the foundations of entrepreneurship
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The Foundations of Entrepreneurship. The World of the Entrepreneur. Every year in the U.S., entrepreneurs launch 850,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. - PowerPoint PPT PresentationTRANSCRIPT
The Foundations of
Entrepreneurship
The Foundations of
Entrepreneurship
2Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
The World of the The World of the EntrepreneurEntrepreneur
Every year in the U.S., Every year in the U.S., entrepreneurs launch 850,000 entrepreneurs launch 850,000 new businesses.new businesses.
Entrepreneurial spirit - the most Entrepreneurial spirit - the most significant economic development significant economic development in recent history.in recent history.
GEM study: 11.3 percent of adult GEM study: 11.3 percent of adult population in the U.S. is actively population in the U.S. is actively involved in trying to start a new involved in trying to start a new business. business.
Entrepreneurial Activity Across the GlobePersons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity
0.05.0
10.015.020.025.030.035.040.045.0
Arg
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ing
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ain
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ited
Un
ited
Country
To
tal
En
trep
ren
euri
al
Act
ivit
y (T
EA
) In
dex
TEA Index
Global TEAAverage
Source: 2004 Global Entrepreneurship Monitor.
4Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
The World of the The World of the EntrepreneurEntrepreneur
GEM studyGEM study Globally 9.4 percent of adults are Globally 9.4 percent of adults are
actively engaged in trying to start a actively engaged in trying to start a business.business.
Men are twice as likely as women to Men are twice as likely as women to start a business (exactly the start a business (exactly the oppositeopposite trend in the U.S., however).trend in the U.S., however).
Nearly one-third of global Nearly one-third of global entrepreneurs are between the ages entrepreneurs are between the ages of 25 and 44. of 25 and 44.
5Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
What Is an What Is an Entrepreneur?Entrepreneur?
One who creates a new business One who creates a new business in the face of risk and in the face of risk and uncertainty for the purpose of uncertainty for the purpose of achieving profit and growth by achieving profit and growth by identifying opportunities and identifying opportunities and assembling the necessary assembling the necessary resources to capitalize on them. resources to capitalize on them.
6Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Characteristics of Characteristics of EntrepreneursEntrepreneurs
Desire for responsibilityDesire for responsibility Preference for moderate risk – risk Preference for moderate risk – risk
eliminatorseliminators Confidence in their ability to Confidence in their ability to
succeedsucceed Desire for immediate feedbackDesire for immediate feedback High level of energyHigh level of energy Future orientation – serial Future orientation – serial
entrepreneursentrepreneurs Skilled at organizingSkilled at organizing Value achievement over moneyValue achievement over money
7Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
EntrepreneurshipEntrepreneurship
One characteristic of One characteristic of entrepreneurs stands out:entrepreneurs stands out:
Diversity!Diversity! AnyoneAnyone – regardless of age, race, – regardless of age, race,
gender, color, national origin, or gender, color, national origin, or any other characteristic – can any other characteristic – can become an entrepreneur become an entrepreneur (although not everyone should). (although not everyone should).
8Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Benefits of Benefits of EntrepreneurshipEntrepreneurship
The opportunity to:The opportunity to: Create your own destinyCreate your own destiny Make a differenceMake a difference Reach your full potentialReach your full potential Reap impressive profitsReap impressive profits Contribute to society and to be Contribute to society and to be
recognized for your effortsrecognized for your efforts Do what you enjoy and to have Do what you enjoy and to have
fun at it fun at it
9Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Drawbacks of Drawbacks of EntrepreneurshipEntrepreneurship
Uncertainty of incomeUncertainty of income Risk of losing your entire Risk of losing your entire
investmentinvestment Long hours and hard workLong hours and hard work
Small Business Owners' Work WeekNumber of Hours Worked per Week
Less than 30 hours11%
30 to 40 hours24%
41 to 50 hours28%
51 to 60 hours20%
More than 60 hours17%
Source: Adapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report, 2002, p. 35.
11Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Drawbacks of Drawbacks of EntrepreneurshipEntrepreneurship
Uncertainty of incomeUncertainty of income Risk of losing your entire investmentRisk of losing your entire investment Long hours and hard workLong hours and hard work
Lower quality of life until the Lower quality of life until the business gets establishedbusiness gets established
Entrepreneurs' Age at Business Formation
18 - 2412.0%
25 - 3432.3%
35 - 4430.6%
45 - 5417.4%
55 - 646.7%
Over 651.0%
Source: 2004 Global Entrepreneurship Monitor.
13Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Drawbacks of Drawbacks of EntrepreneurshipEntrepreneurship
Uncertainty of incomeUncertainty of income Risk of losing your entire investmentRisk of losing your entire investment Long hours and hard workLong hours and hard work Lower quality of life until the business gets Lower quality of life until the business gets
establishedestablished
High levels of stressHigh levels of stress Complete responsibilityComplete responsibility DiscouragementDiscouragement
14Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire
Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economic Demographic and economic
factorsfactors Shift to a service economyShift to a service economy Technological advancementsTechnological advancements Independent lifestyleIndependent lifestyle E-commerce and the World E-commerce and the World
Wide WebWide Web
$94.0
$117.7
$142.5
$169.5
$199.3
$232.1
$-
$50.0
$100.0
$150.0
$200.0
$250.0
Re
ve
nu
es
(in
Bill
ion
s)
2003 2004 2005 2006 2007 2008
Year
U.S. Retail E-Commerce Revenues
Source: eMarketer, 2005.
16Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire
Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economic Demographic and economic
factorsfactors Shift to a service economyShift to a service economy Technological advancementsTechnological advancements Independent lifestylesIndependent lifestyles E-commerce and the World E-commerce and the World
Wide WebWide Web International International
opportunitiesopportunities
17Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
The Cultural The Cultural Diversity of Diversity of
EntrepreneurshipEntrepreneurship Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs
Why Women Start Businesses
Gain control over my schedule
46%
Saw a market opportunity and
decided to pursue it
24%
Frustrated with "glass ceiling" at
big companies23%
Other reasons7%
Source: Center for Women’s Business Research, 2004.
19Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
The Cultural The Cultural Diversity of Diversity of
EntrepreneurshipEntrepreneurship Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs Minority-owned enterprisesMinority-owned enterprises Immigrant entrepreneursImmigrant entrepreneurs Part-time entrepreneursPart-time entrepreneurs
20Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
The Cultural The Cultural Diversity of Diversity of
EntrepreneurshipEntrepreneurship Home-based businessesHome-based businesses Family businessesFamily businesses CopreneursCopreneurs Corporate castoffsCorporate castoffs Corporate dropoutsCorporate dropouts
Small Business by Industry
Service39.2%
Retail20.5%
Construction11.8%
Wholesale7.4%
Manufacturing5.8%
Finance8.0%
Other7.3%
Source: U.S. Small Business Administration, 2005.
22Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Small Small Businesses...Businesses...
Make up 99.7 percent of all Make up 99.7 percent of all businesses in the U.S.businesses in the U.S.
Employ 51 percent of the Employ 51 percent of the nation’s private sector nation’s private sector workforce.workforce.
Create more jobs than big Create more jobs than big businesses.businesses.
Are leaders in offering training Are leaders in offering training and advancement opportunities and advancement opportunities to workers.to workers.
23Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Produce 51 percent of the Produce 51 percent of the nation’s private GDP.nation’s private GDP.
Account for 47 percent of Account for 47 percent of business sales.business sales.
Create 13X more innovations Create 13X more innovations per employee than large per employee than large companies.companies. Zipper, FM radio, laser, air Zipper, FM radio, laser, air
conditioning, escalator, light conditioning, escalator, light bulb, personal computer, bulb, personal computer, automatic transmission, and automatic transmission, and many more!many more!
Small Small Businesses...Businesses...
100%
81%
65%
54%46%
40%36%
32% 29% 27% 25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% o
f S
mal
l F
irm
s S
urv
ivin
g
New 1 2 3 4 5 6 7 8 9 10
# of Years in Business
Small Business Survival Rate
Source: NFIB Business Policy Guide, 2003, p. 16.
25Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Ten Deadly Mistakes of Ten Deadly Mistakes of EntrepreneurshipEntrepreneurship
1.1. Management mistakesManagement mistakes
2.2. Lack of experienceLack of experience
3.3. Poor financial controlPoor financial control
4.4. Weak marketing effortsWeak marketing efforts
5.5. Failure to develop a strategic Failure to develop a strategic planplan
26Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Ten Deadly Mistakes of Ten Deadly Mistakes of EntrepreneurshipEntrepreneurship
6.6. Uncontrolled growthUncontrolled growth
7.7. Poor locationPoor location
8.8. Improper inventory controlImproper inventory control
9.9. Incorrect pricingIncorrect pricing
10.10. Inability to make the Inability to make the “entrepreneurial transition”“entrepreneurial transition”
27Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Putting Failure into Putting Failure into PerspectivePerspective
Entrepreneurs are Entrepreneurs are notnot paralyzed by the prospect of paralyzed by the prospect of failure.failure.
Failure – a natural part of the Failure – a natural part of the creative process. creative process.
Successful entrepreneurs learn Successful entrepreneurs learn to fail to fail intelligentlyintelligently..
28Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing
Avoiding the Avoiding the Pitfalls of Pitfalls of
Small Business Small Business FailureFailure
Know your business in depthKnow your business in depth Develop a solid business planDevelop a solid business plan Manage financial resourcesManage financial resources Understand financial Understand financial
statementsstatements Learn to manage people Learn to manage people
effectivelyeffectively Keep in tune with yourselfKeep in tune with yourself