- Entrepreneurial Concept
Both expert, Herbert and Link (1989) has identified two different intellectual traditions in the development of literature on entrepreneurship. Both of these traditions can be characterized as a German Tradition, which is based on Von Thuenen and Schumpeter and Austrian Tradition, which is based on Von Mises, Kirzner and Shackle (Audtretsch, 2004). Thus an entrepreneur is someone who covers the entire spectrum of entrepreneurship functions. Entrepreneur is someone who specializes in taking responsibility and makes judgments that affect the location, shape, and use of goods, resources, physical or non-physical (Herbert and Link, 1989).
Entrepreneurship is a mental attitude and an active soul nature in the effort to promote the devotion works in an effort to increase revenue in its business activities. Additionally entrepreneurship is the ability to be creative and innovative which is used as the base, tips, and resources to find opportunities for success. Meanwhile, according to According to Peggy A. Lambing & Charles R. Kuehl in the book Entrepreneurship (1999), entrepreneurship is a creative business that builds a value of the missing becomes available and can be enjoyed by many people.
Entrepreneurship is an important phenomenon for the economic growth, productivity innovation and employment. In the current economic crisis, entrepreneurship has gained additional attention because new economic conditions require new methods and new guidelines for the companies, in order to create sustainable economic growth (OECD, 2009).
Entrepreneurship literature developed in time has not that much detail on how to be a successful entrepreneur (Swedberg, 1998). Also, the traditional literature on entrepreneurship has an academic character and is less engaged in the practical dimension of entrepreneurship (Casson, 2005). One of the reasons this happen is because only a few of the scholars enrolled themselves in business activities (Swedberg, 1998).When we ask questions such as “how to be a successful entrepreneur?” and “which are the means that make an entrepreneur successful” we need specific answers.
- Growth of Entrepreneurial
In general, the process of entrepreneurial growth in small businesses have three important characteristics, namely imitation and duplication, duplication and development, creates its own different new goods and services of stages.
In the first stage, which is a process of imitation and duplication, entrepreneurs began to imitate the ideas of others, for example, to start or pioneer its new business by duplicating others business, in creating the type of goods to be produced imitate the existing ones. Production engineering, design, processing, business organizations, and imitate its marketing pattern. Some specific skills acquired and through internships or experiences both in the family and others. However, it is not a few entrepreneurs that succeed because the process of observation.
Furthermore, at this stage of duplication and development, entrepreneurs began to develop their new ideas. In the stage of product duplication, for example, entrepreneurs began to develop its products through diversification and differentiation with their own design. Similarly, in the organization, marketing and efforts began to develop their own marketing models. Although at this stage progressing slowly and tend to be less dynamic, but there has been little change. For example, design and engineering tend to be monotonous, may be changed three to five years, the marketing tend to be controlled by other forms of monopsony by collectors such as small businesses in general. Some entrepreneurs also follow marketing model and tend to act as a market follower and a few more companies follow the will of the collector.
After duplication and development stage, and then create their own stages of something new and different with their own ideas to continue to grow. At this stage entrepreneurs usually start to get bored with the existing production processes, curiosity, dissatisfaction with the existing results start and their desire to achieve superior results passionately. At this stage of the business organizations started to be expanded to the wide scale, the product began to be created they based on market observations and based on the needs of consumers, there is a desire to become a challenger to market even the market leader. Unique products driven by market began to be created and adapted to the existing development of techniques. Some specific small industries, such as shoes small industrial and garment industry began to challenge the market, while other industries that use traditional production techniques and modern semi still be a follower of the market.
According to Zimmerer the growth stage of entrepreneurship development first has objectives and planning as simple growing up, efficient, profit-oriented, plans, and directly plans to achieve it. Second, it has the nature or characteristics of the personal key as the capacity to forge during rapid growth, the purity of the organization and numeracy; managerial knowledge and experience with others and using existing resources. Third, it has simple and comprehensive pattern structure with extensive communication networks horizontally as functional or vertical structures, but informal communication channels are often used; delegating decision-making authority to the second level manager; formal quasi (i.e. not too complex or cooperate) in operation.
Environmental factors that affect the growth of entrepreneurship are competitors, customers, suppliers, and financial institutions that will help fund. While the factors that comes from a personal are commitment, content, leadership and managerial skills. The next factors derived from the organization are a group, structure, culture, and strategy. So entrepreneurship begins with innovation. Innovation is influenced by personal values, sociology, organizational, and environmental.
- Timmons Model
Collaboration conducted by Timmons to the research results conducted over three decades by Harvard Business School, the entrepreneurial process is described as three balls a force to be mixed, so there is a match and balance. Timmons further illustrate the interaction of those three forces with the chart below.
The Timmons Model of the Entrepreneurial Process
Figure 1. Timmons Chart of Entrepreneurship Process
(Source: Timmons & Spinelli, 2008)
From the chart above, Timmons analyzed that the shape, size, and depth of business opportunities determine the shape, size and depth of resources and the team. A business opportunity is the core of the entrepreneurial process. A business opportunity is considered good if it has a market demand, market structure and size of the god market, the magnitude of the margin. Shortly, an opportunity is said to have the power when investors get their capital back. Resources are the potential and competencies supported by creativity and austerity. Successful entrepreneur is someone who can conserve the capital and use it cleverly. Entrepreneurial team led by entrepreneurs who already have successful working experience by putting the right person in the right position.
1.2 THE CASE SUMMARY
Lazybones is a laundry delivery service for college students. It collects dirty laundry from college students, clean it, and then delivery it back to their dorm or apartment in less than 24 hours. It used monitor each unit remotely via webcam and a barcode tracking system to feed a comprehensive reporting system for each store: the daily dashboard performance monitor.
Dan Hermann’s business, prior to adding the new locations, generated a consistent flow of cash and allowed him and Reg Mathelier (co-founder) to earn a nice living. He faced the dilemma that many successful lifestyle entrepreneurs face: Should he keep the business as it is, or should he grow it? He felt the itch to grow the Lazybones franchise and the two stores in Boston and Boulder were steps in that direction.
The barriers to entry in laundry service were low with a loan of $ 12,000. Lazybones needed to launch as a laundry delivery service targeted at college students. The strategy was simple: appeal to the parents of incoming and returning students and offer a fee-based subscription program. Parents willingly prepaid for the semester to bring a little bit of “mom” to college with the kid.
The first year was a struggle for survival. They often used credit cards to finance the business over the first few years, especially during the summer, when the business basically came to a halt as students returned home. Three years passed before either founder took home any money. But by year five, they were turning a profit. The whole process was an exercise in logistics, with a steep learning curve. They were constantly operating about 30% to 40% over what their actual logical capacity to do laundry was, given our facility, equipment, and staff. The demand for our service exceeded our ability to deliver.
Six years into the business, Reg and Dan decided it was time to expand, based on market research; Syracuse University charged a high tuition and possessed a large student base with a more-than-adequate-amount of disposable income. Customers loved the service, and many parents had approached Dan and Reg about the possibly franchising Lazybones to other locations.
In 2009, the non-coin-operated laundry represented $9.6 billion of business, with the service sector occupying 21.5% of the total market. Two segments exist are commercial customers and noncommercial customers. Lazybones’ direct market size at $1.0 billion was highly fragmented and matures and had reached revenues declining by 2.1% from the previous year of owner-operated businesses. 6% of the industry was composed of companies with 20 or more employees. 5.4% of the market share went to the largest competitors: National Dry cleaning Inc., Dry Clean USA, and Hangers America franchises. Due to the narrow customer segment, Lazybones did not compete directly with the three companies.
On the college campuses, Lazybones saw very little competition. Most of its competitors operated at only one school or city, mom-and-pop type players. University Laundry in Texas and Soapy Joe’s out of Maryland did not have facilities in close proximity to any current Lazybones location.
For the first three years the two founders were tirelessly at work improving the business and evaluating their progress as efficiency was a priority. They focused solely on developing the quality that was needed to sustain Lazybones. Realizing the potential for growth in the business, Dan and Reg decided that it was time to take a risk and test the company’s potential to grow by relocating their seasoned Wisconsin manager to run the new store.
During the first year, laundry sales in Boulder were much slower than projected. They had sent an operations specialist into a startup environment. The manager did not know the town or the university. They really needed someone who knew how to sell. Lazybones needed more structure and metrics. The pair worked on a business plan during their Entrepreneurship class to investigate the feasibility of a franchising growth plan. Dan and Joel Pedlikin implemented incentives for the manager to grow the business locally. To minimize the potential for missteps, every candidate would go through both phone and in-person interviews, and at least two executives would thoroughly interview the best managerial candidates.
Once Dan and Joel proved that they could replicate Lazybones’ business model, both managers became certain of the company’s future growth through franchising. The primary benefits of this made of growth is that the franchisees finance each new location, thereby minimizing the need for Lazybones to rise outside capital from investors or banks. Each new location has strong financial incentive to grow the business and contribute positively to both the franchisee’s and Lazybones’ bottom line.
Between 2003 and 2008, U.S. franchise units grew over 4.5% compounded annually. The growth totals about 16,000 new units across approximately 3,000 franchised brands. Franchising companies make money through three streams: an initial franchise fee, royalty rates, and advertising contributions. This fee covers only the right to use the company name, plus training and manuals. The franchisee is responsible for property, equipment, inventory, and staffing. The franchisee also pays a fixed ratio, based on revenues, toward any nationwide advertising campaign run by the franchisor.
Dan and Joel planned on setting the franchise fee at $35,000 higher than the service industry mean, the premium with above-average benefits, such as high unit revenues and profits, a proven business model, and location exclusively. Franchisees will also pay 1% of their monthly revenues to Lazybones’ national advertising fund.
Lazybones had five locations of their 7-10 store goals, a milestone they felt they should reach before adopting the franchise model. Before they could worry about where to open next, the Lazybones partners had to get each of their current locations to break even, or, even better, to operate at a profit. They had 155 laundry customers in Boston. Boston operating costs were much higher than those of the other sites due to the driving, labor, and marketing expenses needed for functioning in a major city. The local manager wanted to start servicing residential customers, including evening pick-ups and deliveries and an upgraded company Web site.
1.3 STATE OF PROBLEM
- How is Lazybones’ entrepreneurial process based on Timmons Model?
- How is Lazybones strategy to increase its growth?
- How are recommendations of Lazybones’ business future development plan?
- To know Lazybones’ entrepreneurial process based on Timmons Model.
- To know Lazybones strategy to increase its growth.
- To know recommendations of Lazybones’ business future development plan.
In this chapter, the author will provide theories that will be used as a foundation of the research. The research is based on one study cases of Lazybones. This research will be focused on an analysis of entrepreneurial process using Timmons Model. There are two main concepts/variables that the researcher wants to focus on. The theories will be started with an overview of entrepreneurial and Timmons Model.
Entrepreneurial is activity in running a business or entrepreneurship. Entrepreneurial leaders inject imagination, motivation, commitment, passion, tenacity, integrity, teamwork, and vision into their companies. They face dilemmas and must make decisions despite ambiguity and contradictions (Jeffry A. Timmons, New Venture Creation, p. 101).
According to Nadim Ahmad and Richard G. Seymour, entrepreneurial activity is the enterprising human action in pursuit of the generation of value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets. Entrepreneurial activity is differentiated from the relatively “static” management (Hartmann, 1959), and is concerned with the process of change, emergence, and creation (Bruyat & Julien, 2000, Hartmann, 1959, Schumpeter, 1934, Weber, 1947).
One interesting quote from one of the very comprehensive journal article in linking concepts entrepreneurship and entrepreneurial mindset:
Entrepreneurship is a particular type of mindset, a unique way of looking at the world…At the heart of entrepreneurship lies the desire to achieve, the passion to create, the yearning for freedom, the drive for independence, and the embodiment of entrepreneurial visions and dreams through tireless hard work, calculated risk-taking, continuous innovation, and undying perseverance (Ma & Tan, 2006).
Entrepreneurial is nothing but one way to take advantage of the unique capabilities of a person committed to build, own and run a business in order to be useful to themselves and society. For example, an entrepreneurial company is one that displays the characteristics of doing something different, (new products, processes, markets) but does not necessarily need to have an entrepreneur at the helm. Employees can also be entrepreneurial.
The characteristics of the entrepreneurial spirit are in-tune with their passion, always questioning how it can be done better, optimistic about all possibilities, take calculated risks, and execute (Matt Ehrlichman, 2015).
Saras D. Sarasvathy in what makes entrepreneurs entrepreneurial, stated:
Entrepreneurs are entrepreneurial,
as differentiated from managerial or strategic, because they think effectually;
they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it.
It is much more useful to understand and work with the people who are engaged
in the decisions and actions that bring it into existence.
 Nguyen, Lien., Antonela Thoma & Valdone Kupsyte. (2013). Entrepreneurial Network. Master in Economics and Business Administration.
 Ghanoz2480. 2008. Proses Kewirausahaan. https://muhammadghazali.files.wordpress.com/2008/03/18-02-2008.pdf
 Hisrich, R.D. dkk., 2005. Entrepreneurship. sixth edition. New York: McGraw-Hil.
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