In this paper, I attempt to
show how the
bootstrapping challenge, other ‘practical’ elements of ENSI207, as well as the
lecture material have influenced how I understand entrepreneurship. This will
be done partly by reflecting on my own experience through three different
lenses. The chosen lenses are 1)
growth and business models, 2) Learning from failure, and 3) Social context and
community. In week 4, as a group we started to come up with different ideas for
the bootstrapping challenge. As part of
the challenge, we were given up to £5 to spend. The idea we went with in the end was to sell
second-hand items. We believed that this was a good
idea as we knew we wouldn’t need to spend any money; instead of buying the
items we would help other students sell their unwanted items and in return
receive an agreed percentage of the sale. We advertised online using different
social media platforms and handed out flyers to create awareness; this didn’t cost us
anything so all the money we made would be counted as profits. Most of the items we were selling were offered by the individuals
within the group or friends, which meant we received all of the money from the
sale of some items. The products we were selling ranged from books to games
consoles to a tea set. This paper goes through each of the chosen lenses and
ultimately concluding by summarising how the bootstrapping challenge, other ‘practical’ elements of ENSI207, as
well as the lecture material have swayed my understanding of entrepreneurship.

 

 

The first
lens focuses on growth and business models. I will look at Greiner’s (1972)
business growth model and how key performance indicators relate to business
growth. I will also be drawing
on the idea of Customer Value Proposition, to reflect on the challenges that I
have faced in determining value propositions.
Value proposition ‘is an innovation,
service, or feature intended to make a company or product attractive to
customers.’ (Oxford Dictionaries, 2017).

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Some
examples of value propositions presented to customers are: Newness (this is
when 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 their
own liking by changing the colour, size etc.).

 

One example
of a firm which uses these three value propositions to make their products more
attractive to customers is Apple. The tech giant releases newer versions of
their iPhone every year with newer features that fulfil the needs of their
customers; needs that they might not have identified earlier. Apple promotes
their by saying that the newer phones are faster and more powerful than their
predecessors; they also sell the phones in different colours and with
distinctive storage options.

 

Brands such
as Coca-Cola and Ferrero have shown the use value propositions to attract
customers by allowing them to individualise their products; making the item
more personal for their customers. Coca-Cola’s ‘Share a Coke’ campaign was a
huge success; receiving ‘998 million impressions on Twitter’. They printed over
a thousand of the UK’s most common names onto the labels of their bottles. They
sold over ‘150 million personalised bottles’. ‘Over 730,000 glass bottles were personalised via the e-commerce
store’. ‘It sparked a sharing frenzy
across the nation and quickly became one of (Coca-Cola’s) most successful
marketing campaigns.’ (Hepburn, 2017). Coca-Cola targeted young consumers and
encouraged them to share their experiences online by using the #ShareaCoke
hashtag. They were given full creative control and brand ownership and as a
result of this, they were able to create huge amounts of social media content for
Coca-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 own
social media conversations. (Tarver, 2015).

 

Ferrero did
something very similar with their ‘Your Nutella, Your Way’ campaign. The campaign
allowed consumers to create their own free label by adding their name
on a jar of Nutella. ‘The first year of the
Nutella personalisation campaign ‘Your Nutella Your Way’ was a huge success,
making it Ferrero UK & Ireland’s biggest ever promotion.’ (Ferrero, 2016). In week 2 of
the module, I learned about different forms of creativity in addition to customer
value proposition.

Both of these companies have used combinational creativity
to offer customers a value proposition. Combinational creativity is shown when there
are new combinations of familiar ideas. Coca-Cola combined their soft drinks with
the idea of personalised printing and; Ferrero combined the personalised
printing 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 (taking
products to people previously excluded) and; Convenience/Usability (e.g. Apple
and iTunes).

 

When looking
at business growth one of the key questions is how we can tell whether a
business is growing. Key performance indicators show a business how effectively
it is meeting its targets. A business isn’t likely to be successful if its
costs are higher than its revenue. ‘Gross profit margin as a percentage of sales is an expression of
total profits as they compare to revenue. The benefit of tracking this KPI over
time is that you can easily quantify how much money you’re keeping against the
amount paid out to suppliers.’ (Maguire, 2017). Although for the bootstrapping
challenge we didn’t have any costs, we made our money by taking a commission on
some 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 of
times inventory is sold or used in a given period of time, and is
valuable because it reveals a business’ ability to move goods.’ (Maguire, 2017). Another
important key performance indicator for a business is relative market share
which managers can track over time and see how much of a given
market is controlled by their business as a percentage. (Maguire, 2017). As the business grows, managers will hope that
the relative market share also increases.

Greiner’s (1972) growth model gives insight into how small
businesses grow in five logical phases. However, we have to question whether
all businesses grow in the same way and if they all follow the same sequential
stages. Phase 1 of this model illustrates how a business start-up focuses on
creating a product and a market. The next phase looks at growth through
direction. The firms that last the first phase by appointing a proficient
manager can ’embark on a period of sustained growth under able and directive
leadership.’ ‘The delegation stage proves useful for gaining expansion through
heightened motivation at lower levels.’ (Greiner, 1972). The fourth phase is
characterized by the use of formal systems for attaining better coordination.
The final phase looks at growth through collaboration. (Greiner, 1972).

For the
bootstrapping challenge we were selling second-hand items to students at
Lancaster University on campus. As a group we felt that promoting the items we
were selling online through social media, was the best idea as it would be free
and we could reach our target market easier than through other methods of
advertising. We also printed and handed out flyers to further increase
awareness. For us, convenience was the key value proposition that was offered
as we were targeting students on campus. 
The positives of our idea for the bootstrapping challenge were that we
knew we wouldn’t be spending any money and as a result, the money we received
would be counted as profits and it wasn’t possible for us to make a loss. I
think overall, the bootstrapping challenge went well, however, I think that the
idea wasn’t very creative and if I had to do it again I would look to go for an
idea that was more focused on customer value proposition. In particular,
customisation as we have seen how offering a product that is more personal to
an individual allows you to connect with customers.

 

In terms of
how I understand entrepreneurship, this has helped me to recognise the
importance of connecting with customers. The key goal is to convince customers
to come to you and not your competitors. Customers will choose to come to you
based on the value proposition (which makes you a more attractive option than
your competitors) you are offering them. Giving customers the chance to
individualise/personalise products can be one very important value proposition
as it makes the product offered more personal for the individual.

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