In this paper, I attempt toshow how thebootstrapping challenge, other ‘practical’ elements of ENSI207, as well as thelecture material have influenced how I understand entrepreneurship. This willbe done partly by reflecting on my own experience through three differentlenses.
The chosen lenses are 1)growth and business models, 2) Learning from failure, and 3) Social context andcommunity. In week 4, as a group we started to come up with different ideas forthe bootstrapping challenge. As part ofthe challenge, we were given up to £5 to spend. The idea we went with in the end was to sellsecond-hand items. We believed that this was a goodidea as we knew we wouldn’t need to spend any money; instead of buying theitems we would help other students sell their unwanted items and in returnreceive an agreed percentage of the sale. We advertised online using differentsocial media platforms and handed out flyers to create awareness; this didn’t cost usanything so all the money we made would be counted as profits. Most of the items we were selling were offered by the individualswithin the group or friends, which meant we received all of the money from thesale of some items. The products we were selling ranged from books to gamesconsoles to a tea set.
This paper goes through each of the chosen lenses andultimately concluding these by summarising how the bootstrapping challenge, other ‘practical’elements of ENSI207, as well as the lecture material have swayed myunderstanding of entrepreneurship. The firstlens focuses on growth and business models. I will look at Greiner’s (1972)business growth model and how key performance indicators relate to businessgrowth. I will also be drawingon the idea of Customer Value Proposition, to reflect on the challenges that Ihave faced in determining value propositions.Value proposition ‘is an innovation,service, or feature intended to make a company or product attractive tocustomers.’ (Oxford Dictionaries, 2017). Someexamples of value propositions presented to customers are: Newness (this iswhen a product fulfils needs that customers didn’t previously perceive);Performance (when a new product is faster, more powerful or has more storage etc.
)and; Customisation (when customers are able to personalise products to theirown liking by changing the colour, size etc.). One exampleof a firm which uses these three value propositions to make their products moreattractive to customers is Apple. The tech giant releases newer versions oftheir iPhone every year with newer features that fulfil the needs of theircustomers; needs that they might not have identified earlier.
Apple promotestheir by saying that the newer phones are faster and more powerful than theirpredecessors; they also sell the phones in different colours and withdistinctive storage options. Brands suchas Coca-Cola and Ferrero have shown the use value propositions to attractcustomers by allowing them to individualise their products; making the itemmore personal for their customers. Coca-Cola’s ‘Share a Coke’ campaign was ahuge success; receiving ‘998 million impressions on Twitter’. They printed overa thousand of the UK’s most common names onto the labels of their bottles. Theysold over ‘150 million personalised bottles’.
‘Over 730,000 glass bottles were personalised via the e-commercestore’. ‘It sparked a sharing frenzyacross the nation and quickly became one of (Coca-Cola’s) most successfulmarketing campaigns.’ (Hepburn, 2017). Coca-Cola targeted young consumers andencouraged them to share their experiences online by using the #ShareaCokehashtag. They were given full creative control and brand ownership and as aresult of this, they were able to create huge amounts of social media content forCoca-Cola without feeling as though they were being used to promote the brand;but instead were under the impression that they were just starting their ownsocial media conversations. (Tarver, 2015). Ferrero didsomething very similar with their ‘Your Nutella, Your Way’ campaign.
The campaignallowed consumers to create their own free label by adding their nameon a jar of Nutella. ‘The first year of theNutella personalisation campaign ‘Your Nutella Your Way’ was a huge success,making it Ferrero UK & Ireland’s biggest ever promotion.’ (Ferrero, 2016). In week 2 ofthe module, I learned about different forms of creativity in addition to customervalue proposition.Both of these companies have used combinational creativity to offercustomers a value proposition. Combinational creativity is shown when there arenew combinations of unfamiliar ideas. Coca-Cola combined their soft drinks withthe idea of personalised printing and; Ferrero combined the personalisedprinting idea with their hazelnut cocoa spread ‘Nutella’. Other examples of value propositions presented to customers are:Brand/Status (e.
g. Rolex); Price (e.g. value pricing); Cost reduction (e.g.
when companies use technology to replace employees); Accessibility (takingproducts to people previously excluded) and; Convenience/Usability (e.g. Appleand iTunes). When lookingat business growth one of the key questions is how we can tell whether abusiness is growing. Key performance indicators show a business how effectivelyit is meeting its targets.
A business isn’t likely to be successful if itscosts are higher than its revenue. ‘Gross profit margin as a percentage of sales is an expression oftotal profits as they compare to revenue. The benefit of tracking this KPI overtime is that you can easily quantify how much money you’re keeping against theamount paid out to suppliers.’ (Maguire, 2017). Although for the bootstrappingchallenge we didn’t have any costs, we made our money by taking a commission onsome of the products we sold.
For some of the products we received from friends,we were able to take 100% of the revenue from the sale. ‘Inventory turnover measures the number oftimes inventory is sold or used in a given period of time, and isvaluable because it reveals a business’ ability to move goods.’ (Maguire, 2017). Anotherimportant key performance indicator for a business is relative market sharewhich managers can track over time and see how much of a givenmarket is controlled by their business as a percentage. (Maguire, 2017).
As the business grows, managers will hope thatthe relative market share also increases. Greiner’s (1972) growth model gives insight into how smallbusinesses grow in five logical phases. However, we have to question whetherall businesses grow in the same way and if they all follow the same sequentialstages. Phase 1 of this model illustrates how a business start-up focuses oncreating a product and a market.
The next phase looks at growth throughdirection. The firms that last the first phase by appointing a proficientmanager can ’embark on a period of sustained growth under able and directiveleadership.’ ‘The delegation stage proves useful for gaining expansion throughheightened motivation at lower levels.’ (Greiner, 1972). The fourth phase ischaracterized by the use of formal systems for attaining better coordination.The final phase looks at growth through collaboration. (Greiner, 1972).For thebootstrapping challenge we were selling second-hand items to students atLancaster University on campus.
As a group we felt that promoting the items wewere selling online through social media, was the best idea as it would be freeand we could reach our target market easier than through other methods ofadvertising. We also printed and handed out flyers to further increaseawareness. For us, convenience was the key value proposition that was offeredas we were targeting students on campus. The positives of our idea for the bootstrapping challenge were that weknew we wouldn’t be spending any money and as a result, the money we receivedwould be counted as profits and it wasn’t possible for us to make a loss. I thinkoverall, the bootstrapping challenge went well, however, I think that the ideawasn’t very creative and if I had to do it again I would look to go for an ideathat was more focused on customer value proposition. In particular,customisation as we have seen how offering a product that is more personal toan individual allows you to connect with customers. In terms ofhow I understand entrepreneurship, this has helped me to recognise theimportance of connecting with customers.
The key goal is to convince customersto come to you and not your competitors. Customers will choose to come to youbased on the value proposition (which makes you a more attractive option thanyour competitors) you are offering them. Giving customers the chance toindividualise/personalise products can be one very important value propositionas it makes the product offered more personal for the individual.