ch01_entrepreneurship.ppt

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The Foundations of Entrepreneurship



Copyright 2008 Prentice Hall Publishing 2Chapter 1: Entrepreneurship

The World of the Entrepreneur

Every year in the U.S., entrepreneurs launch850,000 new businesses.

Entrepreneurial spirit - the most significanteconomic development in recent history.

GEM study: 11.3 percent of adult populationin the U.S. is actively involved in trying to

start a new business.



Entrepreneurial Activity Across the GlobePersons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

A r g e n t i n a

A u s t r a l i a

B e l g i u m

B r a z i l

C a n a d a

C r o a t i a

D e n m a r k

E c u a d o r

F i n l a n d

F r a n c e

G e r m a n y

G r e e c e

H o n g

H u n g a r y

I c e l a n d

I r e l a n d

I s r a e l

I t a l y

J a p a n

N e t h e r l a n

N e w

N o r w a y

P e r u

S i n g a p o r

S l o v e n i a

S o u t h

S p a i n

S w e d e n

U n i t e d

U n i t e d

Country

T o t a l

E n t r e p r e n e u r i a l

A c t i v i t y ( T E A ) I n d e x

TEA Index

Global TEA

Average

Source: 2004 Global Entrepreneurship Monitor.




The World of the Entrepreneur

GEM study

Globally 9.4 percent of adults are activelyengaged in trying to start a business.

Men are twice as likely as women to start abusiness (exactly the opposite trend in the U.S.,however).

Nearly one-third of global entrepreneurs are

between the ages of 25 and 44.




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.




Characteristics of Entrepreneurs

Desire for responsibility

Preference for moderate risk – risk eliminators

Confidence in their ability to succeed Desire for immediate feedback

High level of energy

Future orientation – serial entrepreneurs Skilled at organizing

Value achievement over money


http://slidepdf.com/reader/full/ch01entrepreneurshipppt 7/28Copyright 2008 Prentice Hall Publishing 7Chapter 1: Entrepreneurship

Entrepreneurship

One characteristic of entrepreneurs standsout:

Diversity!

Anyone – regardless of age, race, gender,color, national origin, or any othercharacteristic – can become an entrepreneur

(although not everyone should).



Benefits of Entrepreneurship

The opportunity to:

Create your own destiny

Make a difference

Reach your full potential

Reap impressive profits

Contribute to society and to be recognized

for your efforts Do what you enjoy and to have fun at it



Drawbacks of Entrepreneurship

Uncertainty of income

Risk of losing your entire investment

Long hours and hard work



Small Business Owners' Work Week

Number of Hours Worked per Week

Less than 30 hours

11%

30 to 40 hours

24%

41 to 50 hours

28%

51 to 60 hours

20%

More than 60 hours

17%

Source: Adapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report , 2002, p. 35.







Lower quality of life until the business gets

established



Entrepreneurs' Age at Business Formation

18 - 2412.0%

25 - 3432.3%

35 - 4430.6%

45 - 5417.4%

55 - 646.7%

Over 651.0%

Source: 2004 Global Entrepreneurship Monitor.







Lower quality of life until the business getsestablished

High levels of stress

Complete responsibility Discouragement



Feeding the

Entrepreneurial Fire

Entrepreneurs as heroes

Entrepreneurial education

Demographic and economic factors Shift to a service economy

Technological advancements

Independent lifestyle E-commerce and the World Wide

Web



$94.0

$117.7

$142.5

$169.5

$199.3

$232.1

$-

$50.0

$100.0

$150.0

$200.0

$250.0

R e v e n u e s ( i n B i l l i o n s )

2003 2004 2005 2006 2007 2008

Year

U.S. Retail E-Commerce Revenues

Source: eMarketer, 2005.



Feeding the

Entrepreneurial Fire

Entrepreneurs as heroes

Entrepreneurial education

Demographic and economic factors Shift to a service economy

Technological advancements

Independent lifestyles E-commerce and the World Wide

Web International opportunities



The Cultural Diversity of

Entrepreneurship

Young entrepreneurs

Women entrepreneurs



Why Women Start Businesses

Gain control over my schedule

46%

Saw a market

opportunity and

decided to pursue

it

24%

Frustrated with

"glass ceiling" at

big companies23%

Other reasons

7%

Source: Center for Women’s Business Research, 2004.




Entrepreneurship

Young entrepreneurs

Women entrepreneurs

Minorit y-owned enterprises Immigrant entrepreneurs

Part-time entrepreneurs




Entrepreneurship

Home-based businesses

Family businesses

Copreneurs Corporate castoffs

Corporate dropouts



Small Business by Industry

Service

39.2%

Retail20.5%

Construction

11.8%

Wholesale7.4%

M anufacturing5.8%

Finance8.0%

Other 7.3%

Source: U.S. Small Business Administration, 2005.



Small Businesses...

Make up 99.7 percent of allbusinesses in the U.S.

Employ 51 percent of the nation’s

private sector workforce. Create more jobs than big businesses.

Are leaders in offering training andadvancement opportunities to workers.




Produce 51 percent of the nation’s private GDP.

Account for 47 percent of business

sales. Create 13X more innovations per

employee than large companies.

Zipper, FM radio, laser, airconditioning, escalator, light bulb, personal computer, automatictransmission, and many more!

Small Businesses...



100%

81%

65%

54%

46%40%

36%32% 29% 27% 25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% o

f S m a l l F i r m s S u r v i v i n g

New 1 2 3 4 5 6 7 8 9 10

# of Years in Business

Small Business Survival Rate

Source: NFIB Business Policy Guide, 2003, p. 16.




Ten Deadly Mistakes of

Entrepreneurship

1. Management mistakes

2. Lack of experience

3. Poor financial control

4. Weak marketing efforts

5. Failure to develop a strategic plan




Ten Deadly Mistakes of

Entrepreneurship

6. Uncontrolled growth

7. Poor location

8. Improper inventory control

9. Incorrect pricing

10. Inability to make the “entrepreneurial

transition”




Putting Failure into Perspective

Entrepreneurs are not paralyzed by the

prospect of failure.

Failure – a natural part of the creative process.

Successful entrepreneurs learn to fail

intelligently .



Avoiding the Pitfalls of Small Business Failure

Know your business in depth

Develop a solid business plan

Manage financial resources

Understand financial statements

Learn to manage people effectively Keep in tune with yourself

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ch01_entrepreneurship.ppt