The Entrepreneurial Process Chapter 1 Section 2

The History of Entrepreneurship Entrepreneurship became a popular topic in the 1980’s Small businesses were the norm Basic needs were supplied Industrial Revolution brought about the growth of large companies in steel, railroads, and manufacturing. 1960’s no international competition Job security, workers spent entire life with one company

The History of Entrepreneurship High inflation, produced high prices and higher-than-normal interest rates Competition from countries with lower labor costs. Introduction of the microprocessor and the personal computer brought the world into the Information Age Whole categories of products become obsolete

The History of Entrepreneurship Known as the “Decade of Entrepreneurship” Large companies were suffering New smaller companies were responding to the market change Outsourcing Increased, more Service companies emerged Mid 1990’s Internet Changed the way businesses operated New entrepreneurial ventures Do business anywhere & reach customers in cost effective and efficient ways anywhere in the world

The Entrepreneurial Start-Up Process Includes Five key components Entrepreneur Driving force Recognizes opportunity Pulls together the resources to exploit the opportunity Creates a company to execute the opportunity in the marketplace Adds all life experiences and expertise Sees the venture through from idea to market

The Entrepreneurial Start-Up Process The Environment Includes variables that affect the venture but are not controlled by entrepreneur Four variables affect a new venture’s ability to start and grow Nature of the environment Availability of resources Ways to realize value Incentives to create a new business (enterprise zones)

The Entrepreneurial Start-Up Process The Opportunity An idea that has commercial potential Idea + market = opportunity

The Entrepreneurial Start-Up Process Start-up Resources Skilled labor Management expertise Capital Legal & financial advice Facility Equipment Customers New Venture Organization Supports all the products, processes, and services Allows for the creation of value to benefit the owners, the employees, the customers, and the economy

New Business Success and Failure Small Business Admin. Report that 66% of small businesses survive the first two years. Drops to 40% by six years One-third of businesses that close do so successfully; due to selling, closing for retirement, or merging with another company A business failure – has stopped operating with a loss to creditors Discontinuance – was purposely discontinued by an owner who wanted to start a new one; the business may also be operating under a new name Not failures

How Entrepreneurs Can Succeed Effective Planning & Management Recognizing a need in the Market Testing that opportunity in the marketplace Assembling a team with the necessary expertise to execute the business concept