More than 20 years ago, business entrepreneurship processes began in the country and in many of Latin America and the world, with the aim of improving the income conditions of a large part of the population.
One of the bases on which the path towards the fulfillment of the Millennium goals is built is the creation by the state; of micro-enterprises for people in a vulnerable condition, trying on many occasions to exploit the knowledge acquired or that is traditionally known.Why do they not work or are they closed in at least one or two months? Why don't these last ventures over time?
Basically the problem has to do with the tool used for the design and creation of the micro-business. The Business Plan, became the panacea to solve the economic problems of the marginalized, is applied here and there where there are unmet basic needs. But it is not that the tool does not work, but simply that it is misused; Many professionals dedicated to these processes, never in their life even know how to do the accounts from their own pockets, as they intend to manage and improve the management of others, and these with many more needs than they do.
Fundamentally, there are 3 reasons why these so-called ventures do not work and they are:
- Believe that the innovative spirit is in every human being and it only needs to be awakened Confuse entrepreneur with entrepreneur Think that by applying the panacea (the business plan) everything is solved
Let's start by analyzing each of our hypotheses to verify that the entrepreneurship process, as a way out of poverty, does not really work as it should.
1. Believe that the innovative spirit is in every human being and it only needs to be awakened
Based on the theory of the Schumpeterian innovative entrepreneur, throughout Latin America from the 1960s on, public policies for the development of the entrepreneurial mindset began to be applied, innovation centers were created, with the aim of improving the growth conditions of the economies involved and bring innovation, science and technology to all people; in short, become innovative entrepreneurs according to Schumpeter's recipe. This transplanted theory of economic development failed, like all the recipes that are applied, without adapting it to the prevailing social conditions in the countries.
The spirit of the innovative entrepreneur is based on various psychological aspects and suggests that the entrepreneur's behavior does not have the goal of obtaining profit and less the goal of accumulating money and wealth, but that they are the very way of measuring success. For Schumpeter, the case of the entrepreneur is nothing but a specific form of the phenomenon of leadership in general and should be studied in this framework and not in a strictly economic context.
characteristics
- Ability to imagine the new, to intuit what will later prove correct, to grasp what is essential, to act decisively Acts more by will than by understanding Acts more with personal authority than by original ideas
This is how “The employer defines a particular type of conduct that clearly departs from everyday conduct based on custom or written or unwritten rules, codified by tradition and transmitted through education, in which it is framed the routine economic activity inherent to the direction and management of companies. The businessman opposes the manager in the same way that the theoretical apparatus of dynamics, opposes that of statics "
What this defines is a type of social and economic leadership, which allows the entrepreneur to overcome barriers; that the innovation process encounters and which are essentially of two types: 1) those specific to the function to be performed and 2) social ones.
The importance of the entrepreneurial function is greater when the results of their work will be less reasonable, evaluable and knowable and also when the fulfillment of the task of entrepreneur itself requires a mental freedom, which allows them to change the prevailing paradigms or dogmas.
Now every change in economic life provokes a reaction from the social environment, which condemns any deviation from the traditional way of doing things.
This is what the planners of public policies intend to achieve, only by granting seed capital and setting up a business through a business plan, trying to convert people taught to live in a daily life, where the state guarantees free services of health, education, etc. and additionally she pays her to send her children to study or feed them. This same process is what turns the citizen beneficiary of an entrepreneurship process, into a person who does not have the mental freedom to act, proceed and progress, since if he does not do so, he will continue in the same initial conditions, therefore he does not exist the stimulus for business advancement and advancement that is required. We are therefore in a vicious circle that does not allow the development of entrepreneurs.
Undoubtedly here lies the first error of the public policy of income improvement, through entrepreneurship and it is the one that gives rise to our second failure factor.
2. Confusing businessman with entrepreneur
The same confusion occurs when we do not have entrepreneurs among our population and what we want is to set up business units that generate economic surpluses that improve the income of families; here is the easiest task to get what we need; Entrepreneurial and innovative businessmen are scarce, like a drop of water in summer, here or what we need, they are simply businessmen who to define them here we use the following definition “is the person who, individually or collectively, sets objectives and makes strategic decisions to achieve the desired results. He is the one who manages, plans, organizes, directs, coordinates and directs companies ”.
What this definition contains is much easier to achieve among our population and requires only a few tools and a discipline that allows it to develop this work; and actually many of them already have them. Now this process does not deny the presence of entrepreneurs in the communities, or the existence of social or economic leaderships within themselves, but it will allow us to work in a more optimal way with them and take advantage of those exceptional qualities of the entrepreneur, for their own development and that of their community. The existence or not of entrepreneurs does not limit the income generation of a community through business units, but where they exist it will be easier for a process of collective change to take place that improves the conditions and standard of living of the community itself.
So why do public policy-based businesses fail? This is when we get to the heart of the matter and our third factor.
3. Think that by applying the panacea (the business plan) everything is solved
The most important thing to keep in mind when starting any productive activity is that the business plan is simply an instrument that allows calculating the probable future performance of the productive unit and like any instrument, if it is fed with garbage, it produces garbage. The main thing is in the economic assumptions of income and expenses that are introduced to the model, many of them obsolete or simply never tested in the daily life of a business.
For this process of lack of clear, simple, useful and applicable data to work, it is required that whoever feeds it or builds it knows what they are talking about. When the state contracts operators to carry out these processes, within these organizations there are very few professionals who have the minimum requirements that are required to optimally formulate a business plan, they do not even have teams that collectively add the minimum requirements that are required and that are:
to. Business experience
When we talk about experience, we are not talking about having participated as an advisor in entrepreneurship or business strengthening processes, we are talking about the experience that is required in the daily management of a company, which is not taught at the university or anywhere and it is to be able to use the tools of administration and management in the daily tasks of a company.
Many of those who operate these projects in the country, hire university personnel without graduating (due to costs) or many of them are Universities that recruit their students and put them to be this job; Even in the majority of Colombian universities, the majority of those who teach, have never in their life seen a machine working (with the exception of their car's engine), much less have they ever smeared their hands with cement or grease, as a design. a business, that I do not know, that I know only in the examples of the case theory.
And this is not only the case for many graduates and old graduates (be careful to differentiate in time of graduation and experience, which are not equivalent), who are supposed to have a journey through the paths of entrepreneurship, they do not even have the main tool which in this case is the practical application of what is written in the Business Plan.
b. Technical background
Many of the business plans involve production processes, procedures or methods, which you do not even know about or know about in a textbook or in a simple factory visit. Many of our engineers only know the production processes through videos and have not even worked in a factory to differentiate the theoretical and practical factory environment. Many design production processes based on those that others write on the internet or in a book, and that in many cases are simply reminders of the actual production process, which is usually documented, corrected and continuously improved.
Many of them do not even know the requirements that a physical installation must meet for the assembly of a business and on many occasions, they do not know how to make a plant distribution, nor a distribution in a gondola or on a shelf, let alone propose alternatives for assets overpriced fixtures or the use of multi-tools or at least dual-purpose machines. Thus and with this background, the business plan that comes out as a result of this work will be like them mediocre and will fail in the market.
c. Business experience
The professionals in charge of creating the business plan must know in depth the marketing tools and which ones to use depending on the type of product, the location and the marketing mix in general, and in many cases on the design. of the marketing mix necessary for each company, including the distribution of products on a shelf or in a gondola and this technical capacity must be proven in the very entrails of the market, that is, by selling products or services, thus learning to use the tools not to design marketing plans, out of reality or simply interpret the market signals in the appropriate way.
And now initially in the assembly of a production unit is the selection of the installation site, which depends on almost all occasions on the proximity to a market for the product or service to be sold. In most cases, these business designers forget that the most important thing is the marketing study for the productive unit and stores are set up simply with the theory that family consumer products are sold anywhere.
d. Financial experience
One of the blunders when building a business plan is the use of very optimistic assumptions regarding the behavior of sales and expenses, which almost always lead to the business as such not working in practical life, errors that the planner of the business plan omits because if he has been in these processes for years, he assumes the equality of processes and markets and assumes that they behave the same because half a block, 10 kilometers or in another city they work.
The lack of analysis of prices, income and costs in a market, are normally responsible for 98% of failures in startups, the other 2% is the fault of the employer.
and. Prospective and holistic vision of the business
Many of them only dedicate themselves to grinding figures or balancing spreadsheets so that they give the financial results that are required, but they do not have a medium and long-term vision of the company and less a vision of the relationships that the same business creates in their social environment and the impact it has on their performance and survival.
The prospective vision allows the formulator of the project, which will happen in a year, or more with the business and with its same environment and the holistic vision, will allow him to visualize the business and the development of his relationships with the different communities that do it. affect and that it also affects. In other words, we need a social analysis of the business plan, which involves environmental, social and political dimensions of it.
These minimum capacities are those that are lacking when putting into operation the public policy of entrepreneurship to improve family income and reduce the inequality gap and it is necessary that the state and its officials apply it.
In conclusion, the income generation policy for vulnerable groups fails not because we do not have entrepreneurs or innovators, but because we do not use the resources that we have efficiently and effectively. We have the people with the minimum necessary capacities, we have the tools, we have to use them in the best way, so that the processes do not fail and we can empower the community so that it itself is the standard bearer and the leader of its own development.
Now if we can answer our question, is entrepreneurship the solution to improve the income of the vulnerable population in Colombia? And we answer affirmatively when the requirements mentioned here are met to minimize or eliminate the factors that lead to failure.
