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Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 1 Entrepreneurs: The Driving Force Behind Small Business.

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Presentation on theme: "Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 1 Entrepreneurs: The Driving Force Behind Small Business."— Presentation transcript:

1 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 1 Entrepreneurs: The Driving Force Behind Small Business

2 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 2 The World of the Entrepreneur In the U.S., entrepreneurs start nearly 6 million businesses a year! In the U.S., entrepreneurs start nearly 6 million businesses a year! Global Entrepreneurship Monitor (GEM) Global Entrepreneurship Monitor (GEM)  Approximately 10.5% of U.S. population is actively involved in trying to start a new business.  Approximately 12% of people in 37 GEM countries studied are involved in starting a new business.

3 Source: 2002 Global Entrepreneurship Monitor.

4 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 4 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.

5 What Is an Entrepreneur? An entrepreneur is someone who is willing to work 16 hours a day to keep from working 8 hours a day for someone else!

6 Source: Dun & Bradstreet 19 th Annual Small Business Survey, 2000.

7 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 7 Characteristics of Entrepreneurs Desire to take initiative Desire to take initiative Preference for moderate risk Preference for moderate risk Confidence in their ability to succeed Confidence in their ability to succeed Self-reliance Self-reliance Perseverance Perseverance Desire for immediate feedback Desire for immediate feedback

8 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 8 Characteristics of Entrepreneurs High level of energy High level of energy Competitiveness Competitiveness Future orientation Future orientation  Serial entrepreneurs Skilled at organizing Skilled at organizing Value achievement over money Value achievement over money

9 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 9 Entrepreneurship One characteristic of entrepreneurs stands out: One characteristic of entrepreneurs stands out:Diversity! Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should).

10 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 10 Benefits of Small Business Ownership The opportunity to: Create your own destiny Create your own destiny Make a difference Make a difference Reach your full potential Reach your full potential Reap impressive profits Reap impressive profits Contribute to society and to be recognized for your efforts Contribute to society and to be recognized for your efforts Do what you enjoy and to have fun at it Do what you enjoy and to have fun at it

11 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 11 Drawbacks of Small Business Ownership Uncertainty of income Uncertainty of income Risk of losing your entire investment Risk of losing your entire investment Long hours and hard work Long hours and hard work

12 Source: Dun & Bradstreet 21st Annual Small Business Survey, 2002.

13 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 13 Drawbacks of Small Business Ownership Uncertainty of income Uncertainty of income Risk of losing your entire investment Risk of losing your entire investment Long hours and hard work Long hours and hard work Lower quality of life until the business gets established Lower quality of life until the business gets established

14 Source: National Federation of Independent Businesses and Wells Fargo Bank, 2002.

15 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 15 Drawbacks of Small Business Ownership Uncertainty of income Uncertainty of income Risk of losing your entire investment Risk of losing your entire investment Long hours and hard work Long hours and hard work Lower quality of life until the business gets established Lower quality of life until the business gets established High levels of stress High levels of stress Complete responsibility Complete responsibility Discouragement Discouragement

16 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 16 Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurs as heroes Entrepreneurial education Entrepreneurial education Demographic and economic factors Demographic and economic factors Shift to a service economy Shift to a service economy Technological advancements Technological advancements Independent lifestyles Independent lifestyles E-Commerce and the World Wide Web E-Commerce and the World Wide Web

17 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 17 Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurs as heroes Entrepreneurial education Entrepreneurial education Demographic and economic factors Demographic and economic factors Shift to a service economy Shift to a service economy Technological advancements Technological advancements Independent lifestyles Independent lifestyles E-Commerce and the World Wide Web E-Commerce and the World Wide Web International opportunities International opportunities

18 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 18 The Cultural Diversity of Entrepreneurship Young entrepreneurs Young entrepreneurs

19 Source: Milken Institute, 2003.

20 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 20 The Cultural Diversity of Entrepreneurship Young entrepreneurs Young entrepreneurs Women entrepreneurs Women entrepreneurs

21 Source: National Federation of Women Business Owners, 2003.

22 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 22 The Cultural Diversity of Entrepreneurship Young entrepreneurs Young entrepreneurs Women entrepreneurs Women entrepreneurs Minority-owned enterprises Minority-owned enterprises Immigrant entrepreneurs Immigrant entrepreneurs Part-time entrepreneurs Part-time entrepreneurs

23 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 23 The Cultural Diversity of Entrepreneurship Home-based business owners Home-based business owners Family business owners Family business owners Copreneurs Copreneurs Corporate castoffs Corporate castoffs Corporate dropouts Corporate dropouts

24 Source: Small Business Administration, 2002.

25 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 25 Small Businesses... Make up 98.5% of all the businesses in the U.S. Make up 98.5% of all the businesses in the U.S. Employ 52% of the nation’s private sector workforce. Employ 52% of the nation’s private sector workforce. Pay 45 % of total private payroll. Pay 45 % of total private payroll. Create more jobs than big businesses. Create more jobs than big businesses. Are leaders in offering training and advancement opportunities to workers. Are leaders in offering training and advancement opportunities to workers.

26 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 26 Produce 51% of the nation’s private GDP. Produce 51% of the nation’s private GDP. Account for 47% of business sales. Account for 47% of business sales. Create 4X more innovations per R & D dollar spent than medium-sized firms and 24X as many as large companies. Create 4X more innovations per R & D dollar spent than medium-sized firms and 24X as many as large companies.  Create two-thirds of all new inventions.  Produce 13X to 14X more patents per employees than large companies. Small Businesses...

27 Source: National Federation of Independent Businesses Business Policy Guide, 2003.

28 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 28 Eleven Deadly Mistakes of Entrepreneurship 1. Management incompetence 2. Lack of experience 3. Forcing a flawed idea 4. Undercapitalization 5. Poor cash management 6. Failure to develop a strategic plan

29 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 29 Eleven Deadly Mistakes of Entrepreneurship 7. Weak marketing effort 8. Uncontrolled growth 9. Poor location 10. Lack of inventory control 11. Inability to make the “entrepreneurial transition”

30 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 30 Putting Failure Into Perspective Entrepreneurs are not paralyzed by the prospect of failure. Entrepreneurs are not paralyzed by the prospect of failure. Failure – a natural part of the creative process. Failure – a natural part of the creative process. Successful entrepreneurs learn to fail intelligently. Successful entrepreneurs learn to fail intelligently.

31 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 31 Avoiding the Pitfalls of Small Business Failure Know your business in depth Know your business in depth Prepare a solid business plan Prepare a solid business plan Manage financial resources Manage financial resources Understand financial statements Understand financial statements

32 Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 32 Avoiding the Pitfalls of Small Business Failure Learn to manage people effectively Learn to manage people effectively Set your business apart from the competition Set your business apart from the competition Keep in tune with yourself Keep in tune with yourself


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