By Irving Shou Hui Ting, Dr. Gabriel Wei En Wee and Professor Weng Marc Lim
Many people aspire to be their own boss, to call the shots, and enjoy the freedom of work and lavish life, all of which point to the lucrative promises and rewards of entrepreneurship. Owning a business is exciting, but ask anyone who runs a business and you will quickly realise that entrepreneurship is full of challenges.
Most entrepreneurs are more worried and face daily stress compared to their employees. After all, the bottom line is key to the return on their investment in the business. Success in entrepreneurship is not guaranteed: it depends on many things, with sales or revenue arguably being the number one front-facing factor in determining entrepreneurial success.
According to Startup Genome, 11 out of 12 start-ups are bound to experience failure – that’s an astonishing 91.7% failure rate! Competence, which is the combination of knowledge, skills, and attitude, is key to avoiding failure.
In this article, we focus on explaining the importance and relevance of knowledge, which can be acquired through continuous learning and reflection, which can be done formally (university education) and informally (self-learning), and subsequently actioned upon by taking full advantage of that knowledge in one’s best interests. Having knowledge about (1) people, (2) the economy, and (3) your gut instinct is crucial for entrepreneurship.
Understand people
“If you don’t understand people, you don’t understand business”—Simon Sinek.
Far too often, entrepreneurs become engrossed in financial figures that they lose sight of a basic fact: every customer is a person. Though you have a great product, you may not sell well if your product does not interest nor satisfy people’s needs. The main purpose of a business should not be to enrich entrepreneurs. Instead, a good business needs to offer solutions that satisfy needs, gratify wants, and ultimately, improve lives. Similarly, a good business needs to be sustainable, which means that customer loyalty is important. This means that people, not only financial figures or products, should also be kept at the forefront, be it in the short or long run, if entrepreneurs truly want to ensure the continued attractiveness and sales of their products.
Understanding people within the business is also essential. Like customers, employees too are people – they may even be the customers of your business! Ask any entrepreneur about their key challenges and people issues will surface, most likely after sales. Despite job unemployment, recruitment of good employees is challenging, and the same can be said about the retention of high performers – they are the ones who are in demand and thus always employed. Like customers choosing brands to purchase, employees choose employers for work. Therefore, entrepreneurs will need to create value to attract and retain not only their customers, but also their employees, and crucial to that is understanding what make these people interested, engaged, and committed to your business.
Entrepreneurship is social. Thus, you will need to keep yourself updated with the society’s evolving needs and wants in order to expand and improve your customer base, human capital, and brand image whilst keeping your valued customers, employees, and stakeholders happy and loyal to your business.
Understand the economy
Economic literacy is important. It is about understanding the issues that are happening in the local and international macro- and micro-economic environment. People think and discuss economic issues that influence the different roles they play in life, be it as a citizen, consumers, employees, employers, or investors. Economic literacy equips people with the knowledge and skills necessary to comprehend the economy and analyse events that may directly or indirectly affect them. To understand the economy, entrepreneurs must recognise that a business operates in an environment that is shaped by political, economic, social, technological, legal, and environmental macro-forces, as well as competitor, customer, intermediary, public, and supplier micro-sentiments.
Thus, entrepreneurs must keep abreast of the latest disruptions and trends in the economy in order to steer their businesses in the right direction.
Trust your gut instinct too, not just your spreadsheet!
Entrepreneurs are often accused of being enslaved by spreadsheets and statistics. However, things, in reality, are rarely black and white. Your gut feeling is valuable for decision-making. No one knows more about your business than you do.
Our parting advice is to always be and stay knowledgeable. As Benjamin Franklin puts it, “an investment in knowledge pays the best interest.”
Irving Shou Hui Ting (ithui@swinburne.edu.my) teaches business, Dr. Gabriel Wei En Wee (gwewee@swinburne.edu.my) leads entrepreneurship initiatives and teaches entrepreneurship units, and Professor Weng Marc Lim (wlim@swinburne.edu.my) serves as dean at the Faculty of Business, Design and Arts at Swinburne University of Technology Sarawak. Dr. Wee and Professor Lim have extensive entrepreneurial experience from their family and own businesses. Follow @swinburnesarawak on social media to keep updated with the latest entrepreneurship happenings at Swinburne Sarawak.