Understanding Your Operating Environment

Entrepreneurial Principles extracted from Entrepreneurship On Trial Dr T. A. Makoni

Entrepreneurs build their business within the context of an environment which they sometimes may not be able to control. The robustness of an entrepreneurial venture is tried and tested by the vicissitudes of the environment. Within the environment are forces that may serve as great opportunities or menacing threats to the survival of the entrepreneurial venture. Entrepreneurs need to understand the environment within which they operate so as to exploit emerging opportunities and mitigate against potential threats.
There is critical need for entrepreneurs to appreciate and understand the salient issues in the operating environment. It also demonstrates how the regulatory environment opened an opportunity for entrepreneurs. Some banks failed because they did not recognise the potential impact of the changes in the environment. This underlines the susceptibility of entrepreneurs in volatile environments to policy changes and reversals. The effect of the macro-environment on banking was highlighted. The underlying forces in the industry were revealed by the industry analysis.
The change in the regulatory environment brought in by the new governor resulted in the collapse of about ten financial institutions. Some of these had been deemed to be strong and thriving. In one year the financial services moved from the greatest growth industry in Zimbabwe to a virtual collapse.
The lesson learnt is that entrepreneurs need to scan the environment regularly and position their businesses appropriately. Entrepreneurs should to understand that the environment is always in a state of flux and hence has to be monitored to enable their businesses to exploit opportunities while mitigating against potential threats.
It is critical for entrepreneurs to recognise that the rules of the game in business are not cast in stone, these can change dramatically overnight to the detriment of the entrepreneurial venture. It is therefore imperative for entrepreneurs in volatile environments to maintain strategic flexibility.
Within each industry there are differing market penetration strategies open to entrepreneurs.
Another important principle is the need to analyse and understand the underlying forces driving the industry in which one does business. Banking entrepreneurs could have benefited from this analysis. In high flux environments it is important to recognise the presence of key uncertainties both “known unknowns” (things we know that we do not know) and “unknown unknowns” (things we do not know that we do not know)24.

Ensure that you seek to understand the underlying forces at work in the environment in which your business will operate. The environment can provide either great opportunities or send some threats to your survival. Continue scanning your environment. Entrepreneurs become astute at managing their environment to exploit opportunities and reduce risks. Entrepreneurs learn to handle what ever hand they are dealt with by the environment. Manage your environment. Stop crying foul. Entrepreneurs are not cry babies.

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