Entrepreneurs - Dr. Nghia's Blog | Dr. Nghia Trong Nguyen · •Opportunity obsession •Tolerance...

Chapter 1 Copyright © 2010 by Nelson Education Ltd.

Entrepreneurs

1

PowerPoint Presentation by

Ian Anderson, Algonquin College

Chapter 1 Copyright © 2010 by Nelson Education Ltd. 1-2

Looking Ahead

After studying this chapter, you should be able to:

1. Discuss the availability of entrepreneurial opportunities and give

examples of successful businesses started by entrepreneurs.

2. Explain the nature of entrepreneurship and how it is related to small

business.

3. Define and identify the importance of small business.

4. Identify rewards and drawbacks of entrepreneurial careers.

5. Describe the various types of entrepreneurs and entrepreneurial ventures.

6. Discuss several factors related to readiness for entrepreneurship and

getting started in an entrepreneurial career.

7. Describe some characteristics of successful entrepreneurs.


Entrepreneurial Opportunity

• An economically attractive and timely opportunity

that creates value.

• A true opportunity exists only for the entrepreneur

who has the interest, resources, and capabilities

required to succeed.


Entrepreneurial Opportunity

• In the Trenches: Gumdrops

Vancouver’s first wet weather boutique

proved that customers saw value in the

concept and that a business idea was

present, not just an opportunity.

1-4


Entrepreneurship and Small Business

• Despite similarities, entrepreneur and small

business manager are not synonymous

– Entrepreneurs might be the founders of

business firms, or they might be owner-

managers of existing firms

– Small business managers receive specified

compensation and do not assume ownership

risks

1-5


What Is a Small Business?

• Criteria for Defining Smallness in Business

–Financing supplied by one person or small group

–Localized business operations (except marketing)

–Business’ size small relative to larger

competitors

–Fewer than 100 employees


Why is Small Business Important?

• In 2007, 1,030,000 small businesses were registered in Canada – 97% of these businesses have fewer than 50 employees

– 80% of all business entities have less than 5 employees

• There are 2.5 million self-employed Canadians

• 56% of Canadians work for small and medium-sized businesses

• New jobs created by small businesses are growing at rate of 2.3 percent per year, with almost 80 percent of the growth being generated by the newly self-employed.


Exhibit 1-1

Entrepreneurial Incentives


Drawbacks of Entrepreneurship

• Hard work

– Finding new customers and markets

– Frustrations with financing, government, tax,

technology, and employment issues

• Long hours

– 20% work more than 60 hours per week

• Emotional loneliness

• Strong possibility of failure

• Disruptions to personal life


Causes of Business Failures

• Lack of managerial and financial abilities

• Fail to adapt to competitive environment

• A broad based study found the following: – 32% inadequate research and development

– 23% lacked competitive advantage

– 14% uncontrolled costs

– 13% poorly developed marketing strategies

– 10% poor market timing

– 8% succumbed to competitor activities


Varieties of Entrepreneurship

• Founder (“Pure” Entrepreneur)

An entrepreneur who brings a new firm into existence.

• General Manager (“Second Stage” Entrepreneur)

An entrepreneur who directs the continuing operations

of established firms.

• Franchisee

An entrepreneur whose power is limited by the

contractual relationship with a franchising

organization.


High-Potential Ventures versus Small

Firms and MicroBusinesses

• High-Potential Venture (Gazelle)

A small firm that has great prospects for growth.

• Attractive Small Firm

A small firm that provides substantial profits to its owner.

• MicroBusiness (Lifestyle)

A small firm that provides minimal profits to its owner.

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• A person with primarily technical skills and little

business knowledge.

– Paternalistic approach

– Reluctance to delegate

– Narrow view of strategy

– Personal sales effort

– Short planning horizon

– Simple record keeping

Characteristics of

Artisan Entrepreneurs


• A person with both business skills and technical

knowledge.

– Scientific approach to problems

– Willing to delegate

– Broad view of strategy

– Diversified marketing approach

– Longer planning horizon

– Sophisticated accounting

and financial control

Characteristics of

Opportunistic Entrepreneurs


Entrepreneurial Teams

Two or more people who work together as entrepreneurs.

Helpful to:

Secure a broad range of managerial talents

Enhance profits

Useful in:

High technology businesses

Attractive small firms

High potential ventures


Four Routes to Entrepreneurship

Entering a family business

Opening a franchised business

Starting a new business

Buying an existing business


Exhibit 1-2

Age Concerns in Starting a Business


• Refugee – a person who becomes an

entrepreneur to escape an undesirable

situation

• Foreign refugee

– Becomes an entrepreneur in

a new country

• Corporate refugee

– Leaves big business to go

into business for themselves

Entrepreneurial Refugee


• Precipitating Event

An event, such as losing

a job, that moves an

individual to become

an entrepreneur.

Job termination

Job dissatisfaction

Unexpected opportunity

Taking The Plunge


Successful Entrepreneurs

• Strong commitment / passion

• Willingness to take risks

Moderate risk-takers

• Self-Confidence

have an internal locus of control


Internal vs. External Locus of Control

Internal Locus of Control:

Entrepreneurs tend to hold themselves accountable

for their own successes or failures.

External Locus of Control:

Non-entrepreneurs tend to believe that external

circumstances, luck or fate impact upon their

worlds.


Entrepreneurial Characteristics

• Commitment and determination

• Leadership

• Opportunity obsession

• Tolerance of risk, ambiguity and

uncertainty

• Creativity, self-reliance and adaptability

• Motivation to excel

Entrepreneurs - Dr. Nghia's Blog | Dr. Nghia Trong Nguyen · •Opportunity obsession •Tolerance...

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