Entrepreneurs adjust their business but direction remains the same

The current crisis has hit many companies who have had to adapt quickly to the new economic conditions. The past five years have represented a tipping point for many businesses as entrepreneurs had to cut costs by freezing salaries or even axing jobs. Increasing the efficiency and swiftness of operational processes through the optimal planning of activities is among the cost optimization measures businesses have implemented.

By Anda Sebesi

The downturn has changed priorities for many companies faced with the difficulties of reduced cash-flow and falling customer purchasing power. The crisis has also shown us how dependent fields and economies are on each other. Customers in general have been more cautious in terms of new acquisitions in the past few years. But while many who appreciate high-quality products and services did not adjust their consumption behavior, both entrepreneurs and large companies have needed to pay more attention to their current and potential customers.

In the real estate sector, for example, market stagnation combined with increased costs of borrowing put many entrepreneurs from this field in a tricky position. It is clear for everyone that tough times are natural in any business and sometimes it is those times that drive the entrepreneur to seriously review the business strategy and decide whether to stay on the same path or look to improve things. That is why entrepreneurs have learned in the past five years how to adjust their businesses to unexpected market conditions.

Despite this, according to the Entrepreneurship in Romania in 2011 country report put together under the Global Entrepreneurship Monitor (GEM) banner, the total early-stage entrepreneurial activity rate (TEA) was 9.89 percent in Romania in 2011. For the first time during 2007-2011 this is a higher rate than those posted in other Central Eastern European countries, such as Hungary and Croatia, and even higher than the proportion registered in 2010 (4.29 percent).

Real entrepreneurs remain the same

Real entrepreneurs often think that there is no place for regret in their business because it’s worse not to come to a decision than make the wrong one, as it could cost them much more. Many entrepreneurs believe that this is the difference between a real entrepreneur and any other person who is in business.

Since the current crisis, many entrepreneurs have become more cautious and tenacious. On top of that, they have tried to control for the effects of unexpected events. In the past five years they have paid and continue to pay more attention to how they spend or invest their money. The rule now is that no entrepreneur would waste his or her money on businesses that don’t turn a profit.

But there is good news. The GEM study found that the share of potential entrepreneurs among the population aged 18-64 increased from 13.6 percent in 2007 to 27.7 percent in 2011. The nascent entrepreneurial rate was relatively stable between 2007 and 2010, at around 3 percent, while in 2011 it stood at 5.56 percent. In addition, the young entrepreneurs rate also increased from 1.3 percent in 2007 to 4.51 percent in 2011.

Many entrepreneurs were driven to found their own companies by the feeling that they were not meant to work for someone else. So they set up shop alone, aware both of the opportunities and risks that such a decision entails. The GEM country report found that more than half of early-stage entrepreneurs (57.5 percent) are opportunity-motivated.

Since 2008 many entrepreneurs have started to be very careful about the people they choose as their associates or partners, because they may come from different areas of activity and have different mentalities. In such a context it was crucial for them to find a common denominator in order to make things work perfectly.

Once an entrepreneur has grown the business enough to delegate his or her responsibilities to a manager, it is important to know how to go about it. The difficult economic context has made many businesspeople facing personal or professional difficulties think about reshaping their enterprises so that short- and medium-term activities don’t have to be reliant on their presence.

Business attitude remains prudent…

Many entrepreneurs on the local market have continued to develop their business since 2008 but in a more prudent way. The main objective was to continue to grow and develop but in a controlled manner as no one knew when the crisis started which projects were for the long term and which for the short term. Consolidation of market share or position was and still is another option for businesses. While rational entrepreneurs preferred to concentrate on the present situation of their company rather than making big plans for the coming years, others aimed to develop their business both locally and internationally.

For example, the GEM report found that 39.07 percent of the early-stage entrepreneurs had more than 25 percent foreign customers in 2011, considerably higher than the proportion in 2010 (28.47 percent), but still lower than in 2008 (49.16 percent). As for established entrepreneurs, the percentage of those who have more than a quarter foreign customers also increased from 12.44 percent in 2010 to 25.38 percent in 2011. A comparison of the share of foreign customers of early-stage entrepreneurs and established business owner-managers respectively indicates that the internationalization of early-stage entrepreneurs was higher over the five-year period.

… While businesspeople learned their lessons

Although entrepreneurs are often courageous and visionary people, they now prefer to choose the businesses in which they get involved cautiously, ensuring that they can be completely dedicated to them. Both entrepreneurs whose businesses are very people oriented and those involved in other fields of activity have learned during these five years that satisfying their customers is one of the main challenges. Many entrepreneurs have preferred to rely more on their intuition and less on market research. The idea of “I felt I had to do it even in a time of crisis” seems to remain the same as it is part of an entrepreneur’s nature.

The new economic context has not allowed many businesses to rush through any stages. In addition, online entrepreneurs especially learned that it was probably better to choose standard solutions, verified and optimized over many years of experience at a large number of international companies. Regardless of the field of activity, many start-ups learned to be more attentive to each detail of their business and started to think of introducing work procedures from the start. Last but not least, the past five years have changed the way entrepreneurs do business and they have adjusted their strategies to the new economic context. But what has not changed is the real nature of an entrepreneur. He or she continues to be the courageous, visionary, rational and yet frenetic person that sets up a business from scratch and takes on any difficulty to achieve his or her final goal: success.

anda.sebesi@business-review.ro

DMCA

PROTECTED