IT Entrepreneurs: Opportunities and Challenges
This essay discusses the opportunities and challenges faced by information technology entrepreneurs. Information technology has become the driver of economic and social progress. Krueger and Deborah (91) asserted that technological progress, technical progress, globalization, and innovation are the primary drivers of economic growth. In particular, they lead entrepreneurs to create new business strategies and ideas. The new technological advancements have created numerous entrepreneurship opportunities. However, this opportunity is associated with many challenges faced by entrepreneurs. Thus, there is a need to research and understand the opportunists and challenges of IT entrepreneurs. It is also essential to comprehend the way IT entrepreneurs relate to these challenges and opportunities.
Keywords: entrepreneurship, entrepreneurial strategies, entrepreneurial opportunities, entrepreneurial challenges, IT entrepreneurs
The information technology industry is characterized by emergence of very many new dynamic business start-ups. As explained by Lee and Janet (44), there are very many business opportunities in the field of IT. Another distinction in this industry is that it creates opportunities for entrepreneurs to be more competitive. There is a need to understand the reality of these opportunities and entrepreneurial challenges that come along with them. Entrepreneurs serve the most important function of exploiting the inventions for reform or reinvestments. Information technology continues to create a new economic context that increases the role of innovation in the economic system as a factor in wealth creation. Technological entrepreneurship may also be referred to as technical entrepreneurship or techno-entrepreneurship.
Entrepreneurship is the major force of innovation, even in the field of technology. Throughout history, technology has helped to boost entrepreneurial activities through the introduction of new ideas to the marketplace. In particular, information technology has helped create a number of entrepreneurial opportunities, starting from the high-tech start-ups to mom and pop stores. In essence, information technology has made a profound impact in shaping the economy of most countries. In addition, the widespread adoption of the internet has also helped to create a number of entrepreneurial opportunities. However, these opportunities are associated with challenges such as cybercrime and security or personal information. Gans and Scott (334) concluded that information technology has created inter-related networks that go beyond the international boundaries.
The history of e-commerce dates back during the initial invention of the internet and the old notion of sell and buy. However, the idea became possible and real during 1991 following the widespread application of the internet. The use of internet subsequently opened the world to all commercial users. This created a platform for the evolution and development of e-commerce. Since then, thousands of businesses are now being undertaken through the internet. The idea was later reinvented and consolidated in 2001.
There has been remarkable global e-commerce trend since its invention. In 2010, United Kingdom was the biggest e-commerce market. This was measured by the amount per capita spent through e-commerce. In United States, e-commerce contributes about 24% of the country’s annual revenue. There is emerging strong trend for e-commerce in other European countries such as Czech Republic. E-commerce presence continues to grow in other emerging economies like China. E-commerce is quickly growing in Brazil and has reached $17.3 billion. The e-commerce trend is rivaling traditional business by creating easier and quicker means of purchase.
There is a distinct life cycle of developing an e-commerce business. This life cycle includes system planning, building the system, system designing, testing, and finally implementation. These are the most important steps to following in an e-commerce business development. The first and foremost important step of this life cycle is to build an e-commerce strategy. The strategy guides the development and growth of the business. The strategy should include mission and aims, business alignment, business objectives, tactical deployment, as well as marketing requirements and goals among others.
There are several types of e-commerce business. The major types include business-to-customer, social e-commerce, business-to-business, customer-to-customer, mobile e-commerce, and local e-commerce. Business-to-Consumer e-commerce deals with companies selling their products online directly to customers, which are the end users. An example is eBay. On the other hand, business-to-business e-commerce environment, involve companies selling their products to other companies. An example is Salesforce. In consumer-to-business e-commerce, consumers sell their products to companies. An example is Clickbank. Lastly, consumer-to-consumer e-commerce deals with consumers selling their products to other consumers. An example is eBay.
It is a difficult task, though, to start and develop a new business in the field of information technology, despite the numerous opportunities available. In general, different opportunities and problems arise that demand different solutions. In addition, the IT field is very dynamic. What was relevant and that worked two years might not be relevant and work today. Besides, avoidable mistakes may turn an excellent business opportunity into a loss-making enterprise. Recognizing the current entrepreneurship opportunities in the field of IT is the start of the journey. Besides the ability to recognize these opportunities, the entrepreneur must be equipped with right strategies of overcoming common pitfalls associated with business growth and development. This is essential to ensure the continuity and sustainability of the business.
Information Technology Entrepreneurs
Marvel, Matthew and George (808), who are among the most cited authors in this field, defined information technology entrepreneurship as a special type of business leadership that involves identification of technology-intensive commercial venture opportunities. Significant risk-taking and management of accelerated growth characterize this type of business activity. It can also be considered as the process of assembling technical systems, resources, and strategies through the entrepreneurial venture. In this case, the primary goal of the entrepreneurs is to seek investment opportunities. Graham et al. (255) identified key elements of IT entrepreneurship as new technology venture, corporations, business sectors, professionals, markets, advisors, government, communities, universities, capital, and investments.
Fichman (11) illustrated that there are very many elements of information technology entrepreneurship; however, the most important one is the entrepreneur him/herself. In particular, the entrepreneur is the key catalyst in the entire business process, including emergence and growth of the start-up. The uniqueness of IT entrepreneurship is that it relies more on technological skills and competencies than others do. This is reflected by the type of activities done and how the business is done. In IT entrepreneurship, the most important step is the transformation of the entrepreneurial mind. This step is necessary to the success of new ventures in this industry. As illustrated by Gans and Scott (334), the entrepreneurial mind needs to be transformed into managerial mind for the success of the new venture.
Krueger and Deborah (94) explained the need for IT entrepreneurs to understand correctly how their business will evolve in the near future. They also need to understand the importance of their managerial skills. However, most important of all is for IT entrepreneurs to orient their mindset strategically for the benefit of business growth and profitability. According to Lee and Janet (47), the essential motivational factors for information technology entrepreneurs include opportunities exploitation, independence, and value generation. In this industry, the network between entrepreneurs plays important roles in enhancing first start-ups. The network between entrepreneurs also enhances the life cycle stages of the news venture. Networking is improved through sharing of information, especially about the available business opportunities and challenges of the new ventures.
The Opportunities of having IT Business
Innovation and new technologies are the heart of modern business competitiveness. The necessity of information technology in business has created many opportunities for new ventures. Information systems are certainly ubiquitous. As at now, data necessity has touched almost all aspects of the business. The modern data necessity had leveraged intelligence in business, thus leading to more opportunities for new ventures and growth of existing start-ups through innovation. The economies of developed nations highly depend on the increasing effectiveness of development, application, and implementation of innovative information technology. With this mindset, there are many entrepreneurial opportunities in the field of information technology. The reality of these opportunities lies in the entrepreneur’s ability in fostering multidisciplinary approaches to generating new ideas and actualizing them into sustainable business activities. Their ideas should generate new jobs that can lead to stable wealth creation process.
The number of new graduates and recruits in information technology has been increasing, and there is no indication that this trend will decline. This is because of the numerous employment and entrepreneurial opportunities in the field of information technology. Krueger and Deborah (94) asserted that the innovative use of information technology has created numerous opportunities for entrepreneurship. Besides, the cost of entry is low. Below are some of the significant opportunities for IT entrepreneurs.
There are many opportunities for e-commerce business. Some of the major opportunities include low cost of entering the market , easy tracking of potential customers, ability to gain revenue from many ways such as sales, transaction fee, ads, subscription fee , affiliate revenue amongst others. Starting e-commerce business allows you to operate 24 hours a day, 7 days a week without closure. In fact, an e-commerce business operates 365 days a year.
Besides, e-commerce business has very low running cost. You need only a little money to keep your store open and running than a brick and mortar shop. E-commerce business also offers great opportunities to reach out to new markets. This gives you the opportunity to expand speedily your customer base and enter new markets all over the world. In addition, e-commerce offers limitless opportunities to create new sales channels. With electronic commerce, you can potentially reach out to any person irrespective of their location across the world.
Ecommerce allows entrepreneurs to expand their businesses to international market without incurring additional costs. Entrepreneurs can do this at minimum capital investment. It also allows the business to locate more and more customers, suitable business partners, best suppliers across the globe. In essence, ecommerce has helped simplified the business process and made it more friendly to both business owners and consumers. Through ecommerce, business process has been made efficient and faster.
Difficulties/ Challenges of IT Entrepreneurs
Information technology is a valuable tool especially for new ventures and those who want to streamline their businesses as well as increase productivity. It is important for entrepreneurs who want to make their lives easy. Despite its many opportunities’ and benefits, information technology provides a business tool that is complex, multifaceted and a plain mystery to some people. It leads to huge business profits if used effectively. However, using information technology effectively may mean lost customers, lost workers, inefficient system, and a host of other problems. IT entrepreneurs face a number of business challenges. The major challenges are the lack of education, Inability to prioritize, integrating information, and data protection and security. They are discussed as follows:
(a) Lack of Education
Gans and Scott (338) explained that information technology is still a ‘closed box’ even though it gets easier every day. This is contributed by lack of education about the information technology. The lack of knowledge and education in information technology creates a digital divide that makes it inapplicable in some business areas. For example, a website is so easy to create; however, the digital divide is associated with the different features available. Some competitors so many features on their website that enables them to provide better customer services than others do. It is essential to note that some IT entrepreneurs lack some education on certain capability and features of the system. This limits their ability to explore the industry for a new venture and business growth.
IT entrepreneurs need to educate themselves about their business venture. There are a lot provided by the industry, which sometimes is missed out by the entrepreneurs. For example, an entrepreneur can fail to add an important instant chat tool on the website simply because he or she did not know about it. Probably he or she does not know that such a service exists. Lack of education is making IT entrepreneurs miss several significant opportunities for a new venture and improvement of existing start-ups. To overcome this problem, IT entrepreneurs need to set goals for keeping updated with the new technologies especially those affecting their business activities. The entrepreneurs can start by subscribing to few free online newsletters that focus on small businesses. Keeping in touch with local technology advisors is also essential.
(b) Inability to Prioritize
This is a serious problem faced by many IT entrepreneurs. Even though they might have correct information about the greatest and latest technologies, some IT entrepreneurs cannot prioritize well for the success and growth of their business. As said by Graham et al. (257), sometimes IT entrepreneurs fail to prioritize because of limited time and money for the implementation of the technology needs of the business. To overcome this challenge, it is important if the business use a technology plan. This plan will help the entrepreneur prioritize on what technology should be implemented and at what time. Lack of prioritization makes a proper implementation of technology difficult in the business process. It is vital to work with a technology plan. This plan is helpful in selecting the near-term, mid-term, as well as long-range goals of the business. It helps identify key technological needs to prioritize on for the benefit of the business. Technology plan works in a similar way as an enterprise plan. Technology plan helps in the proper management of the business. Without the plan, you will always run after the technology.
(c) Integrating Information
Another serious problem faced by IT entrepreneurs is the ability to integrate the information correctly. The problem comes about by the many types of available applications and platforms for different activities and services. For instance, when a new venture starts up, the entrepreneur might choose to use Microsoft Excel for storing critical data. However, it reaches a point when the entrepreneur might feel like using PDA and Microsoft Outlook for storing customer information and other relevant data. As the business grows, various needs of applications arise for each department. It reaches a point when the business graduates into multiple silos of data, requiring different applications and systems.
It is essential to ensure integration of data as the business grows. The IT entrepreneur needs to come up with better ways of integrating inventory, marketing information, as well as sales data as much as possible as the business grows. According to Marvel, Matthew, and George (810), there is a need to link together the inventory data, marketing information, and sales data to achieve best customer service and increase profitability. However, most IT entrepreneurs have challenge achieving this requirement for their businesses. Integrating the company information is essential to growing business in the field of information technology. Every IT entrepreneur needs to find the appropriate way of doing that. The challenge is that there are many possible options. Most IT entrepreneurs face a challenge in choosing the right integration method for their businesses. Some choose the low-cost freeware while others consider the possibility of hiring IT professionals.
(d) Data Protection and Security
According to Fichman (15), data protection and security is a critical challenge affecting the information technology entrepreneurs. The personal information needs to be guaranteed of security and privacy. However, the use of information technology has opened up the world and created so many privacy and security loopholes and breaches. It is important to protect the business data from a number of both internal and external threats. Data can be destroyed through many ways. For instance, the business data can be destroyed by flood, fire, storm, and earthquake. In addition, some employees, especially if disgruntled, may want to erase some business data. An employee may also accidentally delete important business data from the system.
These are just some of the possible ways of losing business data. It is essential to have a mechanism for protecting the business data from all these potential losses. Hackers also pose a serious security threat to the business data. It is the work of the entrepreneur to ensure that data is protected from possible hackers. The high cybercrime rate is increasing worries many entrepreneurs. Business data should also be protected from illegal access. Achieving these requirements for data protection and security is not an easy task for IT entrepreneurs. Sometimes, it comes with increased cost to the business especially if IT professional is hired to do the task.
Another disadvantage of e-commerce business is the persistent cultural attraction of physical market and traditional shopping. In addition, there is persistent global inequality limiting access to telephones and computer saturation and ceiling effect.
There is a large percentage of e-commerce businesses that were started but failed. Most of them failed after facing numerous challenges including too many competitions, poor inventory management, poor product photography, poor website, lack of website traffic, as well as lack of cash flow among other reasons. Examples of big name e-commerce companies that failed include Broadband Sports, boo.com, Cyberian Outpost, CyberRebate, eToys.com, and Flooz.com. On the other hand, there are a number of successful e-commerce businesses. They managed to overcome challenges of the industry and succeeded. They include amaon.com, eBay, Ask.com, Picasa among others.
In conclusion, information technology entrepreneurship is rapidly growing due to the availability of numerous diverse opportunities. Many entrepreneurs are nowadays focusing on venturing into this lucrative industry. However, they have to be ready to deal with the various industry challenges. It is essential to note that formal IT training is not necessary for an entrepreneur in this industry. Formal IT training is desirable but not necessary to be a successful information technology entrepreneur. The advantage of IT entrepreneurship is the limited start-up cost required. Massive capital base is not required in order to become an IT entrepreneur. With the increased permeation of mobile phones globally, creation of a mobile culture is next frontier for e-commerce. Moreover, content creation and marketing through social integration via videos, social profiles, mobile apps and social media provide platforms for future e-commerce activities. These new trends allow for personalization of content and will appeal to the customers. They are also emotion-driven.
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