Define and explain the Timmons Model.
The Timmons Model is based on three major driving forces - opportunity, the entrepreneur and the entrepreneurial team (or just team), and the resources required to capitalize on the opportunities. The likeliness of the performance of the business is higher if the business fits into most of those driving forces (Bhave, 1994). One’s perception and knowledge change with time. This is why someone who has recently started on the journey of entrepreneurship often cycles through those stages multiple times to have the best fit for their business. However, ones versed in the world of entrepreneurship with their experience, gut feeling and the ability to analyze patterns and trends guide themselves through those processes much quicker.
The process starts with the opportunity and not the money, business plan, networks, or anything else. The identification of opportunity is key as per Timmons Model (Ardichvili & Cardozo, 2000). This is because more than the entrepreneur and his/her team, the opportunity holds the key to drive the business to be a long-term success. The team is vital as well in the process and is thus responsible to remove the uncertainty and ambiguity with the use of creativity for the opportunity.
The other core component of the process is the resources. Timmons have a different take to the standard notion that extensive research is required to reduce the risk factor before venturing in into any business. He, however, voices that if anyone indents to gain that competitive advantage, one has to start with minimal research or bootstrap. This process helps to bring the cost down, install discipline within the team, and encourage creative solutions within limited resources. The concept of minimizing and control is more prominent with this approach rather than maximize and own. This approach helps the leader to gauge upon the ability of his/her team, have a strong base and start formulating a business plan using fit and balance method. All these by balancing the potential of the team, opportunity that is available, and resources at hand.
Once the entrepreneur has the right opportunity and resources, the team shouldn’t be forgotten. It is equally crucial to ensure success. An effective entrepreneur should be able to bring together the brightest mind together (Zeng, Bu & Su, 2011). The team should be built around the opportunity and the requirement to accomplish it. So, the member’s skill, mentality, and size should be guided by the opportunity. As per Timmons, a bad team can be a huge disaster and no matter how good an idea is to make it a waste. However, a good team can convert a good opportunity to a successful business. Thus, a good team can sustain the pressure while also growing the business.
Thus, the three forces as highlighted in Timmons Model doesn’t exist in a vacuum. They have an environment around it in which dynamism, change, uncertainty, chaos, imperfect information, symmetries of information, and missing information all have a playing field. So, based on this model, entrepreneurship can be said to be a dynamic process comprising of three main components (opportunity, team, and resources) which drive the entrepreneur process. If an entrepreneur can effectively balance all those components, the likelihood of success is a lot higher. And, on the contrary, if the balance isn’t proper, a business might even crumble.
Ardichvili, A., & Cardozo, R. (2000). A Model of the Entrepreneurial Opportunity Recognition Process. Journal Of Enterprising Culture , 08 (02), 103-119.
Bhave, M. (1994). A process model of entrepreneurial venture creation. Journal Of Business Venturing , 9 (3), 223-242.
Zeng, F., Bu, X., & Su, L. (2011). Study on entrepreneurial process model for SIFE student team based on Timmons model. Journal Of Chinese Entrepreneurship , 3 (3), 204-214.
Dr. Jeffery Timmons was a professor at PABSON College, which are known for entrepreneurship program. In Timmons model he considers opportunities, teams, and resources as the three critical factors available to an entrepreneur and holds that success depends on the ability of the entrepreneur to balance these critical factors.
To be able to access and evaluate with opportunity
To be able to marshal the resources that may be available to them
The third is to be able to forms start -ups teams forming start-up team is one of the critical factors.
The entrepreneur searches for an opportunity and on finding it, the entrepreneur shapes the opportunity into a high - potential ventures by drawing up a team and gathering the required resources to start a business that capabilities on the opportunity (Hammad, 2013). The entrepreneur risk his or her career, personal cash flow and net worth in order to peruse such opportunity.
Fig (1): Diagram of Timmons Model
In a diagram of Timmons Models, it’s easier to understand. There are three key elements and they are opportunity, resources, and the team. The opportunity is foggy at beginning so over time you need to propagate in terms of when the opportunity is real one and because of the ambiguity actually cause a lots of uncertainty and risk involve. In a new ventures when you see opportunity as a founder team, actually need to create a business model/ business plan and in order to seek the resource that may be required in order to peruse opportunity (Adam. & Stephen., 2012). And the resource can be external. Leadership is a special attribute of a team. The founder will be necessary convince external stakeholder participate in this new ventures creation process. The team involve the founder the founder need to really balance the uncertainty and the risk at the same time and try to acquire financial capital from capital market. To some extent money is very important thing in entrepreneurial process. Money follows high - potential opportunities conceived of and led by a strong management team. So to have a strong team including the founder is important in terms of successful entrepreneurial activity.
In Timmons Model is starting from opportunity. In this point you may not have enough money, strategy, network, team and business plan buy you need to shape, estimate the size and depth of opportunity and establishes required shape, size and depth of resource and team. The starting point is opportunity but based on opportunity you need to find a resources and form a team. Finally, in entrepreneurship process, Dr. Jeffers Timmons believed that the entrepreneurial process was not just about creating new companies, capital and Jobs but also about forecasting " an ingenious human spirit and improving human Kind” (Adam. & Stephen., 2012).
Adam., & Stephen. (2012). New Venture Creation: Entrepreneurship for the 21st Century. NewYork: McGraw Hill.
Hammad, A. (2013). An analysis of Timmons’ model for the entrepreneurial process. Munich, GRIN Verlag, https://www.grin.com/document/308659 .
Entrepreneurship is something that has been hyped as of late and many enter head on into it without understanding its various aspects and face certain loss. Research have pointed out that with 100 new startups over 90% of it fail. This has resulted from the misbalance between academic intelligence and practicality (Spinelli, Jr. & Adams). Timmons model talks about how to reduce the risk of such paramount level of business failure by understanding the importance of three basic factors that affect new venture which are opportunities, teams and resources. Any entrepreneur that understands the risk factors involved and can balance these three aspect will have higher rate of success in new startups.
A new venture has to climb over the uncertainty hill, the only thing that will help an entrepreneur to reach the other side to the opportunity would be the team and resources. Resources is a vague word and could mean a lot of things. According to a journal in Chinese entrepreneurship, students who start new venture will require resource in terms of information, human resource and finance. They can only get this through network of entrepreneurs who are in fact the university instructors, advisors and their social networks (Fan-qi, Xiang-zhi, & Li, 2011). People should also be aware as not to let the shadow of money to affect the long term profit.
Similarly entrepreneurs must be able to justify an idea with an opportunity. Not all ideas are opportunity and so understanding the potential of the idea to generate profit and how much of investment and time is required would be important. Most of the time people are so emotionally attached to their idea that they do not clearly see that the idea is a dead end but still keep investing in it.
Team is a part of the trio that is vital for the success. It is in itself a balancing act. Team can either make or break the business. Even in my experience I have seen a lot of business that have stopped due to ineffective team dynamics and ideas. Three friends of mine in my locality, purchased a restaurant and with such zeal initiated a new venture. Two were working and covered the early morning and late night shift while one covered the whole day. Their discussion was to pay the full day working partner remuneration as the other two were holding full time jobs. Around 8 months down, they had a falling out as the full day worker felt he was the only one working and giving time. The income was satisfactory but could not be increased and the remaining partners did not have confidence to leave their job. As the team broke so did the business.
These three components require trust, communication, leadership and rules to function. Without these the three components will also not function well. Timmons model was initially written as a thesis paper and over the year has been improved. The basic trio are still the same but the inter connection and relationship between them have been improved.
Fan-qi, Z., Xiang-zhi, B., & Li, S. (2011). Study on entrepreneurial process model for SIFE student team based on Timmons model. Journal of Chinese Entrepreneurship; Bingley , 204-214.
Spinelli, Jr., S., & Adams, R. (n.d.). New Venture Creation . New York City: McGraw-Hill Irwin.
The Timmons model is used as a guiding framework to explore issues related to the entrepreneurial process by understanding, analyzing, identifying and evaluating the potential venture (Spinelli, et al., 2007). This model considers opportunities, teams and resources as three important factors for entrepreneurship and the success of an entrepreneur depends on his/her ability to balance these factors. The identification, evaluation and exploitation of opportunities need to be balanced by resource acquisition and team development to make an entrepreneur project successful (Yadav, 2015).
Opportunity identification and evaluation is the heart of entrepreneurial process which is influenced by existing market knowledge, experience in serving markets and understanding of customers’ needs and wants. But it is important to understand that good ideas are not necessarily good opportunities. Opportunities need to be attractive, timely and durable that can be used to generate profit by offering something of value to the customers (Spinelli, et al., 2007). For example: Someone may have the idea to produce electric vehicle but it can be considered as opportunity only if there is need for the product backed up by economic and emotional values it carries and growth potential.
Once the opportunities are identified, the entrepreneur need to make sure that it has the resources available to convert the available opportunity into profitable venture. However it is not necessary that we need to own every resources that are to be used in the process. If we can convince people that our idea will work, the financial resources can be acquired through networks or angel investors. In addition, private equity can also be used for acquiring resources. The entrepreneur should pay attention on developing valuable, inimitable, durable and value capturing resources that can help the company gain competitive advantage in long run (Spinelli, et al., 2007).
As an entrepreneur, one has to look over multiple things and doing everything alone is not possible. So, there should be a team working towards achieving the same goal. The selection of team members is greatly affected by the social networking of the leader. A good team can turn an average idea into brilliant business while incompetent team can lead to failure of the best business ideas. If the team members are willing to learn from one another, resilient, deal with adversity, exhibit dependability and honesty and build inclusive organizational culture, the identification of opportunities and resource acquisition become easier (Spinelli, et al., 2007).
Thus, as an entrepreneur one needs to focus on these forces to improve chances for success. The leadership of the entrepreneur plays major role on identification of opportunities, resource acquisition and team building. S/he is the one responsible for maintaining fit and balance among these variables to attract key players in the team and redefine risk-return equation (Spinelli & Adams).
Spinelli, S., & Adams, R. J. (n.d.). New Venture Creation: Entrepreneurship for the 21st Century (Nineth ed.). Irwin: McGraw Hill Education.
Spinelli, S., Neck, H. M., Timmons, J. A., Minniti, M., Zacharakis, A., Rice, M. P., & Habbershon, T. G. (2007). Entrepreneurship: The Engine of Growth (First ed.). United States: Praeger Publishers. Retrieved from https://books.google.co.uk/books?id=zw-4o0rKZkAC&pg=RA1-PA13&lpg=RA1-&hl=en#v=onepage&q&f=false
Yadav, M. P. (2015, January). Model of Entrepreneurial Success: A Review and Research Agenda. Journal of Advanced Academic Research (JAAR), 2 , 40-69. Retrieved from https://www.nepjol.info/index.php/JAAR/article/viewFile/16596/13445