Entrepreneurial Psychology: Family Business Problems - Assignment Example

Family Business- Problems Samson Varghese Family Business- Problems (An analysis based on Entrepreneurial Psychology) It is difficult for new entrepreneurs to tackle the challenges from business along with family problems. The family issues may not be addressed properly by such new entrepreneurs because of the challenges from their business. Their prime focus will be on their business rather than the family because of the immense challenges in the business sector. The Globalization Liberalization policies opened up doors for international entrepreneurs and hence the challenges in the domestic circuit increased rapidly. Since we are living in a society which is filled with so many types of stresses the family problems are increased and hence the challenges of entrepreneurs also increased in co coordinating with family and business problems. “Entrepreneurship is essential for international social and economic well-being, as new ventures are the dominant source of job creation, market innovation, and economic growth in many societies. In this book, a noted group of researchers use findings, methods, and theories of modern psychology as the basis for gaining important, new insights into entrepreneurship-and into the hearts and minds of the talented, passionate professionals who create new business ventures”.( The Psychology of Entrepreneurship) Family Business- Problems 2 Entrepreneurship is a vast topic. . Entrepreneurship looks at the macro and micro perspectives of the topic. It concentrates on the social, structural, as web as psychological factors that determine who will become entrepreneurs. The study of entrepreneurs concentrates on the person in the process, the dancer of the dance, the core of the theoretical process. “Some researchers have defined entrepreneurs as someone who recognizes an opportunity, and marshals the resources to take advantage of, or act on that opportunity. Other researchers have attempted more encompassing definitions, which look at the entrepreneurial process, event and the entrepreneur”.( A psychological model of entrepreneurial behavior) “Alexander Zelaznick, a professor emeritus of psychology at Harvard Business School, says years of interviewing entrepreneurs led him to the dramatic conclusion that they simply did not feel risk, or weigh consequences, in the same way as other people. "To understand the entrepreneur," Zelaznick told The New York Times in 1986, "you first have to understand the psychology of the juvenile delinquent."( Matthew Herper-Entrepreneurship-The Psychology Of Success). There are two distinct schools of researchers in the field of entrepreneurial psychology. First one is the personality characteristics of the individual such as: locus of control, risk taking, achievement motivation, problem solving style and innovativeness, perception, and work values. The second group of researchers has taken a social cognitive approach, looking at the relationship between an individual and his or her environment. The external factors include culture, role models, work experience, education, and environment. It is important to look at all of these factors and their influence on entrepreneurial behavior. The relationship between the entrepreneur, personality characteristics, values, and other dimensions helps explain why some Family Business- Problems 3 become entrepreneurs and others do not. This model has implications for entrepreneurial educators and policy makers. Entrepreneurial behavior, The entrepreneurial event is the creation of a new organization to pursue an opportunity. The Entrepreneurial behavior mainly depends on the personality characteristics of entrepreneurs. The individuals who become entrepreneurs will share certain common characteristics such as; the need for achievement risk taking propensity, locus of control and work values. They also have psychological characteristics such as problem solving style and innovativeness, role models, work experience, education, environment and perception etc. The risk taking attitude actually makes or breaks an entrepreneur. I know a person who was working as a sales executive in an advertising agency in Dubai. After around 2 years of his services with the agency, he has resigned and started his own ad agency by borrowing money from some friends. The initial stage of the business was very dull and he had faced a lot of challenges from family and also from the business. In order to stay in the business he borrowed so much money from the friends and also taken so much loans from the banks. He found it very difficult to meet the family expenses and forced to send his family back to his native place in India. The business became dull and dull and he found it absolutely difficult to stick on with it. But still he didn’t lose his confidence. Finally he decided to take one more risk before winding up the company. He has appointed 4 smart sales guys from different countries, offering them high salaries. The business started to develop and more and orders poured in. Finally he had to open another four more manufacturing units to meet the requirements. At the same time lot of Family Business- Problems 4 entrepreneurs who failed to take such amount of risks has been failed in establishing their business. Control and work values are another thing the entrepreneurs must concentrate on. The business should be under control every time. There is lot of fluctuations in the business sector. Sometimes there will be overflow of businesses and sometimes there will be dull seasons. It is the entrepreneur’s job to control it properly in both the occasions. Controlling of the business is easy when there is lot of jobs. But during the dull seasons the challenges will be more and the entrepreneur should forecast it and should take remedial measures in advance. The values and ethics in business is another important aspect the entrepreneur should focus on. Such standards will boost the image of the business. For getting business, the entrepreneur should never employ any false means. The business should be developed on values, ethics and standards. The businesses coming from false means will be short living and may give the entrepreneur some temporary advantages. The entrepreneur should have a long vision for the success of his business. The psychological characteristics such as problem solving style and innovativeness, role models, work experience, education, environment and perception etc of the entrepreneur also play a vital role in the success of the business. The problem solving styles may be different for different entrepreneurs. In employee relations some may adopt autocratic approaches while others may follow the democratic approaches. Both have its own merits and demerits. The success of the entrepreneur lies in adopting a mixed and balanced approach. In financial matters also the styles may be different. Some may go for more and more bank loans in crisis situations Family Business- Problems 5 while some others may try to reduce the expenses in such circumstances. In solving the problems related to their business also we can see differences in approaches among different entrepreneurs. Innovations play an important role in the success of a business. In the market we have leaders and followers. Leaders always innovate something which will be imitated by the followers. The followers will always wit for some others to develop new ideas. But since the technical knowledge of the leaders will be much more than that of the followers since they have studied the concept thoroughly. The followers will often find it difficult to solve a problem related to the copied innovation. A smart entrepreneur will always have some role models in business. They will try to do things just like their role models do. Their selection of role models will always be based on the success these role models have in their business. Such modeling will always help an entrepreneur to seek advices from their role models whenever they are in a crisis. A successful entrepreneur will always be a good listener and a student. He will analyze the whole things happening around the world related to his business and will take lessons from each of these incidents. Work experience makes a successful entrepreneur. It is absolutely rubbish for an entrepreneur to start a business in which he does not have any experience. If he is not experienced enough in his business the possible risks and problems in that business he may not be aware of. The employees have limitations in advising him. I know a person who has started a steel fabrication unit after seeing the success of another in the same field. He has appointed smart fabricators and co workers in his unit. But he was not at all aware of the do’s and don’ts of the fabrication industry since his experience was in banking sector. He has followed the advices Family Business- Problems 6 from the employees and his manager. Finally after around 2 years of operations he forced to wind it up. Work experience will make an entrepreneur aware of the risk in each project and the consequences of the project. So he can forecast it and can take precautionary measures. Education is another aspect the entrepreneur should have. Education will help the entrepreneur to understand the problems of business in its theoretical frame works. Since he has the theoretical knowledge the problem situations can be easily identified. A smart worker without proper education may not be a success in business and at the same time education alone may not make a successful businessman. For the success of an entrepreneur, he needs both the education and the work experience. Actually education and work experience, both are the two sides of the same coin. We cannot avoid any of them to make a successful entrepreneur. Proper business environment is essential for a business to be established. The demand for the commodity should be analyzed before starting the business. The infrastructure facilities such as road, transport, accessibility, electricity, water etc also should be taken into the consideration before starting the business. The availability of the raw materials and the labor force also should be assessed before starting the business. In some countries like India the excessive trade unionism is a problem. Such unhealthy trade unions will destroy an entrepreneur. The famous “Nano car” project of business tycoon Tata has to be shifted from one state, Bengal to another state, Gujarat recently because of the unionism. So business environment analysis will always help an entrepreneur to establish his business. Proper perception is required for an entrepreneur. Sensation and perceptions, both are different. Senses will always give you what it senses. But perception makes you think about the Family Business- Problems 7 consequences of the facts supplied by the senses. For example, the current financial crisis in the banking sector has been witnessed by all using their senses. But those who perceived it, will take necessary precautionary measures to overcome such issues even if they are not direct victims of it. Those who have merely sensed such things will not go for any precautionary measures. So perception plays an important role in the structuring of a successful entrepreneur. Bureaucracy in organizations The bureaucrats or the employees of the organization play an important role in the success or failure of a business. The smart employees will always reduce the headaches of the entrepreneur. They will try to resolve things by themselves instead of approaching the entrepreneur for everything. In some successful companies the entrepreneur doesn’t have much role when compared to other employees. He will pass all the responsibilities to the employees and will look into the serious matters only. In other cases, the employees will not give a single minute rest to the entrepreneur. They will approach him with simple tasks which could have been rectified by them. Successful entrepreneurs are more likely to be on a mission to change something that bothers them, or to take advantage of an opportunity they have identified as significant to their business. They are focused on being the agent of change and while making their impact felt and establishing their ventures profitably. Financial outcomes, while they play a significant role in motivating them, are not the prime focus of their day-to-day journey. It is the mission of changing something, or establishing their legacy, that inspires them The employees of organizations may be of different types. They will spread unnecessary rumors about the company or the management. They may be utilized by the competitors for the Family Business- Problems 8 business gain. The entrepreneur should identify all such matters and should be prepared to meet such challenges. The employees can create other headaches like strikes, personal clashes, etc. The entrepreneur is the person who is the ultimate victim of such things. So he should be well prepared for such challenges. Personal fears “Entrepreneurship is a continuum of behavior that is related to, and similar to, creativity. Creative people, and entrepreneurial people, appear to have shared similar, anxiety inducing, experiences in early childhood, and have many similar psychological characteristics. Thus, attachment theory, with its overtones of anxiety, may be related to both creative achievement, and entrepreneurship”.(Australian Digital Theses Program) Personal fears always play an important role while starting a business. The fears about the success of the business and the future of the family all will disturb the equilibrium of a new businessman. All are working for the well being of him and the family. A married business man should always have concern about his families. He knows better than anybody about the needs of his family. A wrong step in business can affect his family life also. Here is an interesting example of a family person who have successfully tackled both the family and the business problems. “Starting my second company proved to be more difficult than the first one. I was afraid that I would start losing it at home and so I delayed my departure from the cocoon for as long as I could. Finally it became clear to me that the only reason that I was not starting my next company was that I was concerned about my mood at home. And the geek in me came up with a solution. Family Business- Problems 9 The solution was a spreadsheet that I call my Awareness Spreadsheet. What else do you expect from a programmer who has not programmed in nine years? Here’s an extract from the first few days… Date Peace Index Cause Avg SD Yoga minutes Pranayam minutes Tuesday, February 01, 2005 10 0 0 Wednesday, February 02, 2005 10 0 0 Thursday, February 03, 2005 6 0 0 Friday, February 04, 2005 8 0 0 Saturday, February 05, 2005 10 0 0 Sunday, February 06, 2005 10 0 0 Monday, February 07, 2005 8 10 5 Tuesday, February 08, 2005 10 10 5 Wednesday, February 09, 2005 10 10 5 Thursday, February 10, 2005 2 10 5 Friday, February 11, 2005 10 10 5 Saturday, February 12, 2005 6 0 0 Sunday, February 13, 2005 10 0 0 Monday, February 14, 2005 10 10 10 Tuesday, February 15, 2005 8 10 10 Wednesday, February 16, 2005 10 10 5 Thursday, February 17, 2005 10 10 5 Friday, February 18, 2005 10 10 5 Saturday, February 19, 2005 10 10 5 The primary parameter that I track is my Peace Index. 10 stands for not getting upset all, 8 reflects getting upset but not expressing it, 6 means getting upset and expressing it; 4 symbolizes expressing it vigorously, and so on. I tracked my Peace Index over the last six months at the large company and calculated its Average and Standard Deviation. And I promised myself that I would beat those numbers by a margin.” (D D Ganguly, Entrepreneurial Psychology) If the business failed then the entrepreneur may face financial difficulties. This will affect him as well as his family. But the attitude for taking risk may override such fears. A smart entrepreneur will always be an optimistic. He will think about the success only rather than the failure. The success of an entrepreneur remains in how well he overcomes such fears. Cultural differences in organizations The cultures followed in one organization may be different form that in another organization though both of them may be doing the same business. For example the working cultures in Pepsi Cola and Coca Cola may not be the same though both of them well established in soft drink industry. The entrepreneur’s attitude and culture may reflect in the overall working atmosphere of the company. In some companies they may offer 2 months leave in an year while in other only one month leave will be granted though in both the companies the nature of the Family Business- Problems 10 work is the same. Some companies offer good wages while the other may offer less wages for the same work. So the working environment and culture can be different from company to company and from entrepreneur to entrepreneur. The employees working in an organization will be of different regions or cultures. In India like countries there are lot of states; each of them have its own culture, languages and social life. In an organization the employees could be a mixture of all such cultures. So the customs, personal traits etc. will be different. In such multicultural environment, the man management is very difficult. Conclusion “Successful entrepreneurs are more likely to be on a mission to change something that bothers them, or to take advantage of an opportunity they have identified as significant to their business. They are focused on being the agent of change and while making their impact felt and establishing their ventures profitably”( Gunjan Sinha- Psychology of successful entrepreneurs) An entrepreneur always obsessed with changing the world, building new concepts, and building products or services which will create a big impact. While the entrepreneur is in the trenches working on changing the world around him, it is equally important for him to recognize that to become successful and grow as an entrepreneur he need to allow the world to change him and also his family matters should not be avoided. The success of the entrepreneur remains in how well he is able to co ordinate with the business problems with his family problems. He has to personally embrace learning from his peers and employees and customers to make possible for him to think differently. Good entrepreneurs always see this learning as a two way street, never a one-way street. Family Business- Problems 11 Sources 1. A psychological model of entrepreneurial behavior – Retrieved on 29/11/08 http://findarticles.com/p/articles/mi_m0OGT/is_2_2/ai_113563670 2. D D Ganguly, Entrepreneurial Psychology - Retrieved on 29/11/08 http://dimdim.typepad.com/dimdim_blog/dd_ganguly/index.html 3. Matthew Herper -Entrepreneurship -The Psychology Of Success , 10.18.02, Retrieved on 29/11/08 http://www.forbes.com/2002/10/18/1018profile.html 4. Gunjan Sinha- Psychology of successful entrepreneurs Retrieved on 29/11/08 http://www.siliconindia.com/magazine/articledesc.php?articleid=JJSM754422663 5. The Psychology of Entrepreneurship - Retrieved on 29/11/08 http://www.workpsychologyarena.com/books/The-Psychology-of-Entrepreneurship-isbn9780805850628 6. Australian Digital Theses Program Retrieved on 29/11/08 http://www4.gu.edu.au:8080/adt-root/public/adt-QGU20070219.155404/index.html Read More