ENTREPRENEURSHIPENTREPRENEURSHIP

CHAPTER 1:CHAPTER 1:The Foundations of The Foundations of EntrepreneurshipEntrepreneurship

Zimmerer, T. W and Scarborough, Zimmerer, T. W and Scarborough, N. M. N. M. Essentials of Essentials of

Entrepreneurship and Small Entrepreneurship and Small Business Management (3rd ed.)Business Management (3rd ed.)

Prentice Hall © 2002.Prentice Hall © 2002.

The World of the EntrepreneurThe World of the Entrepreneur

A new business is born every 11 seconds in the U.S.

Study of influential Americans – the defining issue of the 21st Century: Entrepreneurship!

One of 12 Americans is actively involved in trying to start a new business.

Entrepreneurial Activity Across Entrepreneurial Activity Across the Globethe Globe

1.4%

1.6%

1.8%

2.0%

2.2%

3.3%

3.4%

5.4%

6.8%

8.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Percent

Finland

J apan

France

Denmark

Germany

Great Britain

Italy

Israel

Canada

United States

Co

un

try

Percentage of Adult Population Working to Start a New Business

What is an Entrepreneur?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.

Characteristics of EntrepreneursCharacteristics of Entrepreneurs

Desire for responsibility

Preference for moderate risk

Confidence in their ability to succeed

Desire for immediate feedback

High level of energy

Future orientation

Skilled at organizing

Value achievement over money

Benefits of Small Business Benefits of Small Business OwnershipOwnership

The opportunity to:

create your own destiny

make a difference

reach your full potential

reap unlimited profits

contribute to society and to be recognized for your efforts

do what you enjoy and to have fun at it

Drawbacks of Small Business Drawbacks of Small Business OwnershipOwnership

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

Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire

Entrepreneurs as heroes

Entrepreneurial education

Demographic and economic factors

Shift to a service economy

Technological advancements

Independent lifestyles

E-Commerce and the World Wide Web

International opportunities

The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship

Young Entrepreneurs

Women

Minority-owned enterprises

Immigrant entrepreneurs

Part-time entrepreneurs

Home-based businesses

Family businesses

Copreneurs

Corporate castoffs

Corporate dropouts

Small Business by Industry

Services39.2%

Retail20.5%

Wholesale7.4%

Manufacturing5.8%

Construction11.8%

Financial8.0%

Other7.3%

Small Businesses...Small Businesses...

make up 99% of all the businesses in the U.S.

employ 53% of the nation's private sector workforce.

create more jobs than big businesses.

are leaders in offering training and advancement opportunities to workers.

Small Businesses...Small Businesses...

produce 51% of the nation's private GDP.

account for 47% of business sales.

create 4X more innovations per R & D dollar spent than medium-sized firms and 24X as many as large companies.

0%

20%

40%

60%

80%

100%

% o

f Sm

all F

irm

s S

urv

ivin

g

New 2 4 6 8 10

# of Years in Business

Small Business Survival Rate

The Small Business The Small Business Failure RecordFailure Record

24% of new businesses fail after two years.

51% fail within four years.

63% fail within six years.

Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

Management incompetence

Lack of experience

Poor financial control

Failure to develop a strategic plan

Uncontrolled growth

Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

Poor location

Improper inventory control

Incorrect pricing

Inability to make the “entrepreneurial transition”

Avoiding the Pitfalls of Avoiding the Pitfalls of Small Business FailureSmall Business Failure

Know your business in depth

Develop a solid business plan

Manage financial resources

Understand financial statements

Learn to manage people effectively

Keep in tune with yourself