Micro Entrepreneurs Preparing for the Future – Process, Tools & Experiences

Teksti | Tarja Meristö , Jukka Laitinen

Futures research as a part of strategic planning is common in large corporations, but it is important for small and medium size companies as well. Especially micro-entrepreneurs are not familiar with foresight practices and tools. In this paper, we will introduce a process, tools and experiences in nine micro-entrepreneur companies during 2018-2019 in Finland as part of the project Stay Well. Results will show the need for lighter procedures to run foresight activities in SMEs. This includes not only tools and processes to work with but also data concerning the future trends and wild cards as well as a facilitator to encourage the entrepreneur to recognize and realize his or her skills and competences and opportunities in the business portfolio. For this purpose the core competence tree concept seems to be an excellent tool to co-create the solutions for the future.

1. Introduction

Futures studies methodology in business has been mostly developed in and for large organisations, whereas small and medium size companies are not familiar with foresight practices, or at least they do not have enough resources to exploit that information (see e.g. Rohrbeck 2010, Rohrbech et al. 2015, Masini 1993). Network based structure in some industries or regions can usually support also SMEs to follow the futures trends and weak signals in their business environment (Dimecc 2019).  Especially micro-entrepreneurs usually working alone will have a lot of lack of not only knowledge and skills but time as a key resource to think ahead. Therefore, new forms of support for foresight in micro-entrepreneur companies are required, including co-creation and coaching as a part of the foresight process.

Micro-entrepreneur is according to Oxford dictionary “a person, who sets up or runs a small business”. Furthermore, the EU has defined that micro-entrepreneur is a person who operates a microenterprise which is by definition  an enterprise with fewer than 10 employees and an annual turnover or balance sheet below 2 million euro (EUR-Lex 2003). The word has its origin in 1980´s when Washington Post used micro-entrepreneur expression for the first time. Micro-entrepreneurs work alone, often doing not only the customer-related business issues, but also all the administrative activities concerning e.g. book keeping and invoicing or marketing and sales. Micro-entrepreneur´s focus is in his or her passion, i.e. the substance of the business, but all the other activities have to be done as well. The lack of time is defining the day of the micro-entrepreneur, and he or she has to work almost around the clock, without having any time to stop and think ahead. Compared with larger companies, micro-entrepreneurs seldom have a board or a sparring partner to discuss problems they are facing on their work. They often keep their problems inside to protect their family members from their worries and fears. These all are factors to stress micro-entrepreneurs and this will weaken their wellbeing, having a direct impact on their business, too. In a stressed mode, the micro-entrepreneurs try to survive from day to day not having any insight or foresight how to lead the business successfully forward.

Project Stay Well, financed by European Social Fund in 2018-2019 and led by Laurea University of Applied Sciences, is the context where we have worked with micro-entrepreneurs for their future success. The objective of the project is to support the self-employed and micro-entrepreneurs to take care of their own wellbeing as part of the everyday activity of the business and as part of the development of their business. As a result, the micro-entrepreneurs participating in the project are better equipped to take care of their wellbeing at work as part of their overall wellbeing and as part of their work activities and developmental activities as entrepreneurs.

According to David Wilkinson (2018), people’s intolerance of uncertainty or how they cope with uncertainty will have an influence on the fact that, how we see things. The uncertainty concerning the future of the firm, or more broadly the future of the whole business area, will have an influence on, how e.g. micro-entrepreneur will interpret the signals from the operating environment. The more being afraid of uncertainties, the more negative interpretation they will give to the changes and signals. In Stay Well project the micro-entrepreneurs have participated in alternative modules including issues as follows: wellbeing and health, self-management, business development, multi-goal time management and success for the future. Without having all the business activities running well today, there is no opportunity for the personal wellbeing nor the success for renewing their business for the future.

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Figure 1. Starting point for the study stems from micro-entrepreneurs and corporate foresight. (Meristö & Laitinen)

The aim of this study is to examine 1) How do the micro-entrepreneurs see the future and what are the biggest threats and challenges concerning the future?  2) How do the micro-entrepreneurs innovate their business portfolio and their skills to deal with the future challenges? 3) What are the critical points in corporate foresight for the micro-entrepreneurs? In this study, we will describe the process and results of the cases run during 2018-2019 with nine micro entrepreneurs from different business fields in Finland.

2. Process

In the project Stay Well (2018-2019) altogether 30 micro-entrepreneurs participated in the project, which provided opportunities to improve their wellbeing as well as to develop their everyday practices both in business and in private life. The project was divided into five act camps with the themes of wellbeing and health, self-management, business development, multi-goal time management and success for the future. Each of the micro-entrepreneurs can choose from one to three of those camps to improve their wellbeing and business. In addition to the act camps, there are two general camps concerning all the participating entrepreneurs. At the beginning of the project, the needs and challenges were mapped in NeedCamp interviews and at the end of the process the results of the entrepreneurs were evaluated in EvalCamp.

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Figure 2. The elements of Stay Well project. (Meristö & Laitinen)

This paper focuses on those entrepreneurs with the choice of the success for the future, i.e. FutuCamp, altogether nine firms, which all have been participated in the facilitated futures workshops during the project in 2018-2019. The framework for the futures session is based on the futures research paradigm, i.e. according to Roy Amara (1981) the future is not predictable, it is not predetermined, but it can be influenced by individual choices and actions. The tools used are as follows: environmental scanning by PESTE analysis, weak signal recognition by taboo analysis, alternative futures building by scenario axes, SWOT analysis from the business perspective and finally, the core competence tree as a tool for describing the existing business as well as to develop new opportunities for the future needs and challenges towards continuous growth.

The purpose of FutuCamp was to help entrepreneurs to manage their future by recognizing the future challenges and opportunities and to develop actions to meet those challenges and opportunities in practise. There were three different process alternatives to carry out FutuCamp:

  1. Quick version: Small tasks and presentations to all entrepreneurs in project seminars
  2. Workshop: A half day tailored workshop for individual entrepreneurs
  3. Process version: the series of 2-3 small tailored workshops for individual entrepreneurs

All the nine entrepreneurs chose the workshop version, number 2 on the list, i.e. a half-day facilitated workshop. The structure of the workshops was based on the action scenario approach developed by Meristö (1991). In practice it consisted of three main phases: 1) Who are we, 2) What are the possible worlds and 3) Where can we go and how (Meristö 1991).

The workshops were tailored for each individual entrepreneur based on results from NeedCamp interviews done at the beginning of the project as well as on the business-specific background data collected by the researcher group from the public data sources.

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Figure 3. FutuCamp workshop in practice: phases and tools. (Meristö)

In the first phase, the basic facts of the business were described, but also the entrepreneur´s basic beliefs and even taboos were discussed to recognize certainties and possible uncertainties. In the second phase, the environmental scanning concerning the company and its industry field was done in order to recognize the key drivers for alternative future paths and scenarios in long run. In the beginning all the participants in the project listed change phenomena from alternative perspectives concerning the future. Later, each individual entrepreneur in FutuCamp session completed this list from his or her viewpoint. Also, the scenario alternatives were constructed for the entrepreneur and his or her business. The preliminary drafts for the future were described by the researchers and in the FutuCamp session, these drafts were completed in the co-creation process together with the entrepreneur. In the third phase, these scenarios were analyzed from the micro-entrepreneur´s viewpoint to recognize the threats and opportunities, but also the strengths and weaknesses in each scenario. Furthermore, the steps towards vision (see e.g. Nanus 1992), i.e. the desired future state for the company (and the entrepreneur, too) were created. Finally, the feedback from the entrepreneur was collected to improve the process. The results from these sessions will be described in the next chapter, where the tools used in the workshops during its various phases are introduced in the light of examples that have been processed in FutuCamp sessions.

3. Tools

The purpose of FutuCamp was to help entrepreneurs to manage their future by recognizing the future challenges and opportunities  according to the phases of the action scenario approach (Meristö 1991). The basic thought behind this was that less uncertainty concerning the future means less stress to the entrepreneur. Tools used in different phases were as follows

  • Core competence tree
  • Changing factors
  • Alternative scenarios
  • SWOT analysis
  • Steps towards the vision

Each tool will be described by the entrepreneurial examples produced during the FutuCamps in Stay Well project sessions facilitated by the writers of this article. Most of these results will be presented as the synthesis of more than one session in order to keep the anonymity of the participants.

3.1. Core competence tree

The basic facts of the entrepreneurs were described with the core competence tree. The concept of the core competence tree was original presented by Hamel & Prahalad (1996). In our work, we applied further developed version which has more detailed definition of roots, i.e. competences. (Meristö 1993, Kamensky 2008). Figure 4 below illustrates the synthesis core competence tree of wellbeing entrepreneurs who participated in FutuCamp workshops. The branches in the tree show various business areas with the products and the services of the companies. In this case, they consist of basic care services (e.g. hair cutting, foot care, green care, physiotherapy), special case services (e.g. hairdressing for wedding), educational services, consulting services, product sales and care services for special groups (e.g. ageing people, people with special needs). The trunk of the tree summarizes the core competences of the business which in this case are local brand & location, reputation & quality, customer relations, trust and 24/7 flexibility. The roots illustrate competences in more detailed level consisting of knowledge and skills, values and attitudes as well as contacts and experiences. Together they form the set of core competences which are necessary to run business successfully also in the future. The bird´s nest in the tree represents preliminary ideas concerning the future plans, e.g. storytelling, network marketing and pop-up activities. The bird’s nest could also include e.g. joint projects as an additional resource to finance development work.

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Figure 4. Synthesis core competence tree of wellbeing entrepreneurs in FutuCamps. (Meristö & Kamensky)

3.2. Changing factors

In the next phase, the changing factors were mapped in order to recognize the key drivers for alternative future scenarios. As a background data, we had collected changing factors from all the entrepreneurs involved in the Stay Well project. The most general changing factors amongst the entrepreneurs were:

The entrepreneur’s own health and coping with daily life

  • Economic situation, financial issues, investment needs, cash flow from the company
  • Using of time and its priorisations (productive work/a social media/other)
  • Adequacy of customers, customers’ individual needs
  • Energy required for the change of actions
  • Continuity of the company and possibilities of the growth
  • General changes in the operational environment, e.g. legislation
  • Employing of additional workers and risks related to it
  • Keeping the cheerfulness in the work

The list of changing factors was completed with the entrereneur-specific factors in FutuCamp workshops. In order to receive a holistic picture of each entrepreneurs’ operational environment, PESTE framework was applied (Meristö 1991). PESTE framework consists of political (P), economic (E), social (S), technological (T) and ecological (E) perspectives. Table 1 shows some examples of the changing factors that micro-entrepreneurs are confronting.

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3.3. Alternative scenarios

Scenarios are illustrative pictures of the various futures and alternative paths towards the future (see e.g. Schwartz 1996).  Scenarios are originally from the theatre world, describing both the stage and the scene there. In the context of futures research, these are metaphors for the general business environment and to the competitive business environment (see e.g. Porter 1990, Meristö 1989 & 1991). In our FutuCamp sessions with the micro-entrepreneurs, we used a simple axes method to construct scenarios in order to test their business idea against changing business environment, i.e. using alternative scenarios as wind tunnels to deepen the scenario stories in the eyes of the micro-entrepreneur to realize the real action alternatives to build the future success.

The scenario axes have been chosen among the recognized change factors, usually considering the action alternatives for the entrepreneur, i.e. as a goal was not only scenarios, rather action scenarios to go further. It is important to keep the discussion concrete and close to the micro-entrepreneur´s everyday business in spite of the long-term goals of the scenario work.

As an example, we will present a case concerning one of the wellbeing entrepreneurs participated in our FutuCamp sessions. The main axes are on one hand business orientation regarding Business to Business and Business to Consumer dimensions and on the other hand the operating mode by asking working alone or working in a partner network. Most of the micro-entrepreneurs are working alone, and often their customers are individual consumers form the region nearby. Many of them had a feeling of the lifestyle entrepreneurship instead of running business.

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Figure 5. Example scenarios of a wellbeing entrepreneur. (Meristö & Laitinen)

3.4. SWOT analysis

In order to manage the entrepreneurs’ risks in alternative future scenarios, SWOT analyses were done for each scenario. In the workshops, so called Excellent SWOT analysis was applied which emphasizes future aspects in the analysis (Meristö et al. 2007). Table 2 introduces some examples of entrepreneurs SWOT factors. For the future, it is important to tackle the threats and exploit the opportunities by using your own strengths and eliminating the weaknesses.

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3.5 Steps towards the vision

The action scenario approach is not only for scenario building, but for actions based on alternative scenarios (Meristö 1991). The final choice for the scenario as a basis for futures plans depends on the risk taking profile of an entrepreneur and the resources of the firm. Also, the developing phase of the company will have an impact on the future visions and their clarity. A newcomer (or a young entrepreneur) in business will see the future in other eyes than an entrepreneur in a maturate phase and age. The vision in the long run will show the direction and ambition level how to go towards the future. The path to the future will consist of several steps, which will require time and resources to achieve the vision. The key questions are as follows: Is a partner needed? Will the decisions be made? Are investments required? Enough know-how? As an example, we will describe one of the cases e worked during the FutuCamp process (Figure 6). The timeframe is also important here and for the entrepreneur (Bluedorn & Martin 2008. It is fruitful to think through also alternatives, where time flies quickly versus it takes a longer time than expected.

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Figure 6. Example of the steps towards the vision (case wellbeing entrepreneur). (Meristö)

4. Experiences & Conclusion

In their feedback, the entrepreneurs told that FutuCamp sessions have helped them e.g. to question the basic beliefs of their own; create new product and service ideas; consider new business models, including financial solutions; realize the power of an entrepreneur, enabling rapid decision making and ability to exploit new opportunities. Additionally, scenario thinking helped one entrepreneur recognize image risks when moving from a scenario to another.

The benefits of the process and tools used in the project can be summarized as followed:

  1. Facilitated workshop with a micro entrepreneur: great experience to get well prepared, individual sparring, and free of charge – this will have an impact on the wellbeing of their own, bringing joy to the life. Background information from NeedCamps and open sources of the company, e.g. websites.
  2. Core competence tree: a) putting attention to the networks not recognized earlier; getting help and resource from them, too b) thinking systematically supply/demand based on what and to whom questions on the branches of the tree – opportunities for the productization of his/her skills and competences c) seeing new opportunities through a bird’s nest metaphor – what I already do but do not sell or don´t get money yet d) seeing the whole core competence tree as a platform for generating new innovations –connecting own skills and market needs and competition together!
  3. Alternative scenarios as wind tunnels: testing ideas before action; using scenarios as a platform for new product and service concepts – visionary concept design!
  4. SWOT analysis: recognizing opportunities, understanding the strengths of their own, not only weaknesses or risks; possible to use Excellent SWOT when analyzing alternative scenarios.
  5. Vision and Steps towards vision: expressing their own dreams and will loudly in words; understanding the purpose of the timeframe and timing!
  6. Benefit of the whole process: different for entrepreneurs in different development phases i.e. challenges differ from those of startups compared to maturate businesses, but also compared with the actual age of an entrepreneur!

As much as to see into the future it is important to recognize the present situation, who and where you are. This is important for the renewal for the future. By using existing core competences the transformation towards new challenges is faster and more agile, and with the help of the core competence tree the new options can be found e.g. in the form of bird´s nest or as new branches growing from the trunk. Productizitation is the key word, including also the customer segmentation and partnering strategies.

In the theory, the innovation process including phases from futures foresight via concept design for the commercialization to the market will fit well to the core competence tree concept: Bird´s nest in the tree will represent those new ideas at the beginning of the innovation process phase called foresight, whereas the branches in the tree are various business areas with products and services as describing in the concept design phase. The trunk of the core competence tree will summarize the core competences of the business, and it will face the commercialization phase in the innovation process by answering the question “by which competitive advantage”, which means considering the competition in the market.

In the practice, the micro-entrepreneurs participated in the futures workshops have found new perspectives to their future as entrepreneurs especially by defining innovation needs from market perspective in alternative scenarios based on SWOT analysis, but also on core competence tree analysis of their own. Furthermore, innovations not only directly for business but also for micro-entrepreneurs themselves concerning their competences in terms of knowledge and skills, values and attitudes and networks and contacts. The roots of the core competence tree will represent these three elements of competences, which then can act as a source for a new combination of competences to form required competitive advantage to the future with its innovative solutions in business, in services and products.

According to our experiences, the main challenges of micro entrepreneurs seem to be related to the environmental scanning, resources prioritizing, own wellbeing and the economic success of their companies (Figure 7).

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Figure 7. Challenges for micro entrepreneurs concerning the future. (Meristö & Laitinen)

The innovation process model connected to the future-oriented core competence tree as a tool for the micro-entrepreneurs will broaden and deepen the role of skills and competences when explaining the innovativeness of small firms. Combined to the futures thinking this approach will produce ideas and concepts to the market not yet recognized. In the form of a simple workbook, this approach will provide an opportunity for the micro-entrepreneurs to leave the everyday business for a moment, without losing the customers or opportunities for business today. Among those micro-entrepreneurs participated in the project, the new perspectives to the future were opened, including the view of their own wellbeing as a source for new thoughts and ideas.

Acknowledgements:

This study is done in Stay Well project (2018 – 2019) which is funded by European Social Fund (ESF).

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URN http://urn.fi/URN:NBN:fi-fe2020061242951

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