ISSN: 2349-4468 International Journal of Advances in Management, Economics and Entrepreneurship

Available online at: www.ijamee.info RESEARCH ARTICLE

Entrepreneurial Journey with Friedman’s Personality Theory Iqbal Amera K*1, Rasheedm Iqbal2, Ghaffar Adeel3 1Cardiff

Metropolitan University, UK.

2Ministry 3Novel

of Health, Saudi Arabia.

Logics, Pakistan.

*Corresponding Author: Iqbal Amera K

Abstract:Most finance professionals find human psychology as a dry subject in comparison to calculating monetary returns. Still, it is imperative for finance professionals to understand the thought processes of decision makers and entrepreneurs that are driving our economy. The aim of this research is to providea general but focused guideline to young entrepreneurs about their entrepreneurial journey using Friedman’s personality theory. This study also intends to provide awareness for the investors. Investors should not only to evaluate monetary returns on the business product or system while weighing down alternative investments, but also benefit from recognizing the entrepreneur behind it. Keywords: Entrepreneur, Innovation, Investor, Money, Type A and Type B personality.

Introduction Man has often dreamt of having both his hand full with money and/ or gold. I mean most of us have liked watching Richie Rich and Duck Tales during our childhood days. A time when we hardly understand the true potential of what money can buy. In adulthood, finance professionals fancy counting money in every business deal. Yet, learning about cognitive thought processes that propel these money making decisions is not thatappealing. Hayton [1] believes that corporate entrepreneurship and human resource management are interdependent of each other. The main purpose of writing this research article is to furnishdefinite guidelinesto young entrepreneurs and investors for their entrepreneurial journey. This article computes cognitive behavior patterns using Friedman’s Personality Theory. It also elucidates the benefits of understanding personality types during the innovative and decision making processes. Krueger [2] ruminates that cognition research offers well grounded, immediately applicable theory and methodology for academic scholars, investors, entrepreneurs and business industry professionals. Hence, we have used Friedman’s Personality Theory to estimate people’s strengths and weaknesses that Iqbal Amera K et. al. |Oct. 2016 | Vol.3| Issue 10|01-06

affect their performance while becoming entrepreneurs.

The Entrepreneurial Journey Well, entrepreneurship is the latest vogue to becoming rich and famous. Entrepreneurship is the process of creating market value with a unique combination of existing resources. Market value indicates the additional satisfaction derived by customers as a result of using your product and/ or system. Greater the market value, higher will be the profits for the entrepreneur. With three simple steps, as depicted in fig. 1, almost anyone can become an entrepreneur: Step 1. Generate an idea Step 2. Delineate a business plan Step 3. Execute and cash-in Gender has minimal effects on how you respond to situation and circumstances. Robert et. al. [3] agrees that age is more important than gender when observing behavior development. For young entrepreneurs, Friedman’s theory of personality traitsis easyto understand and ingenuously applicable.

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Available online at: www.ijamee.info Step 1: Generate an idea

Step 2: Delineate a Business plan

Step 3: Execute and Cash-in

Business Plan

Business Objectives

Strategy

Marketing

Finance

Fig. 1

It conveniently separates people in two distinct classes, Type A and Type B personalities. In this research paper, we will be guiding young entrepreneurs in their entrepreneurial journey using Friedman’s personality theory.

If you feel that you are not getting anywhere, ask a neutral person to listen to your talk. You may also imitate an expert. Try to think the way they think and let them find the solution for you.

Step 1: Generate an Idea

If you have type B personality, your friends may describe you as slow and steady. To upgrade an existing system, you need to carefully disintegrate a system into lots of tiny sub systems. Identify areas that generate value for the customers. Pause to think critically about these areas. Think how you may simplify, add volume or complete the incomplete areas of key value. Evaluate the problem top to bottom, bottom to top, sideways and inside out. Let your imagination discover the solution. Write down all ideas as possible solutions. If you feel your creativity is fading, take a break and start over again.

This is by far the most difficult step of the three. Whether you are a type A or type B personality,here you have to work with gaps that have not yet been addressed by anyone. Critics are usually good at identifying these gaps.You may be an evil genius; or you may be brilliantly stupid. However, believe it or not, this step can be made simple using Friedman’s personality theory. To create a money making idea, you may start by evaluating and upgrading an existing system. You may also invent a new system with the unique combination of existing resources. Remember, both systems should addmarket value for your clients. You can never hope to make a profit as shown in fig. 1 at the execution stage if your solution or product doesn’t add market value. If you have type A personality, you may be described as the fast and furious. To upgrade an existing system, select a system or product you would like to work on. List all its attributes. Challenge any one or more of the listed attributes. Brainstorm to find a reasonable solution. You may also sit in a group with your friends to discuss and identify the best solution. Talk your way out to the solution. You may also provoke a healthy argument to annex more ideas. Iqbal Amera K et. al. |Oct. 2016 | Vol.3| Issue 10|01-06

On the other hand, you may wish to construct an entirely new system. Creating a new innovative system is usually the job of type B personality. But that doesn’t mean that people with type A personality can never hope to become great inventors. In fact, people with type A personality can get great ideas while socializing with a large audience. They may also try and fashion new products originating from fantasy stories. Brainstorm and ask simple questions to acquire prodigious answers. Just keep creating till you hit the million dollar bucket.

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Type B people are calmand composed. Therefore, they enjoy detailed research work. If you identify with type B personality attributes, you could start by filling out the missing gaps in life. Meditate. Look for wishes in your heart that never came true. Devise a way that would make your wishes a reality. Always begin with ‘how to’ to maintain focus in your research. Use conflicts to identify problems. Work with one problem at a time. Generate incentives that would help people get through a common problem not addressed before. Or generate a system that would forestall these problems from happening in future. Keep writing till you can clearly explain its solution.

Step 2: Delineate a Business Plan Now that you are poisedwith an idea that you believe will be successful in creating market value, move to step 2. Your million dollar idea is worthless without a good business plan. To bargainwith investors you need to delineate an effective business plan. A business plan elucidates how you propose to use the investor’s money, deliver your product and/ or system to the customers and earn a profit for yourself as well as for the investor.A typical business plan has four main parts: Business objectives, Strategy, Marketingand Finance. All investors wish to see a monetary return on their investments. You have to convince themthat your product or system is a good investment through your business plan. First, identify business objectives. This is your responsibility irrespective of whether you are a business expert or not. List down what you wish to achieve from selling your idea in bullet points. Also formulate a Mission statement. Why do you think your idea is useful? What has motivated you to sell your product? Why people should buy your product or system? Your mission statement should constitute of one to two lines at most. Money should not be mentioned at this step. Focus on your innovation. It is far more important than the money you wish to earn from it. As Tony Hsieh, CEO, Zappos - online shoe and clothing, has said:“Chase the vision, not the money; the money will end up following you.”

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Second, design the business strategies. How you wish to achieve your business objectives in the mass market? This is a technical area. It requires in-depth knowledge and comprehensive experience about the relevant business industry. Type A personalities are high risk takers. They rarely like to give control to anyone else.While, type B personalities, being risk averse, look for guidance. In both cases, it is best to hire a small business consultant at this stage. Startup businesses require a lot of hard work and skill. A business consultant will provide advice and may also coach you in a variety of business departments. For example, management, organizational infrastructure, vesting, operations, key performance indicators, location, start date, supply chain management, labour and tax laws, projected financial statements for the next five years etc. Third is marketing. Brainstorm to see who would want to use your system or product. Is your product only for the niche market? Or can it be utilized by the masses? Do you wish to introduce it locally, nationally or internationally? At the least, you should have elementaryknowledge about the potential of your system or product. Use sample surveys to discover how far your product or system is usable. If you are a type A personality, youadore social creativity. You love to mingle with and entertain people. You can effortlessly supply lots of dazzling statements and techniques. But not all statements and techniques are applicable in the mass market. Even so, your business consultant will help you complete the detailed marketing plan.If you have a type B personality, you are an introvert.Nevertheless, you can also produce eye-catching techniques through comprehensive research. You may also use sample surveys to find the most widely hailed statements.There are also numerous marketing firms that specialize in industry analysis, competitor analysis, cyberspace advertising and market segmentation. Your choices will depend on your investor budget and availability of resources. Fourth and most important is finance. Just like the human body needs blood to survive, 3

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businesses need cash to flourish. Your business consultant will inform you about the legal and financial issues attached to your business. He will also help you calculateyour capital expenditures, asset/ liabilityratios, profits/ losses and cash flow approximates for the next five years. He will give you a break even analysis for your product or system and fill out the relevant legal paperwork. Since, type A personalities are risk takers.They like to keep controls of the business in their hands. As such, they would prefer debt financing for their business. Whereas, type B personalities are risk averse. Consequently,they would prefer to capital financing for their business. Debt financing is a cheap form of finance as most business risks are on the shoulders of the entrepreneur. In contrast, capital financing is expensive as the business risks are shared by both the entrepreneur and his investor (s).

Step 3: Execute and Cash-in Once you have finalized your business plan, move to step 3: execute and cash in. Execution has two phases. Acquiring investors and implementing your business plan in the market. Firstly, set up an appointment with the potential investors. Approach them with enthusiasm. Present your business plan with style. Don’t forget to apply the 7 C’s of communication here (that is, Completeness, Conciseness, Concreteness, Correctness, Clarity, Courtesy and Consideration). Be yourself. If you have a type A personality, be ambitious, friendly and goal-oriented. Accentuate how you will achieve your business objectives through your multi-tasking abilities.Don’t be overconfident. No matter what happens at the final presentation, don’t lose your temper in front of your potential investors. Instead, play it with humor to highlight your intellect. Handle rejections as a pro. If you have a type B personality, show your innovative and reflective research skills. Remember, investors always like to be informed in advance. Talk confidently about your numbers. However, avoid unnecessary details. Try to remain composed yet aspiring. Demonstrate your enthusiasm through words as well as actions. Logically explain your motivation for the system or product you wish to deliver in the market. Iqbal Amera K et. al. |Oct. 2016 | Vol.3| Issue 10|01-06

Smile whenever possible to depict gestures of goodwill. Try to get an idea about investor’s investment budget. Investors always have a definite amount of money they wish to invest. You may have to convince more than one investor to finally execute your business plan. Whether you are a person with type A or type B personality, implement your business plan as decided with your business consultant and as discussed with your investor (s). Don’t move too far away from the monetary approximates. Investors and clients become discontent when you are not delivering what you had promised them. Maintain your focus on the cash flow. Liquidity has a vitalinfluence in the startup success and failures.Next you may hire a diverse, talented and goal-driven team that you and your new company can get along with. Your team members should believe in the mission statement of your new startup. You should also be able to work comfortably with them. Establishing a new business in the market is a painstaking task. Disagreements are bound to occur in every stage. It is best to minimize conflicts from the initial stages. Create the need in the market. Your system or product will not add market value unless your customers need to buy it. Know your clients. Understand why they need to buy your system or product now! Maintain the quality of your service. Recognize and swiftly correct your mistakes. Follow up on complaints and provide regular feedback. Stay in touch with your clients throughout your startup journey. Kill competition by keeping your customers loyal to your company. Soon you will be cashing in on your hard work.

Results and Discussion To summarize, young entrepreneurs experience different entrepreneurial journeys depending on their personality types. Using Friedman’s personality theory, we assume there are only two types of young entrepreneurs in this world. Type A and type B personalities. Entrepreneurs that possess type A personality are friendly, creative, ambitious, competitive, aggressive, impatient, active controllers and high risk takers. They love to be the center of 4

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attention at every party. They savor fame and fortune. Thus, they are likely to revel in their entrepreneurial struggle. Their social creativity helps them mingle with a people from diverse ethnic backgrounds. This enables them to generate innovative ideas and upgrade existing systems with a variety of resources. Therefore, they are likely to jump to conclusions when listing their business objectives and mission statement. They may also be over-confident about the demand for their product and/ or system in the mass market. Working with a business consultant would be difficult for entrepreneurs with type A personality.They like to be the sole decision makers. Nevertheless, it is best to hire a good business consultant during their first startup venture. Try using logical reasons when taking decisions. Most type A personalities readily acquire investors as they have an impressive persona. Type A personalities may end up becoming serial entrepreneurs. They like challenges and stress. They toil arduously to launch their startup company in the market. When it has established, they transfer their responsibilities to a designated manager. They constantly like to challenge themselves and due to their restless nature, they quickly move on to their next venture. They may also end up as startup founders as type A personalities crave for recognition. Big achievements give them a sense of inner satisfaction. Entrepreneurs that possess type B personalityare introvert, gentle, composed, reflective, risk averse andlogical decision makers. They are likely to take pleasure in inventing original systems and upgrading existing systems. They will be doubtful about theirproposed business objectives and mission statement. They will look for guidance from their business consultant at every step. It is best to use a bit of creativity and not become too dependent on your business consultant. They are also shy of public speaking and therefore may have trouble attracting investors for their first startup.Nevertheless, they will be good at calculating numbers and sticking to their projected estimates.They are also hardworking and goal oriented. Slowly and steadily they achieve their targets. Type B Iqbal Amera K et. al. |Oct. 2016 | Vol.3| Issue 10|01-06

personalities are usually lifestyle entrepreneurs. They have a gentle and laidback nature. They passionately devote their entire life to a startup they create. Then they sit back to relish its monetary rewards. Type B personalities may also become startup founders as they like to invent new systems and products through dedicated research [04-22].

Conclusion Most finance professionals find human psychology as a dry subject in comparison to calculating monetary returns. Still, it is imperative for finance professionals to understand the thought processes of decision makers and entrepreneurs that are driving our economy. The aim of this research is to providea general but focused guideline to young entrepreneurs about their entrepreneurial journey using Friedman’s personality theory. This study also intends to provide awareness for the investors. Investors should not only to evaluate monetary returns on the business product or system while weighing down alternative investments, but also benefit from recognizing the entrepreneur behind it. Entrepreneur’s personality type is useful in predicting his/her behavior patterns.Personality types A and B are trouble-free to assess. With a few questions and observations the investor will gain insight of how the inventor will respond in various situations and circumstances. It will also inform the investor about the future opportunities and threats that may arise at later stages of the startup venture. In further studies, we may explore meticulous biases that affect investors and entrepreneur relations. Thebenefits and dangers of unique individualist understanding while uncovering innovation. We may also investigate bias as an economic cost to innovation. Inspect the systems designed to eradicatebiaseddecision making as errors of venture capital industry. Whether naturally occurring bias percentage can be minimized further? We will also scrutinize the socio-economic impact of human psychology under entrepreneurial studies in developed, developing and under developed nations.

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