PowerPoint Presentation by Charlie Cook, The University of West Alabama © 2010 Cengage Learning....

PowerPoint Presentation by Charlie Cook, The University of West AlabamaPowerPoint Presentation by Charlie Cook, The University of West Alabama

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.

The Entrepreneurial LifeThe Entrepreneurial Life

PART 1 Entrepreneurship: A World of OpportunityPART 1 Entrepreneurship: A World of Opportunity

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–2

1.1. Distinguish between an entrepreneur and a small business owner.Distinguish between an entrepreneur and a small business owner.

2.2. Explain the characteristics of entrepreneurial opportunities and give Explain the characteristics of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs.examples of successful businesses started by entrepreneurs.

3.3. Describe some motivators or rewards of entrepreneurial careers.Describe some motivators or rewards of entrepreneurial careers.

4.4. Identify the various types of entrepreneurs and entrepreneurial Identify the various types of entrepreneurs and entrepreneurial ventures.ventures.

5.5. Identify five potential competitive advantages of small Identify five potential competitive advantages of small entrepreneurial companies as compared to large firms.entrepreneurial companies as compared to large firms.

6.6. Discuss factors related to readiness for entrepreneurship and Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career.getting started in an entrepreneurial career.

7.7. Explain the concept of an entrepreneurial legacy and the Explain the concept of an entrepreneurial legacy and the challenges involved in crafting a worthy legacy.challenges involved in crafting a worthy legacy.

Looking AheadAfter studying this chapter, you should be able to:Looking AheadAfter studying this chapter, you should be able to:


Who Are Entrepreneurs?

• Entrepreneurs are:Entrepreneurs are:

A person who starts and/or operates a business.A person who starts and/or operates a business.

Individuals who discover market needs and Individuals who discover market needs and launch new firms to meet those needs.launch new firms to meet those needs.

Risk takers who provide an impetus for change, Risk takers who provide an impetus for change, innovation, and progress.innovation, and progress.

All active owner-managers All active owner-managers (founders and/or managers (founders and/or managers of small businesses).of small businesses).

• Entrepreneurial OpportunityEntrepreneurial Opportunity An An economically attractiveeconomically attractive and and timely opportunitytimely opportunity that that

creates value for interested buyers or end userscreates value for interested buyers or end users


What Is a Small Business?

• Criteria for Defining Smallness in BusinessCriteria for Defining Smallness in Business

1.1. Business’ size small relative to larger competitors Business’ size small relative to larger competitors (fewer than 100 employees)(fewer than 100 employees)

2.2. Localized business operations (except marketing)Localized business operations (except marketing)

3.3. Financing supplied by one person or small groupFinancing supplied by one person or small group

4.4. Has the potential to become more Has the potential to become more than a “one-person show”than a “one-person show”


The Contributions of Small Business

• Small Businesses:Small Businesses:

Comprise 99.7% of all firms with employees.Comprise 99.7% of all firms with employees.

Employ over 50% of employees in the private sector.Employ over 50% of employees in the private sector.

Account for 45% of private payrolls.Account for 45% of private payrolls.

Generated 60 to 80% of net new jobs in past decade.Generated 60 to 80% of net new jobs in past decade.

Create more than half of the country’s GDP.Create more than half of the country’s GDP.

Hire 40% of high-tech employees Hire 40% of high-tech employees

Represent 97.3% of all exporters.Represent 97.3% of all exporters.


Exhibit 1.2 Entrepreneurial Incentives


Why People Become Entrepreneurs

• Reluctant EntrepreneurReluctant Entrepreneur A person who becomes an entrepreneur A person who becomes an entrepreneur

as a result of some severe hardship.as a result of some severe hardship.

• RefugeeRefugee A person who becomes an entrepreneur A person who becomes an entrepreneur

to escape an undesirable situation.to escape an undesirable situation.


Commitment and

Determination

Commitment and

Determination

LeadershipLeadershipMotivation to Excel

Motivation to Excel

Creativity, Self-Reliance,

and Adaptability

Creativity, Self-Reliance,

and Adaptability

Opportunity Obsession

Opportunity Obsession

Tolerance of Risk,

Ambiguity, and

Uncertainty

Tolerance of Risk,

Ambiguity, and

Uncertainty

Attitudes and

Behaviors of Entrepreneu

rs

Attitudes and

Behaviors of Entrepreneu

rs

Entrepreneurial Characteristics(Timmons and Spinelli)


The Many Varieties of Entrepreneurship

• Founder (“Pure” Entrepreneur)Founder (“Pure” Entrepreneur) A person who brings a new firm into existenceA person who brings a new firm into existence

• Administrative EntrepreneurAdministrative Entrepreneur An entrepreneur who overseas the operations of a An entrepreneur who overseas the operations of a

ongoing businessongoing business

• FranchiseeFranchisee An entrepreneur whose power is limited by the An entrepreneur whose power is limited by the

contractual relationship with a franchising organizationcontractual relationship with a franchising organization

• Entrepreneurial TeamEntrepreneurial Team Two or more people working together as entrepreneursTwo or more people working together as entrepreneurs


Small Business Growth Potential and Profits

• High-Potential Venture (Gazelle)High-Potential Venture (Gazelle) Has great prospects for growthHas great prospects for growth

• Attractive Small FirmAttractive Small Firm Provides substantial profits Provides substantial profits

to its ownerto its owner

• MicrobusinessMicrobusiness Provides minimal profits Provides minimal profits

to its ownerto its owner

• Lifestyle BusinessLifestyle Business Permits the owner to follow Permits the owner to follow

a desired pattern of livinga desired pattern of living


Artisan Entrepreneurs

• Artisan EntrepreneurArtisan Entrepreneur A person with primarily technical skills and little business A person with primarily technical skills and little business

knowledge who starts a businessknowledge who starts a business

• Characteristics:Characteristics: Take a paternalistic approachTake a paternalistic approach Are reluctant to delegateAre reluctant to delegate Use few sources of capitalUse few sources of capital Have a traditional marketing strategyHave a traditional marketing strategy Focus on personal sales effortFocus on personal sales effort Have a short planning horizonHave a short planning horizon


Opportunistic Entrepreneurs

• Opportunistic EntrepreneurOpportunistic Entrepreneur A person with both sophisticated managerial skills and technical A person with both sophisticated managerial skills and technical

knowledge who starts a businessknowledge who starts a business

• Characteristics:Characteristics: Broad-based educationBroad-based education Scientific approach to problemsScientific approach to problems Willing to delegateWilling to delegate Broad view of strategyBroad view of strategy Diversified marketing approachDiversified marketing approach Longer planning horizonLonger planning horizon Sophisticated accounting Sophisticated accounting

and financial controland financial control


The Competitive Edge of Entrepreneurship

Customer Focus

Customer Focus

Quality Performance

Quality Performance

Innovation and Globalization

Innovation and Globalization

Integrity and Responsibility

Integrity and Responsibility

Special Niche

Special Niche

Competitive Advantages

of Entrepreneur

ial Firms

Competitive Advantages

of Entrepreneur

ial Firms


Age

Early Career Concerns

1. Getting an education

2. Gaining work experience

3. Acquiring financial resources

Late Career Concerns

1. Fulfilling familyresponsibilities

2. Attaining seniorityin employment

3. Earning investment ina retirement program

25 35 4520

Getting Started

• Age and Entrepreneurial OpportunityAge and Entrepreneurial Opportunity


Millennial Entrepreneurs

• Have no fear of technologyHave no fear of technology

• Are idealistic and optimisticAre idealistic and optimistic

• Are more collaborativeAre more collaborative

• Build elements of community Build elements of community in the businessin the business

• Start companies while Start companies while studying entrepreneurshipstudying entrepreneurship

• Fail fast, learn a lot, and Fail fast, learn a lot, and keep goingkeep going


Getting Started (cont’d)

Characteristics of Successful Entrepreneurs

Characteristics of Successful Entrepreneurs

Strong Commitment

to the Business(Tenacity)

Strong Commitment

to the Business(Tenacity)

Moderate Risk Takers

(Financial, Career, Psychic Risks)

Moderate Risk Takers

(Financial, Career, Psychic Risks)

Strong Internal Locus of Control (Self-Reliance)

Strong Internal Locus of Control (Self-Reliance)


How to Fail as an Entrepreneur

1.1. Overestimate what you can doOverestimate what you can do

2.2. Lack an understanding of the marketLack an understanding of the market

3.3. Hire mediocre peopleHire mediocre people

4.4. Fail to be a team playerFail to be a team player

5.5. Be a domineering managerBe a domineering manager

6.6. Not share ownership in the business Not share ownership in the business in an equitable wayin an equitable way


The Importance of Mentors

• MentorMentor A knowledgeable person who can A knowledgeable person who can

offer guidance from their offer guidance from their experience in a given field.experience in a given field.

The “Go-To” TeamThe “Go-To” Team


Success in Business and Success in Life

• Beginning with the End in MindBeginning with the End in Mind Proper values and actions lead to a good exit.Proper values and actions lead to a good exit. Evaluating accomplishmentsEvaluating accomplishments

• Winning the Wrong GameWinning the Wrong Game The nature of the entrepreneurial endeavor reflects The nature of the entrepreneurial endeavor reflects

personal goals and values.personal goals and values.

• Crafting a Worthy Entrepreneurial LegacyCrafting a Worthy Entrepreneurial Legacy The tangible items and intangible qualities passed on The tangible items and intangible qualities passed on

not only to heirs but also to the broader society.not only to heirs but also to the broader society.


Key Terms• entrepreneurentrepreneur• small businesssmall business• entrepreneurial opportunityentrepreneurial opportunity• bootstrappingbootstrapping• reluctant entrepreneurreluctant entrepreneur• refugeerefugee• founderfounder• franchiseefranchisee • high-potential venture high-potential venture

(gazelle)(gazelle)• attractive small firm attractive small firm

• microbusiness microbusiness • lifestyle business lifestyle business • artisan entrepreneur artisan entrepreneur • opportunistic opportunistic

entrepreneurentrepreneur• entrepreneurial teamentrepreneurial team• niche marketniche market• internal locus of controlinternal locus of control• external locus of controlexternal locus of control• mentormentor• entrepreneurial legacyentrepreneurial legacy

PowerPoint Presentation by Charlie Cook, The University of West Alabama © 2010 Cengage Learning....

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