Chapter 1Introduction to Entrepreneurship

Section 1

What is an Entrepreneur?

• Most people work for a business.

• A business is an organization that provides products of services, usually to make money.

• Someone who works for a business owned by someone else is an employee

• Someone who creates and runs their own business is called an entrepreneur

How are they different?

• When an entrepreneur starts their own business, they incur risk (the chance of losing something)

• Entrepreneurs risk more than employees

▫ Employees risk losing their job if they do not perform.

▫ Entrepreneurs risk not being able to pay their selves OR their employees

Why take the risk?

• Chance of a reward

▫ Reward can be money

▫ Can be personal satisfaction or independence

▫ Business owners control the money made by a business

▫ Ultimately responsible for success or failure of business

Big Business vs. Small Business

• What do you think of when you think „business‟?

• More businesses are considered small than big.

• Small businesses employ about half of the US private workforce and create about 64% of all new jobs.

Small vs. Big

• The Small Business Administration (SBA) –government agency that provides aid to small businesses

▫ Defines a small business as one with less than 100 employees, 500 for manufacturing companies

▫ Found that over 600,000 new businesses are started in the US each year (about 500,000 close)

▫ Not all stay small – depends on goals

How can you get experience?

• Internship – provide practical on the job training in a business setting

• Apprenticeship – teaches particular trade or skill (i.e. carpentry or plumbing)

Rewards

• Biggest reward: feeling of self-sufficiency

• Making your own rules

• Doing work you enjoy

• Creating greater wealth

• Helping your community

Risks

• Potential business failure

• Unexpected obstacles

• Financial insecurity

• Long hours and hard work

Multiple businesses

• Some people do so well with their first business, they open another one. People who start multiple businesses are called Serial Entrepreneurs. They take the skills they learned in their success in the first business, and apply them to success in many businesses.

1800s

• Thomas Edison showed signs of being an entrepreneur at 12 – selling newspapers, candy, snacks at the RR station. Started newspaper business at 14, held over 1000 patents including the electrical system – he changed the world

• P.T. Barnum was 60 when his circus staged its first show – it generated $400,000 in sales the first year. Became known as “greatest show on earth”

1900s

• 1903 – William Harley and Arthur Davidson „improved‟ the two wheel bicycle. One of only two motorcycle companies that made it through the depression. Makes over $41 million annually

• Maggie Lena Walker – first woman to charter a bank in the US – philosophy of turning “nickels into dollars” St. Luke Penny Saving Bank with receipts of $9,430.44 – now Consolidated Bank and Trust, assets over $116 million

Present Day

• Ingvar Kamprad (Sweden) bought bulk matches and sold them in smaller batches. Invested this and others – age 17 founded IKEA now one of top ten wealthiest in world

• 1976 Steven Wozniak and Steve Jobs took total possessions of $1300 and began selling personal computers. Apple went public in 1980 and they became multi-millionaires

Continued

• Russell Simmons – passion for hip hop turned into Def Jam Recordings – named one of the top 25 most influential people in the past 20 years.

• 1995 Dineh Mohajer wanted light blue nail polish to match her shoes. Combined other polishes to get her color. Within 2 years her company (Hard Candy) had sales over $10M

Today's Entrepreneurship

• Need to pay attention to social trends

• i.e. internet companies (Amazon.com)

• Entrepreneurs don‟t only have the opportunity to change the economy and the world.

▫ Green companies aim to protect or improve the environment

Spudware makes utensils from corn and potato starch that can withstand boiling water

SELCO-India provides solar lighting to rural areas

Section 2

Who are Entrepreneurs?

• US Census Bureau survey of 16.7 million business owners

▫ 64% had some college education when they started the business

▫ Over 60% used their own money or money from a family member for the venture

▫ Slightly over half of them who had employees worked overtime

▫ About half of the businesses were home based

Ages

0%

5%

10%

15%

20%

25%

30%

35%

Over 55

45-54

35-44

25-34

Under 25

Minorities

• Went from 7% of businesses to 18% of business from 1982 to 2002

• Businesses owned by women increased from 1.76 Million to 3.75 Million from 1976 to 2000

Characteristics of Successful

Entrepreneurs• Self Assessment – the ability to evaluate your

strengths and weaknesses is important

• Important to see where you lack, as you can hire employees who compliment you

• Aptitude – a natural ability to do a particular type of work or activity well

• Attitude is a way of viewing or thinking about something

▫ Entrepreneurs tend to have positive attitudes.

Personal Characteristics• Courage

• Creativity

• Curiosity

• Determination

• Discipline

• Empathy

• Enthusiasm

• Flexibility

• Honesty

• Patience

• Responsibility

Skills

• A skill is an ability learned through training and practice.▫ Business Skills – understanding business▫ Communication Skills – ability to listen, write, and

speak▫ Computer Skills – using technological skills▫ Decision Making and Problem Solving Skills –

applying logic, info, and past experiences to new things

▫ Mathematical Skills – creating budgets, records, and financial statements

▫ Organizational Skills – keep your things in order▫ People Skills – ability to persuade and motivate people

How can you increase your potential?

• Business Knowledge – read magazines and newspapers about business

• Financial Skills – take a course in accounting, personal finance, or investing

• Career exploration – look at different careers that are out there that fit your strengths/weaknesses

• Community Awareness – volunteer/internships• Education – always learning• Relationships – know people, find a mentor

▫ Someone who will provide guidance, tutoring, suggestions

Why study Entrepreneurship?

• Not all of you will become entrepreneurs

• Studying entrepreneurship can help you be a better employee

• Many businesses practice intrapreneurship

▫ Giving employees opportunities to be creative and try our new ideas within the company

• Learning about entrepreneurship often helps young people develop a vision for their life