Determining Entrepreneurial Potential

LOUISIANA TECH UNIVERSITYTechnology Business Development Center (TBDC)

Determining Entrepreneurial Potential


someone who seeks to capitalize on new and profitable endeavors or business; usually with considerable initiative and risk . . . Wikipedia

one who organizes, manages, and assumes the risks of a business or enterprise . . . Merriam-Webster Online

an individual engaged in the process of starting and growing one's own business or idea . . . The Public Forum Institute

those who perceive and pursue opportunities that enhance the regional and global economy . . . LA Tech University Center for Entrepreneurship and Information Technology (CEnIT)

Some Definitions of an

Entrepreneur


6 – 7% of U.S. population is in the process of starting a business at any given time

53% of new small businesses begin in the home with less than $10,000

entrepreneurial activity for men has declined

activity for women remained the same

immigrants outpace native-born Americans

older individuals (55-64) increasingly engaged in new business starts

More Descriptions of Entrepreneurs


http://abese.org/videos/FinalLarge.wmv

What is Entrepreneurshi

p?


Persistence Desire for immediate feedbackInquisitiveness Strong drive to achieveHigh energy level Goal oriented behaviorIndependent DemandingSelf-confident Calculated risk takerCreative InnovativeVision CommitmentProblem solving skills Tolerance for ambiguityStrong integrity Highly reliablePersonal initiative Ability to consolidate resourcesCompetitive Change agentTolerance for failure Desire to work hardStrong management Organizational skillsLuck

Indicators of Entrepreneurial

Aptitude


More Characteristics

of Successful Entrepreneurs

Able to do many things at once

Likes a challenge

Likes to work for self and be in control

Not easily discouraged

Good health, lots of energy and handles stress well

Positive thinker, does not dwell on setbacks

Focused on success rather than chances of failure

Often has close friend or relative who owns a business

Recent immigrant to N America (within two generations)


Seize an opportunity (17%)Personal accomplishment (13%)Dream to run own business (9%)Use experience or skills (9%)Be own boss (8%)Economic necessity to make living (7%)Had previous experience (7%)Supplement income from other employment (5%)Create job for self (4%)Frustrated in previous job (3%)Make lots of money (3%)Other reasons (15%)

Common Reasons for

Business Startup


Importance of Entrepreneurs

hip •about 50% of private sector employment

•youngest and smallest firms are the biggest job producers

•firms with fewer than 20 employees generate majority of net new jobs in the U.S

•fast-growth companies responsible for about two-thirds of new jobs created between 1993 and 1996

•since 1980, Fortune 500 companies have lost five million jobs, while the United States as a whole has added 34 million new jobs

•JOBS



hip •Small businesses developed significant number of this nation’s most important inventions and innovations

•Entrepreneurs responsible for 67 percent of inventions and 95 percent of radical innovations since World War II

•Small firms produce more highly cited patents than large firms

•Small patenting firms produce 13-14 times more patents per employee

•Small companies represent 65% of new companies in the list of most highly innovative companies in 2002

•INNOVATION



hip •American small business is the world’s third largest economy, trailing only the U.S. as a whole and Japan

•mall businesses generate about half of nonfarm private gross domestic product

•Economic models show that firm births are positively correlated with innovation and regional growth (employment, wage and productivity)

•In 2004, the median net worth for self employed households was $335,600 compared to $67,200 for those that worked for others

•WEALTH CREATION


Sobering Statistics

About 50% of small businesses fail/close within the first five years

Of the 50% closing, only about one-third closed under circumstances that owners considered unsuccessful

Within a 10 year period, about 64.2% of businesses fail/close, but only 5.3% actually filed for bankruptcy during a decade

NFIB estimates that over the lifetime of a business, 39% are profitable, 30% break even, and 30% lose money, with 1% falling in the "unable to determine" category


Striving to Survive

More likely to close:Relatively young ownersServices or retail tradeInsufficient start-up capitalBeing in an urban/suburban area

Greater chance of survival:Starting with some resources and sizeHaving employeesSufficient starting capitalEducated ownerPreviously owning another businessHaving multiple ownersHome-based at startup

Being an employer main factor leading to survival


Common Reasons for

Business Failure

Lack of experienceInsufficient capitalPoor locationPoor inventory managementOver-investment fixed assetsPoor credit arrangementsPersonal use of business fundsUnexpected growthCompetitionLow sales


Improves understanding of factors affecting sales potential

Provides tools for basic assessment of business feasibility

Defining the Opportunity


Provides understanding for development of initial management team

Introduces framework for defining and prioritizing staffing needs

Bringing the Right People

on Board


Provides understanding of basic budgeting

Allows rough estimate of funding needs

Calculating the Financial Need


Provides understanding of factors influencing choice of legal entity

Helps with deciding on best form of business organization

Choosing an Ownership Structure


Provides understanding of how to prepare for business ownership

Helps avoid common mistakes

Learning from Experienced

Entrepreneurs


Prepare for Success

Biz Opp People Finance

Lack experience X

Insufficient capital x X

Poor location X x

Poor inventory mgt x X

Over investment x X

Poor credit arrangement x X

Personal use of funds x X

Unexpected growth X x X

Competition X x

Low sales X x


Assistance and Support for

New Ventures • Technology Business Development Center (TBDC)Kathy Wyatt, Director: [email protected]

• Center for Entrepreneurship & Information Technology (CEnIT)Jon Pratt, Director: [email protected]

• Association of Business, Engineering, & Science Entrepreneurs Dr. Mark Barker and Mrs. Debbie Inman, Advisors:

[email protected]

• LSU-S Small Business Development Center Cooper Cochran, Director: [email protected]

• LA SBDC State Office: https://www.lsbdc.org


Reports & Studies on

Entrepreneurship

Kauffman Index of Entrepreneurial Activity, 1996-2005http://www.kauffman.org/items.cfm?itemID=704

National Dialogue on Entrepreneurshiphttp://www.publicforuminstitute.org/nde/entre/index.htm

SBA Office of Advocacyhttp://www.sba.gov/advo/index.html

National Federation of Independent Businesshttp://www.nfib.com/

Kauffman eVenturing http://www.eventuring.com/eShip/appmanager/eVenturing/eVenturingDesktop


Decide whether you are committed enough to continue

Determine how you want to conclude/exit

Develop brief, but clear and compelling, explanation of your concept

Start building the team needed to succeed

Set some goals and timelines

Get the plan in writing

Next Steps


The beginning is the most important part of the work.

Plato

Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.

St. Francis of Assisi

Next Steps


LA Tech TBDC

Louisiana Tech UniversityTechnology Business Development CenterP.O. Box 3145, Ruston, LA 71272Phone: (318) 257-3537Fax: (318) 257-4442Email: [email protected]: Kathy Wyatt, Director

Documents

Determining Entrepreneurial Potential