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CHAPTER 6
US ENTREPRENEURSHIP AND SMALL FIRM
INTRODUCTION:
Entrepreneurship and small companies are two important concepts in the business world. Entrepreneurship refers to the process of identifying, developing and realizing business opportunities, while small companies are a type of business with a smaller scale than large companies or corporations. In this lecture material, we will discuss the meaning of entrepreneurship, small companies, as well as examples that illustrate these two concepts.
UNDERSTANDING ENTREPRENEURSHIP. Entrepreneurship is derived from the word and business entrepreneurship. Hero means warrior, hero, superior human being, exemplary, virtuous, brave and of great character. Business is an act of charity, working and doing something. So an entrepreneur is a fighter or hero who does something. Entrepreneurship (Entrepreneurship) or Entrepreneurship is the process of identifying, developing, and bringing a vision to life. The vision can be an innovative idea, an opportunity, a better way of doing things. The final result of this process is the creation of a new business that is formed under conditions of risk or uncertainty.
The term entrepreneurship was introduced by Prof. Dr. Suparman Sumahamijaya in 1975, explaining in the original term, namely entrepreneur, in the sense of those who start a new business, bear all the risks, and make a profit. The word "Entrepreneur" is a translation of the English term centrepreneur, which means people who have the ability to see and assess business opportunities.
Entrepreneurship(Entrepreneurship) is a person's ability and willingness to take risks by
investing and risking time, money, and effort to start a company and make it successful. Through the efforts he carries out, the person concerned plans and hopes for compensation in the form of profits as well as satisfaction. A business sector or company built by someone with a certain personality (entrepreneur /entrepreneur) as an alternative to providing employment opportunities, at least for those who own capital, we call them entrepreneurs. The advantages of entrepreneurship are the possibility of setting the expected level of profit (the more vigorous the effort and time devoted, the greater the hope of making profits), training the sharpness of business intuition, increasing the nature of responsibility towards oneself. Meanwhile, the disadvantages of entrepreneurship are the large responsibility for business continuity, the need to maintain good relationships with related parties in order to maintain the company's survival, bearing the burden of company losses, dedication of work time, and other forms of sacrifice related to family.
Entrepreneurship is a process that involves identifying, creating, developing, and managing business opportunities with the goal of achieving profit or a positive impact on society. Entrepreneurship involves taking risks, innovation, and creativity in running a business venture.
The definition of entrepreneur refers to a particular person who is qualitatively superior to most humans in general, with the following characteristics :
1. Innovation: Entrepreneurship often involves new ideas, products, or services that are
different or better than existing ones.
2. Risk Taking: Entrepreneurs are willing to take financial, social, and professional risks to
achieve their business goals.
3. Creativity: Creativity is needed in overcoming challenges and finding solutions to problems
faced.
4. Opportunity Development: Entrepreneurship involves the ability to identify potential
business opportunities and turn them into reality.
The following are several examples of successful entrepreneurship in Indonesia covering various industrial sectors, from technology to food and drink, as well as trade. Entrepreneurship continues to develop in Indonesia, creating jobs, increasing innovation, and supporting economic growth , namely:
- Gojek: Gojek is an example of successful entrepreneurship in Indonesia which has achieved success not only at the national level, but also internationally. Starting as an online motorcycle taxi service in 2010, Gojek has grown into a multifunctional platform offering transportation services, food delivery, goods delivery, digital payments, and more. This is a great example of how innovation and entrepreneurship can change an existing industry.
- Tokopedia: Tokopedia is one of the largest e-commerce platforms in Indonesia. Founded in 2009, Tokopedia provides millions of small traders and micro businesses the opportunity to sell their products online. It has also become one of Indonesia's unicorn companies illustrating the rapid growth in technology entrepreneurship in the country.
- Traveloka: Traveloka is a travel and reservation platform founded in 2012. By offering booking services for plane tickets, hotels, train tickets and other holiday activities, Traveloka has become a leader in the online travel industry in Indonesia and the Southeast Asia region.
- Blibli: Blibli is an e-commerce platform that focuses on electronics, fashion and lifestyle products. They have gained popularity due to their focus on customer experience and quality product offerings.
- Ruangguru: Ruangguru is an online education platform that provides various types of courses, from school lessons to foreign language courses. They have helped facilitate access to education throughout Indonesia, especially during the COVID-19 pandemic.
- Kopi Kenangan: Kopi Kenangan is an example of entrepreneurship in the food and beverage sector. They are a coffee franchise network that was founded in 2017. In a short time, they have opened many outlets throughout Indonesia and brought innovation to the coffee drink industry with various unique menus.
- J&T Express: J&T Express is a fast-growing delivery service company in Indonesia. They provide package delivery services at affordable costs and with a wide reach, supporting the growth of e-commerce businesses in Indonesia.
- Warung Pintar: Warung Pintar is a startup that helps traditional stalls in Indonesia to increase productivity and sell digital products. They provide various solutions, such as digital cash registers and access to digital products such as credit and bill payments.
- GudangAda: GudangAda is a digital wholesale trading platform that allows small traders and micro businesses to buy and sell products more efficiently. They help connect manufacturers with traders online.
- Sayurbox: Sayurbox is a startup that provides delivery services for fresh agricultural products to customers throughout Indonesia. They support local farmers and facilitate urban communities' access to quality agricultural products.
IMPORTANT ELEMENTS OF ENTREPRENEURSHIP In entrepreneurship there are several important elements which are interrelated with each other. These elements are:
1. The element of knowledge characterizes the level of reasoning that a person has. In general,
the elements of knowledge are largely determined by the level of education of the person concerned.
2. Skill elements are generally obtained through practice and real work experience.
Entrepreneurs who are equipped with high skills will have higher success.
3. The element of alertness is a combination of elements of knowledge and mental attitude in
facing future situations. Precautions relate to thinking or planning actions to deal with something that might happen or is expected to be experienced.
FAILURE FACTORS IN ENTREPRENEURSHIP According to Zimmerer (in Suryana, 2003: 44-45) there are several factors that cause entrepreneurs to fail in running their new business:
1. Incompetent in managerial. Being incompetent or not having the ability and knowledge to
manage a business is the main contributing factor that makes a company less successful.
- Grocery Stores: Grocery stores are small businesses that usually sell everyday items such as food, drinks, household items, and other daily necessities. They are often found on every street corner throughout Indonesia.
- Motorcycle Repair Shop: A motorcycle repair shop is an example of a small business that offers motorcycle maintenance and repair services. They are usually run by the owner himself or an experienced mechanic.
- Beauty Salons: Beauty salons are small businesses that offer a variety of beauty care services such as haircuts, facials, and nail care. They can be found in various cities and villages in Indonesia.
- Coffee Shop: A coffee shop is a small business that provides coffee, tea, and snacks. Coffee shops are often places to gather and talk for local residents.
- Online Stores: Many small companies in Indonesia run online businesses, such as online stores for fashion, food and handicraft products. They use e-commerce platforms to reach customers throughout Indonesia.
- Handicraft Business: Many individuals run handicraft businesses in their homes. They make products such as bags , jewelry, or decorative items and sell them online or through local markets.
- Family Restaurant: A family restaurant is a small establishment run by a family or single owner. They serve food that is suitable for families to enjoy, such as rice or noodle dishes.
- Unique Culinary Businesses: Some small companies offer unique foods or drinks, such as regional specialty snacks or experimental foods that can't be found anywhere else. CHARACTERISTICS OF SMALL COMPANIES:
- Limited Scale: Small companies have a smaller scale of operations compared to large companies. They may only serve local or regional markets.
- Limited Resources: Small companies often have limitations in terms of capital, technology, and human resources.
- Independent Owner: Many small companies are owned and operated by a single owner or family.
- Flexibility: Small companies are often more flexible in changing strategies and adapting to market changes.
Small business criteria according to Law no. 9 of 1995 are as follows:
1. Has a net worth of at most Rp. 200,000,000 ,- (Two Hundred Million Rupiah) does not
include land and buildings for business premises.
2. Has annual sales results of a maximum of Rp. 1,000,000,000 ,- (One Billion Rupiah).
3. Belongs to Indonesian Citizens.
4. Standing alone, it is not a subsidiary or branch of a company that is not owned, controlled,
or affiliated either directly or indirectly with a Medium Enterprise or Large Enterprise.
5. In the form of an individual business , a business entity that is not a legal entity, or a business
entity that is a legal entity, including cooperatives.
THE POWER OF SMALL COMPANIES In fact, small businesses are able to survive and anticipate economic downturns caused by inflation and various other causal factors. Without subsidies or protection, small businesses are able to add value to the country's foreign exchange, especially small industries in the informal sector and are able to act as a buffer in the economy of small/lower class communities.
Apart from that, small businesses also have strategic value for the development of our country's economy, including the following:
1. The number of certain products produced by small companies. Large and medium
companies are heavily dependent on small companies, because if only large and medium companies work, the margins will be uneconomical.
2. It is an equal concentration of economic forces in society.
WEAKNESSES OF SMALL COMPANIES
Companies of any size (large, medium or small) always contain risks. Small companies are more easily affected by changes in circumstances, economic conditions, competition and adverse locations. The weaknesses of small companies are mainly related to specialization, capital and job security for their employees.
Weaknesses and obstacles in managing small businesses are generally related tointernal factors
of the small business itself. These weaknesses and obstacles are as follows:
1. Too many costs incurred, useless debts, non-compliance with standard bookkeeping
provisions.
2. Disproportionate division of labor, and employees often work outside standard working
hours.
3. Not knowing exactly how much working capital is needed because there is no cash
planning.
4. There is too much inventory so that some types of goods are not selling well.
5. There is often mismanagement and management's indifference to managerial principles.
6. Capital sources are limited to the owner's capabilities.
7. Planning and control programs often do not exist or have never been formulated.
Entrepreneurship and small companies have an important role in the global economy. Entrepreneurship involves a process of innovation and risk taking to create business opportunities, whereas small companies are businesses with a smaller scale and often have high flexibility in adapting to market changes. These two concepts have a significant impact on economic growth and job creation around the world.
THE ROLE OF ENTREPRENEURSHIP IN SMALL COMPANIES Entrepreneurship has a very important role in driving the growth and development of small companies. Entrepreneurship helps small companies to identify new opportunities, overcome challenges, and expand their businesses. Here are some entrepreneurial roles in the context of small companies:
- Identify Business Opportunities: Entrepreneurship helps small company owners to identify business opportunities that they may not have thought of before. By thinking creatively and
innovatively, small company owners can find new ways to meet market needs. Example: A
small restaurant owner may identify an opportunity to offer food delivery services to
customers who do not wish to dine-in.
- Increased Efficiency and Productivity: Entrepreneurship can encourage small company owners to look for new ways to increase operational efficiency and productivity. This could involve using new technology, changing work processes, or developing more efficient
products. Example: An owner of a small manufacturing company can use robotics to
increase efficiency in the production process.
- Risk Management: Entrepreneurship involves taking measured risks. Small company owners can learn from an entrepreneurial approach to managing their business risks,
including how to identify, assess, and mitigate risks. Example: A small business owner can
conduct more in-depth market research before deciding to launch a new product, thereby
reducing the risk of failure.
- Business Strategy Development: Entrepreneurship can also help small companies in the development of long-term business strategies. This involves careful planning and
adaptation to changes in the market and business environment.Example: An owner of a
small company in the fashion industry may develop a new marketing strategy to face
increasing competition.
- Meeting Challenges: Small companies often face challenges such as limited resources and strong competition. Entrepreneurship can help small company owners find creative
solutions to overcome these challenges. Example: A small store owner competing with large
stores can create a unique marketing strategy and focus on more personalized customer
service.
- Time Management Challenges: Implementing entrepreneurship can require extra time and attention. Small company owners often have many duties and responsibilities, making it difficult to fully focus on entrepreneurial initiatives.
- Organizational Culture Change: Adopting an entrepreneurial culture in a small company can be a significant change. Employees and management may have to adapt to a culture that is more open to change and experimentation.
Challenge Example: A small manufacturing company wants to create a new, more environmentally friendly product to meet growing market demand. However, they have limited resources and lack the entrepreneurial skills to identify the necessary new technologies and processes. They also worry about the financial investment required and the risk of failure.
STRATEGIES TO OVERCOME CHALLENGES:
- Mature Business Plan: Small company owners must develop a mature business plan that includes market analysis, financial strategies, and product development plans. This will help reduce financial risks and market uncertainty.
- Education and Training: Small company owners can seek training and education in entrepreneurship to increase their knowledge. They may also consider hiring or partnering with individuals who have experience in entrepreneurship.
- Efficient Time Management: Small company owners must manage their time wisely, prioritize the most important entrepreneurial initiatives, and allocate resources efficiently.
- Collaboration and Consulting: Small companies may look for partners or consultants who have expertise in a particular area, such as technology or marketing, to help them with their entrepreneurial initiatives.
Although there are some challenges to overcome in implementing entrepreneurship in a small company, the benefits can be enormous. With good planning, education, and careful risk management, small companies can overcome these obstacles and achieve success in growing their business through entrepreneurship. With creativity, hard work and determination, small companies can become a source of innovation and significant economic growth.
Bibliography of this Chapter
- Prawirosentono, Suryadi, Introduction to Modern Business, Indonesian Case Study and Qualitative Analysis, 2002, Bumi Aksara, Jakarta
- Private, Basu, 2002, Introduction to Modern Business, Yogyakarta, Liberty Publishers
- Ricky, Griffin, Ronald, and Ebert, Business, 2002 , Sixth Edition Prentice Hall, New Jersey
- Sigit, Suhardi, Introduction to Practical Company Economics, 1982, Liberty Publisher Yogyakarta
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