Chapter 1: Entrepreneurship 1 Copyright 2005 Prentice Hall Inc. A Pearson Education Company The Foundations of Entrepreneurship

Chapter 1: Entrepreneurship 2 Copyright 2005 Prentice Hall Inc. A Pearson Education Company The World of the Entrepreneur In the U.S., entrepreneurs start between 3 million and 4.5 million businesses a year! In the U.S., entrepreneurs start between 3 million and 4.5 million businesses a year! Study of influential Americans – the defining issue of the 21 st Century: Entrepreneurship. Study of influential Americans – the defining issue of the 21 st Century: Entrepreneurship. Approximately 10.5% of Americans are actively involved in trying to start a new business. Approximately 10.5% of Americans are actively involved in trying to start a new business.

Chapter 1: Entrepreneurship 3 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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.

Chapter 1: Entrepreneurship 4 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Characteristics of Entrepreneurs Desire for responsibility Desire for responsibility Preference for moderate risk Preference for moderate risk Confidence in their ability to succeed Confidence in their ability to succeed Desire for immediate feedback Desire for immediate feedback High level of energy High level of energy Future orientation Future orientation Skilled at organizing Skilled at organizing Value achievement over money Value achievement over money

Chapter 1: Entrepreneurship 5 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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).

Chapter 1: Entrepreneurship 6 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 7 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 9 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Drawbacks of Small Business Ownership Lower quality of life until the business gets established Lower quality of life until the business gets established

Chapter 1: Entrepreneurship 11 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 12 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 13 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 14 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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

Chapter 1: Entrepreneurship 15 Copyright 2005 Prentice Hall Inc. A Pearson Education Company The Cultural Diversity of Entrepreneurship Home-based businesses Home-based businesses Family businesses Family businesses Copreneurs Copreneurs Corporate castoffs Corporate castoffs Corporate dropouts Corporate dropouts

Chapter 1: Entrepreneurship 17 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Small Businesses... Make up 99% of all the businesses in the U.S. Make up 99% of all the businesses in the U.S. Employ 51% of the nation's private sector workforce. Employ 51% of the nation's private sector workforce. 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.

Chapter 1: Entrepreneurship 18 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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. Small Businesses... (continued)

Chapter 1: Entrepreneurship 20 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Ten Deadly Mistakes of Entrepreneurship 1. Management mistakes 2. Lack of experience 3. Poor financial control 4. Weak marketing efforts 5. Failure to develop a strategic plan

Chapter 1: Entrepreneurship 21 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Ten Deadly Mistakes of Entrepreneurship (continued) 6. Uncontrolled growth 7. Poor location 8. Improper inventory control 9. Incorrect pricing 10. Inability to make the “entrepreneurial transition”

Chapter 1: Entrepreneurship 22 Copyright 2005 Prentice Hall Inc. A Pearson Education Company 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.

Chapter 1: Entrepreneurship 23 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Avoiding the Pitfalls of Small Business Failure Know your business in depth Know your business in depth Develop a solid business plan Develop a solid business plan Manage financial resources Manage financial resources Understand financial statements Understand financial statements Learn to manage people effectively Learn to manage people effectively Keep in tune with yourself Keep in tune with yourself