Chapter 1 the foundations of entrepreneurship
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Transcript of Chapter 1 the foundations of entrepreneurship
The Foundations of The Foundations of EntrepreneurshipEntrepreneurship
The Foundations of The Foundations of EntrepreneurshipEntrepreneurship
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
CHAPTER CHAPTER 11
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Group Division Section CGroup Division Section C
ZuckerbergZuckerberg Larry PageLarry PageBibekBibek GLGL MonicaMonica GLGL
SangeetSangeet BishalBishal
KiranKiran NishanNishan CR CR
RamRam RajendraRajendra
RupaRupa ShantaShanta
SushmaSushma
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Group Division Section AGroup Division Section A
Steve JobsSteve Jobs Bill GatesBill GatesRabinaRabina NamrataNamrata GLGL
AmitAmit SabinaSabina
ManishManish GLGL RajanRajan
RajibRajib PrashnaPrashna
RoshaniRoshani SumanSuman
AmritaAmrita
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Group Division Section CGroup Division Section C
Sam WaltsonSam WaltsonBinodBinod GLGL
KrishnaKrishna
SulavSulav
JashmineJashmine
SabnamSabnam
AnilAnil
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 5Ch. 1: The Foundations of Entrepreneurship
The World of the EntrepreneurThe World of the Entrepreneur
Every year U.S. entrepreneurs launch Every year U.S. entrepreneurs launch 550,000 new businesses.550,000 new businesses.
Entrepreneurial spirit - the most Entrepreneurial spirit - the most significant economic development in significant economic development in recent history.recent history.
GEM study: 18.7% of adult population GEM study: 18.7% of adult population in the U.S. is actively involved in trying in the U.S. is actively involved in trying to start a new business. to start a new business.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 6Ch. 1: The Foundations of Entrepreneurship
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
The World of the EntrepreneurThe World of the Entrepreneur
Global Entrepreneurship Monitor (GEM) Global Entrepreneurship Monitor (GEM) study reports:study reports: Men are twice as likely to start a business Men are twice as likely to start a business
as women.as women. Most entrepreneurs turn to family members Most entrepreneurs turn to family members
and friends for capital.and friends for capital. Entrepreneurs are most likely to launch Entrepreneurs are most likely to launch
businesses when they are businesses when they are between the ages of 25 and 44.between the ages of 25 and 44.
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
What is an Entrepreneur?What is an Entrepreneur?
One who creates a new business in the face One who creates a new business in the face of risk and uncertainty for the purpose of of risk and uncertainty for the purpose of achieving profit and growth by identifying achieving profit and growth by identifying opportunities and assembling the necessary opportunities and assembling the necessary resources to capitalize on them.resources to capitalize on them.
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Characteristics of Characteristics of EntrepreneursEntrepreneurs
Desire for responsibilityDesire for responsibility Preference for moderate levels of risk – Preference for moderate levels of risk –
risk eliminatorsrisk eliminators Confidence in their ability to succeedConfidence in their ability to succeed Desire for immediate feedbackDesire for immediate feedback High level of energyHigh level of energy Future orientation – Future orientation – serial entrepreneursserial entrepreneurs Skilled at organizingSkilled at organizing Value achievement over moneyValue achievement over money
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
EntrepreneurshipEntrepreneurship
One characteristic of entrepreneurs One characteristic of entrepreneurs stands out:stands out:
Diversity!Diversity!
AnyoneAnyone – regardless of age, race, – regardless of age, race, gender, color, national origin, or any gender, color, national origin, or any other characteristic – can become an other characteristic – can become an entrepreneur entrepreneur (although not everyone (although not everyone should). should).
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Benefits of EntrepreneurshipBenefits of Entrepreneurship
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 Contribute to society and to
be recognized for your effortsbe recognized for your efforts Do what you enjoy and to have fun at it Do what you enjoy and to have fun at it
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
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 Lower quality of life until the business
gets establishedgets established High levels of stressHigh levels of stress Complete responsibilityComplete responsibility DiscouragementDiscouragement
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire
Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economic factorsDemographic and economic factors Shift to a service economyShift to a service economy Technology advancementsTechnology advancements Independent lifestyleIndependent lifestyle E-commerce and the InternetE-commerce and the Internet
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 14Ch. 1: The Foundations of Entrepreneurship
FIGURE 1.3 U.S. Retail E-Commerce Revenues Source: Based on Forrester Research, 2008.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire
Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economic factorsDemographic and economic factors Shift to a service economyShift to a service economy Technology advancementsTechnology advancements Independent lifestylesIndependent lifestyles E-commerce and the InternetE-commerce and the Internet International opportunitiesInternational opportunities
(continued)
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship
Young entrepreneurs Young entrepreneurs
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 17
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship
Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs
(continued)
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 19Ch. 1: The Foundations of Entrepreneurship
FIGURE 1.4 Why Women Start Businesses
Source: U.S. Small Business Administration, 2007.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship
Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs Minority-owned enterprisesMinority-owned enterprises Immigrant entrepreneursImmigrant entrepreneurs Part-time entrepreneursPart-time entrepreneurs
(continued)
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship
Home-based businessesHome-based businesses Family businessesFamily businesses CopreneursCopreneurs Corporate castoffsCorporate castoffs Corporate dropoutsCorporate dropouts Social entrepreneursSocial entrepreneurs Retiring Baby BoomersRetiring Baby Boomers
(continued)
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Small Businesses ...Small Businesses ... Make up 99.7% of the 30.14 million Make up 99.7% of the 30.14 million
businesses in the U.S.businesses in the U.S. Employ 51% of the nation’s private Employ 51% of the nation’s private
sector workforce.sector workforce. Create more jobs than big businesses.Create more jobs than big businesses.
60% to 80% of net new jobs over the last 60% to 80% of net new jobs over the last decadedecade
Are leaders in offering Are leaders in offering training and advancement training and advancement opportunities to workers.opportunities to workers.
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Produce 51% of the nation’s private Produce 51% of the nation’s private GDP.GDP.
Account for 47% of business sales.Account for 47% of business sales. Create 13 times more patents per Create 13 times more patents per
employees than large companies.employees than large companies. Zipper, light bulb, FM radio, laser, Zipper, light bulb, FM radio, laser,
air conditioning, escalator, air conditioning, escalator, personal computer, personal computer, automatic transmission, automatic transmission, and many more!and many more!
Small Businesses ...Small Businesses ...(continued)
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 24Ch. 1: The Foundations of Entrepreneurship
FIGURE 1.5 Small Business by Industry
Source: U.S. Small Business Administration, 2007.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
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 planFailure to develop a strategic plan
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
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”
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Putting Failure Into Putting Failure Into PerspectivePerspective
Entrepreneurs are Entrepreneurs are notnot paralyzed by paralyzed by the prospect of failure.the prospect of failure.
Failure – a natural part of the Failure – a natural part of the creative process. creative process.
Successful entrepreneurs learn to Successful entrepreneurs learn to fail fail intelligentlyintelligently..
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 1: The Foundations of Entrepreneurship
Avoiding the Pitfalls of Avoiding the Pitfalls of Small Business FailureSmall Business Failure
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 statementsUnderstand financial statements Learn to manage people effectivelyLearn to manage people effectively Set your business apart from the Set your business apart from the
competitioncompetition Maintain a positive attitudeMaintain a positive attitude
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 29Ch. 1: The Foundations of Entrepreneurship
ConclusionConclusion
Entrepreneurs:Entrepreneurs: Are an important part of the free Are an important part of the free
enterprise systementerprise system Are a diverse and talented group of Are a diverse and talented group of
peoplepeople Represent a cross-section of society as Represent a cross-section of society as
a wholea whole Are able to enhance the profitability of Are able to enhance the profitability of
their businesses through acquiring their businesses through acquiring additional knowledge and experienceadditional knowledge and experience
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1 - 30Ch. 1: The Foundations of Entrepreneurship
What is Ahead?What is Ahead?
Section 1: Section 1: The Challenge of EntrepreneurshipThe Challenge of Entrepreneurship
Section 2: Section 2: Building a Business Plan: Building a Business Plan: Beginning ConsiderationsBeginning Considerations
Section 3: Section 3: Building a Business Plan: Building a Business Plan: Marketing ConsiderationsMarketing Considerations
Section 4: Section 4: Building a Business Plan: Building a Business Plan: Financial MattersFinancial Matters
Section 5: Section 5: Putting the Business Plan to Work: Putting the Business Plan to Work: Making the New Venture a SuccessMaking the New Venture a Success
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 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.
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