2005_entrepreneurshipandecommerce_muske_entre

8/3/2019 2005_entrepreneurshipandecommerce_muske_entre

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EntrepreneurshipEntrepreneurship


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Glenn MuskeGlenn Muske

Micro Business SpecialistMicro Business Specialist

Oklahoma State UniversityOklahoma State University


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OutlineOutline

EntrepreneurshipEntrepreneurship MythsMyths DefinedDefined Opportunity, Risk and RewardOpportunity, Risk and Reward What the social sciences tell usWhat the social sciences tell us

Entrepreneurs and the communityEntrepreneurs and the community Entrepreneurs vs. small business owners &Entrepreneurs vs. small business owners &

othersothers Role of entrepreneurs in the local economyRole of entrepreneurs in the local economy

Building an entrepreneurial communityBuilding an entrepreneurial community Entrepreneurial examplesEntrepreneurial examples

Special entrepreneurial situationsSpecial entrepreneurial situations

Final thoughtsFinal thoughts


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Personal PassionPersonal PassionPersonal PassionPersonal Passion

The freedom to pursue personal passionThe freedom to pursue personal passionleads many to start businesses.leads many to start businesses.

Nothing great in the world has beenNothing great in the world has beenaccomplished without passion.accomplished without passion.

George Wilhelm Friedrich HegelGeorge Wilhelm Friedrich Hegel

German Philosopher (1770German Philosopher (1770--1831)1831)


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Questions often askedQuestions often asked

but arent the most importantbut arent the most important

1.1. What can I do? What businessWhat can I do? What businessshould I start?should I start?

2.2. Can I get a grant?Can I get a grant?

3.3. What business will earn lots ofWhat business will earn lots ofmoney?money?

4.4.

What about eWhat about e--commerce?commerce?


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Questions often not askedQuestions often not asked

but should be!!but should be!!1.1. Am I an entrepreneur?Am I an entrepreneur?

2.2. Is there a market?Is there a market?

3.3. Can I profitably tap that market?Can I profitably tap that market?

4.4. How do I get to market?How do I get to market?-- EE--commerce is just a means to marketcommerce is just a means to market


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The Myths ofThe Myths of



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Myth #1Myth #1

Get Rich Quick!Get Rich Quick!

Truth is

Truth is Life as an entrepreneur is not about money.Life as an entrepreneur is not about money.

Success rarely happens overnight.Success rarely happens overnight.

It's about what you want to do with your life.It's about what you want to do with your life.


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Myth # 2Myth # 2

You must be born an entrepreneurYou must be born an entrepreneur

(trait theory)(trait theory)

Truth is:Truth is:

some of the most successful entrepreneurs aresome of the most successful entrepreneurs arethe most unlikely.the most unlikely.

It is a lifestyle choice, not an accident.It is a lifestyle choice, not an accident.


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Myth # 3Myth # 3

You must be at the right place at theYou must be at the right place at theright timeright time

(environment theory)(environment theory)

Truth is:Truth is:

successful entrepreneurs operate whatever thesuccessful entrepreneurs operate whatever the

macroeconomic and structural factors aremacroeconomic and structural factors are


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Myth # 4Myth # 4

"I'll have all this free time""I'll have all this free time"

Truth is entrepreneurs work manyTruth is entrepreneurs work manyhourshours

advantages are:advantages are:

control of timecontrol of time

variety of tasksvariety of tasks


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Myth # 5Myth # 5

It get easier.It get easier.

Truth is it gets more challengingTruth is it gets more challengingmust work faster, smarter & longermust work faster, smarter & longer

must enjoy the battlemust enjoy the battle


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Myth # 6Myth # 6

If you build it, they will come.If you build it, they will come.

Truth is building your business is just the

Truth is building your business is just thestart.start.

Next is the real work:Next is the real work:

planningplanning

timingtiming strategizing and more.strategizing and more.


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Myth # 7Myth # 7

It's all about the bottom line.It's all about the bottom line.

Truth is that the bottom line is necessary

Truth is that the bottom line is necessarybut not sufficientbut not sufficient

purpose and meaning to the businesspurpose and meaning to the business

inspire customers and employeesinspire customers and employees


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Myth # 8Myth # 8

Entrepreneurs are risk takersEntrepreneurs are risk takers

TruthTruth Entrepreneurs are calculatorsEntrepreneurs are calculatorsStudies show entrepreneurs are onlyStudies show entrepreneurs are only

moderate risk takersmoderate risk takers


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Myth # 9Myth # 9

You have to have a great ideaYou have to have a great idea

TruthTruthYour idea must be goodYour idea must be good

Your idea must be doableYour idea must be doable

Your idea must be wanted or needed

Your idea must be wanted or needed

Your idea must be priced rightYour idea must be priced right


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Myth # 10Myth # 10

It takes a lot of moneyIt takes a lot of money

TruthTruth Over 50% start for underOver 50% start for under$10,000$10,000

Also look forAlso look for

Certain business typesCertain business types

TurnTurn--around situationsaround situations

Possibility of using other peoples moneyPossibility of using other peoples money


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Entrepreneurs goal isEntrepreneurs goal is

By finding new solutions toBy finding new solutions toexisting problemsexisting problems

Or by connecting existingOr by connecting existing

solutions to unmet needs or newsolutions to unmet needs or newopportunitiesopportunities

SOURCE: Lichtenstein & Lyons, Incubating NewSOURC

E: Lichtenstein & Lyons, Incubating NewEnterprises: A Guide to Successful Practice, 1996Enterprises: A Guide to Successful Practice, 1996

to create or capitalize on new economic

opportunities through innovation


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Entrepreneurship Definitions:Entrepreneurship Definitions:

1.1. Creation of an innovative economicCreation of an innovative economicorganization for the purpose of gain ororganization for the purpose of gain orgrowth under conditions of risk andgrowth under conditions of risk and

uncertaintyuncertainty2.2. SelfSelf--employment through businessemployment through business

ownership that includes significantownership that includes significantelements of risk, control, and rewardelements of risk, control, and reward

(Coleman Foundation)(Coleman Foundation)

3.3. Organizing a business venture assumingOrganizing a business venture assuminga certain amount of risk to make a profita certain amount of risk to make a profit(Burns and Bolton)(Burns and Bolton)


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More Definitions:More Definitions:

Profits from bearing uncertainty andProfits from bearing uncertainty andriskrisk

Purposeful activity to initiate andPurposeful activity to initiate anddevelop a profitdevelop a profit--oriented businessoriented business

Moderate risk takingModerate risk taking

Creation of new organizationsCreation of new organizationsThe pursuit of opportunity withoutThe pursuit of opportunity without

regard to resources currentlyregard to resources currentlycontrolledcontrolled


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Entrepreneurship:Entrepreneurship:

Basic ElementsBasic Elements

1.1. Opportunity recognitionOpportunity recognition

2.2. Creation and/or innovationCreation and/or innovation

3.3. Resource gathering and theResource gathering and the

founding of an economicfounding of an economic

organizationorganization

4.4. Desiring the chance for gain whileDesiring the chance for gain while

accepting risk and uncertaintyaccepting risk and uncertainty


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Other EntrepreneurialOther Entrepreneurial

MotivatorsMotivators


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?? Tell a time when you?? Tell a time when you

were entrepreneurial ??were entrepreneurial ??Were you successful??Were you successful??


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Opportunity Recognition


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An EntrepreneurialAn Entrepreneurial

Opportunity defined:Opportunity defined:

A situation in which changes in whichA situation in which changes in which

changes in technology, or economic,changes in technology, or economic,political, social, and demographicpolitical, social, and demographicconditions generate the potential toconditions generate the potential tocreate something new or to remarketcreate something new or to remarket

something existing.something existing.


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Entrepreneurial OpportunityEntrepreneurial Opportunity

GridGrid

Product/Service

Existing New

Existing

New

Market

Market

Penetration

Diversification

New Offering

Development

Market

Development


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What are opportunities?What are opportunities?

Small stepsSmall steps

Little jumpsLittle jumps

Huge leapsHuge leaps


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"Don't be afraid to take a bigstep if one is indicated; youcan't cross a chasm in two

small jumps."

David Lloyd George


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Opportunities can be...Opportunities can be...

Technical orTechnical orscientificscientific

Political andPolitical and

regulatoryregulatory Process orProcess or

production methodproduction method

OrganizingOrganizing

New market andNew market andmarketingmarketing

PersonnelPersonnel

Social &Social &demographicdemographicchangeschanges

New raw materialNew raw material

ProductProductobsolescenceobsolescence

CorporateCorporate

stagnationstagnation OneOne--productproduct

vulnerabilityvulnerability

ChanceChance


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Think like a..Think like a..

ManagerManager Problem solvingProblem solving

EntrepreneurEntrepreneur OpportunityOpportunityExploitationExploitation


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OpportunitiesOpportunities

ExternalExternal

Unexpected eventUnexpected event

T

echnology changes and convergenceT

echnology changes and convergenceChange in methodsChange in methods

Demographics/marketDemographics/market size,size,

Changes in competitionChanges in competition

InternalInternal

Other methodsOther methods


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The OpportunityMythThe OpportunityMyth

AnAn IdeaIdea

does not equal andoes not equal an

OpportunityOpportunity


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Creation & Innovation


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CreativityCreativity

Imagination is more Imagination is moreimportant than knowledgeimportant than knowledge-- EinsteinEinstein


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The Creative ProcessThe Creative ProcessPlanning & definitionPlanning & definition

focus on building the RIGHTfocus on building the RIGHT

productproductDesign, demonstration &Design, demonstration &

customer supportcustomer support

focus on building the productfocus on building the productRIGHTRIGHT


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Customer requirementCustomer requirement

Find a consumerProductTechnology

NOT

Product solution


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Basic questionsBasic questions

What is the customers need?What is the customers need?

How large is the opportunity?How large is the opportunity?How likely is it to happen?How likely is it to happen?

What is the market timing?What is the market timing?

Is it aligned with ourIs it aligned with our

organizational strengths?organizational strengths?


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Time is money!

Time is money!

Delays give others time toDelays give others time todevelop the same product.develop the same product.


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Reduce product developmentReduce product development

time by 1/3 & you will triple profitstime by 1/3 & you will triple profits

& growth.& growth.


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Resource GatheringResource Gathering

ResourcedResourced--based Theorybased Theory

ofEntrepreneurshipof

Entrepreneurship


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Dimensions of EntrepreneurshipDimensions of Entrepreneurship

NewVentureCreation

Individual Characteristics

Constraints in theEnvironment

OrganizationEnvironment


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ResourceResource

any thing or quality that is usefulany thing or quality that is useful

used to develop sustainableused to develop sustainable

competitive advantagecompetitive advantage heterogeneous & immobileheterogeneous & immobile

you have them, others cannot easily getyou have them, others cannot easily getthemthem


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Strategic ResourcesStrategic Resources

ValuableValuable Exploit an environmentalExploit an environmentalopportunityopportunity

RareRare Not enough for allNot enough for allcompetitorscompetitors

Imperfectly imitableImperfectly imitable Cannot beCannot bemerely copiedmerely copied

NonNon--substitutablesubstitutable


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Competitive AdvantageCompetitive Advantage

No AdvantageNo AdvantageResourceResource

DimensionDimension AdvantageAdvantage

CommonCommonV

aluableV

aluable

ExploitsExploits

opportunitiesopportunitiesReadilyReadilyavailable &available &

cheapcheap RareRareUnique &Unique &expensiveexpensive

OrdinaryOrdinary ImitableImitableComplex &Complex &ambiguousambiguous

Many & easyMany & easy SubstitutableSubstitutable DifficultDifficult


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Types of ResourcesTypes of Resources

FinancialFinancial

PhysicalPhysical

HumanHumanTechnologyTechnology

ReputationReputation

OrganizationalOrganizational


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Risk and Reward


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Business Failure RateBusiness Failure Rate

0

20

40

60

80

0 2yrs 5yrs 6yrs 8yrs

Number ofbusinessfailures per100 start-ups


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StatisticsStatistics

10% of small businesses fail each10% of small businesses fail eachyearyear

4040 -- 80% of small businesses do not80% of small businesses do notsurvive for 5 yearssurvive for 5 years

Most small businesses closures doMost small businesses closures donot result in uncovered liabilitiesnot result in uncovered liabilities

Majority of small business ownersMajority of small business ownerswho fail will start another businesswho fail will start another business


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Why do businesses fail?Why do businesses fail?

2 general categories2 general categories

FinancialFinancial

NonfinancialNonfinancial


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Financial ReasonsFinancial Reasons

UnderUnder--capitalizedcapitalized

Poor cash flow planningPoor cash flow planning

Lack of record keepingLack of record keeping Inadequate financial forecasting andInadequate financial forecasting and

reviewreview

Lack of accounting trainingLack of accounting training Excessive debtExcessive debt


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Nonfinancial ReasonsNonfinancial Reasons

LonelinessLoneliness

Lack of management skills andLack of management skills and

trainingtraining Little passionLittle passion

Impact of regulationsImpact of regulations

InefficiencyInefficiency InexperienceInexperience

Lack of planningLack of planning


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"I never failed once. It

just happened to be a200l-step process."Thomas A. Edison


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RewardsRewards

??????


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"In the realm of ideas everything"In the realm of ideas everythingdepends on enthusiasm, in the realdepends on enthusiasm, in the realworld all rests on perseverance."world all rests on perseverance." --

Johann Wolfgang von GoetheJohann Wolfgang von Goethe


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The Social Sciences onThe Social Sciences onWhat Makes anWhat Makes an

EntrepreneurEntrepreneur


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Trait TheoryTrait TheoryTrait TheoryTrait Theory

Energy/motivationEnergy/motivation

Business orientationBusiness orientation

Business attitudeBusiness attitude

People skillsPeople skills


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http://www.sba.gov/starting_businesshttp://www.sba.gov/starting_business/startup/entrepreneurialtest.html/startup/entrepreneurialtest.html

http://www.toolkit.cch.com/tools/dowhttp://www.toolkit.cch.com/tools/downloads/swchek.rtfnloads/swchek.rtf


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Personality CharacteristicsPersonality CharacteristicsPersonality CharacteristicsPersonality Characteristics

Need for achievementNeed for achievement

Locus of controlLocus of control

RiskRisk--taking propensitytaking propensity


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Career AnchorsCareer AnchorsCareer AnchorsCareer Anchors

Motivate vocational choicesMotivate vocational choices

TechnicalTechnical

ManagerialManagerial

SecuritySecurity

CreativityCreativity AutonomyAutonomy


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Sociological CharacteristicsSociological CharacteristicsSociological CharacteristicsSociological Characteristics

Negative displacementNegative displacement

Between thingsBetween things

Positive pullPositive pull

Positive pushPositive push


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Situational CharacteristicsSituational CharacteristicsSituational CharacteristicsSituational Characteristics

Perceptions of desirabilityPerceptions of desirability

Perceptions of feasibilityPerceptions of feasibility

Entrepreneurial eventEntrepreneurial event


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DesiresDesires

Change:Change:

Your lifeYour life

A product or serviceA product or service

The environmentThe environment


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Entrepreneurs and theEntrepreneurs and the

CommunityCommunity


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CARE ModelCARE Model(Dr. Mike Woods, Jack Frye, & Stan Ralstin)(Dr. Mike Woods, Jack Frye, & Stan Ralstin)

CCreationreation

AAttractionttraction

RRetentionetentionEExpansionxpansion

% ofNew JobsCreated

Attraction - 1%

Retention &

Expansion 44%

Creation 55%


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We all want to find the nextWe all want to find the next

gazelle!!gazelle!!


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Entrepreneurs vs. Small BusinessEntrepreneurs vs. Small Business

OwnersOwners

Carland, Hoy, Boulton, & CarlandCarland, Hoy, Boulton, & Carlandaargue they are differentrgue they are different

-- Entrepreneurs and entrepreneurialEntrepreneurs and entrepreneurial

businesses involve innovation & growthbusinesses involve innovation & growth-- Entrepreneurs goalEntrepreneurs goal--orientation is differentorientation is different

-- financial success vs. other criteriafinancial success vs. other criteria

-- need for achievement/powerneed for achievement/power

-- Entrepreneurs use strategic managementEntrepreneurs use strategic managementpracticespractices


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Small BusinessSmall Business

Independently owned and operated, notIndependently owned and operated, notdominant in its field, and does not engagedominant in its field, and does not engagein any new marketing or innovativein any new marketing or innovativepracticespractices

OwnerOwner Establishes and manages forEstablishes and manages forpurpose of furthering personal goals.purpose of furthering personal goals.Business is primary source of income &Business is primary source of income &consumes majority of time & resources.consumes majority of time & resources.Owner perceived business as extension ofOwner perceived business as extension ofpersonality, intricately bound with familypersonality, intricately bound with familyneeds and desires.needs and desires.

E t i l V tE t i l V t


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Entrepreneurial VentureEntrepreneurial Venture

Engages in growth and profitabilityEngages in growth and profitabilityand innovation by introducing newand innovation by introducing newproducts, new processes, openingproducts, new processes, opening

new markets, or reorganizes thenew markets, or reorganizes theindustryindustry

EntrepreneurEntrepreneur Establishes andEstablishes and

manages the business for growthmanages the business for growthand profit. Is innovative andand profit. Is innovative andemployees strategic managementemployees strategic management

practices.practices.


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??QUESTION????QUESTION??

Are entrepreneurs and small businessAre entrepreneurs and small businessowners the same thing?owners the same thing?

Why??Why??

Why not??Why not??

Does rural make a difference??Does rural make a difference??

C i E t tC i E t t


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Comparing Entrepreneurs toComparing Entrepreneurs to

Managers and LeadersManagers and Leaders

EntrepreneurEntrepreneur ManagerManager LeaderLeader

InnovatesInnovates AdministersAdministers InnovatesInnovates

CreatesCreates MaintainsMaintains DevelopsDevelops

SeesSeesopportunitiesopportunities

See problemsSee problems Sees the futureSees the future

Asks how andAsks how and

whenwhen

Asks how andAsks how and

whenwhen

Asks what andAsks what and

whywhyMakes it happenMakes it happen Does thingsDoes things

rightrightUses influenceUses influence

Builds the teamBuilds the team Relies on controlRelies on control Inspires trustInspires trust


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Entrepreneurship is a styleEntrepreneurship is a styleand a general method ofand a general method of

operating, not just a set ofoperating, not just a set ofbusiness skills.business skills.

Jerry GustafsonJerry Gustafson

Beloit CollegeBeloit College


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EntrepreneursEntrepreneurs

People who create and growPeople who create and growenterprisesenterprises

Aspiring entrepreneursAspiring entrepreneurs

Survival entrepreneursSurvival entrepreneurs

Lifestyle entrepreneursLifestyle entrepreneurs

Growth entrepreneursGrowth entrepreneurs

Serial entrepreneursSerial entrepreneurs

Social entrepreneursSocial entrepreneurs

SOURCE: WK Kellogg FoundationSOURCE: WK Kellogg Foundation


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Entrepreneurs and theEntrepreneurs and the

CommunityCommunityWhat they bringWhat they bring

D it tt h t thD it tt h t th


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Does it matter what they areDoes it matter what they are

called?called?

Both:Both:

Add income to the household andAdd income to the household andjobs and wealth to the communityjobs and wealth to the community

Add economic strength to aAdd economic strength to acommunitycommunity

Add stability to a communityAdd stability to a community

Provide the owner with the ability toProvide the owner with the ability toachieve his or her goalsachieve his or her goals

Create new opportunities within theCreate new opportunities within thecommunitycommunity -- MultiplierMultiplier


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Who entrepreneurs are?Who entrepreneurs are?

Classified as:Classified as:

Small businessSmall business

Micro businessMicro business

HomeHome--based businessbased business

Family businessFamily business

Also:Also:

Underground economyUnderground economy

Informal economyInformal economy

Formal economyFormal economy


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Metro, Micro, Rural ComparisonMetro, Micro, Rural Comparison20% ofOK households own & run a business20% ofOK households own & run a business

MetroMetro(n=146)(n=146)

MicroMicro(n=54)(n=54)

RuralRural(n=46)(n=46)

Primary bus.Primary bus. ServiceService

ConstructionConstructionRetailRetail

Ag/For/FishAg/For/Fish

ServiceServiceRetailRetail

Ag/For/FishAg/For/Fish

Construction,Construction,FIRE & ServiceFIRE & Service

Family bus.Family bus. 62%62% 74%74% 78%78%

HomeHome--basedbased 66%66% 63%63% 70%70%Spouse inSpouse inbus.bus.

48%48% 46%46% 65%65%


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Metro, Micro, Rural ComparisonMetro, Micro, Rural Comparison

MetroMetro(n=146)(n=146)

MicroMicro(n=54)(n=54)

RuralRural(n=46)(n=46)

Avg # emplAvg # empl 1.831.83 2.042.04 2.112.11

Gross inc.Gross inc.-- MeanMean

-- MedianMedian

$241,891$241,891

$49,000$49,000

$333,589$333,589

$35,000$35,000

$162,190$162,190

$40,000$40,000


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The numbersThe numbers

Small businessesSmall businesses 16 million nonfarm16 million nonfarm

OKOK 290,000 (employer & nonemployer)290,000 (employer & nonemployer)

50% of private workforce50% of private workforce

OKOK 54%54%

Create 2/3 of all new jobsCreate 2/3 of all new jobs

52% of all nonfarm output52% of all nonfarm output

Micro businessesMicro businesses ?????? OKOK 270,000270,000 94%94%

+ 84,000 farm/ranch operations+ 84,000 farm/ranch operations


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The numbersThe numbers

Family businessesFamily businesses 12.7% of households12.7% of households OKOK 185,000185,000 -- $6.5 billion inc transferred to$6.5 billion inc transferred to

familyfamily

SouthSouth 3.3 million3.3 million -- $109 billion transferred$109 billion transferred

U.S.U.S. 9.7 million9.7 million -- $348 billion transferred$348 billion transferred

HomeHome--based businessesbased businesses 5%5% -- 18% of hh18% of hh OKOK 67,00067,000 176,000176,000

-- $1$1 -- $6.2 billion/year$6.2 billion/year

Creating EntrepreneurialCreating Entrepreneurial


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Creating EntrepreneurialCreating Entrepreneurial

CommunitiesCommunities

People

Informal

Organizations

FormalInstitutions


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Entrepreneurial CommunitiesEntrepreneurial Communities

4 types4 types

1.1. Those that develop entrepreneursThose that develop entrepreneurs

2.2. Those that act entrepreneuriallyThose that act entrepreneurially

3.3. Those that do bothThose that do both

4.4. Those that do neitherThose that do neither


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developmentdevelopmentthe infrastructure of public andthe infrastructure of public andprivate supports that facilitateprivate supports that facilitate

entrepreneurshipentrepreneurship

Entrepreneurial communitiesEntrepreneurial communitiesthose where significant economic andthose where significant economic and

social entrepreneurial activity existssocial entrepreneurial activity existsand where there is an effective systemand where there is an effective systemof entrepreneurship developmentof entrepreneurship development

SOURCE: WK Kellogg FoundationSOURCE: WK Kellogg Foundation


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Entrepreneurial CommunitiesEntrepreneurial Communities

1.1. Has critical mass of entrepreneurs activelyHas critical mass of entrepreneurs activelyengaged in capturing new marketengaged in capturing new marketopportunitiesopportunities

2.2. Group of entrepreneurs recognizable withinGroup of entrepreneurs recognizable within

the communitythe community

3.3. Community as a whole is entrepreneurialCommunity as a whole is entrepreneurial

Social capital (Floras)

Human capital-diversity(Florida)Clusters (Porter)

Public-Private Partnerships (Tupelo-Grishom)

Innovative Infrastructure (Feldman)


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Theory ExpansionTheory Expansion

Social capitalSocial capital Trust, networks, reciprocity, and collective actionTrust, networks, reciprocity, and collective action

Horizontal, vertical, and flexible (not in theHorizontal, vertical, and flexible (not in thegroup at all times)group at all times)

Human capitalHuman capital EducationEducation

Beyond high schoolBeyond high school

Continuous and lifeContinuous and life--life longlife long

Include specific and generalInclude specific and general InclusiveInclusive prepre--KK older citizenolder citizen

JustJust--inin--timetime

Knowledgeable and involved citizensKnowledgeable and involved citizens


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Theory ExpansionTheory Expansion

ClustersClusters

Why?Why? Based on economies of scale,Based on economies of scale,technology transfer & availability oftechnology transfer & availability of

human capitalhuman capital (Eric Scorsone, Industrial clusters: Enhancing rural(Eric Scorsone, Industrial clusters: Enhancing ruraleconomies through business linkages, SRDC 21economies through business linkages, SRDC 21stst Century Series)Century Series)

Innovative infrastructureInnovative infrastructure

Basics plus items such as a visionaryBasics plus items such as a visionary

government, day care, & technologygovernment, day care, & technology

Creating an EntrepreneurialCreating an Entrepreneurial


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Creating an EntrepreneurialCreating an Entrepreneurial

ClimateClimate

1.1. Entrepreneurship must be an explicit economicEntrepreneurship must be an explicit economicdevelopment strategydevelopment strategy

2.2. Community must embrace and nurtureCommunity must embrace and nurtureentrepreneursentrepreneurs

GoalGoal -- A continuous pipeline of entrepreneursA continuous pipeline of entrepreneurs

a.a. Supportive public policiesSupportive public policies

b.b. Balances regulations with business needsBalances regulations with business needs

c.c. EducationEducation early & onearly & on--going, formal and nonformalgoing, formal and nonformal

3.3. Access to capitalAccess to capital banks, investment, angelsbanks, investment, angels4.4. Access to quality workersAccess to quality workers

5.5. Recognize entrepreneurial effortsRecognize entrepreneurial efforts


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Enterprise DevelopmentEnterprise Development

Assistance to entrepreneurs in supportAssistance to entrepreneurs in supportof the creation, growth, and survival ofof the creation, growth, and survival of

their businessestheir businessesKoven & Lyons (2003)Koven & Lyons (2003)

nonprofit, private, public service providers

youth entrepreneurship programs

micro enterprise programs

business incubators

manufacturing networksmall business development centers

angel capital networks

revolving loan funds

technology transfer programs


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Nurturing of EntrepreneursNurturing of Entrepreneurs

Mentors and coachesMentors and coaches

Business/management assistance &Business/management assistance &supportsupport

Coordinated, seamless, and localCoordinated, seamless, and localAccess to technologyAccess to technology

Technical assistanceTechnical assistance

Inclusion of all into events,Inclusion of all into events,programs, & groupsprograms, & groups

Other Examples:Other Examples:


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Other Examples:Other Examples:

How Communities Can HelpHow Communities Can Help

Purchase locallyPurchase locally

Help create newHelp create new

local businesseslocal businesses

Develop humanDevelop human

resourcesresources

FreeFree--up potentiallyup potentiallyproductive spaceproductive space

Initiate localInitiate localinvestment strategiesinvestment strategies(endowments,(endowments,fundraising, microfundraising, micro--

loan programs)loan programs)

Mobilize externalMobilize externalresourcesresources

Challenges for SustainableChallenges for Sustainable


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Challenges forSustainableChallenges forSustainable

Rural Economic DevelopmentRural Economic Development

1.1. Translating models to placeTranslating models to place--based strategiesbased strategies

-- no silver bulletno silver bullet

2.2. Implement strategy withImplement strategy withtangible benefitstangible benefits

-- taxpayers see return ontaxpayers see return oninvestmentinvestment

3.3. Need to create good jobsNeed to create good jobs

-- selfself--sustaining wagessustaining wages

Ch ll f S i blCh ll f S i bl


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Challenges forSustainableChallenges forSustainable

Rural Economic DevelopmentRural Economic Development(cont.)(cont.)

4.4. Need for strategies that build onNeed for strategies that build onall assetsall assets

-- young, old, men, women,young, old, men, women,ethnicitiesethnicities

5.5. Shortage of resources in mostShortage of resources in mostsmall towns.small towns.

SOURCE: Emery, Wall, Macke, 2004SOURCE: Emery, Wall, Macke, 2004

Shortcomings of EnterpriseShortcomings of Enterprise


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DevelopmentDevelopment#1 Tool#1 Tool--DrivenDriven--Not NeedsNot Needs--FocusedFocused

Worked oneWorked one--place and oneplace and one--timetimeSolutions in search of a client baseSolutions in search of a client baseVoice of the customerVoice of the customer--the entrepreneurthe entrepreneur--isis

missingmissing

Entrepreneurial NeedsEntrepreneurial NeedsHard for entrepreneurs to articulateHard for entrepreneurs to articulateEntrepreneurs may not trust those asking the

Entrepreneurs may not trust those asking thequestionsquestions

Entrepreneurs difficult to identify and reachEntrepreneurs difficult to identify and reach

SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004



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DevelopmentDevelopment (continued)(continued)

#2 Fragmented and Categorical#2 Fragmented and Categorical

CreamingCreaming we need more than awe need more than aquarterbackquarterback

#3 Too Little Focus on Execution#3 Too Little Focus on Execution

Various gurus crisscross the countryVarious gurus crisscross the country then gothen gohomehome

Gap between ideas and educationGap between ideas and education

#4 The Broken Learning Cycle#4 The Broken Learning Cycle

Best practices vs. successful practicesBest practices vs. successful practicesSOURCE: Lichtenstein, Lyons, Kutzhanova, 2004SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004



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DevelopmentDevelopment (continued)(continued)

#5 Focus on the Business, not the Entrepreneur#5 Focus on the Business, not the Entrepreneur

#6 Missing Function: Responsibility for the#6 Missing Function: Responsibility for the

Communitys Supply ofEntrepreneursCommunitys Supply ofEntrepreneurs

#7 Funders, not Clients, Drive the Program#7 Funders, not Clients, Drive the Program

#8 Impact is not Scalable#8 Impact is not ScalableCommunityCommunity--wide impactwide impact

SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004

Successful Entrepreneurial(?)Successful Entrepreneurial(?)


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Successful Entrepreneurial(?)Successful Entrepreneurial(?)

CommunitiesCommunities

1.1. Acceptance of ControversyAcceptance of Controversy

2.2. Ability to Depersonalize PoliticsAbility to Depersonalize Politics

3.3. Surplus Income to InvestSurplus Income to Invest

4.4. Willingness to Take RisksWillingness to Take Risks

5.5. Ability to Define Community More BroadlyAbility to Define Community More Broadly

6.6. Networking AbilityNetworking Ability

7.7. Emphasis on AcademicsEmphasis on Academics

8.8. Flexible, Dispersed LeadershipFlexible, Dispersed Leadership

SOURCE: Flora and FloraSOURCE: Flora and Flora

SOURCES FOR THISSOURCES FOR THIS


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SOURCES FOR THISSOURCES FOR THIS

PRESENTATIONPRESENTATION

Lichtenstein, Lyons, KutzhanovaLichtenstein, Lyons, KutzhanovaBuilding EntrepreneurialCommunities:Building EntrepreneurialCommunities:

The Appropriate Role of EnterpriseThe Appropriate Role of Enterprise

Development ActivitiesDevelopment Activities Journal of theJournal of theCommunity Development SocietyCommunity Development Society, 2004, 2004

Emery, Wall, MackeEmery, Wall, Macke

From Theory to Action: EnergizingFrom Theory to Action: EnergizingEntrepreneurship (E2), Strategies to AidEntrepreneurship (E2), Strategies to AidDistressedCommunities Grow TheirDistressedCommunities Grow TheirOwnOwn Journal of the Community SocietyJournal of the Community Society,,20042004


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Entrepreneurs WeEntrepreneurs We

KnowKnow

D k h h ?D k h h ?


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Do you know who they are?Do you know who they are?

Stan ClarkStan Clark

Frank EppersonFrank Epperson

Fred SmithFred Smith

Bill Bowerman & Philip KnightBill Bowerman & Philip Knight

Dr. John Pemberton & AsaDr. John Pemberton & AsaChandlerChandler

D k h th ?D k h th ?


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Do you know who they are?Do you know who they are?

Jeff BezosJeff Bezos

Cohen and GreenfieldCohen and Greenfield

Ray KrocRay KrocTom MonaghanTom Monaghan

Bill GatesBill GatesHoward SchultzHoward Schultz


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EntrepreneursEntrepreneursAll are not equal,All are not equal,

nor do they want to be!!nor do they want to be!!



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People who create and growPeople who create and growenterprisesenterprises

Aspiring entrepreneursAspiring entrepreneurs

Survival entrepreneursSurvival entrepreneurs

Lifestyle entrepreneursLifestyle entrepreneurs

Growth entrepreneursGrowth entrepreneurs

Serial entrepreneursSerial entrepreneurs

Social entrepreneursSocial entrepreneursSOURCE: WK Kellogg FoundationSOURCE: WK Kellogg Foundation

F il B i NF il B i N


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Family Business NamesFamily Business Names

WalWal--MartMart

FordFord

WeyerhaeuserWeyerhaeuser

MichelinMichelin

GapGap

AnheuserAnheuser--BuschBusch

Tyson FoodsTyson FoodsDillardsDillards

CargillCargill

Koch IndustriesKoch Industries

IkeaIkea

Cox CommunicationCox Communication

Enterprise RentEnterprise Rent--AA--CarCar

HallmarkHallmark

Levi StraussLevi StraussKohlerKohler

F il B iF il B i


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Family BusinessesFamily Businesses

Generate 62% of nonfarm businessGenerate 62% of nonfarm businessreceiptsreceipts -- $16.8 trillion in 1996$16.8 trillion in 1996

Even greater impact in midwest economyEven greater impact in midwest economy

Dominate form in agriculture, retail,Dominate form in agriculture, retail,wholesale, and distribution sectorswholesale, and distribution sectors

Employ 54.8% of workforceEmploy 54.8% of workforce 69.5 million69.5 million

Provide higher than average householdProvide higher than average household

income and net worthincome and net worth Only 1% of households are poor vs. 11%Only 1% of households are poor vs. 11%

overalloverall


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M i fM i f


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More infoMore info

www.hce.osu.edu/fambuswww.hce.osu.edu/fambus

http://www.human.cornell.edu/ne167/http://www.human.cornell.edu/ne167/

HH b d B i Nb d B i N


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HomeHome--based Business Namesbased Business Names

HewletHewlet--PackardPackard

NikeNike

CokeCoke

Mrs. Fields CookiesMrs. Fields Cookies

MicrosoftMicrosoft

DellDell

HH b d B i F tb d B i F t


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HomeHome--based Business Factsbased Business Facts

NineNine--state study (1988)state study (1988)

Typical homeTypical home--based workerbased worker 44 year old male, married, with children, 14 yrs.44 year old male, married, with children, 14 yrs.

education, & a homeownereducation, & a homeowner

Mean gross business incomeMean gross business income -- $53,164$53,164

Mean net business incomeMean net business income -- $15,628$15,628

Mean household incomeMean household income -- $42,263$42,263

Had medical insurance from some other sourceHad medical insurance from some other source

As # children increased, number of work hoursAs # children increased, number of work hoursdecreased (1 day per child on average)decreased (1 day per child on average)

Had greater longevity in the communityHad greater longevity in the community

CopreneursCopreneurs


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CopreneursCopreneurs

DefinedDefined Couples in business togetherCouples in business together 31% of family businesses31% of family businesses

Have more children, lower educational levels,Have more children, lower educational levels,rural location, business manager earns less perrural location, business manager earns less per

year, more likely homeyear, more likely home--based, and have fewerbased, and have feweremployeesemployees

Make significantly less business income andMake significantly less business income andbusiness profits (by factor of 5) & feel businessbusiness profits (by factor of 5) & feel businessis less successfulis less successful

Copreneurs more likely to view business as aCopreneurs more likely to view business as away of life as opposed to a way to earn incomeway of life as opposed to a way to earn income

Copreneurs contCopreneurs cont


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Copreneurs cont.Copreneurs cont.

More likely to intermingle money betweenMore likely to intermingle money betweenbusiness and familybusiness and family More often family toMore often family tobusinessbusiness Also use more ways of interminglingAlso use more ways of intermingling

Approximately 20% of couples discontinuedApproximately 20% of couples discontinuedthe copreneurial relationship (but stayedthe copreneurial relationship (but stayedtogether as a couple) in a 3together as a couple) in a 3--year periodyear period Made less money & saw the business as less successful.Made less money & saw the business as less successful.

Another 20% started a copreneurialAnother 20% started a copreneurialrelationshiprelationship Made most money of all 3 groups, run by older men withMade most money of all 3 groups, run by older men with

more education, had fewer dependents, and spouse workedmore education, had fewer dependents, and spouse workedfewer hours in business.fewer hours in business.


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ValueValue--AddedAdded

OpportunitiesOpportunities

ValueValue AddedAdded


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ValueValue--AddedAdded

Defined: Adding consumerDefined: Adding consumer--desired featuresdesired featuresto raw materialsto raw materials

Done by:Done by:1.1. Additional processingAdditional processing

2.2. MarketingMarketing -- change from the currentchange from the currentmethod of distributionmethod of distribution

3.3. Use existing resources to produce a new,Use existing resources to produce a new,more valued product/servicemore valued product/service

4.4. Some combinationSome combination


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MarketingMarketing

StrategiesStrategies

forforFarmersFarmers

& Ranchers& Ranchers

Reap New ProfitsReap New Profits::


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FarmersFarmersMarketsMarkets


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People dont come all the way out here to getcheap food. They come because its fun and th

berries are absolutely fresh.

-- Earnie Bohner, Persimmon Hill Berry Farm

Pick YourOwn

E F


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N

TE

R

T

AI

N

M

EN

T

F

A

RM

I

N

G

F St dO


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Farm Stands

Community supportedagriculture (CSA)

Cooperatives

Restaurant sales

Mail order/ Internet/Direct marketing

O

T

HE

R

O

P

T

IO

N

S


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Resources:Resources:


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Resources:Resources:

USDA Sustainable Agriculture Research andUSDA Sustainable Agriculture Research andEducation (SARE)Education (SARE) www.sare.orgwww.sare.org

Farmers MarketsFarmers Markets --www.ams.usda.gov/farmersmarketswww.ams.usda.gov/farmersmarkets

Alternative Farming Systems Info CtrAlternative Farming Systems Info Ctrwww.nal.usda.gov/afsicwww.nal.usda.gov/afsic

USDA Farmer Direct MarketingUSDA Farmer Direct Marketing

www.ams.usda.gov/directmarketingwww.ams.usda.gov/directmarketing

North American Direct Marketing Assn.North American Direct Marketing Assn.

www.familyfarms.comwww.familyfarms.com


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Minorities and WomenMinorities and Women

General InformationGeneral Information


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General InformationGeneral Information

Small business ownership rates for womenSmall business ownership rates for womenand minorities are increasing faster thanand minorities are increasing faster thanfor white malesfor white males Still men start newStill men start newbusinesses at twice the rate of womenbusinesses at twice the rate of women

WomenWomen 9.8% own businesses9.8% own businesses Translates to over 50% of all businessesTranslates to over 50% of all businesses MinoritiesMinorities Ranges from 5% (Blacks) toRanges from 5% (Blacks) to

10.4% (Asian)10.4% (Asian)

Firm receipts average about 2/3 of all bus.Firm receipts average about 2/3 of all bus.

Proprietor income averages about 50% ofProprietor income averages about 50% ofall other businessesall other businesses Firms employee fewer peopleFirms employee fewer people

Special IssuesSpecial Issues


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Special IssuesSpecial Issues

Access to capitalAccess to capital

Acceptance by business communityAcceptance by business community

Acceptance by family and friendsAcceptance by family and friends

Networks are smaller and moreNetworks are smaller and morefamilyfamily--focusedfocused

Most often in retail or serviceMost often in retail or serviceindustriesindustries

Industries with highest failure rates andIndustries with highest failure rates andlowest profitslowest profits


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Barriers toBarriers to


A lack of:A lack of:


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1.1. Steady stream ofwantSteady stream ofwant--aa--besbes

2.2. CanCan--do attitude held by thedo attitude held by theentrepreneur and the communityentrepreneur and the community

3.3. Coordinated, accessible, longCoordinated, accessible, long--termtermsupport networksupport network

4.4. Coaches and mentorsCoaches and mentors

5.5. CapitalCapital

6.6. Available human capitalAvailable human capital

7.7. MultiMulti--faceted healthy communityfaceted healthy community

8.8. Supportive regulatory environmentSupportive regulatory environment


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The man who makes no

The man who makes nomistakes does not usuallymistakes does not usuallymake anything."make anything."

Edward John Phelps, American lawyer and diplomat (1822Edward John Phelps, American lawyer and diplomat (1822--1900)1900)

"Nothing great was ever"Nothing great was everachieved withoutachieved withoutenthusiasm."enthusiasm." Ralph Waldo EmersonRalph Waldo Emerson


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HighlightsHighlights



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Entrepreneurship is an everEntrepreneurship is an ever--continuing,continuing,growing trendgrowing trend

Entrepreneurs contribute to theirEntrepreneurs contribute to theirhousehold and to their communityhousehold and to their community

Entrepreneurship is a learned talentEntrepreneurship is a learned talent

Entrepreneurs form our economic baseEntrepreneurs form our economic base

Entrepreneurship allows people to remainEntrepreneurship allows people to remain

in a communityin a community Communities can encourageCommunities can encourage

entrepreneurshipentrepreneurship


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Entrepreneurs:Entrepreneurs:

-- See opportunitySee opportunity

-- Are innovative in developing thatAre innovative in developing that

opportunity through creativityopportunity through creativityand resource gatheringand resource gathering

-- Seek gain while accepting riskSeek gain while accepting risk

andand uncertaintyuncertainty

One Last MythOne Last Myth


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The key to success is a great ideaThe key to success is a great idea

Good ideaGood idea

Great planGreat plan

Passion!Passion!

The keys are:


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How Extension can help?How Extension can help?

1. Awareness of owners priorities

2 Comfort with subject matter


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OneOne--onon--oneone

MentoringMentoring

AdvocatingAdvocatingPartneringPartnering

Community supportCommunity support

Awareness of other programsAwareness of other programs

EducationEducation

2. Comfort with subject matter

ResourcesResources


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ResourcesResources

Southern Rural Development CenterSouthern Rural Development Center

http://srdc.msstate.edu/http://srdc.msstate.edu/

Kansas City Federal Reserve BankKansas City Federal Reserve Bank

Center for the Study of Rural AmericaCenter for the Study of Rural Americahttp://www.kc.frb.org/RuralCenter/RuralMain.htmhttp://www.kc.frb.org/RuralCenter/RuralMain.htm

Rural Policy Research Institute (RUPRI)Rural Policy Research Institute (RUPRI)http://www.rupri.org/http://www.rupri.org/

Resources cont.Resources cont.


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AdultAdultCashing In On Business OpportunitiesCashing In On Business OpportunitiesNeXt Level/Fasttrac/other commercialNeXt Level/Fasttrac/other commercial

OSUOSUPutting It All TogetherPutting It All TogetherFood Based Business: The Owners GuideFood Based Business: The Owners Guide

An Exploration ofEntrepreneurshipAn Exploration ofEntrepreneurship

Visual MerchandisingVisual Merchandising

Educational programEducational program Demonstration programDemonstration program

Mapping Your Marketing FutureMapping Your Marketing Future

Magazines, i.e. EntrepreneurMagazines, i.e. Entrepreneur

Resources cont.Resources cont.


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YouthYouthMiniMini--SocietySociety

Be the E: EntrepreneurshipBe the E: Entrepreneurship (4(4--H CCS)H CCS)

http://youngbiz.com/http://youngbiz.com/

http://www.celcee.edu/http://www.celcee.edu/ -- clearinghouseclearinghouse

GeneralGeneral

http://www.entrehttp://www.entre--ed.org/index.htmed.org/index.htm


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Glenn MuskeGlenn Muske

2005_entrepreneurshipandecommerce_muske_entre

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