One can consider small businesses as examples of entrepreneurship because they share of the element of ‘need of constant innovation” with other entrepreneurial ventures. Important here to note is that this does not necessarily imply that large businesses can survive without innovation but the fact is that large businesses can delay innovation by using the other resources, competitive advantages and competencies at their disposal (Scarborough, Wilson & Zimmerer, pp. 41-42, 2010). When companies grow big, they develop a loyal customer base and develop other mechanisms to retain customers. Their buyers associate certain level of quality with them and at least, with certain products and services, the buyers face certain switching costs due to which may hold the customers with the company for a longer period (Bridge, O’Neill & Cromie, pp. 263, 2003).
Furthermore, when companies grow big, they either outsource the tasks of innovation or create separate departments for the same, and provide them with enough funding to experiment and keep an eye on the changing market trends. In case of both small businesses and entrepreneurs, there are no separate departments for research and development but the owner and the employees themselves must take out the time for coming up with new ideas and testing them thus creating a unique challenge for them (Lee-Ross & Lashley, pp. 52-53, 2011). Not only that constant innovation is a difficult task for small businesses but also at the same time, they need innovation more desperately than large companies do. As mentioned earlier that large companies with their huge loyal customer base can survive in the market for quite some time since they have other factors to attract their customers; however, in case of small businesses and entrepreneurial ventures, innovation is all that they have to attract and retain their customers (Allen & Meyer, pp. 63-68, 2005). Most small businesses and entrepreneurs enter in the market based on a new, unique, and exclusive idea or business plan and that is the same reason why they end up attracting and retaining their customers (Stokes & Wilson, pp. 115-116, 2006).
Extending the discussion from the point that most entrepreneurial ventures and small businesses are based on a unique idea, they also face legal challenges in terms of protecting those ideas against others. Small business owners and entrepreneurs need to have enough knowledge of trademarks, patents, copyrights, trade licensing, insurances and others in order to save them from any possible legal action and problems in the future (Longenecker, Moore, Palich, & Petty, pp. 193, 2005).
Small businesses can also be regarded as examples of entrepreneurship because of the fact that research has shown that entrepreneurs and small business owners share certain distinct characteristics that make up their DNA. First, these people have commitment, determination, and perseverance (Storey & Greene, pp. 10-12, 2010). They have an inbuilt or over the period, they develop a tendency to see failures and barriers as a sign that they are near to their destination. Factors that tend to be on the surface stopping them are in reality giving them more determination and power to energy to achieve their targets. These people are focused and external events or mishaps do not have the power to distract them from their targets. Second, these people share great problem solving skills (Scarborough, Wilson & Zimmerer, pp. 41-42, 2010).
People who lack problem-solving skills may find themselves distracted, disorientated and confused when they face problems but these people are optimistic enough to keep their focus on the issues and try to find their solutions. Third, these people are active risk takers; however, their risk taking is different from that of the risk taking of gamblers (Allen & Meyer, pp. 63-68, 2005). Entrepreneurs and founders of small businesses are most inclined to take measured chances. Fourth, these people are born energetic and powerhouses that not only remain pumped up all the time but their presence can energize the people around them (Bridge, O’Neill & Cromie, pp. 263, 2003). Fifth, despite the fact that these may lack when it comes to strategic planning but that does not mean that they do not have a clear vision. These people are idealistic visionaries who create pictures for the future in their minds and then put in their best to achieve them. Sixth, these people undergo a different process of grief, which is also known as a dual grief process. In this process, they not only regret their actions and undergo a brief period of isolation from the world but on the other hand, they also develop a sense of restoration of their pride during their grief process, which inspires them to undertake new ventures (Down, pp. 20-21, 2010).
Small businesses are also examples of entrepreneurship because both of them face similar challenges during their early growth or expansion face. These problems are similar to such an extent that many academicians, experts and researchers have not bothered to write separately about small businesses and entrepreneurship but have merged them under the same head considering their similarities. Consider the problem of hiring new people and expanding the employee base during the early days of business (Stokes & Wilson, pp. 115-116, 2006). However, as corporations expand, they begin to recruit more people; often founders just launch a new company when they prefer to operate alone. Recruitment, procurement, and preparation are a challenge for the entrepreneur or small business owner in the absence of a centralised human resource department (Storey & Greene, pp. 10-12, 2010).
And if the entrepreneur succeeds in discovering talented persons, thus delegating duties to such individuals, challenges are expected to arise. Many small companies and entrepreneurial enterprises face the dilemma of their owners struggling to successfully assign duties to their sub-ordinates, mainly because they do not truly trust them or wish to have their own near eye and upper hand over the company activities. Both founders and small business owners experience difficulties in terms of control of their own time during the development process. When these businesses rely strongly on the insights, decision-making and imagination of the investor or the founder, the entrepreneur or the owner of the company finds himself short of time to look after all facets of the business as the business expands (Burns, pp. 274-275, 2010).
The reality that they typically contend against big corporations, some that have been in the market for quite long time, is another obstacle that startups and small businesses share. Typically, these corporations have gained charge of different sales networks, communications channels, retailer channels and other forms of contact (Lee-Ross & Lashley, pp. 52-53, 2011). We still have the value of existing clients and the future costs of switching that the clients encounter. Furthermore, big companies, when find themselves competing against small but potentially dangerous competitors, are more likely to decrease their price in the short term to force them out of the market with shrinking profits or even losses. Big firms can survive price cuts even below their average costs level because of the possible economies of scale, availability of funds, possible investment in other ventures and others (Stokes, Wilson & Mador, pp. 88-89, 2010).
At the same time, the entrepreneur and small business owner may not have the freedom to do the same. Interesting here to note is that both small business and entrepreneurial ventures try to combat with these challenges in similar ventures. Both entrepreneurs and small businesses share certain advantages, which they try to exploit as an attempt to survive in the market while challenging the big fishes of the ocean at the same time (Schaper & Volery, pp. 37-38, 2004). They focus on personalization of the product or service and relationship marketing. When companies grow big, they fail to cater to the needs of every customer directly and in an attempt to cater the masses, every company end up having some disillusioned customers. In the result, small businesses try to cater the needs of that niche market by listening to their queries and ideas on a personal level an improvising those ideas and demands into the product and service (Stokes & Wilson, pp. 115-116, 2006). Both small businesses and entrepreneurial ventures have the advantage of being in direct contact with the customer and being able to use those ideas in their business.
Small businesses can also be regarded as examples of entrepreneurship because like other entrepreneurial ventures, they lack strategic planning or strategic focus. There are various reasons behind the same. Entrepreneurs and small business owners believe that strategic planning would require too much time and it is only fit for big companies. Furthermore, most entrepreneurs and small business owners lack the skills required for planning or the strategic focus. Moreover, strategic planning is painful process that first requires detachment from the operations of the business and stepping back to see the big picture with all the environmental and external features influencing the business (Longenecker, Moore, Palich, & Petty, pp. 193, 2005). Entrepreneurs or small businesses believe in flowing with the wind and trust the insight of their customers and their feedback for deciding on the future directions. In the absence of any sufficient training and policy focus, small businesses and entrepreneurial ventures are more prone to external threats and environmental changes since they fail to anticipate them (Burns, pp. 274-275, 2010).
The literature that is available about entrepreneurship goes hand in hand with the literature about small businesses and vice versa. The reasons why academicians, experts and researchers have merged them into a single head while discussing their problems, issues, challenges, strategies, approaches and other aspects is because of the fact that they have a lot in common. Indeed, small businesses are an example of entrepreneurship at so many levels. The issues that small businesses and entrepreneurial ventures face in raising capital and searching for sources of funding share striking similarities. Furthermore, small businesses also face the same set of legal issues that are faced by entrepreneurs. In fact, entrepreneurial ventures are indeed small businesses, small businesses can easily trace back their existence to entrepreneurial ventures, and since by definition, they are still small, they face similar set of challenges and opportunities faced by other entrepreneurial ventures.