businesses in a particular industryindustry expertise, industry skill, market knowledge, ability to diagnose the businesss health, ability to see opportunities

3-88Some functions are common to businesses.But every industry has its own set of skills necessary to be successful. A doctors office and a car mechanic both involve scheduling, selling a service, both have accounting and billing needs, both require employees. But the skills to be a successful doctor or successful mechanic are very different.Resource competenciesthe ability or skill of the entrepreneur at finding expendable components necessary to the operation of the businessTime, information, location, financing, raw materials, support people (e.g. founders, advisors, partners, customers)E.g. gocell2u.com3-99There are some types of competencies which are skills, but not the mechanic or doctors skills needed to provide the specific service of the business.Determination competenciesskill identified with the energy and focus needed to bring a business into existenceWillingness to take actionStick with the businessE.g. The spirit of Samurai knight3-1010These competencies are essential to success for entrepreneurs. Starting a new company takes much in terms of time, effort, and focus in order to become successful.Opportunity competenciesskills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable businessIdeally distinctive, hard for others to copyE.g. mbg.com3-11

11These competencies are essential to success for entrepreneurs. Starting a new company takes much in terms of time, effort, and focus in order to become successful.4. ProfessionalizationThe extent to which a company meets or exceeds standard businesses practices for its industryStandard business practicea business action that has been widely adopted within an industry or occupationE.g. a professional design website

3-1212Professionalization is key in a world with many fly-by-night operations. Customers prefer to do business with a professional company.Outward signs of being a professional company can beCertification (ISO 9000)Membership in the Chamber of CommerceA clean professional websiteStandard business practices become the norm in an industry. Doctors see patients only 4 days per weekRetail stores open 7 days per weekProviding more than the standard in an industry is an outward sign of quality. Providing less leaves customers questioning whether you are a real company.

ProfessionalizationThree levels:Expert, specialized, minimalized3-1313Professionalization is key in a world with many fly-by-night operations. Customers prefer to do business with a professional company.Outward signs of being a professional company can beCertification (ISO 9000)Membership in the Chamber of CommerceA clean professional websiteStandard business practices become the norm in an industry. Doctors see patients only 4 days per weekRetail stores open 7 days per weekProviding more than the standard in an industry is an outward sign of quality. Providing less leaves customers questioning whether you are a real company.

Expert businesses A situation that occurs when all the major functions of a company are conducted according to the standard business practices of its industryA pool of talented management team3-1414Expert business professionalization:Subcontractors: big companys require subcontractors to meet hundreds of corporate-dictated proceduresFranchises: corporate parents specify most of the procedures for the businesss operationInternational quality certifications (ISO 9000): small businesses must write in full detail how they will ensure consistency and professionalismEverything seems to be done in the best way possibleExceeds the standard business practices of the industryE.g. ESQ 165 leadership training regarded as the bestWhy? ISO certification, CS Survey, Kaizen philosophy3-1515Expert business professionalization:Subcontractors: big companys require subcontractors to meet hundreds of corporate-dictated proceduresFranchises: corporate parents specify most of the procedures for the businesss operationInternational quality certifications (ISO 9000): small businesses must write in full detail how they will ensure consistency and professionalismSpecialized The middle levelA situation that occurs when businesses have founders or owners who passionate about one or two of the key business functions such as sales, operations, accounting, finance or human resources

3-1616The owners passion receives the lions share of attention, consciously causing that area of expertise to exceed the standards of the industry.

E.g PR consultant, SEO, Interior Designer, lawyer, accountantSatisfied if other activities are no worse than other companies in the marketDr. Fadhilah Kamsah, training consultancyTrainers, facilitators, owns training centre

3-1717The owners passion receives the lions share of attention, consciously causing that area of expertise to exceed the standards of the industry.

Minimalized A situation that occurs when the entrepreneur does nearly everything in the simplest way possible3-1818Entrepreneur figures that good enough - to keep the business goingNo systematic accountingLittle recordkeepingE.g. Dr. Robiah HamzahIndividual-based Motivational Speaker3-19195. Entrepreneurial CareersCombine personality characteristics, competencies, and professionalization levels.Actual types of entrepreneurial careers:Habitual entrepreneursGrowth entrepreneursHarvest entrepreneursSpiral or helicalOccasional entrepreneurs3-2020A single practice doctors office is a habitual entrepreneur. They work until they retire.Kids dont come in and take over the business when dad retires.

Habitual entrepreneursOwners for a lifetimeBusinesses may vary, 1 or morePrimary goal = personal satisfactionSecondary goal = incomeNo succession plankeep working until they can no longer continueE.g. Steve Jobs - Apple, NEXT Computers, Pixar, and Apple

3-2121A single practice doctors office is a habitual entrepreneur. They work until they retire.Kids dont come in and take over the business when dad retires.

Growth entrepreneursAlso owners of a lifetimeGoal = major successAs soon as success is achieved - enter into the next venture high growth-orientedKeep working until they can no longer workWhen they retire, they tend to micromanage their successorsE.g. Bill Gates

3-2222Harvest entrepreneursWith an exit planWork first, play laterInterested strong balance sheets, sizable market shares and capable management teamBuild one company at a time, sell it, enjoy the proceeds, and then start anotherVery wealthy but largely unknownE.g. Valueclick, Bluelithium

3-23Spiral (helical) entrepreneursAlternate periods of growth and stability which are driven by personal or family needsA typical spiral strategy slow down when children are young push for growth when the children are olderThe endgame strategy is scaling down the businessAdvantage Advertising Laura Tidwell3-2424Occasional entrepreneursGenerally have another primary jobFascinated by entrepreneurship and pursue it periodicallyClassic part-time entrepreneurSeasonal basis E.g. event organiser, or making Eidul Fitris cookies

3-25Which form of the various entrepreneurial careers appeals to you most?Why?

3-266. Family BusinessesFamily businessa company in which one family owns a majority stake Involved in the daily management of the business

3-2727Family businesses have all the facets of normal entrepreneurial companys but also have the emotional drama inherent in a family.Interesting Facts:1/3 of the Standard & Poors 500 companies are family owned and managedFamily businesses make up over 1/2 of the businesses in the United States.39% of businesses in the United States are small family businesses.They employ 58% of Americas workforce.

3-2828Family businesses have all the facets of normal entrepreneurial companys but also have the emotional drama inherent in a family.Its AdvantagesCommunication can be more effectiveDecision making may be easier and quickerStrong family bonds may lead to strong corporate culture

3-2929Pre-established family relationship carries over into the workplaceFamilies are often the first source for business capitalEntrepreneurial parents often serve as the first entrepreneurship teachers for their children

3-30307. Family Business ChallengesRole conflictProblem arises when people have multiple responsibilities such as parent and boss, and different responsibilities make different demands on them.Occurs when family issues bleed into the workplace and vice versaAt worst, when people fail to recognise it.A boss daughter to work a parent e.g. to ask her to be with own children

3-3131SolutionsTo keep family issues out of the businessWhenever possible, make decisions based on business necessities.When making decision from a family perspective, broaden it to apply equally to nonfamily as well as family members.3-3232Role conflict breeds another unending problem-the shortage of time.Time management skills can help meet the overloadorganizing process to help make the most efficient use of the dayList, 123 Prioritize, Delegate, Repeat, Strategize3-33SuccessionProcess of intergenerational transfer of a business.Only 1/3 survive beyond the first generationReality - founders get ill / incapacitated / die

3-3434One problem seen in successful family owned businesses is that the second generation may not be as passionate about, or as capable of, running the family business. Many children who grow up with parents running a successful family business do not desire to work the weekends and late nights which were required to make the business successful.Another issue is who is the successor? And where does that leave a child who chooses not to work in the family business? These issues will also be discusses later in the book. Answer is taking a professional approachOnly 5% of entrepreneurs can rely on family members to take over

ChallengesRefusing to let go, or appointing a new managerInterfering and undermining him/her consciously and unconsciouslyNo clear cut succession plan and a family member is thrust into the position with little or no preparation

3-3535One problem seen in successful family owned businesses is that the second generation may not be as passionate about, or as capable of, running the family business. Many children who grow up with parents running a successful family business do not desire to work the weekends and late nights which were required to make the business successful.Another issue is who is the successor? And where does that leave a child who chooses not to work in the family business? These issues will also be discusses later in the book. Answer is taking a professional approachOnly 5% of entrepreneurs can rely on family members to take over

Loss of the founder causes dissension between family members competing for the top positionOr taking side on who theyd like to see in that position3-3636One problem seen in successful family owned businesses is that the second generation may not be as passionate about, or as capable of, running the family business. Many children who grow up with parents running a successful family business do not desire to work the weekends and late nights which were required to make the business successful.Another issue is who is the successor? And where does that leave a child who chooses not to work in the family business? These issues will also be discusses later in the book. Answer is taking a professional approachOnly 5% of entrepreneurs can rely on family members to take over

Taking a Professional ApproachCreates a family council immediate interestsAn advisory board board of directors strategic directionSet boundary between a family council and a board of directorsTo keep family involved - focused on running the business3-3737One problem seen in successful family owned businesses is that the second generation may not be as passionate about, or as capable of, running the family business. Many children who grow up with parents running a successful family business do not desire to work the weekends and late nights which were required to make the business successful.Another issue is who is the successor? And where does that leave a child who chooses not to work in the family business? These issues will also be discusses later in the book. Answer is taking a professional approachOnly 5% of entrepreneurs can rely on family members to take over

Identifies who will take over roles, supportSets up the necessary training for the successorProvides a schedule for the changeover or trigger a point at which the changeover is affectedA good plan will also handle the assets to minimize the tax burden on the family and company3-3838One problem seen in successful family owned businesses is that the second generation may not be as passionate about, or as capable of, running the family business. Many children who grow up with parents running a successful family business do not desire to work the weekends and late nights which were required to make the business successful.Another issue is who is the successor? And where does that leave a child who chooses not to work in the family business? These issues will also be discusses later in the book. Answer is taking a professional approachOnly 5% of entrepreneurs can rely on family members to take over

Revision3-3939Competencies are very important for small business ownersA competency is something you do well.Our competency is your strength in business. Many times it takes the form of a hobby which later becomes a small business.