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The Nature and

Importance ofEntrepreneurs

Chapter 1

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Nature and Development of

Entrepreneurship

French word

Means between-taker or go-

betweenIndividual who takes risks and

starts something new

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To include all types of entrepreneurial

behavior the following definition:

Entrepreneurship is the process of

creating something new with value

by devoting the necessary time and

effort, assuming the accompanyingfinancial, psychic, and social risks,

and receiving the resulting

rewards IN monetary TERMS,

personal satisfaction andindependence.

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DEFINITION OF

ENTREPRENEUR TODAY

- A concise, universally accepted definitionhas not yet emerged

- Almost all the definitions includes:(1) initiative taking,(2) the organizing and reorganizing of

social and economic mechanisms

to turn resources and situations topractical account,

(3) the acceptance of risk or failure.

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Who is an Entrepreneur

recognise opportunities where others

see chaos or confusion

highly creative and innovative

possess business know-how ,networks and general managementskills

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Who is an Entrepreneur ..

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T

The entrepreneur

The opportunity-spotter The project championThe inventor

The person who realizes the

opportunity and is determined to

engage it

The person who makes

things happen

The originator of

the product or

concept

The idea

Identifying

theopportunity

Matching

the idea

to the

opportunity

Exploiting

the

opportunityto build

something

of value

Source: Bolton & Thompson

Entrepreneurs: Talent, Temperament, Technique

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Entrepreneur as an innovator:an integral part of entrepreneurship

the act of introducing something newthe ability to create and conceptualize

to understand all the forces at work in theenvironment

the history from Egyptians who designed andbuilt great pyramids out of stones blocksweighing many tons each to the Apollo Lunar

module to laser beamsTools have changed with advances in science

and technology but the ability to innovate hasbeen present in every civilization

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Myths aboutEntrepreneurship

The Lone Cowboy Myth.

The Experience Myth.

The Im Only in it for theMoney Myth.

The Entrepreneurs areGamblers Myth.

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Myths aboutEntrepreneurship

The Entrepreneurs Dont Haveto Worry about Numbers Myth.

The All You Need is MoneyMyth.

The Ive Got a Secret Myth.

The IPO Myth.

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The Entrepreneurial Process The process of starting a new venture is embodied in the

entrepreneurial process.

An entrepreneur must find, evaluate, and develop anopportunity by overcoming the forces that resist thecreation of something new.

The process has four distinct phases:

(1) identification and evaluation of the opportunity

(2) development of the business plan (3) determination of the required resources

(4) management of the resulting enterprise.

Although these phases proceed progressively, no one stage

is dealt with in isolation or is totally completed before workon other phases occurs.

For example, to successfully identify and evaluate anopportunity (phase 1), an entrepreneur must have in mindthe type of business desired (phase 4).

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Decisions for a potential

Entrepreneur

Form New EnterpriseDesirable1. Cultural2. Sub-cultural3. Family

4. Teachers5. PeersPossible1. Government2. Background

3. Marketing4. Financing5. Role models

Change from present lifestyleWork environment

Disruption

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Possibility of new venture

formation:

Several factors contribute to thecreation of a new venture.

1. The Government

2. Formal education3. Previous business experience

4. Marketing know how

5. A role model

6. Financial resources

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Types of start - ups

Three categories

1. Life style firm

2. Foundation firm3. High potential venture

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1. Lifestyle Firm:

Privately held Modest growth

Limited money devoted to R&D

Grow after several years to 30 or 40employees

Annual revenues of about $2 million

Exists primarily to support owners Little opportunity for significant

growth and expansion

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2. Foundation Company:

Created for R&D Grows in 5 to 10 years from 40 to

400 employees

$10 million to $20 million in yearlyrevenues

Rarely goes public Draws the interest of private

investors only

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3. High Potential Venture:

Receives the greatest investment,interest and publicity

Rapid growth

After 5 to 10 years could employabout 500 employees

Revenues are $20 million to $30million

Also called Gazelles

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Role of entrepreneurship in

Economic Development It involves initiating and constituting

change in the structure if business andsociety (i-e innovation).

Innovation

Developing new stimulating investment

products (& services) interest in the new venture

for the market

Expanding the capacity Utilizing new capacity

for growth and output

(supply side) (demand side)

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Government as an innovator Govt. is one conduit for commercializing

the results of the synthesis of social needand technology. This is frequently calledtechnology transfer.

Though the govt. has the financialresources to transfer technology but itfaces the following problems:

It lacks business skills Bureaucracy and red tape

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Intrapreneurship Entrepreneurship with in an existing

organization It bridges the gap between science and

the marketplace.

Problems:- Bureaucratic structure Emphasis on short term profits

Highly structured org inhibit creativity

In the present era of hyper competitionorganizations need to develop theintrapreneurial spirit.

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Overall objectives for a Course

in Entrepreneurship Understand the role of new and smaller

firms in the economy. Understand the relative strengths and

weaknesses of different types ofenterprises.

Know the general characteristics of anentrepreneurial process.

Assess the students own entrepreneurial

skills. Understand the entrepreneurial process

and the product planning and

development process

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Know alternative methods for identifying

and evaluating business opportunities andthe factors that support and inhibitcreativity

Develop an ability to form, organize andwork in interdisciplinary teams.

Know the general correlates of successand failure in innovation and new venture

creation. Know the generic entry strategies for new

venture creation.

Understand the aspects of creating andpresenting a new venture business plan.

Know how to identify, evaluate and obtain

resources.

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Know the essentials of :

Marketing planning

Financial planning

Operations planning

Organization planning Venture launch planning

Know how to manage and grow a new

venture. Know the managerial challenges and

demands of a new venture launch.

Understand the role of entrepreneurship inexisting organizations.

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Types of Skills required in

Entrepreneurship Technical skills

Writing

Oral communication

Monitoring environment

Technical business management

Technology Interpersonal

Listening

Ability to organize Network building

Management style

Coaching

Being a team player

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Business management skills

Planning and goal setting Decision making

Human relations

Marketing

Finance

Accounting

Management

Control Negotiation

Venture launch

Managing growth Personal entrepreneurial skills

Inner control

Risk taker

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Innovative

Chang oriented

Persistent

Visionary leader

Ability to manage change