As we live and grow, development comes, generally our thoughts are usually on some measure of progressive activity. This action is normal, because survivability in the twenty-first century with the advent of technology and with the rapid pace of development our tenacity has to be calculated and further redefined.
When one examines the term “economic growth” in any society the characterization is always the same: the increase of per capita gross domestic product (GDP) or other measures of aggregate income, typically reported as the annual rate of change in real GDP. Economic growth is primarily driven by improvements in productivity, which involves producing more goods and services with the same inputs of labour, capital, energy and materials.
On the other hand, we have to consider sustainable development, which, according to the Brundtland Report,
is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts:
- the concept of needs, in particular the essential needs of the world’s poor, to which overriding priority should be given; and
- the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.
As such, the process of structural alteration is the process of intentionally regulating or shifting the structure and organization of the economy to alleviate the consequences of negative shock or to benefit from new opportunities or challenges. All of this brings to mind a quote from John Welwood: “The most powerful agent of growth and transformation is something much more basic than any technique: a change of heart.”
The Caribbean overall has a wide range of income earners. Activities span from fisheries, nickel, iron, bauxite, petroleum, agriculture and timber. In terms of the Caribbean’s greatest attraction, there is tourism sector which has an alluring effect on individuals from just about every part of the globe. The experience of luxurious beaches can be considered therapeutic in nature, the unpolluted mountain air that circulates to gives a breath of real fresh air, the folklore, coupled with the delicious local cuisine is a must for any vacationer.
Notwithstanding the achievements of the Caribbean, which has had varying challenges in a number of areas, when compared to the more developed countries around the world, the tourism element has certainly placed Caribbean islands far be on the point of just sun, sea and sand. This point was formalized, According to the World Tourism Organization which states: At the start of the new millennium, tourism is firmly established as the number one industry in many countries and is the fastest growing economic sector in terms of foreign exchange and job creation.
The UWI-CARICOM Project of October 27, 2006 states - The Single Market addresses liberalisation, harmonisation/homogenisation and establishment of institutions, relating to access to the market. The Single Economy tackles the formulation, coordination and implementation of macro-economic policies. The gamut of issues under the microscope for magnifying economic oneness include, monetary policy, the supply of money in the economic system, taxation and expenditure, the level of interest rates, the price system, inflation control, the stability of exchange rates etc. Carryl said, on the other hand
The Single Economy phase is about measures, decision-making processes and institutional arrangements that are horizontal in their effect across the economy, as distinct from the Single Market phase which deals in specifics about, the labour market, the capital market, the market for goods, the services markets and so on.
The will to work together in now very strong and Caribbean Community and Common Market (CARICOM) States have demonstrated that an active singular approach will enable full implementation of the Caribbean Single Market and Economy (CSME). There has never been a shift from the holistic idea of the CSME. It is only being implemented in progressive steps.
It is not a question of a shift from Single Market to Single Economy. It is a question of progression. Integration is a process not an event and one cannot write an agreement like this and expect that every state will be able to put it in place tomorrow morning. It is not possible in our circumstances. You can only do it if all parties have agreed on everything and are prepared to take all of the legislative actions to transform the entire national economy that they control and this assumes that they have the resources to do so,
Carryl reiterated (UWI-CARICOM Project October 27, 2006).
Peter Drucker, an authority on management theory, noted that although the term entrepreneur has been used for 200 years, “there has been total confusion over the definition.” There is substantial disagreement concerning the concept of entrepreneurship and the individual who is called an entrepreneur.
The earliest reference to the term has been traced to Richard Cantillon’s work in the field of economics in 1734. To Cantillon, entrepreneurship was self-employment with an uncertain return. Cantillon focused on the entrepreneur as a person; for the next 200 years, considerable research investigated the entrepreneurial personality. Researchers tried to determine who was and who was not an entrepreneurial-type individual. Thus, the emphasis was on trait theory – it was assumed that people were born with or without entrepreneurial traits and this determined their career path.
Recently though, there has been a focus on defining the entrepreneur by entrepreneurial behavior and actions. This is referred to as the process school of thought. As early as 1934, Joseph A. Schumpeter had described an entrepreneur as a person who carries out new combinations, which may take the form of new products, processes, markets, organizational forms, or sources of supply. Another more recent definition states that “entrepreneurship is the creation of organizations.”
The entrepreneurial process is common worldwide and in the developed countries such as the United States, where each year about four percent of the adult population (1 person in every 25) is actively involved in trying to start a new business. Most have full– or part-time jobs, or they are already running another business and do not devote themselves full-time to the new venture until it is a going concern. The general public also believes that entrepreneurs always have a “flash of genius” that results in the new business. In fact, “flashes of genius” are rare. It is also true that some of the companies we consider great today did not start out with a compelling idea for a product or service. For example, in 1945, Masaru Ibuka and seven employees started a company in a bombed-out department store in Tokyo. However, they did not have an idea of what the business would do. For weeks, they tried to figure out what business the company could enter. Today, that company is known as the Sony Corporation.
Similarly, when Bill Hewlett and Dave Packard founded Hewlett-Packard, they had no specific idea to pursue. Although the business was vaguely defined as electronic engineering, the owners did not have any formative plans. Hewlett explains, “We did anything that would bring in a nickel…. Here we were with about $500 in capital trying whatever someone thought we might be able to do.”
James Collins, a columnist for Inc., explains “you don’t have to have a great idea if you execute it better than anyone else.” In fact, Collins states that identifying with a specific idea may actually be detrimental, because, if you equate the success of your company with the success of a specific idea, then you’re more likely to give up if that idea fails. If instead you consider the business the ultimate product, it is more likely to survive if the first product concept fails. Thus, for the person who has thought of being an entrepreneur but has not had a flash of inspiration or a unique idea, business ownership is still quite possible.
Some writers claim that our economy has developed to the point where the job is no longer the best way to accomplish the things that need to be done. They contend that jobs were a societal invention that provided the needed human resource element to allow the Industrial Revolution to proceed. Up to that point in history, people did not have, or need, jobs as we define them today. What the Industrial Revolution made necessary, the post-industrial society does not need. We now have the technology to run large production facilities-the kind that used to employ thousands of workers-with a skeleton crew. This is what one observer had in mind when he said, “The plant of the future will have only two employees: a man and a dog. The man will be there to feed the dog and the dog will be there to see that the man doesn’t touch the equipment.”
The text, Small Business Management, An Entrepreneurial Emphasis states:
It is important to note that, despite many similarities, the terms entrepreneur and small business manager–owner are not synonymous. Some entrepreneurial endeavors, for example, begin as small businesses but quickly grow into large businesses. As such, entrepreneurs are those individuals who discover market needs and launch new firms to meet those needs. They are the risk takers who provide an impetus for change, innovation, and progress in economic life. (In contrast, salaried employees receive some specific compensation and do not assume the ownership risk.) All active owner–managers can be considered to be entrepreneurs. On the other hand, there is no generally accepted or universally agreed definition for the term small business. One way of assessing small business is using the criteria of:
The number of employees
Sales volume
Value of assets
However, consideration and attention can be given to small businesses which meet the following criteria:
Financing for the business is supplied by one individual or a few individuals.
Except for its marketing function, the business’s operations are geographically localized.
Compared to the biggest firms in the industry, the business is small.
The number of employees in the business can be one (1) to approximately fifteen (15) in the Caribbean. Elsewhere, small business employee numbers can even reache up to one hundred (100).
In an article by N. Nayab dated Jun 28, 2010, four spheres were identified for influencing and determining entrepreneurial behavior. The major factors included: culture, political environment, economic environment, availability of resources, and the skill set and psychological orientation of the entrepreneur.
How Cultural Factors Influence Entrepreneurship
Culture refers to the customary practices and beliefs that have a significant impact on the basic values, perceptions, preferences, and behaviors of people.
Culture and entrepreneurship intervene in many ways.
- People traditionally engaged in businesses have a pro business attitude and disdain working as employees.
- Many people fall outside the establishment and remain unsuited for the traditional job market due to a strong culture of independence or other reasons.
- Business school students come under the missionary zeal of teachers who exhort them to become entrepreneurs even if the opportunity cost is very high.
- The culture of consumerism where people desire material goods encourages entrepreneurship within the area as returns from a business become more than returns from a job.
- People engaged in jobs and other services pressure their children to find secure jobs and crush their entrepreneurship spirit at a very early age.
- A culture of thrift where people spend less and save for a rainy day discourages entrepreneurship within the local community as the returns from a business become less attractive compared to returns from a job.
- Cultures where people are risk averse and do not attach much importance to hard work and persistence is not conducive to entrepreneurship.
How Political Environment Influences Entrepreneurship
The following are some of the ways in which the political environment influences entrepreneurship:
- Unstable political conditions where government policies change frequently discourage business, as investors fear for the safety of their investments.
- Government support to economic development through infrastructure development, facilitation, industrial parks, and the like all encourage entrepreneurship.
- High taxes that cut into the returns usually discourage entrepreneurs. On the other hand, tax holidays to encourage business attract start-ups.
- The availability of infrastructure and utilities such as good roads, power, communication facilities, and lack of corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurship.
- Economic freedom in the form of favorable legislation and few hurdles to start and operate businesses encourage entrepreneurship.
- While most businesses accept laws related to safeguard of labor rights and the environment, some countries have retrograde laws that make compliance very difficult and time consuming. Such legal hurdles create a barrier to entrepreneurship.
How Economic Factors Influence Entrepreneurship
The nature of the economy is a major factor that influences entrepreneurship.
- The general purchasing power of the people, manifested by income levels and economic prosperity of the region, plays a major role in the success of entrepreneurial ventures.
- During times of economic slowdown or recession, the purchasing power declines and people remain reluctant to invest, affecting entrepreneurship adversely.
- In a subsistence economy, most of the people engage in agriculture, consuming most of their output and bartering the rest for simple goods and services. Entrepreneurial opportunities are few in such scenarios.
Availability of Resources as a Major Factor that Affects Entrepreneurship
Critical factors that influence entrepreneurship include availability of resources such as capital, human assets, raw materials, infrastructure, and utilities.
- Capital remains indispensable to start an enterprise. The availability of capital allows the entrepreneur to bring together other factors and use them to produce goods or services.
- The importance of human assets or employees can never be underestimated. No enterprise succeeds without skilled and committed workforce.
- The very existence of the business depends on the availability of raw materials to process.
- Physical infrastructure and utilities such as good roads, parking space, communication facilities, and power all play a crucial factor in the seamless functioning of a business.
How Entrepreneurial Skill Sets and Psychological Orientation Affect Entrepreneurship
All other factors notwithstanding, the success of an entrepreneurial venture depends on the entrepreneur. The entrepreneur is the leader and driver of the venture, and requires the following skill-set and orientation for success:
- hard work and persistence
- ability to manage and minimize risk
- ability to draw up a comprehensive business plan, and having a contingency plan ready
- a strong need-orientation that provides the inclination to achieve things
- With the collapsing trade barriers bringing in greater opportunities, and job security passé, the conditions for entrepreneurship are better than ever before.
The fact is that working for a large organization no longer provides the kind of security and career opportunities it once did. Consequently, it should come as no surprise that many people are looking for a new route to take in the world of work. For a growing numbers of people, that new route is entrepreneurship, and today that route has greater accessibility than ever.
The new challenge facing the population of the world is that there is a large numbers of capable unemployed, or underemployed, managers for whom the chances of regaining a comparable position are slim. For many of these people, the appeal of making it on their own is very understandable. They have talent, experience, drive, conductive channels for these managers to be able to make their contribution is clear; entrepreneurship is that channels for these managers to be able to make such contribution; entrepreneurship is that channel for many.
Even for people who have not been directly touched by layoffs or by the uncertainties and pressures associated with corporate downsizing, the lure of the independence of entrepreneurship is usually strong.
It is usually perceived on the surface that small businesses respond negatively in economic slowdowns. This is a common delusion that is not necessarily factual. Well organized small business operations actually seize the opportunities downturns in economies present. While it may be true that by almost any measure the United States has the most vibrant entrepreneurship of any of the world’s economies, by no means does it have a monopoly. The advantages of widespread entrepreneurial activity have not gone unnoticed by economic planners in countries around the globe, and recent years have seen the initiation of many programs to encourage small business formation. Although China and Russia were traditional opponents of any economic ideas that even hinted of capitalism, both of these major powers have seen entrepreneurship emerge as a major force in their respective economies.
There are a number of people who should never start businesses. And there are reasons not to start a business. Not because everyone is doing it makes it a good idea to start a business. Everyone seems to be playing with a concept of one sort or another. While there’s nothing wrong with all this wishing and hoping going on, it’s certainly no reason for you to start a business. Talking about starting a business is easy; actually starting a business is hard work. Entrepreneurship is one of the great ways to create substantial wealth. I just want to caution you that most successful entrepreneurs started their businesses for reasons that had nothing to do with money. Those reasons usually had everything to do with being passionate about their business ideas and wanting to turn them into the best businesses they could.
Getting fired or laid off is a common precipitator of entrepreneurship. Sometimes, it takes that unexpected event to push someone to start a small business, which will create jobs for themselves; jobs that they believe will always be there (unlike the job from which they were just laid off). What they don’t realize is that, on average, small mom-and-pop type businesses pay their owners less than they earned working for someone else, and they get the privilege of working seven days a week, twelve hours a day. What’s more, they still don’t have job security, because the failure rate of small businesses is quite high.
People who dislike working for someone else cite numerous reasons. They want independence – to do what they want, when they want, with no one looking over their shoulders and telling them what to do. They also don’t like the idea of spending all their time working for the benefit of someone else, creating wealth for someone else to enjoy. Jo Hazelhurst in an article for a business report dated July 3rd 2008 wrote: “If a person wants to be happy learn this lesson well: learn to work harder on yourself than you do on the your job.” Nothing is wrong with these reasons if the job provides stock options or some other way to share in ownership and growth of the company you’d feel you have more of a personal stake in the job and the company.
An entrepreneur with too much money can be pretty frightening. How can you ever have too much money to start a business, you ask? Because you have a lot of money available to you at the beginning, you don’t make as wise decisions as when you have a limited amount of capital. The problem with being flush with cash is that if you lose money, you know there’s more where that came from. A better plan is to formulate a business concept, test it in the market, and figure out how much money you need to start the business and take it to a positive cash flow on its own.
Investors often run in the other direction when they see a group of relatives running and advising the business, to an outsider, this looks like you were going for cheap labor rather than getting the best people for your team.
Starting a business is about execution. You may have a great idea, but if you don’t have the experience, knowledge, and persistence to make it happen, what’s it really worth?
Life is a risk. Driving a car, crossing the street, going to the parking garage at night, putting your money in stocks – all are risks that we take everyday. Yes, starting a business entails risk, some of which can be calculated and some of which is unknown. You need to look at how much risk you can handle, while still keeping your sanity, and not hurting your family.
Entrepreneurial types tend to do just the opposite. They rationalize why they should start a business and discount any potential negative views. Nothing is wrong with listing all the pros and cons to starting a business. Go through all the ifs and consider those negative scenarios.
Do a feasibility analysis, this is a great way to become comfortable with your business concept and feel more confident about moving forward. A feasibility study helps you define the conditions under which you are willing to proceed.
One of the big reasons the 1980s are called the Decade of Entrepreneurship is that so many people were laid off because of downsizing by big corporations. Some of the suddenly unemployed even started new companies to compete with their old workplaces.
Immerse yourself in an industry and find out everything you can about it. Become the expert on your industry and soon you’ll find the opportunity that’s right for you. It is important to make contacts in the industry and understand how the industry works. Your knowledge motivates you to give your new business a shot. Spend time with an Entrepreneur you admire, shadow that person, on a day-to-day basis. Your chosen entrepreneur can give you personal advice based on his or her experience on how to get started, what pitfalls to look out for, and how to balance your personal and business lives. it’s rewarding to have someone you can turn to when you need advice, when you’re frustrated or discouraged, or when you want to share a small win, the best mentors are ones who believe in you and can be honest with you, who has had a successful business in the industry in which you’re interested or someone whom you admire regardless of whether he or she happens to have experience in the same area as you. It’s of pivotal importance to network, get out there and meet new people, because you never know when you’ll meet the person who ultimately starts you on your way.“Just do it!” Leap into your opportunity with both feet and start doing something that makes your business happen.
Regardless of whether it is an upheaval in existing markets or the emergence of a new one, small businesses have important advantages that allow them to succeed. One is their responsiveness to conditions and trends in the market, which comes from a close relationship with customers and therefore a thorough understanding from a close relationship with customers and therefore a thorough understanding of their needs. For many entrepreneurs the relationship with the customers is a personal one, and that means being the first to learn of changes in preferences that will affect the market. Not only does such a relationship give the entrepreneur the chance to learn from the customer, but it also gives the entrepreneur the chance to reverse the communication process: to give the customer the message that he or she matters to the business. Large companies spend considerable amounts of money and energy to learn from the customer and to send messages of concern; for small firms, both learning and showing concern are natural parts of the process of doing business. Successful small businesses never lose sight of that.
Another factor that distinguishes the successful small business from the typical large company is its ability to innovate. The independence of an entrepreneurial company allows it to move quickly when something changes or a new opportunity rises. While many large firms recognize the need to change directions quickly, most seem to be burdened with procedures and administrative controls that slow things down, no matter what the sense of urgency might be. This ability of small businesses to innovate can take on many forms, including product innovation (new features, improvements), process innovation (improvements to how production is carried out), and service innovation (offering something new to serve the market). Regardless of its form, innovation enables small business to complete successfully.
Closely related to innovation is flexibility. For many successful small businesses, a change requested (or even hinted at) by the customer, or a new product feature developed by a competitor, typically becomes a call for action that leads to new ways of doing things or modifications to the product line. The reasons for this flexibility are both attitudinal and practical. Entrepreneurs know that responding to the customer is essential enough to deal with the disruption brought on by change; it “goes with the territory.” As a practical matter, small companies tend to invest less than many big firms in expensive, single-purpose machines, large inventory levels, and rigid production tools and techniques. As a result, they can change what they do, or the way they do it, with far less difficulty.
Taken together, these characteristics-responsiveness, has the ability to innovate, and provide-flexibility for a small business which is willing to compete in a rapidly changing environment. But clearly the entrepreneur, the individual, is at the core of any success achieved by the small company.
While big business seems anxious to promote its efforts to save the planet, many ambitious plans remain just that: plans. Companies learn that the market isn’t large enough or that entering it may require turning its back on its old customers, or that more study is needed, and so on. These obstacles seem to be less formidable to small business.
Whether entrepreneurial tendencies exist at birth or are developed as a person matures, certain traits are usually evident in those who enjoy success. Many of these traits have been found in successful managers-owner as well as entrepreneurs. The entrepreneur must have more than a casual interest in the business because there will be many hurdles and obstacles to be overcome. If there is no passion, or consuming interest, the business will not succeed. Because of the hurdles and obstacles that must be overcome, the entrepreneur must be mentally prepared; the entrepreneur must be consistently persistent. Many successful entrepreneurs succeeded only after they had failed several times.
Entrepreneurs must be confident in their abilities and the business concept. They should believe they have the ability to accomplish whatever they set out to do. This confidence is not unfounded. However, often times, successful entrepreneurs have an in-depth knowledge of the market and the industry and they have conducted months (and sometimes years) of investigation. It is common for entrepreneurs to learn an industry while working for someone else. This allows them to gain knowledge and make mistakes before striking out on their own. One successful entrepreneur described this advantage by saying, “I’d rather learn how to ride a bike on somebody else’s bicycle than on my own.”
Nearly every authority on entrepreneurship recognizes the importance of self-motivation and self-determination for entrepreneurial success. Jon P. Goodman, director of the University of Southern California Entrepreneur Program, states that self-determination is a crucial sign of a successful entrepreneur because successful entrepreneurs act out of choice; they are never victims of fate. Entrepreneurs believe that their success or failure depends on their own actions. This quality is known as an internal locus of control. A person who believes that fate, the economy, or other outside factors determine success has an external locus of control and is not likely to succeed as an entrepreneur.
The many facets of entrepreneurship and also owner – manager businesses were examined. When one considers how to develop an approach they should attempt to identify the functionalities of same. When this is established, systems could be developed and then instituted. One of the most effective ways for any structure to work is via an educational approach which should be a combination of both theoretical and practical pursuits. As stated before, the Caribbean is ripe with opportunities in the tourism sector. The country of Anguilla is reckoned as a fabulous tourist island in the Caribbean. This ultimately means there will be a number of downstream industries coming out of the tourism sector. By extension, it broadens the avenues for business activities not only for the large corporations in Anguilla but more so for industries that could be a new venture, one which needs development, or a business which had reached to the point of diversification.
Anguilla’s business community development should not be left to chance. The businesses that have been in operation may have been in position to reap healthy rewards over the years. However, looking to the future, greater emphasis must be placed in educating the business community and at all levels. This way forward has become necessary as the entrepreneurs, owner-manager(s) need to be by far more objective not only in actions but in performance. The only way to achieve this measure is by instituting some level(s) of training and development programs for business people. A move in this direction will surely broaden the mental horizon and if not guarantee some level of success in business, certainly the potential of the business people will increase thus productivity will be in a position to be maintained and enhanced in an effective manner. The benefits of entrepreneurial education (at all levels) in Anguilla will definitely have a positive impact for the citizenry at a domestic level and by extension at a national level having economic repercussions which will aid in the country’s sustainable developments and profitability. It is been written ‘education is the key that opens doors’.
David Bornstein (1995), The New York Times, September 14, A7.
Jon P. Goodman, director of the University of Southern California Entrepreneur Program
Jo Hazelhurst in an article for a business report dated July 3rd 2008
Elsa Leo-Rhynie (2006) Some implications of the Caribbean single market and economy with special reference to education and gender. UWI-CARICOM Project November, 2006
Longenecker, J., Moore, C., Petty, J., and Palich, L.E. (2005), Small Business Management, An Entrepreneurial Emphasis –
N. Nayab (edited & published by Ginny Edwards on Jun 28, 2010), Factors Having an Impact on Starting and Operating a Business, on-line at http://www.brighthub.com/guides/prentice-hall.aspx
HTML last revised 23rd April, 2012.
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