Jean Roberts

Institute for Small Business Affairs
National Entrepreneurship and SME Development Conference
1-3 November 2004 – Newcastle-Gateshead

Paper written and presented by Jean Roberts – title:  Entrepreneurial Initiative as a Sole Operator

Abstract

A ‘sole operator’ is, in the true sense of the word, a one-person business. This paper offers a proven equation “sole operator + sole operation + operational context = entrepreneurial initiative”, based on the author’s experience through twenty years as an entrepreneurial sole operator.

A ‘sole operator’ is the person in the micro business, and this person is the starting point. Next, the person must determine the business structure, methods, systems and processes that will enable her/him to operate effectively and efficiently – and successfully. Finally, the person must know and understand their operational context or business environment. These three components can be categorised as (1) person, (2) task and (3) environment, and they are the three basic components in entrepreneurial initiative. Place them at the 3 corners of an equilateral triangle, and you immediately appreciate their independence and inter-dependence. Finally, place the words ‘entrepreneurial initiative’ in the centre of the triangle to fully appreciate the equation.

This paper firstly explores the ‘person’ component in a micro business, and compares the respective contribution of practical experience, formal study, observation, action-research and evaluation in entrepreneurial initiative. This is followed by an exploration of the ‘task’ component, comparing the respective role of formal and informal structures, methods, systems and processes; and finally an exploration of the ‘environment’ component as an introduction to pro-active, re-active and crisis styles of entrepreneurial initiative.

Finally, a checklist is offered to guide entrepreneurial initiative as a sole operator.

Aim of this Paper

A ‘sole operator’ is, in the true sense of the word, a one-person business. This paper offers a proven equation “sole operator + sole operation + operational context = entrepreneurial initiative”, based on the author’s experience through twenty years as an entrepreneurial sole operator.
The informal study conducted through 19 years of self-employment as a sole operator demonstrates the equal importance and value to a sole operator in (a) gaining a genuine appreciation of their personal characteristics, experience and competencies, and (b) developing a theoretical framework to guide immediate, short-term and longer-term decision-making.

Background

My separate experiences as an SME practitioner includes:

• 10 years as partner in a family precision engineering company that employed up to four people other than the two partners, and
• 19 years (to date) as a sole operator/self-employed consultant, trainer, writer and speaker specialising in (a) tendering and outsourcing, and (b) in the governance and management of nonprofit organisations.

In both experiences, it has been necessary to create a theoretical framework whilst ‘on-the-job’ through carefully planned informal study and an inborn and sometimes compulsive need to analyse and understand why some initiatives work well and others fail badly.

The intervening 9 years between these two separate experiences were spent in a salaried community development role, responsible for assessing community needs and attracting resources to establish appropriate programs, services and activities. This position allowed a practical appreciation of the skills learned in the engineering company associated with planning, estimating, quoting, negotiation, contract management and administration. Management skills that also proved invaluable included

Method used

A ‘sole operator’ is the person in the micro business: the sole operator is the starting point. Next, the sole operator must determine the task component, ie the business structure, methods, systems and processes that will enable her/him to operate effectively and efficiently through successful entrepreneurial initiatives.

Finally, the sole operator must know and understand the operational context or business environment within which the sole operation must exist.

These three components can be categorised as (1) Person – the sole operator, (2) Task – the sole operation, and (3) Environment – the operational context, and they are the three basic components necessary to support entrepreneurial initiatives. Place them at the 3 corners of an equilateral triangle, and you immediately appreciate their independence and inter-dependence. It becomes clear that by expanding or placing too much emphasis on any one of the 3 components, the value and importance of the other two components are automatically reduced.

Finally, place the words ‘entrepreneurial initiative’ in the centre of the triangle to fully appreciate the equation. The Orientation Triangle powerfully demonstrates the fact that the three components of Person, Task, and Environment are of equal value and importance.

Business activity as a sole operator

Planning, implementing and evaluating one or a number of individual tasks or situations is an every-day occurrence for a sole operator: some are of major significance and many are routine or of relative insignificance. Yet it is predictable that each task or situation will affect or be affected by 3 major components:

1. Person Component – the sole operator

• including the experience, formal and informal study, observations, style and
• wisdom of the sole operator, together with their needs, interests and aspirations

2. Task Component – the sole operation

• what needs to be done, why, how, when, where, at what cost to create or produce
• products or services to sell at a price greater than the real cost of creation or production

3. Environment Component – the operational context
ie: the environment or context within which the sole operator will be accomplishing or achieving the ‘Task’: this includes the broad environment (eg political, cultural, industry/sector, social, economic, geographic factors) and the immediate environment (eg organisational issues, buildings, equipment, facilities, physical comfort, advisors, networks)

The Orientation Triangle presents 3 styles:

right-brain style, with a natural value for Person and ‘feeling’:

• the Orientations Inventory presents left-brain and right-brain scores that total 59: right-brain dominance is represented by a dominance of four or more of the right-brain score over the left-brain score

left-brain style, with a natural value for Task and ‘thinking’

• left-brain dominance is represented by a dominance of four or more of the left-brain score over the right-brain score

centre style, with a natural value for Environment and ‘observing’

• the dominance of either right-brain or left-brain score is less then four

Behavioural tendencies in the 3 styles, based on the natural value as a starting point for each style

Left-brain style is more likely to enter the exploration of a situation, problem, opportunity or challenge via Task and ‘thinking’

• more inclined to display and value an analytical, logical, rational and structured style and approach
• can excel at defining and analysing a problem
• can excel at designing a practical and workable action plan
• initial focus is on detail
• tend to process information internally before making an objective statement or observation

Right-brain style is more likely to enter the exploration of a situation, problem, opportunity or challenge via Person and ‘feeling’

• more inclined to display and value a lateral, intuitive and flexible style and approach
• can excel at exploring possible solutions to a problem with a global and conceptual approach, focusing most easily on possibilities
  tend to be excellent people-supporters, bringing out the best in others through their warm enthusiasm and interest in the ideas and activities of others
• can excel at conceptual and strategic development of ideas
• initial focus is on the big picture
• tend to process information externally through their own and others’ conversation, before making a subjective statement or observation

Centre style is more likely to enter the exploration of a situation, problem, opportunity or challenge via Environment and ‘observing’

• centre style will be either ‘centre left’ or ‘centre right’ .. there will be a natural tendency to either left or right-brain styles – with only a slight dominance
• can excel at negotiation, mediation and peace-making
• inclined to remain neutral until they are convinced to adopt either a left-brain dominant or right-brain dominant behaviour
• initial focus is on the context or environment
• prefer to react rather than initiate
• tend to process information internally while observing

The Orientation Triangle presents an equal value and importance for person, task and environment, reminding the sole operator to explore all three components – regardless of their starting point. The Orientation Triangle does away with the idea that there is acceptable and unacceptable behaviour – there simply is behaviour. It does away with the desire or need to judge self or others. It simply shows the wisdom of accepting the fact that people behave differently.

Decision-making and problem-solving are just two of the daily activity of sole operators – no matter the nature of the business. The left-brain and right-brain styles of these two business skills are presented in Table 1 to demonstrate the different approaches. The usefulness of this information for sole operators is that the two styles together ensure a more complete approach and behaviour. The message is to make sure both left-brain and right-brain styles are used for effective, efficient decision-making and problem-solving in relation to themselves as a sole operator, their business as the sole operation, and their operational context.

Sole operations is itself an entrepreneurial initiative, and the Orientation Triangle is an extremely useful tool in managing in an entrepreneurial manner.

Results obtained

Orientation has provided a bank of analytical data, experiences, anecdotes and observations through the past 16 years.

Examples of the usefulness of Orientation:

1. People planning to commence a sole operation after taking retrenchment or a retirement package:

• an Intender commented ‘I’ll give it three months: if it doesn’t work, I’ll find something else to do’ – thus undervaluing Task and Environment
• an Emerging sole operator commented ‘I miss the structure and discipline of my previous position in a large company’ – thus undervaluing Person and Task
• in a workshop for Intenders on business planning:
  • those with a dominant left-brain style heavily over-emphasised Task – thus under-valuing Person and Environment in their planning. Some had prepared as many as 4 business plans and were still delaying their plans to commence their entrepreneurial initiative
  • those with a dominant right-brain style heavily over-emphasised Person – thus under-valuing Task and Environment in their planning: they hoped to complete their first business plan after getting their entrepreneurial initiative under way
  • those with a centre style heavily over-emphasised Environment – thus under-valuing Task and Person in their planning: they were intending to spend preparation time observing existing businesses with the expectation that they would somehow find an appropriate business plan to adapt for themselves
• Sole operators may soon face the dilemma of deciding whether to employ a second person, and the tendency to employ a person of similar orientation rather than one of a different and complementary orientation frequently leads to expensive difficulties
• Setting priorities can be difficult for sole operators, due in part to the consistent demands on their available (and sometimes scarce) resources – including time and money – particularly in the initial stages of an entrepreneurial initiative: and the quick and easy way of setting priorities is to consider only their most natural and easily understood component and ignore the other two
• The stress of an emerging business can be overwhelming for a sole operator, particularly when their business grows at an astonishing rate due to seasonal or temporary factors: under-emphasis on the environment component can cause a sole operator to treat such factors as permanent and commit her/himself to heavy and unwise borrowings in order to cater for such growth – only to see the growth rate return to the gradual rate when the seasonal or temporary factors fade
• Sole operators in the service industry can cause stress for themselves when they have only their own time to sell, indicating an over-emphasis on the person component. A sole operator must attend to all facets of their business, including the ‘back-of-house’ functions, so it is wise to create products or publications as additional income earners. This requires analysis of both the Task and Environment in addition to Person
  • a common behaviour among sole operators is to neglect their accounts and fall behind in billing their work or paying suppliers: they can also neglect important functions such as marketing, promotion, keeping up with their industry or sector, networking, or – more worryingly – monitoring risk and quality.
• Planning ahead for personal needs and well as business demands is essential for sole operators. Many see ‘time off’ or holidays as impossible luxuries. Under-emphasis on Person can cause the sole operator to neglect their own health and well-being, which are critical success factors in a sole operation.
• The difference in the manner in which sole operators regard financial investment in their businesses can be linked to orientation, with the left-brain style being cost-conscious and the right-brain style being investment-conscious. Briefly, the left-brain style is to only invest additional funds when, after extensive analysis, they are convinced of a predictable return on that investment: the right-brain style is to invest additional funds in the hope of a return on investment rather than based on an analysis of fact and potential

Entrepreneurs are people, not organisations

Entrepreneurship is a personal characteristic or quality, and indicates a capacity to be creative, tenacious and patient. The 3 components in the Orientations Triangle are indeed independent – yet they are inter-dependent and complementary. Together, they present an excellent planning tool for entrepreneurial initiatives. The ideal, of course, is to begin with the component that offers the most natural and comfortable starting point, and then to embrace the two remaining components. Observation has shown that the starting point is not as important as embracing all three components in the planning, implementation and evaluation of entrepreneurial initiatives, opportunities or challenges.

Exploring the Person component in a sole operation

The Person component allows analysis of the characteristics of the sole operator that have the potential to lead to and support entrepreneurial initiatives. Such analysis reveals the respective contribution of practical experience, formal study, observation, action-research and evaluation in entrepreneurial initiatives, opportunities or challenges.

Characteristics of Person could be described as critical success factors in relation to entrepreneurial initiatives. These factors enable an analysis of the sole operator. Although listed in alphabetical order, they are each of equal value and importance:

1. Background – trade, business standing, industry/sector knowledge, life path, stage of life, current options
2. Experience – track record, prior achievements, lessons learned from previous activities and initiatives – whether positive or negative
3. Motivation – desperation, opportunity, trial run, gap in one’s life to fill, escape from salaried existence, desire to be one’s own boss
4. Passion – what makes one’s heart sing
5. Personal situation – family commitments and obligations, state of health, level of confidence and comfort
6. Qualification – formal study that contributes to a theoretical framework to guide decision-making and problem solving
7. Reputation – how well known and respected is the sole operator and her/his work/efforts to date: how widely known is the intended entrepreneurial initiative: how readily is the sole operator linked to this initiative: how well is the sole operator ranked and rated within the industry/sector/market
8. Resource base – intellectual capital, available assets, available or accessible finance, network of contacts, role models, mentors
9. Self-esteem – the value that the sole operator places upon her/himself: the level of self-acceptance
10. Skill base – technical, administrative, management and human resource skills and competencies
11. Values – how well does the sole operator know and understand their personal values, as they will knowingly or unknowingly guide the sole operator’s decision-making and problem –solving

Exploring the Task component in a sole operation

Analysis of this component represents the business structure, methods, systems and processes.

Characteristics of the Task Component could be described as critical success factors, with their capacity and capability to support the sole operator’s willingness and ability to undertake entrepreneurial initiatives. These factors enable an analysis of the Task Component of the ‘sole operation’.

Although listed in alphabetical order, they are each of equal value and importance:

1.Business structure – including organisational and legal structures
2.Employment factors
3.Financial factors
4.Physical factors – eg. premises, location, buildings, equipment
5.Program, product or service design
6.Technology and IT
7.Compliance requirements
8.Quality assurance and improvement

Exploring the Environment component in a sole operation

Analysis of this component represents wider context within which the sole operator will plan, implement and evaluate the sole operation. Again, these could be described as critical success factors with their capacity and capability to support the sole operator’s willingness and ability to undertake entrepreneurial initiatives. These factors enable an analysis of the Environment component of the ‘sole operation’.

Although listed in alphabetical order, they are each of equal value and importance:
1.demographic factors
2.economic factors
3.industry or sector factors .. including strategic alliances, networks and competitors
4.political factors .. including changes in government or government priorities
5.social factors
The sole operator needs to know and understand the nature and extent of control or influence s/he is able to exercise over the factors within each of the 3 components in the Orientation Triangle, and this takes time, effort and energy.

Conclusions

Through extensive and practical application of the Orientations Triangle, it has been possible to determine 3 distinct management styles among sole operators. ‘Management style’ is the term given to the manner in which a management group or person carries out the role of managing, i.e. the attitudes, values and behaviour which underlie decisions and actions associated with achieving agreed objectives with and through people.

It could be said that the management style is the ‘art’ of management.

Three broad management styles are presented – and these are not confined to sole operators:
1. crisis management
2. re‑active management
3. pro‑active management

What is Crisis Management?

This is the style of management where nothing new or different is considered unless and until a situation of crisis proportions is reached .. where the status quo reigns and problems or opportunities are ignored or bypassed until a crisis is reached, emotions are exposed and war is declared! Hardly conducive to planned entrepreneurial initiatives, and indicates little knowledge of or use of the Orientation Triangle.

What is Re‑active Management?

his is the style of management where decisions are made absolutely and only in response to problems or opportunities .. where no action is taken to prevent problems or create opportunities and very rarely is anything planned or initiated by the sole operator her/himself. Entrepreneurial initiative by accident? And indicates that the Orientation Triangle is used as a last resort.

What is Pro‑active Management?

This is the style of management where the possibility of problems or opportunities is examined .. where the sole operator thinks ahead, initiates action and therefore takes the lead in preventing problems, creating possibilities and projecting the interests and needs of her/his sole operation.
This is the style most conducive to sustained entrepreneurial initiatives, and indicates that the Orientation Triangle is a constant tool in planning, implementation and evaluation.

Comparison of these three management styles with the Orientation Triangle

• Pro‑active management is committed to a healthy business with the 3 components of the Orientation Triangle having equal value and importance
• Re‑active management is committed to ‘band‑aiding’, with token attention paid to the three components.
• Crisis management is into surgery! Every event is traumatic, affecting the whole business. Anaesthetic is applied for each crisis and the entire business can become stagnant while each crisis is handled.

Sole operators – and people involved with the training, support and study of sole operators – will be able to identify with one or more of these three management styles, for it is possible for a sole operator to be using all three at the same time. For instance, a sole operator could be re‑active in investing additional funds, pro‑active in customer relations and resorting to crisis management in ‘back-of-house’ functions.

The most desirable situation is for sole operator to be consistently pro‑active – particularly where s/he is involved in the planning, implementation and evaluation of entrepreneurial initiatives.

A pro‑active sole operator is able to be consistent in her/his vision for their business and realistic in their decisions on how best to achieve that vision.

Wider implications relating to entrepreneurship and Sole Operators

Together with the critical success factors and management styles aligned to the Orientations Triangle, the following Checklist will be useful for existing and potential sole operators, and may be useful for people involved in teaching, supporting and studying sole operators.

Again, all items are of equal value and importance.

• The bottom line is job satisfaction for the sole operator
  • meeting the needs of the individual, and
  • meeting the demands of the sole operator’s role in the business
• Practice retrospective as well as forward planning
  • know what the sole operator alone can and must do
  • know what others can do for the sole operator, for example what s/he needs to buy from suppliers or advisors to allow her/him to do what s/he alone can only do
• Define, establish and monitor the business lifecycle stages of the sole operation
• Accept that there is little benefit in separating personal from business or business from personal
• The sole operator needs to know, understand and appreciate her/himself, ie products, point of difference and source of inspiration, motivation and success
  • constantly update, improve and refine products/services
  • specialize rather than be a generalist
  • protect, refine and promote the identified point of difference
  • check the source of inspiration and success regularly, as it will change as confidence and competence increase
• Know, understand and recognize all competitors and competing forces and influences
• Know the market
  • carry out regular research
  • be available for enquiries
  • create and maintain an effective marketing strategy
• Celebrate progress – don’t just focus on success
  • turn every negative into a positive
  • identify and honour identified critical success factors
  • carry out regular reality checks using factual data
• Identify, understand and project the sole operator’s uniqueness
• Develop a natural suspicion of people who appear out of nowhere with an offer to ‘add value’ to the sole operator’s business and business potentialKnow the difference between risk aversion, risk avoidance and risk management