Copyright 2013 Jack M. Kaplan & Anthony C. Warren Getting Started The Entrepreneurial Process Patterns of Entrepreneurship Management 4 th Edition, Chapter

Copyright 2013 Jack M. Kaplan & Anthony C. Warren

Getting Started

The Entrepreneurial Process

Patterns of Entrepreneurship Management 4th Edition, Chapter 1

Chapter 1

What is Entrepreneurship

?The

Entrepreneurial Mindset

Spider-webModel

Networks

The 5 StageEntrepreneuri

al Process


Presentation Outline

• What is Entrepreneurship– Definition– Examples

• Entrepreneurial Characteristics– Why?– The Choices– Types– Common Characteristics

• Organizational Fragility• The Importance of Networks• The Initial Stages

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What is Entrepreneurship?

Root of the Word• From the French word entreprendre, which

refers to individuals who “undertook” the risk of a new enterprise

Today’s Meaning• The process of planning, organizing,

operating, and assuming the risk of a business venture

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What is Entrepreneurship?

Today’s Meaning cont.• More than just the creation of a business; it

also includes the generation and implementation of an idea.

• It is about being a dynamic thinker and operator which includes effective communication to all of your stakeholders

• It is not about being a maverick; entrepreneurs must think tactically and strategically, and operate in a similar fashion

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Quick Facts

• Annual creation of 600,000 to 800,000 new companies

• More employees work for entrepreneurial ventures than any other sector in the economy

• No sector of the U.S., and world, economy has been as vital, dynamic, and creative as entrepreneurship

• Think:

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The Ups and Downs ....


Ecstasy

Time

Despair

En

thu

sia

sm

Vision Commercialization

Have an idea!

It works!

No it doesn’t

Yes it does!

Not proprietary

Yes it is!

Customers like it!

Cost too high

New cost modellooks good!

Yields are low

Have a fix

Doesn’t work

New fix works

Qualification

Orders

Approvals

Entrepreneurship is usually a Roller-Coaster Ride

From R. J. Saldich

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Some Reasons to Become an Entrepreneur

Entrepreneurs learn to think differently.

Triggers to start your own venture: • Independence and Freedom from the restrictions and

bureaucracy of corporate life

• Being able to “do your own thing”

• Plateauing in current job

• Opportunity for sustained growth and mobility

• Flexibility

• Financial reward

• Loss of Current Employment“Looking back, the day that I got fired was the best day of my life” ……successful

entrepreneur.

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Types of Entrepreneurs

The Choice• As the economy has shifted to place a premium on

portable skills and knowledge, as well as effective networks, entrepreneurship has become a viable career alternative.

• Entrepreneurs are classed into several categories:

• Serial Entrepreneur—Someone who starts, grows, and sells several businesses over the course of their career.

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Types of Entrepreneurs – 2

• Aspiring Entrepreneurs—Dream of starting a business; they hope for the chance to be their own bosses, but have not yet made the leap from their current employment into the uncertainty of a startup. Research indicates that, at any given time, 7 million adults are trying to start businesses in the U.S.

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• Lifestyle Entrepreneurs—Have developed an enterprise that fits their individual circumstances and style of life. Intention is to earn income for themselves and their families. Sometimes referred to as “small businesses” or “mom-and-pop shops”. 13 million Americans (25 million if you count part-timers) run their own business from home.

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• Growth Entrepreneurs—Have both the desire and ability to grow as fast and as large as possible. Their firms are the most dynamic job generators in the U.S. economy. There are over 300,000 entrepreneurial companies with more than 50 employees that are growing at a rate of 20 percent per year.

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Ask Yourself “What Type am I”

• One of the major mistakes aspiring entrepreneurs make when starting out is NOT to closely question what they want to be when “they grow up”.

• Each type of entrepreneur is a control and lifestyle choice with many advantages and disadvantages that must be considered

• Decide early on what is most important to you – control, wealth, lifestyle…..

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Entrepreneurial Traits

Common Characteristics of Entrepreneurs: • Passionately seek new opportunities and are always

looking for the chance to profit from change and disruption in the way business is done

• Pursue opportunities with tremendous discipline

• Pursue only the very best opportunities, and avoid exhausting themselves and their organizations by chasing after every option

• Focus on execution—specifically, adaptive execution

• Engage the energies of everyone in their domain

• Lead by example, network, and communicate well

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Entrepreneurial Traits


Ambiguity vs. PlanningCreativity vs. DisciplineUrgency vs. PatienceFlexibility vs. Organizational StructureResponsiveness vs. Systematic ProcessesRisk Taking vs. Controlled RiskShort Term Actions vs. Long Term Goals

Entrepreneurs are Comfortable in Paradoxical Situations. They Learn to Balance:

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The Spider-Web Model

• Managing a Start-up is analogous to building and maintaining a fragile Spider-web which is under continuous attack.

• Unlike a large company with specialists for different functions, entrepreneurs must learn “on-the-job” and fulfill many roles simultaneously, many for which they have no experience or training.


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Near-Neighbor Networks


•The Interstate Network is an example in which each node has a similar characteristic…it is connected more or less equally with its neighbors.

•Such networks offer little value to entrepreneurs.

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Scale-Free Networks


•The Airline Network is an example in which certain nodes have a highly concentrated set of connections.

•Entrepreneurs identify and network with highly connected people, or key influencers and build network power into their business models.

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The Internet(work)


The Internet is an example of a “Scale-free” network. Entrepreneurs exploit its unique characteristics for finding resources, tackling problems and creating efficient market entry strategies.

Internet map courtesy of A. Barabasi

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Getting Started - Stage 1

Stage 1: Conducting Opportunity Analysis

• Innovate and create the vision

• Conduct market analysis and research

• Evaluate the competition

• Research pricing and sales strategies

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Getting Started – Stage 2

Stage 2: Developing the Plan and Setting up the Company

• Set goals and objectives

• Start writing the plan

• Investigate new processes and technologies

• Determine pricing, market, and distribution channels

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Stage 3: Acquiring Financial Partners and Sources of Funding

• Innovate and create the vision

• Conduct market analysis and research

• Evaluate the competition

• Research pricing and sales strategies

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Stage 4: Determining the Resources Required and Implementing the Plan

• Determine value of licenses, patents, and copyrights

• Prepare the organization for growth

• Develop a business model to maximize value retention and sustainability

• Manage the finances

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And Possibly – Stage 5

Stage 5: Scaling and Harvesting the Venture

• Prepare a full business plan

• Discuss options and alternatives– Sell or merge

– Go public

– Form a strategic alliance

• Communicate the opportunity

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Documents

Copyright 2013 Jack M. Kaplan & Anthony C. Warren Getting Started The Entrepreneurial Process Patterns of Entrepreneurship Management 4 th Edition, Chapter