Encouraging Small Business Entrepreneurship through Knowledge Development

Small business and entrepreneurship are hot topics in the U.S. economy and it is believed they will make significant contributions to America’s reemergence as a nation of opportunity and growth. A study of 200 small business entrepreneurs in the U.S. and India help highlight how education, personal development and focus contribute to growth (Scales, 2014).  There is an increasing need to teach entrepreneurship and small business development in college to match skills to knowledge needed in the market. He argues:

• 1.      The need to teach the difference between small business development; and,
• 2.      The actual behaviors of entrepreneurs and small business owners.

Education can play a significant part in developing and growing the entrepreneurial class. Small business owners should move more toward an entrepreneurial orientation and seek to further reach the next level in business volume. They will need new knowledge to function at their maximum capacity.

This requires business owners to shift their approach and move more towards understanding technology, developing their structures, and handling greater volume and capacity. These skills are considered adaptive and help push small business to a growth strategy.

Adaptation is required because it destroys older systems and develops new systems as a core component of entrepreneurial activity. All businesses are in a continual process of decline and rejuvenation. Growth oriented businesses can find a way through these cycles by becoming stronger in their management approaches and business development activities.

Because successful small businesses are heavily influenced by the personality and ability of the owner a greater weight should be placed on entrepreneurial personalities. Entrepreneur traits include the desire to achieve, internal locus of control, need for independence, risk-taking behavior, creativity, drive to success, problem solving, goal directed, responsible, performance oriented, and ambitious. 

The author contends that entrepreneur education has been more focused on the economics of entrepreneurship but should also include small business growth. The educational process may be better serviced by focusing on the differences between small business development and entrepreneurship. New research and literature can be used in an emerging educational field and has great potential to impact the sector.

Scales,T. (2014). “Interactive Business” Risk, Reward and Reality. Academy of Business Research Journal, 1.

Dark Horse Coffee Brands Their Urban Barnyard

Dark Horse Coffee may be small but attracts a lot of locals from the urban barnyard. As a start-up operation the idea was to transplant knowledge from the Hawaiian coffee fields to the coastal lifestyle of San Diego. The young entrepreneur Daniel Charlson used his experimentation with coffee beans to create a successful business that frequently has a line out the door. You can’t miss the big black horse on their sign. 

 

It isn’t a large coffee shop and seating is limited but this doesn’t seem to stop anyone. They don’t have a lot of room for people to sit and lounge around with their laptops but they do have an efficient visitor flow mechanism that ensures customers don’t have to wait long before being served. Many of the patrons walk-in and out from the street buying their coffee on the go.

 

They are a specialty shop that focuses on international French press, pour over, and cold brew coffee. Unlike larger chains they operate in small batch production and strategically value quality over quantity. Many of their offerings are organic which appeals to a younger more health conscious crowd. Fresh, niche, convenient and organic are just a few relevant terms that describe their offerings.

 

One of the advantages Dark Horse Coffee has going for it its unique brand. Establishing your coffee business as a quality leader with a unique market brand can further market position (Piquet, 2014). That brand recognition can lead to customer recall when thinking of where to get coffee and that equates to dollars and cents in the owner’s pocket.

 

The coffee industry is a growing market. In 2013 coffee consumption increased 5% and this has led to adjustment of quality, upgraded operations, and remodeling investments (Rigik, 2013).  Dark Horse fits within this market through its niche brand and convenient coffee stand business approach. Low overhead and high opportunities.

 

Dark Horse has things going for it that some of the competitors do not have. They are not large or have all of the amenities but they do serve the street traffic well. If you know anything about Adams Avenue it is busy with all types of commuters. People buy their coffee on the way to work, shopping, baseball, yoga, or some other event. Their unusual brand will help customers remember them and their location will encourage them to keep coming back.

 

7am - 7pm DAILY

3260 Adams Avenue, San Diego, CA.

http://www.darkhorseroasting.com/

 

Piquet, J. (2014). Positioning your coffee shop for success. Specialty Coffee Retailer, 21 (2). 

 

Rigik, E. (2013). Courting Coffee Customers. Convenience Store Decisions, 24 (12).

Building a Stronger Entrepreneurial Society

Stronger national development requires the fostering of entrepreneurs and the matching of their talent to venture capitalism and financial resources. Without the creation of pathways and support many of these small businesses will not grow to a level that furthers economic development in a substantial way. According to a paper by Carl Schramm (2004) the business environment should foster the development of consistent small business growth and not focus only on mature firms; both develop together.

Bias was built into the system when discussing macroeconomic systems and this has impacted how Americans view small business. When WWII was coming to a close much of the U.S. was already developed. Large businesses were the focus of both micro and macroeconomics. The needs of smaller businesses and their contributions have generally been ignored as an economic engine.

The entrepreneurial system within the U.S. is based on high-impact entrepreneurs, mature firms, governments, and universities. Mature firms provide money and training grounds, entrepreneurs capitalize on new ideas, the government focuses development, and universities create technology and human capital. Without an environment where entrepreneurial activity, financing of mature firms, proper government and education enhancements work together growth will be lower.

Government: The lowering of regulatory tape for starting businesses, investing infrastructure such as the Internet, encouraging shared R&D projects, and creating a legal framework that helps businesses succeed. The environment should be conducive to business start-ups.

Education: Education provides a highly skilled population that can effectively compete on the market. Universities help in transferring and generating information. Even though education is not a criterion for business development it is a factor that helps foster business development.

Entrepreneurs:  Entrepreneurs usually invest their own money and after about three years, when they have developed a proper model and are ready to break out, investors offer financing. Investors seek to ensure that the business will have a reasonable risks and opportunities for success. Before this state is realized it is up to the owner to make the financial decisions.

Mature Business: Larger businesses adapt new technologies and have the strength to market these products. Their financial well-being can encourage the development of other businesses around them. They may engage in acquisitions, investment, purchase innovation and the transfer of skilled abilities.

Schramm, C. (2004). Building entrepreneurial economies. Foreign Affairs, 83 (4).

Small Business Start-Ups Create Economic Impact

Economic growth is important for cities, states, and nations. Research by Donald, et. al. (2009) helps decision-makers understand that a healthy balance between large and small business development puts economies on the right track to flourish while encouraging positive budget balances. Their study shows that the activity of business start ups foster growth not only in one state but also the surrounding states. Some businesses will succeed and others will fail but the economic activity of constant start ups is a revenue generator. 

The U.S. Small Business Administration reports small business activity is one of the major engines to economic growth and creates a majority of new jobs. It is possible that smaller businesses that are entrepreneurial by nature engage in research and development that have an even larger impact on the economy (Acs and Plummer, 2005). Both jobs and innovation are needed to keep the economic engine running at ideal speeds. 

There are a number of economic indicators of small business activity. States often focus on gross state product (GSP), state personal income (SPI) and total state employment levels. Much of the information is drawn from the Census or Bureau of Economic Analysis. These hard facts often ignore the rates of new business birth and death within a state. Yet it is this birth and death process that keeps momentum.

Small business growth contributes heavily to economic growth. There is a lag in the start of business and its overall contribution to the economy (Holtz-Eakin & Kao, 2003). It takes time to move from a start-up stage to a more sustainable stage where a successful process can compete on the market. When a number of businesses move into a sustainable stage they contribute to hiring, wealth, and product development. 

The environment is often a predictor of where small businesses will start. Entrepreneurs like places where an educated workforce exists (Lee et. al. 2004). Those who are investing their money want to connect up to those with the skill and knowledge to compete. Universities often act as hubs to entrepreneurial growth under the right conditions and a loosening of bureaucracy can make ideas more possible.

The results on small business for macro economic growth are mixed depending on which metrics one uses. However, by looking at birth and death rates the authors found that small business growth has a large impact on state economic growth. That growth also helps raise other states within their proximity. It is important to have increasing growth of business start-ups to raise tax revenue and positive economic output. The author argues that states who attempt to foster small business start-ups is a factor even more important than raising tax rates or implementing rules to create growth. 

Comment: The author did move into the concept of large firm and small firm growth. It appears that large firms provide a level of stability but higher levels of economic growth can be found in the constant starting of small businesses. Even when some small businesses die off in the first few years the entrepreneurial spirit raises its head again to start another business with new knowledge. Policy makers should be focused on ensuring that there is an appropriate balance of large and small business development and the environment to help encourage this higher economic activity.  States in close proximity also receive benefit in economic activity and should encourage each other to create larger synergy.

Ace, Z. & Plummer, L. (2005). Penetrating the knowledge filter in regional economics. Annals of regional Science, 39

Bruce, Et. Al. (2009). Business activity and state economic growth: does size matter? Regional Studies, 43 (2). 

Holtz-Eakin, D. & Kao, C. (2003). Entrepreneurship and Economic Growth: the proof is in the productivity. Working Paper No. 50. Center for Policy Research, Syracuse University, Syracuse, NY.

Lee, et. al. (2004). Creativity and entrepreneurship: a regional analysis of new firm formation. Regional Studies, 38.