Hugo’s Machine Shop Analysis Essay

Introduction

Entrepreneurship refers to the act of creating a business through innovative and risk assuming management. According to an Australian economist called Schumpeter an entrepreneurship is an innovation and creativity process which results into new products, new production methods, new markets and new forms of business and when it’s created such innovation results into new demands.

An entrepreneur is one who undertakes to organize, manage and ensure the risk of a business.

Which entrepreneurial/small business owner’s characteristics do Bill have that may be important to his success?

1. 1. An eye for opportunity-Bill has a need to succeed and he has proved it to Hugo by being an active employee and by portraying a positive attitude about learning and displayed a drive for perfection that Hugo admired.
   2. Risk taking tendency-Despite the fact that bill was a high school graduate and had never taken business-oriented courses he was determined to learn and make good progress in Hugo’s machine shop.
   3. Judgment- Bill had the ability to think quickly and make wise decisions and according to Hugo he made the most of the technical decisions in the shop.
   4. Ability to accept change– Bill was ready to accept change despite the fact he had no much money in store to purchase the shop and this was because he needed to see the business grow.

Bill has the following entrepreneurial traits

2. 2. Goal oriented behavior-Since bill was determined to achieve his goals, he considered Hugo’s proposal as an important life changing opportunity because his offer was promising.
   3. Problem solving skills-Bill being a decision maker at Hugo’s shop it proved that he could solve different problems found in the shop. He was also creative and idea oriented.
   4. Highly reliable-Bill had worked with Hugo for twelve years and Hugo still considered him as a good employee hence showing ho reliable he was.
   5. Tolerant-Also by staying with Hugo for 12 years it proved that was a tolerant person.
   6. Committed-Hugo believed that bill was committed to his work and that was the reason he considered him the best person to buy his business. Hugo and his wife also felt that bills heart was dedicated to his work and he would always retain the quality that they had believed in for their shop.

Which characteristics could lead to Bills failure?

2. 2. Cash Flow Troubles- Since he dealt mostly with technical decisions of the shop he might not have had enough experience to deal with the shops cash flows troubles.
   3. Lack of Marketing Strategies- Since he had not taken business courses he could have lacked the marketing strategies that needed to be applied in the business.
   4. Not Enough Financial Backing-Bill had no enough money in the bank which was a factor that could affect the business negatively incase a crisis arose. (Norman M. Scarborough, Thomas W. Zimmerer, March 2005)

What steps should Bill take to avoid the pitfalls common to a small business?

1. Have a detailed plan – He should have enough research on the market size, how their products should be made, market pricing and the power of demand.
2. Contact the experts – Bill should not be afraid to contact experts like Hugo for his business to succeed.
3. Assuming control over prices –Bill should assess average prices that the market can bear. (Andrea Coombes June 3, 2007)

If you were Hugo, would you sell Bill the business under the terms discussed in the case?

Yes I would sell Bill the business under the terms discussed in the case because despite the fact that bill had financial problems he had proved himself to be hardworking and a dedicated employee and he also knew the customers and was well respected by the employees.. By making technical decisions in the shop and displayed a drive for perfection he showed that he was intelligent and he could organize and plan his work well and he could make enough to pay for the business. Bill should keep in mind that failing to plan his work is effectively planning to fail in future. (Bernadette Mc Grory march 2006).

References

Judith L. Glick-Smith (1999) – Society for Technical Communicators’ journal.

Norman M. Scarborough, Thomas W. Zimmerer, (2005) – Effective Small Business Management: An Entrepreneurial Approach- Publisher: Prentice Hall.

Bernadette Mc Grory (2006)-Surviving the pitfalls of small business.

Ethan A. Winning (1998-2006) –Avoiding Employee Relations Pitfalls in Smaller Businesses.

Andrea Coombes (2007)–MarketWatch.