4.

Entrepreneurial motivation and Decision

4.1. Entrepreneurial Motivation

Generally, motivation is the set of forces that cause people to do something.

Motivating Factors:

Let us address to the larger question what factors motivate entrepreneurs to start
enterprises. Many researchers have tried to understand and answer this question by
conducting research studies to identify the factors that motivate people to take all the risk
and start a business enterprise.

While some researchers have classified the factors motivating entrepreneurs into ‗push‘
(compulsion) and ‗pull‘ (choice) factors, most of the researchers have classified all the
factors motivating entrepreneurs into internal and external factors as follows:

Internal Factors:

1. Desire to do something new.

2. Become independent.
3. Achieve what one wants to have in life.
4. Be recognized for one‘s contribution.
5. One‘s educational background.
6. One‘s occupational background and experience in the relevant field.

External Factors:
1. Government assistance and support.
2. Availability of labor and raw material.
3. Encouragement from big business houses.
4. Promising demand for the product
4.2. Entrepreneurial Decision
As an entrepreneur, you must make different types of decisions on the everyday basis. You
must choose direction, Let‘s try to describe the decision-making process that you can use
in your business as an entrepreneur.

Decision-Making Process

Decision-making process is one of the most critical processes in your business. You can
see different types of this process in reality, but generally, they all have the same purpose
effective and efficient decision that will bring results to your business.

The most common used approaching in the decision-making process is according the following steps:

1. Recognize the problem…/ the gap

Every decision-making process starts with the problem or some discrepancy that exist
between the desired and current state. You have the desired state, and you have an existing
state. The difference between these two is the gap or problem that you must solve through
the decision-making process.

In this step, you can start with your vision about the desired state of your company and goals
you want to achieve.

Here are some questions you need to answer as a part of this step in your decision-making
process:

What are the most critical desired states for your small business?

How close…/ nearby is your small business to these states?

Why are you close or not close to the desired states?

What are the most significant problems here?

 2. Analyze the problem

After you find possible problems that require solutions you can start with the analysis of
already defined problems. That we focus, how these problems impact on the achievements of
your small business…..?

At the end of this step, you will need to have a list of possible problems sorted by their
urgency for the solution. In your analysis, you need to find causes and how the problem
impact on your small business.

3. Define possible solutions

This is the step when you need to start brainstorming all possible solutions for a given
problem, or problem you want to solve with that solutions. For the most critical problems,
you analyze in the previous step, create possible solutions.

When you think about solutions, also think about the causes of the problems. If you don‘t
remove the causes, your solutions will be only a temporary solution. Your decision-
making process needs to include possible causes of each identified problem.

4. Analyze all possible solutions

Because in the third step you come to more than one possible solution for a given problem,
in this step you need to analyze all proposed solutions to rank them and make a decision
that you will implement in the future. This step will need to give you the rankings of all
possible solutions from the best ones at the top to the worst ones at the end of your list for
each problem you discover at the beginning of the decision-making process.

5. Select the best solution for the application

Now is time for the real decision. The final result from the decision-making process is a
selection of the best possible solution to the problem. What will you implement as a
solution for the given problem? The answer to this question will be the decision you are
making.
 6. Implement the decision

We can‘t talk about decision-making process without the implementation of the decision
you have made. You will not finish the job until you don‘t implement what you have
decided. Can you solve the problem only by discovering the solution and making the right
solution? No, you will not solve your problem. You need to implement the solution and
check the results to see if the specific solution really solves the identified problem.

As you can see the overall process described above can be divided into the following four
parts as shown in the diagram below.
 Quiz (5%)
fill the following spaces with the most appropriate answers

1.______________ is the set of forces that cause people to do something.

2. The two types of factors that motivate entrepreneurs to start enterprises are ________________and
____________________.

3. What are the most important decision making process that an entrepreneurs follow during decision
making ?
4.3. Business Ideas

4.3.1. Definition of business ideas

A business idea is a short and precise description of the basic operation of an intended business.

Before you start a business, you need to have a clear idea of the sort of business you want to run.
Your business idea will tell you:

 Which need will your business fulfills for the customers and what kind of customers will
you attract?

 What good or service will your business sell?

 Who will your business sell to?

 How is your business going to sell its goods or services?

 How much will your business depend upon and impact the environment?

A good business idea will be compatible with the sustainable use of natural resources and will
protect the social and natural environment on which it depends.

A good business idea is essential for starting a successful venture and to stay ahead of
competition in the market.

Therefore: Finding a good business idea is the first step in

transforming the entrepreneur‘s desire and creativity
into a business opportunity.
4.3.1. Generating and Screening business ideas

 Sources of Business Idea!!

The followings are some of the sources from which business ideas are generated

 Mass Media (newspapers, magazines, TV, Internet) …….( Surveys)

 Hobbies/Personal Interest……………( Customer Complaints)

 Personal Skills and Experience ………( Natural scarcities and pollution)

 Business Exhibitions…………………..( Changes in Society)

 Being Creative………………………...( Brainstorming)

 Some tips to generate a successful business idea!!

• Start thinking!....................( Get your brain to work)

• Buy a note book………….(Explore new things)

• Follow your passion………(Check your bank account)

• Keep your eyes open………(Know what you want in life)

• Capitalize on your strengths

• Choose a business that suits your personality

• Read about other people that started their own business

Steps in generating and screening the best viable business idea

Out of the business ideas generated through brainstorming, the best business idea can be screen
out using the following steps:

Step 1: Brain Storming

Step 2: Macro Screening

Step 3: Micro Screening

Step 4: SWOT analysis

Step 1: Brain Storming

 Is a creative idea generation technique.

 It is also a problem solving technique.

 This technique provides free environment to present individual ideas, without attracting
criticism from any one.

 Every generated idea is recorded and considered as solution to a problem.

 Brainstorming shows collective creative power of a group of people. It is group

productivity.

 This is used to find out large number of business ideas in shorter time. This is accepted as
one of the tool in quality management. It is also useful to generate a large number of
ideas about a problem.

 Brainstorming provides an environment free of criticism for creative and free exploration
of options and ideas to solve problem.

Step 2: Macro screening

In this step, the viability of the business idea is checked according to the following criteria:

1. Marketability

2. Availability of raw materials &other inputs

3. Ease of implementation

4. Financial ability of the entrepreneur

5. Consistency with government priorities

Step 3: Micro Screening

In this step, the viability of the business idea is checked according to the following criteria:

1. Marketing Viability

2. Technical Viability

3. Organizational and Management Viability

 4. Financial Viability

5. Environmental Viability

1. Marketing Viability

Target market for the products and why customer would buy the product

 Size and growth rate of target market

 The level of actual market demand and anticipated future market potential

 Demand and supply situation, factors and trends

 Direct and indirect competition

 Marketing Practices

2. Technical Viability

 Technology & its source

 Machines and equipment‘s

 Production process

 Raw Materials, power& other inputs

 Infrastructure and Facilities

 Location &layout of site, building & plan

3. Organizational and Management Viability

 Abilities, competencies, skills, experience, values and motivations of management/key

officers as per the Good network with customers

 Managerial experience

 Superior technology

 Distribution system

 Product requirements of project

 Sketch personnel requirements: what people will be needed now, in a year, in the long
term?
 What skills and qualifications are required and what financial implication results?

4. Financial Viability

 Project startup capital

 Sources of financing/capital

 Balance sheet projections

 Cash flow projections

 Profitability/Income projections

 Break even analysis (BEA)

 Expected return on investment (ROI) & its viability for the entrepreneur (Cost benefit
analysis)

5. Environmental Viability

 What are the types of effluents and emission generated?

 What needs to be done for proper disposal of effluents and treatment of emissions?

 Will the project be able to secure all environmental clearance and comply with all
statuary requirements?

Step 4: SWOT Analysis

 A SWOT analysis is a simple tool to help you work out the internal and external
factors affecting your business.

 The S stands for strengths, the W stands for weaknesses, the O stands for
opportunities and the T stands for threats. It is one of the most commonly used
business analysis and decision-making tools.

 A SWOT analysis helps you to build on strengths (S), minimize weakness (W), seize
opportunities (O), and counteract threats (T).
  In order to get the most out of a SWOT analysis, you need to conduct it with a
particular business objective in mind. For example, a SWOT analysis can help you
decide if you should introduce a new product or service or change your processes.

These steps are shown in the following table using example of 500,000 business ideas generated
at the first step of generating and screening business idea i.e., brainstorming:
Quiz (out of 10%)
Part 1: Short answer questions

1. What is a business idea?

__________________________________________________________________________
__________________________________________________________________________

2. What are the steps to screen out the best business idea?

__________________________________________________________________________
__________________________________________________________________________

3. What is brainstorming?
__________________________________________________________________________
__________________________________________________________________________

Part II. Say True or False for the following statements

1. All business ideas are viable.

2. SWOT analysis is one of the steps to screen out a viable business idea.

3. Ease of implementation is one of the factors considered in macro screening stage.