Chapter 1 - Foundation

8/19/2019 Chapter 1 - Foundation

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ENTREPRENEURS

HIPB.com (Hons)

5th semesterHailey college of Commerce

Instructor :Touseef Ahmad


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Chapter 1

The oundations of!ntrepreneurship


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Chapter "utline

The #orld of entrepreneurs

$hat is entrepreneurship%

The &ene'ts of entrepreneurship The potential dra#&acs of !ntrepreneurship

ole of !ntrepreneurship in !conomic*e+elopment

The po#er of small &usiness Ten ,istaes of !ntrepreneurship


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The $orld of the

!ntrepreneurIn the -../ entrepreneurs start &et#een 0

million and .5 million &usinesses a year2Appro3imately 14.5 of Americans are

acti+ely in+ol+ed in trying to start a ne#&usiness.

6 of entrepreneurs start 'rst time76 of Americans &elie+e in !ntrepreneurship*o#nsi8ing in all o+er the #orld (Increasing

-nemployment )


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The 9lo&al !ntrepreneurship ,onitor (9!,)411 9lo&al eport 'nds an upsurge inentrepreneurship around the #orld ;entrepreneurs are no# num&ering near 44million in 5 countries


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Ch. 1: The oundations of !ntrepreneurship

e or o e!ntrepreneur9lo&al !ntrepreneurship ,onitor (9!,) study

reports:,en are t#ice as liely to start a &usiness as

#omen.

,ost entrepreneurs turn to family mem&ers andfriends for capital.

!ntrepreneurs are most liely to launch&usinesses #hen they are

&et#een the ages of 5 and .

1 < >


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e or o e!ntrepreneur

!+ery year -.. entrepreneurs launch 654/444ne# &usinesses.

!ntrepreneurial spirit < the most signi'cant

economic de+elopment in recent history.

Ch. 1: The oundations of !ntrepreneurship1 < 7


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What is Entrepreneurship?

The #ord @entrepreneur deri+esfrom the rench #ords entre/ meaning&et#een/ and prendre/ meaning @to

tae. The #ord #as originally usedto descri&e people #ho @tae on theris &et#een &uyers and sellers or

#ho @undertae a tas such asstarting a ne# +enture.

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$hat is an

!ntrepreneur%"ne #ho creates a ne# &usiness in the face ofris and uncertainty for the purpose of

achie+ing pro't and gro#th &y identifyingopportunities and assem&ling the necessaryresources to capitali8e on them.

imply *e'ne:

rocess of creating something ne# andassuming the riss and re#ards.

o&ert *.Hisrich/ ,..eters *.A.hepherd


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1


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"ne #ho creates a ne# &usiness in the face ofris and uncertainty for the purpose of achie+ingpro't and gro#th &y identifying opportunities andassem&ling the necessary resources to capitali8e

on them. inding inno+ation and maret gaps for ne#

products and ser+ices.

!ntrepreneurship is a&out creativity. !ntrepreneursuse inno+ation and hard #or to o+ercome o&staclesto their success.

!ntrepreneurship is a&out fun. Dothing feels &etterthan focused e?ort and accomplishment.

Ch. 1: The oundations of !ntrepreneurship1 < 15


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Introduction of a ne# product or ser+ice that is animpro+ement in the Euality of an e3isting product orser+ice.

Introduction of a ne# process or method thatincreases producti+ity.

The opening of a ne# maret/ particularly ane3port maret in a ne# territory.

The conEuest of a ne# source of supply ofra# materials/ half


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Tom Fs decision in the late 1G>4s to create*ominos i88a &ased on home deli+ery and

e? Be8oss decision in 1GG5 to launchAma8on.com as a totally online &oostore aree3amples of inno+ati+e distri&ution strategiesthat re+olutioni8ed the maretplace.


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!ntrepreneur is a person #ho starts anenterprise. The process of creation called

entrepreneurship. The entrepreneur is theactor and entrepreneurship is the act. Theoutcome of the actor and the act is called theenterprise. An enterprise is the &usiness

organi8ation that is formed and #hichpro+ides goods and ser+ices/ creates =o&s/contri&utes to national income/ e3ports ando+er all economic de+elopment.


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To put it +ery simply an entrepreneur issomeone #ho percei+es opportunity/organi8es resources needed for e3ploitingthat opportunity and e3ploits it.

Computers/ mo&ile phones/ #ashingmachines/ AT,s/ Credit Cards/ Courierer+ice/ and eady to eat oods are alle3amples of entrepreneurial ideas that gotcon+erted into products or ser+ices.


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Jou can also choose to &e lie ,r. atel ofDirma #ho #as a chemistKs assistance andhas a s. 544 crore company today. *id youno# that the original ,r.

Bata #as a co&&ler% And no# has stores inmore than 04 countries all o+er the #orld.


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!ntrepreneur performs the function of ris anduncertainty &earing. !+ery decision pertaining tode+elopment of ne# products/ adapting ne#

technologies/ opening up ne# marets in+ol+es ris!ntrepreneurs see diseEuili&rium ; a gap &et#een the

#ants and needs of the customers and the productsand ser+ices that are currently a+aila&le in themarets. The entrepreneurs then &ring together the

factors of production necessary to produce/ o?er andsell desired products and ser+ices. They in+est and ristheir money ; and other peoples money ; to produceproducts andLor ser+ices that can &e sold at a pro't.


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The tapal Story Transforming A Mision Into eality


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Tapal Tea is &orn!sta&lished in 1G7 &y Adamali Tapaltarted &usiness due to maret opportunity

and potential gro#th rather than priore3perience

A small shop ne3t to odia Ba8ar

uccess to lo# o+erhead costs and personal

customer ser+ice


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,aret egmentationAdamali Tapal segments maret Tea stall consumers Tea &re#ed at homeN @amily ,i3ture


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nd

9eneration steps inai8ullah Tapal taes control after ather losesinterest in &usiness

Business has gro#n and management controlremains #ith fe# employees

Both ather and on reluctant to manage&usiness


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Afta& Tapal oins the amily

Business Trained in ri Oana

Oooed after #arehousing/ &lending/pacaging/ shop sales and customer ser+ice.

assionate a&out the tea &usiness after#oring in it.


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Business trategyA+oiding direct competition #ith foreign&rands

ocus on ignored or o+erlooed niche

Introduction of colour coded pacaging

Appointed distri&utors rather than +erticallyintegrating as #as industry norm

Oarger premises &uilt in Porangi/ 'nanced &ysale of assets one at a time to a+oid cash Qo#pro&lems


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Introduction of mechani8ation

AcEuisition of &uilding in odia Ba8ar tomaintain contacts

eorgani8ation of =o& functions such as'nance/ mareting etc!mployee lea+es to open a competing &usiness

Introduction of *anedar/ #hich has a mildertaste &ut strong in Qa+our


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Achie+ementsioneered in mechani8ed soft pacaging fortea in aistan

1st to introduce Penyan teaR e3porting tea to 5continents/ metal free tea &agsR tea plantationin hiniari/ Dorthern Areas

!sta&lished @Hum Sadam/ an entrepreneurial

resource centre for the disad+antaged.


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IAT AACompany pro'le:Ideal tarBusiness type:lastic recycling

,!A9!@De+er say sy is the limit/the moon has footprints @


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Monis Rahan !chairperson o"naseeb networ#s and "ounder

o" ro$ee%co&


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Characteristics of entrepreneurs

'esire "or responsibility

personal responsi&ility for the outcome of their +enture o Pre"erence "or oderate ris#

is taer &ut not #ild ris taero (on)dence in their ability to succeed

"ptimistic U.

o 'esire "or iediate "eedbac#

Dic 9leason ..city soft Inc.

o Hi*h level o" ener*y

,ore energetic than a+erage personUColin Angle and Helen

iRobot spent 18 hours a day with their 6 employees tocreate software and assembling robots.


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o +uture rientation

Al#ays searching for opportunitieserial !ntrepreneurs

"pportunity entrepreneur

Decessity entrepreneurs

o S#ill at or*ani$in*

&uilding a &usiness from setch U.right people to accomplish goal

o -alue o" achieveent over Moneyo Hi*h de*ree o" coitent

Be *!A #hen people tell J"- that

you cannot ful'll your dreams2 Al#ays thin: 9od and I can do this2

Tolerance "or abi*uity

+lexibilitya&ility to adapt the changing demand and technological changes

..rigidity lead to failure


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o Tenacityuch is the case #ith Thomas !dison/ #hose most

memora&le in+ention #as the light &ul&

,ilton Hershey his 'rst three candy maing &usiness failed hecreated Oancaster caramel company #hich &ecame +ery

successful. De+er say I ha+e failed

ay I ha+e not yet succeed


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TH! B!D!IT "!DT!!D!-HI

"pportunity to create your o#n destiny

*oug *anforth Qo#er shop

"prah #infrey started reporter for radio station

U..Harpo production/ Harpo 'lms/ Harpo studios

o "pportunity to mae di?erenceo "pportunity to reach your full potentialo

"pportunity to reach impressi+e pro'ts T#o third of American millionaires are entrepreneurs

or&es 44 richest people 75 are entrepreneurs


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"pportunity to contri&ute to society and &e

recogni8ed for your e?ort,! contri&ution in economy and local &usiness s

o "pportunity to do #hat you en=oy and ha+e fun

,ost of entrepreneurs enter to 'eld in #hichthey ha+e interest

Har+ey ad+ice

@ ind a =o& doing #hat you lo+e/ and you ha+e tone+er #or a day in your life


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Michael 'ell 0132

Created a ne# model for Csales

Cutting out the retail

middleman and custom<&uilding computers to suit&uyerFs needs put *ell at thefront of the class of Cmaers.


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To 4nderson 5 (hris 'e 6ol"e

ounders of ,ypace.com

egistering 1>4/444 people perday #ith no mareting.

As of eptem&er 447/ there are

o+er 44 million accounts.


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prah 6in"rey0127

"prah #infrey turned her

name into one of the most

successful and respected

$rands in the world.

%everaged that fame into

other interests&

magaines, #e$ sites,

film and television

production and (ocial

)ntrepreneurship.


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(had Hurley, 81, Steve (hen, 89 5 :awed;ari, 8<

ounders of JouTu&e

Broadcasts 144 millionshort +ideos daily onmyriad(countless)su&=ects

old to 9oogle


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01=>, Harland Sanders

"pened (anders

Court * Cafe in the

front room of a gas

station.

Colonel (anders

$egan franchising in

+-.

/warded the first

franchise to Pete Harman

in (alt %ak City, 0tah.


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otential dra#&acs of


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otential dra#&acs of!ntrepreneurs

-ncertainty of income is of losing your entire in+estments

Oong hours and hard #or

Oo#er Euality of life until the &usiness get esta&lished

High le+el of stress

Complete responsi&ility

*iscouragement


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B!HID* TH! B"",: $HAT !!*ID9 TH! !DT!!D!- I!%

$hat forces are dri+ing this entrepreneurial trends in our economy %

$hich factors led to this age of entrepreneurship%


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Entrepreneurs as Heroes

intangi&le source for inspiration

Bill 9ates (,icrosoft corporation)

e? Be8os (Ama8on.com)

,ichel *ell (*ell computers)

o Entrepreneurial Education

popular course of study

career path as entrepreneur

o 'eo*raphic and Econoic "actors

Age/ gender/ income


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The ser+ices sector plays a +ital role in sustaining the gro#th of aistanKs economy/ #ith a share o"2


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Technolo*ical 4dvanceents

-sage of computers/ color machines/ a3/ ans#ering machines

currently all these technology are #ithin the &udget of small&usinessU..diVcult to produce hea+y machine and

esta&lish factories Independent life styles

Independent and the $orld $ide $e&

International opportunities :

Access to international maret


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TH! C-OT-AO *IM!ITJ "!DT!!D!-HI

Aoun* entrepreneurs ? *esire to create o#n destiny

9eneration W( &et#een 1G>5 and 1G7>)

64 of all &usiness

@9eneration !

Taylor *icman at the age of 15 cool Tronics

6oen entrepreneurs?

till faces discriminationsDearly > of adult #omen ha+e their o#n &usiness .

/lass (eilin*

*iscriminatory &arrier that pre+ents #omen and minorities from rising topositions of po#er or responsi&ility/ as #ithin a corporation.

Minority Entrepreneurs


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Part Tie Entrepreneurs

15 millions Americans are !

,inimum ris

,ay &ecome full time !ntrepreneur

o HoeB .ased Entrepreneurs

• 50 of &usiness are home &ased

• 64 of them ha+e no employee

• X s7 &illion a year sales• minimum start up cost

• In past cottage industry

• High tech &usinesses

+ il b d b i


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+aily based business ?

t#o or more family mem&er control &usinesso (opreneurs

Co o#ners of &usiness

personality conQicts Common +ision

espect each other talent Dot superior and su&ordinate (full and eEual partners) Appreciate and acno#ledge each other Clear di+ision of duties &ased on the sills of partners A&ility of encouragement

o(orporate castoC ? ha+e e3tensi+e on


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ocial entrepreneurs:

#ho use their sills not only to create pro'ta&le &usiness&ut also achie+e social and en+ironmental goals for common good.

on 9onen/ a former consultant start a &usiness to create a&usiness that can address the pro&lem of gar&age disposal and

also generate a pro't. ecycle Ban.!conomic/ social and en+ironmental

TH! T!D *!A*OJ ,ITAP!


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TH! T!D *!A*OJ ,ITAP!

,anagement ,istaes

Oac of e3perience

•

technical no#ledge a&out the &usiness going to start• !3perience regarding operations of &usiness. oor inancial controls

• uVcient amount of capital to start &usiness

• -ndercapitali8ation

• ,is=udgment a&out the 'nancial reEuirement

@shoestring• oor Cash Qo# management $ea ,areting !?orts

ailure to de+elop a strategic plan

• Deglecting strategic management process


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-ncontrolla&le 9ro#th• 9ro#th must &e planned and controlled

• !3pansion reEuires changes in organi8ationstructure

• inancial controls and also managerial e3pertise.

oor Oocation• oor location #ithout studying in+estigation

Improper in+entory control• InsuVcient in+entory le+el

• roper type of in+entory

Incorrect ricing• Ho# much cost to mae/ maret/ and deli+er their

product

Ina&ility to mae the @ !ntrepreneurialtransition


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!ntrepreneur should delegate authorities

*onKt push into areas #here they are notcapa&le


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utting ailure into perspecti+e

!ntrepreneurs not paraly8ed &y failure

Oearn from failure

ailure is natural part of creati+e process

The only people #ho ne+er fail are those #ho ne+er do anything or ne+er attemptedne# thing

• Ba&e uth

• Base&all player

• ecord of home run in career for many years 71• B-T ho# many no#s record for strieouts

1004%%%


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Harland *a+id anders/ the famous PC couldnt sell hischicen. ,ore than 1/444 restaurants re=ected him.

$alt *isney #as 'red &y a ne#spaper editor &ecause heYlaced imagination and had no good ideas.Ye+eral more of his &usinesses failed &efore the premiere of hismo+ie no# $hite. Today/ most childhoods #ouldnt &e the

same #ithout his ideas.

Al&ert !instein didnt spea until age four and didnt read untilage se+en. His teachers la&eled him Yslo#Y and Ymentallyhandicapped.@

"prah $infrey #as 'red from her tele+ision reporting =o&&ecause they told her she #asnt 't to &e on screen.

H"$ T" AM"I* ITAOO

http://voices.yahoo.com/walt-disney-american-icon-lived-american-11426476.htmlhttp://voices.yahoo.com/walt-disney-american-icon-lived-american-11426476.html


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H"$ T" AM"I* ITAOO

Pno# your Business in *epth

• ight e3perience for &usiness

• tudy your &usiness• ersonal contact #ith suppliers/ customer/ trade

association and rele+ant la#s *e+elop a solid &usiness plan

,anage 'nancial resources

• Cash Qo# management -nderstanding 'nancial statements

• Basic understanding of &usiness and 'nance• $oring capital management

Oearn to manage people e?ecti+ely

• trained and moti+ated employees Peep in tune #ith yourself

• hysically and mentally in your &usiness

• uccess of &usiness depends on your presence and

attention•


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Working capital is a common measure of a

companys liEuidity/ eVciency/ and o+erall health.Because it includes cash/ in+entory/accounts recei+a&le/ accounts paya&le/ theportion of de&t due #ithin one year/ and other

short


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mall Businesses ...

,ae up GG.7 of the 04.1 million&usinesses in the -..

!mploy 51 of the nationKs pri+ate sector#orforce.

Create more =o&s than &ig &usinesses.>4 to 64 of net ne# =o&s o+er the last

decade

Are leaders in o?ering

training and ad+ancement opportunities to#orers.


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,AOO B-ID! ID


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,AOO B-ID! IDAPITAD

Contri&ute 4 to 9*

!mploys 64 of non agricultural la&or force


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The mall and ,edium !nterprise *e+elopment Authority (,!*A) estimates that in aistan/ small and

medium enterprises (,!s) #ith less than 144 employees constitute nearly 1>@ o" all =%2 illion private

'rms that employ 9>@ o" the nonBa*ricultural labor "orceD and their share in the annual /'P is

7>@1% Their 'rm structure is dominated &y sole proprietorship and most are family run &usinesses #ith no

culture of taing it to the pu&ic (I"s).

,! *e'nition


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Enterprise (ate*ory Eployent Si$e !a& Paid Up (apital !b& 4nnual Sales !c&

mall ,edium !nterprise (,!) -p to 54 -p to s. 5 ,illion -p to s. 54 ,illion

Institution Sall Mediu

,! Ban Total Assets of s. 4 million Total Assets of s. 144 million

ederal Bureau of tatistics Oess than 14 employees DLA

un=a& mall IndustriesCorporation

i3ed in+estment. up to s. 4 million e3cluding land and&uilding

DLA

un=a& Industries*epartment

i3ed assets #ith s. 14 million e3cluding cost of land

indh Industries*epartment

!ntity engaged in handicrafts or manufacturing of consumer or producer goods #ith '3ed capitalin+estment up to s.14 million including land &uilding

tate Ban of aistan (,!rudential egulations)

An entity / ideally not &eing a pu&lic limited company/ #hich does not employee more than 54persons ( manufacturing) and 54 persons (trade L ser+ices) and also ful'lls one of the follo#ingcriteria:(i) A trade L ser+ices concern #ith total assets at cost e3cluding land and &uildings up to s 54million.(ii) A manufacturing concern #ith total assets at cost e3cluding land and &uilding up to s 144million.(iii) Any concern (trade/ ser+ices or manufacturing) #ith net sales not e3ceeding s 044 million asper latest 'nancial statements.

9!, aistan


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9!, aistan

aistans estimated population in 411 is o+er 09< illion maing it the #orlds si3thmost


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The te3tile &ased ,!s are the &ac &one of

the economy.


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The "actorBdriven sta*e is mared &y high rates of agriculturalself


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CHAT! 1 TH! "-D*ATI"D "

!DT!!D!-HI !D*


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*iscuss importance of entrepreneurship ineconomic de+elopment of aistan.

( su&mission date: )

9roup assignment :

#rite do#n summary of 14 to 15 pages on

9lo&al entrepreneurship report on aistan andha+e to present. mem&ers in each group.

Dote : do not gi+e any e3use to increase gr[o

(u&mission date: )


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Oearning outcomes

Hope fully at the end of chapter you are a&le to ans#er follo#ing Euestion.


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*e'ne the role of entrepreneurship in united states and across the #orld%

*escri&e the entrepreneur pro'le and e+aluate your potential as an entrepreneur%

*escri&es the &ene'ts and dra#&acs of entrepreneurship%

!3plain the cultural di+ersity of entrepreneurship%

*escri&e important role of small &usiness play in our nation %

*escri&e 14 deadly mistaes of entrepreneurship and e3plain ho# to a+oid them%

ut failure into proper prospecti+e

!3plain ho# entrepreneurs can a+oid &ecoming another failure statistics%


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Documents

Chapter 1 - Foundation