chapter 1 - The Foundations of Entrepreneurship

The Foundations of Entrepreneurship

1. The Foundations of Entrepreneurship Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall CHAPTER 1

2. COURSE OBJECTIVES By the end of this course students will be able to: Understand the foundations of entrepreneurship Design a competitive Business Model and build/implement a Strategic Plan Understand the different forms of Business ownerships Build and properly implement a Marketing Plan Understand the HR and financial aspects related to entrepreneurship Explain the differences among creativity, innovation and entrepreneurship Explain why and how a small business must create a competitive advantage in the market 1 - 2 Ch. 1: The Foundations of Entrepreneurship

3. COURSE DESCRIPTION The course explores the concept and practice of entrepreneurship and its relationship to progress, with a focus on creating and growing global ventures. It analyses the determinants of innovation and develops the skills change managers need to analyze opportunities and stimulate more entrepreneurship, innovation, enterprise, and initiative from their employees. It also helps students to understand concepts of going to market and competitive sustainability. 1 - 3 Ch. 1: The Foundations of Entrepreneurship

4. 1 - 4 Ch. 1: The Foundations of Entrepreneurship The World of the Entrepreneur Every year U.S. entrepreneurs launch 550,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. GEM study: 18.7% of adult population in the U.S. is actively involved in trying to start a new business.

5. Ch. 1: The Foundations of Entrepreneurship

6. Ch. 1: The Foundations of Entrepreneurship The World of the Entrepreneur Global Entrepreneurship Monitor (GEM) study reports: Men are twice as likely to start a business as women. Most entrepreneurs turn to family members and friends for capital. Entrepreneurs are most likely to launch businesses when they are between the ages of 25 and 44. 1 - 6

7. Ch. 1: The Foundations of Entrepreneurship What is an Entrepreneur? One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. 1 - 7

8. Ch. 1: The Foundations of Entrepreneurship Characteristics of Entrepreneurs Desire for responsibility Preference for moderate levels of risk – risk eliminators Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation – serial entrepreneurs Skilled at organizing Value achievement over money 1 - 8

9. Ch. 1: The Foundations of Entrepreneurship Entrepreneurship One characteristic of entrepreneurs stands out: Diversity! Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). 1 - 9

10. Ch. 1: The Foundations of Entrepreneurship Benefits of Entrepreneurship The opportunity to: Create your own destiny Make a difference Reach your full potential Reap impressive profits Contribute to society and to be recognized for your efforts Do what you enjoy and to have fun at it 1 - 10

11. Ch. 1: The Foundations of Entrepreneurship Drawbacks of Entrepreneurship Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established High levels of stress Complete responsibility Discouragement 1 - 11

12. Ch. 1: The Foundations of Entrepreneurship Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyle E-commerce and the Internet 1 - 12

13. Ch. 1: The Foundations of Entrepreneurship FIGURE 1.3 U.S. Retail E-Commerce Revenues Source: Based on Forrester Research, 2008.

14. Ch. 1: The Foundations of Entrepreneurship Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyles E-commerce and the Internet International opportunities (continued) 1 - 14

15. Ch. 1: The Foundations of Entrepreneurship The Cultural Diversity of Entrepreneurship Young entrepreneurs 1 - 15

16. Ch. 1: The Foundations of Entrepreneurship The Cultural Diversity of Entrepreneurship Young entrepreneurs Women entrepreneurs (continued) 1 - 17

17. Ch. 1: The Foundations of Entrepreneurship FIGURE 1.4 Why Women Start Businesses Source: U.S. Small Business Administration, 2007.

18. Ch. 1: The Foundations of Entrepreneurship The Cultural Diversity of Entrepreneurship Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs (continued) 1 - 19

19. Ch. 1: The Foundations of Entrepreneurship The Cultural Diversity of Entrepreneurship Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts Social entrepreneurs Retiring Baby Boomers (continued) 1 - 20

20. Ch. 1: The Foundations of Entrepreneurship Small Businesses ... Make up 99.7% of the 30.14 million businesses in the U.S. Employ 51% of the nation’s private sector workforce. Create more jobs than big businesses. 60% to 80% of net new jobs over the last decade Are leaders in offering training and advancement opportunities to workers. 1 - 21

21. Ch. 1: The Foundations of Entrepreneurship Produce 51% of the nation’s private GDP. Account for 47% of business sales. Create 13 times more patents per employees than large companies. Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more! Small Businesses ... (continued) 1 - 22

22. Ch. 1: The Foundations of Entrepreneurship FIGURE 1.5 Small Business by Industry Source: U.S. Small Business Administration, 2007.

23. Ch. 1: The Foundations of Entrepreneurship Ten Deadly Mistakes of Entrepreneurship Management mistakes Lack of experience Poor financial control Weak marketing efforts Failure to develop a strategic plan 1 - 24

24. Ch. 1: The Foundations of Entrepreneurship Ten Deadly Mistakes of Entrepreneurship Uncontrolled growth Poor location Improper inventory control Incorrect pricing Inability to make the “entrepreneurial transition” 1 - 25

25. Ch. 1: The Foundations of Entrepreneurship Putting Failure Into Perspective Entrepreneurs are not paralyzed by the prospect of failure. Failure – a natural part of the creative process. Successful entrepreneurs learn to fail intelligently . 1 - 26

26. Ch. 1: The Foundations of Entrepreneurship Avoiding the Pitfalls of Small Business Failure Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Set your business apart from the competition Maintain a positive attitude 1 - 27

27. Ch. 1: The Foundations of Entrepreneurship Conclusion Entrepreneurs: Are an important part of the free enterprise system Are a diverse and talented group of people Represent a cross-section of society as a whole Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience

28. Ch. 1: The Foundations of Entrepreneurship What is Ahead? Section 1: The Challenge of Entrepreneurship Section 2: Building a Business Plan: Beginning Considerations Section 3: Building a Business Plan: Marketing Considerations Section 4: Building a Business Plan: Financial Matters Section 5: Putting the Business Plan to Work: Making the New Venture a Success

29. Ch. 1: The Foundations of Entrepreneurship All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. 1 - 30