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ENTREPRENEURSHIPENTREPRENEURSHIP

University of Management and Technology1901 N. Fort Myer Drive

Arlington, VA 22209 USAPhone: (703) 516-0035

Fax: (703) 516-0985Website: www.umtweb.edu

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CHAPTER 1:CHAPTER 1:The Foundations of The Foundations of EntrepreneurshipEntrepreneurship

Zimmerer, T. W and Scarborough, Zimmerer, T. W and Scarborough, N. M. N. M. Essentials of Essentials of

Entrepreneurship and Small Entrepreneurship and Small Business Management (3rd ed.)Business Management (3rd ed.)

Prentice Hall © 2002.Prentice Hall © 2002.

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The World of the EntrepreneurThe World of the Entrepreneur

A new business is born every 11 seconds in the U.S.Study of influential Americans – the defining issue of the 21st Century: Entrepreneurship!One of 12 Americans is actively involved in trying to start a new business.

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Entrepreneurial Activity Across Entrepreneurial Activity Across the Globethe Globe

1.4%

1.6%

1.8%

2.0%

2.2%

3.3%

3.4%

5.4%

6.8%

8.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Percent

Finland

J apan

France

Denmark

Germany

Great Britain

Italy

Israel

Canada

United States

Cou

ntry

Percentage of Adult Population Working to Start a New Business

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What is an Entrepreneur?What is an Entrepreneur?

One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

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Characteristics of EntrepreneursCharacteristics of Entrepreneurs

Desire for responsibilityPreference for moderate riskConfidence in their ability to succeedDesire for immediate feedbackHigh level of energyFuture orientationSkilled at organizingValue achievement over money

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Benefits of Small Business Benefits of Small Business OwnershipOwnership

The opportunity to:create your own destinymake a differencereach your full potentialreap unlimited profitscontribute to society and to be recognized for your effortsdo what you enjoy and to have fun at it

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Drawbacks of Small Business Drawbacks of Small Business OwnershipOwnership

Uncertainty of incomeRisk of losing your entire investmentLong hours and hard workLower quality of life until the business gets establishedHigh levels of stressComplete responsibilityDiscouragement

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Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire

Entrepreneurs as heroesEntrepreneurial educationDemographic and economic factorsShift to a service economyTechnological advancementsIndependent lifestylesE-Commerce and the World Wide WebInternational opportunities

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The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship

Young EntrepreneursWomenMinority-owned enterprisesImmigrant entrepreneursPart-time entrepreneursHome-based businessesFamily businessesCopreneursCorporate castoffsCorporate dropouts

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Small Business by Industry

Services39.2%

Retail20.5%

Wholesale7.4%

Manufacturing5.8%

Construction11.8%

Financial8.0%

Other7.3%

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Small Businesses...Small Businesses...

make up 99% of all the businesses in the U.S.employ 53% of the nation's private sector workforce.create more jobs than big businesses.are leaders in offering training and advancement opportunities to workers.

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Small Businesses...Small Businesses...

produce 51% of the nation's private GDP.account for 47% of business sales.create 4X more innovations per R & D dollar spent than medium-sized firms and 24X as many as large companies.

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0%

20%

40%

60%

80%

100%

% o

f Sm

all F

irms

Surv

ivin

g

New 2 4 6 8 10

# of Years in Business

Small Business Survival Rate

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The Small Business The Small Business Failure RecordFailure Record

24% of new businesses fail after two years.51% fail within four years.63% fail within six years.

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Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

Management incompetenceLack of experiencePoor financial controlFailure to develop a strategic planUncontrolled growth

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Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

Poor locationImproper inventory controlIncorrect pricingInability to make the “entrepreneurial transition”

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Avoiding the Pitfalls of Avoiding the Pitfalls of Small Business FailureSmall Business Failure

Know your business in depthDevelop a solid business planManage financial resourcesUnderstand financial statementsLearn to manage people effectivelyKeep in tune with yourself