Entrepreneurship.

Entrepreneurship

Glenn Muske Micro Business Specialist Oklahoma State University
Entrepreneurship Glenn Muske Micro Business Specialist Oklahoma State University

Outline Entrepreneurship Entrepreneurs and the community
Myths Defined Opportunity, Risk and Reward What the social sciences tell us Entrepreneurs and the community Entrepreneurs vs. small business owners & others Role of entrepreneurs in the local economy Building an entrepreneurial community Entrepreneurial examples Special entrepreneurial situations Final thoughts CM 4.02 Am I An Entrepreneur

CM 4.02 Am I An Entrepreneur Personal Passion The freedom to pursue personal passion leads many to start businesses. “Nothing great in the world has been accomplished without passion.” George Wilhelm Friedrich Hegel German Philosopher ( ) The interviews on the CD talk about personal passion. Be sure that students visit the entrepreneurs on the CD and hear their stories. Most people start a business because of a passion CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Questions often asked but aren’t the most important
CM 4.02 Am I An Entrepreneur Questions often asked but aren’t the most important What can I do? What business should I start? Can I get a grant? What business will earn lots of money? What about e-commerce? These are the questions you might often hear CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Questions often not asked but should be!!
CM 4.02 Am I An Entrepreneur Questions often not asked but should be!! Am I an entrepreneur? Is there a market? Can I profitably tap that market? How do I get to market? - E-commerce is just a means to market These are the questions that you need to direct the entrepreneur into examining. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

The Myths of Entrepreneurship

Myth #1 Get Rich Quick! Truth is
Life as an entrepreneur is not about money. Success rarely happens overnight. It's about what you want to do with your life. CM 4.02 Am I An Entrepreneur

Myth # 2 You must be born an entrepreneur (trait theory) Truth is:
some of the most successful entrepreneurs are the most unlikely. It is a lifestyle choice, not an accident. CM 4.02 Am I An Entrepreneur

Myth # 3 You must be at the right place at the right time
(environment theory) Truth is: successful entrepreneurs operate whatever the macroeconomic and structural factors are CM 4.02 Am I An Entrepreneur

Myth # 4 "I'll have all this free time…"
Truth is entrepreneurs work many hours advantages are: control of time variety of tasks CM 4.02 Am I An Entrepreneur

Myth # 5 It get easier. Truth is it gets more challenging
must work faster, smarter & longer must enjoy the battle CM 4.02 Am I An Entrepreneur

Myth # 6 If you build it, they will come.
Truth is building your business is just the start. Next is the real work: planning timing strategizing and more. CM 4.02 Am I An Entrepreneur

Myth # 7 It's all about the bottom line.
Truth is that the bottom line is necessary but not sufficient purpose and meaning to the business inspire customers and employees CM 4.02 Am I An Entrepreneur

Myth # 8 Entrepreneurs are risk takers
Truth – Entrepreneurs are calculators Studies show entrepreneurs are only moderate risk takers CM 4.02 Am I An Entrepreneur

Myth # 9 You have to have a great idea Truth Your idea must be good
Your idea must be doable Your idea must be wanted or needed Your idea must be priced right CM 4.02 Am I An Entrepreneur

Myth # 10 It takes a lot of money
Truth – Over 50% start for under $10,000 Also look for Certain business types Turn-around situations Possibility of using other people’s money CM 4.02 Am I An Entrepreneur

Entrepreneur’s goal is
“to create or capitalize on new economic opportunities through innovation By finding new solutions to existing problems Or by connecting existing solutions to unmet needs or new opportunities” SOURCE: Lichtenstein & Lyons, Incubating New Enterprises: A Guide to Successful Practice, 1996 CM 4.02 Am I An Entrepreneur

Entrepreneurship Definitions:
CM 4.02 Am I An Entrepreneur Entrepreneurship Definitions: Creation of an innovative economic organization for the purpose of gain or growth under conditions of risk and uncertainty Self-employment through business ownership that includes significant elements of risk, control, and reward (Coleman Foundation) Organizing a business venture assuming a certain amount of risk to make a profit (Burns and Bolton) CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

More Definitions: Profits from bearing uncertainty and risk
Purposeful activity to initiate and develop a profit-oriented business Moderate risk taking Creation of new organizations The pursuit of opportunity without regard to resources currently controlled CM 4.02 Am I An Entrepreneur

Entrepreneurship: Basic Elements
Opportunity recognition Creation and/or innovation Resource gathering and the founding of an economic organization Desiring the chance for gain while accepting risk and uncertainty CM 4.02 Am I An Entrepreneur

Other Entrepreneurial Motivators

Time With Family LIFE STYLE Be my own boss! MONEY
CM 4.02 Am I An Entrepreneur

?? Tell a time when you were entrepreneurial ??
Were you successful??

Opportunity Recognition

An Entrepreneurial Opportunity defined:
A situation in which changes in which changes in technology, or economic, political, social, and demographic conditions generate the potential to create something new or to remarket something existing. CM 4.02 Am I An Entrepreneur

Entrepreneurial Opportunity Grid
Product/Service Market Existing New Existing New Market Penetration New Offering Development Market Development Diversification CM 4.02 Am I An Entrepreneur

What are opportunities?
Small steps Little jumps Huge leaps CM 4.02 Am I An Entrepreneur

"Don't be afraid to take a big step if one is indicated; you can't cross a chasm in two small jumps." David Lloyd George CM 4.02 Am I An Entrepreneur

Opportunities can be... Social & demographic changes
New raw material Product obsolescence Corporate stagnation One-product vulnerability Chance Technical or scientific Political and regulatory Process or production method Organizing New market and marketing Personnel CM 4.02 Am I An Entrepreneur

Think like a….. Manager – Problem solving
Entrepreneur – Opportunity Exploitation CM 4.02 Am I An Entrepreneur

Opportunities External Internal Other methods Unexpected event
Technology changes and convergence Change in methods Demographics/market – size, Changes in competition Internal Other methods CM 4.02 Am I An Entrepreneur

An Idea does not equal an Opportunity The Opportunity Myth

Creation & Innovation CM 4.02 Am I An Entrepreneur

“ Imagination is more important than knowledge” - Einstein
Creativity “ Imagination is more important than knowledge” - Einstein CM 4.02 Am I An Entrepreneur

The Creative Process Planning & definition
CM 4.02 Am I An Entrepreneur The Creative Process Planning & definition focus on building the RIGHT product Design, demonstration & customer support focus on building the product RIGHT The five steps are grouped into 2 overall process categories. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

NOT Customer requirement Product solution Technology Product
CM 4.02 Am I An Entrepreneur Customer requirement Product solution NOT Technology Product Find a consumer This quote focuses on the customer and what they need. A short discussion of needs is appropriate here. Needs are what the customer wants and is willing to pay for. New software that enhances images in ways the customer is not interested is not going to generate business. You must convince the customer that it is easier, better, faster, etc. and make the technology part of the solution. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Basic questions What is the customer’s need?
CM 4.02 Am I An Entrepreneur Basic questions What is the customer’s need? How large is the opportunity? How likely is it to happen? What is the market timing? Is it aligned with our organizational strengths? Remind the students that they have already started to gather market data information in Unit 3. This question encourages the student to consider the macro environment as well as timing. Often products or services are introduced simply before the public is willing to accept them. Car safety issues were introduced in the mid-1930’s. Yet it was not until the mid-1970’s that the public became concerned about it. Finally the business must build on its strengths. It is usually not an effective strategy for a small business to attempt to introduce a new product or service that is not in alignment with the existing company focus. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Delays give others time to develop the same product.
CM 4.02 Am I An Entrepreneur Time is money! Delays give others time to develop the same product. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

CM 4.02 Am I An Entrepreneur Reduce product development time by 1/3 & you will triple profits & growth. Product development times are rapidly shrinking, especially where one firm is trying to imitate another. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Exercise In groups of 3-4, think of 3 things you have observed externally lately that would be a potential business opportunity. CM 4.02 Am I An Entrepreneur

Resourced-based Theory of Entrepreneurship
Resource Gathering Resourced-based Theory of Entrepreneurship

Dimensions of Entrepreneurship
Individual Characteristics New Venture Creation Environment Organization Constraints in the Environment CM 4.02 Am I An Entrepreneur

Resource any thing or quality that is useful
used to develop sustainable competitive advantage heterogeneous & immobile you have them, others cannot easily get them CM 4.02 Am I An Entrepreneur

Strategic Resources Valuable – Exploit an environmental opportunity
Rare – Not enough for all competitors Imperfectly imitable – Cannot be merely copied Non-substitutable CM 4.02 Am I An Entrepreneur

Competitive Advantage
No Advantage Resource Dimension Advantage Common Valuable Exploits opportunities Readily available & cheap Rare Unique & expensive Ordinary Imitable Complex & ambiguous Many & easy Substitutable Difficult CM 4.02 Am I An Entrepreneur

Types of Resources Financial Physical Human Technology Reputation
Organizational CM 4.02 Am I An Entrepreneur

Risk and Reward CM 4.02 Am I An Entrepreneur

If the business succeeds,
CM 4.02 Am I An Entrepreneur If the business succeeds, the entrepreneur reaps the reward of profits; if it fails, one takes the loss. All entrepreneurs risk some of their own resources. For most entrepreneurs that includes some of their financial resources. All entrepreneurs risk the use of their time. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Business Failure Rate CM 4.02 Am I An Entrepreneur
Point out that not all failures mean a loss to the owner. These numbers include businesses that are simply closed or sold. Also most business closings are done without leaving any outstanding debt. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Statistics 10% of small businesses fail each year
% of small businesses do not survive for 5 years Most small businesses closures do not result in uncovered liabilities Majority of small business owners who fail will start another business CM 4.02 Am I An Entrepreneur

Why do businesses fail? 2 general categories Financial Nonfinancial

Financial Reasons Under-capitalized Poor cash flow planning
Lack of record keeping Inadequate financial forecasting and review Lack of accounting training Excessive debt CM 4.02 Am I An Entrepreneur

Nonfinancial Reasons Loneliness Lack of management skills and training
Little passion Impact of regulations Inefficiency Inexperience Lack of planning CM 4.02 Am I An Entrepreneur

"I never failed once. It just happened to be a 200l-step process."
Thomas A. Edison CM 4.02 Am I An Entrepreneur

Rewards ??? CM 4.02 Am I An Entrepreneur

"In the realm of ideas everything depends on enthusiasm, in the real world all rests on perseverance." - Johann Wolfgang von Goethe CM 4.02 Am I An Entrepreneur

The Social Sciences on “What Makes an Entrepreneur”

Trait Theory Energy/motivation Business orientation Business attitude
CM 4.02 Am I An Entrepreneur Trait Theory Energy/motivation Business orientation Business attitude People skills These traits can be summarized into 4 categories. Energy/motivation - #1, 9, 10, 11 & 16 Business orientation - #3, 7, 12, 13 & 15 Business attitude - # 4, 5, 6 & 14 People skills - #2, 3 & 17 Notice however that there is no score for passion. That is something that cannot be measured. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

http://www. sba. gov/starting_business/startup/entrepreneurialtest

Personality Characteristics
CM 4.02 Am I An Entrepreneur Personality Characteristics Need for achievement Locus of control Risk-taking propensity Psychologists have also looked at the personality from the perspective of what drives us. They have evaluated entrepreneurs on these three attributes. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Career Anchors Motivate vocational choices Technical Managerial
CM 4.02 Am I An Entrepreneur Career Anchors Motivate vocational choices Technical Managerial Security Creativity Autonomy Some researchers have evaluated what they call “career anchors.” These anchors represent our most significant motivator. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Sociological Characteristics
CM 4.02 Am I An Entrepreneur Sociological Characteristics Negative displacement Between things Positive pull Positive push Some research has looked at the idea that entrepreneurs are not entirely self-determined, but that the environment in which we live has a significant impact on our decision to start a business. Negative displacement - immigrant status (immigrants are more likely to own a business overall but some nationalities are even more likely), fired, angry, bored, middle-age, divorced Between things - army, school, prison Positive pull - partner, mentor, investor, customer Positive push - father, career, motivation, experience CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Situational Characteristics
CM 4.02 Am I An Entrepreneur Situational Characteristics Perceptions of desirability Perceptions of feasibility Entrepreneurial event Perceptions of desirability - culture, family, colleagues, mentors, peers Perceptions of feasibility - support, demonstration, models, mentors, partners CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Desires Change: Your life A product or service The environment
CM 4.02 Am I An Entrepreneur Desires Change: Your life A product or service The environment Entrepreneurs see change as a positive thing. The entrepreneur desires to be a part of the change process. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Entrepreneurs and the Community

CARE Model (Dr. Mike Woods, Jack Frye, & Stan Ralstin)
Creation Attraction Retention Expansion % of New Jobs Created Attraction - 1% Retention & Expansion – 44% Creation – 55% CM 4.02 Am I An Entrepreneur

We all want to find the next gazelle!!

Entrepreneurs vs. Small Business Owners
Carland, Hoy, Boulton, & Carland argue they are different - Entrepreneurs and entrepreneurial businesses involve innovation & growth Entrepreneurs goal-orientation is different financial success vs. other criteria need for achievement/power Entrepreneurs use strategic management practices CM 4.02 Am I An Entrepreneur

Small Business Independently owned and operated, not dominant in its field, and does not engage in any new marketing or innovative practices Owner – Establishes and manages for purpose of furthering personal goals. Business is primary source of income & consumes majority of time & resources. Owner perceived business as extension of personality, intricately bound with family needs and desires. CM 4.02 Am I An Entrepreneur

Entrepreneurial Venture
Engages in growth and profitability and innovation by introducing new products, new processes, opening new markets, or reorganizes the industry Entrepreneur – Establishes and manages the business for growth and profit. Is innovative and employees strategic management practices. CM 4.02 Am I An Entrepreneur

??QUESTION?? Are entrepreneurs and small business owners the same thing? Why?? Why not?? Does rural make a difference?? CM 4.02 Am I An Entrepreneur

Comparing Entrepreneurs to Managers and Leaders
Innovates Administers Creates Maintains Develops Sees opportunities See problems Sees the future Asks how and when Asks what and why Makes it happen Does things right Uses influence Builds the team Relies on control Inspires trust CM 4.02 Am I An Entrepreneur

Entrepreneurship is a style and a general method of operating, not just a set of business skills.
Jerry Gustafson Beloit College CM 4.02 Am I An Entrepreneur

Entrepreneurs People who create and grow enterprises
Aspiring entrepreneurs Survival entrepreneurs Lifestyle entrepreneurs Growth entrepreneurs Serial entrepreneurs Social entrepreneurs SOURCE: WK Kellogg Foundation CM 4.02 Am I An Entrepreneur

Entrepreneurs and the Community
What they bring

Does it matter what they are called?
Both: Add income to the household and jobs and wealth to the community Add economic strength to a community Add stability to a community Provide the owner with the ability to achieve his or her goals Create new opportunities within the community - Multiplier CM 4.02 Am I An Entrepreneur

Who entrepreneurs are? Classified as: Also: Small business
CM 4.02 Am I An Entrepreneur Who entrepreneurs are? Classified as: Small business Micro business Home-based business Family business Also: Underground economy Informal economy Formal economy Small business - Based on number of employees or sales Micro business - 10 employees or less Home-based business - Work done in the home or from that property that results in income and for which there is no other regular scheduled work place Family business - Business owned by 2 or more related individuals working together in business Underground economy – illegal, unreported, no desire for visibility, Formal economy – visible, formal, reported, regulated, etc - Desired is the “gazelles” Informal – range from totally informal through obey some regs /declare some inc to planning to go formal - legal but unregulated - typically a cash economy - often patching together income – (1) fill a dead season, (2) pay essential bills, (3) provide extra income - often not primary source of income, just a small part constraints - market small & local - regulations - production - personal & household responsibilities - why - way to earn income - small scale, can get in or out - activity new and untested CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

CM 4.02 Am I An Entrepreneur Metro, Micro, Rural Comparison 20% of OK households own & run a business Metro (n=146) Micro (n=54) Rural (n=46) Primary bus. Service Construction Retail Ag/For/Fish Service Ag/For/Fish Construction, FIRE & Service Family bus. 62% 74% 78% Home-based 66% 63% 70% Spouse in bus. 48% 46% 65% This chart just shows some of the same information we just looked at only now broken down by where the business is located, in a metropolitan area, in a micropolitan area (city of 50,000 that is a trade center), or in a rural area. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Metro, Micro, Rural Comparison
CM 4.02 Am I An Entrepreneur Metro, Micro, Rural Comparison Metro (n=146) Micro (n=54) Rural (n=46) Avg # empl 1.83 2.04 2.11 Gross inc. - Mean - Median $241,891 $49,000 $333,589 $35,000 $162,190 $40,000 Again just looking at the businesses by where they are located. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

The numbers Small businesses – 16 million nonfarm
OK – 290,000 (employer & nonemployer) 50% of private workforce OK – 54% Create 2/3 of all new jobs 52% of all nonfarm output Micro businesses – ??? OK – 270,000 – 94% + 84,000 farm/ranch operations CM 4.02 Am I An Entrepreneur

The numbers Family businesses – 12.7% of households
OK – 185,000 - $6.5 billion inc transferred to family South – 3.3 million - $109 billion transferred U.S. – 9.7 million - $348 billion transferred Home-based businesses – 5% - 18% of hh OK – 67,000 – 176,000 - $1 - $6.2 billion/year CM 4.02 Am I An Entrepreneur

Creating Entrepreneurial Communities
People Formal Institutions Informal Organizations CM 4.02 Am I An Entrepreneur

Entrepreneurial Communities
4 types Those that develop entrepreneurs Those that act entrepreneurially Those that do both Those that do neither CM 4.02 Am I An Entrepreneur

Entrepreneurship development
the infrastructure of public and private supports that facilitate entrepreneurship Entrepreneurial communities those where significant economic and social entrepreneurial activity exists and where there is an effective system of entrepreneurship development SOURCE: WK Kellogg Foundation CM 4.02 Am I An Entrepreneur

Entrepreneurial Communities
Has critical mass of entrepreneurs actively engaged in capturing new market opportunities Group of entrepreneurs recognizable within the community Community as a whole is entrepreneurial Social capital (Floras) Human capital-diversity (Florida) Clusters (Porter) Public-Private Partnerships (Tupelo-Grishom) Innovative Infrastructure (Feldman) CM 4.02 Am I An Entrepreneur

Theory Expansion Social capital Human capital
CM 4.02 Am I An Entrepreneur Theory Expansion Social capital Trust, networks, reciprocity, and collective action Horizontal, vertical, and flexible (not in the group at all times) Human capital Education Beyond high school Continuous and life-life long Include specific and general Inclusive – pre-K – older citizen Just-in-time Knowledgeable and involved citizens Needs to include problem solving, creative thinking, English, business skills, futuristic thinking CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Theory Expansion Clusters Innovative infrastructure
Why? – Based on economies of scale, technology transfer & availability of human capital (Eric Scorsone, Industrial clusters: Enhancing rural economies through business linkages, SRDC 21st Century Series) Innovative infrastructure Basics plus items such as a visionary government, day care, & technology CM 4.02 Am I An Entrepreneur

Creating an Entrepreneurial Climate
Entrepreneurship must be an explicit economic development strategy Community must embrace and nurture entrepreneurs Goal - A continuous pipeline of entrepreneurs Supportive public policies Balances regulations with business needs Education – early & on-going, formal and nonformal Access to capital – banks, investment, angels Access to quality workers Recognize entrepreneurial efforts CM 4.02 Am I An Entrepreneur

Enterprise Development
“Assistance to entrepreneurs in support of the creation, growth, and survival of their businesses” Koven & Lyons (2003) nonprofit, private, public service providers youth entrepreneurship programs micro enterprise programs business incubators manufacturing network small business development centers angel capital networks revolving loan funds technology transfer programs CM 4.02 Am I An Entrepreneur

Nurturing of Entrepreneurs
Mentors and coaches Business/management assistance & support Coordinated, seamless, and local Access to technology Technical assistance Inclusion of all into events, programs, & groups CM 4.02 Am I An Entrepreneur

Other Examples: How Communities Can Help
Purchase locally Help create new local businesses Develop human resources Free-up potentially productive space Initiate local investment strategies (endowments, fundraising, micro-loan programs) Mobilize external resources CM 4.02 Am I An Entrepreneur

Challenges for Sustainable Rural Economic Development
Translating models to place- based strategies - no silver bullet Implement strategy with tangible benefits - taxpayers see return on investment Need to create good jobs - self-sustaining wages CM 4.02 Am I An Entrepreneur

Challenges for Sustainable Rural Economic Development (cont.)
Need for strategies that build on all assets - young, old, men, women, ethnicities Shortage of resources in most small towns. SOURCE: Emery, Wall, Macke, 2004 CM 4.02 Am I An Entrepreneur

Shortcomings of Enterprise Development
#1 Tool-Driven-Not Needs-Focused Worked one-place and one-time Solutions in search of a client base Voice of the customer-the entrepreneur-is missing Entrepreneurial Needs Hard for entrepreneurs to articulate Entrepreneurs may not trust those asking the questions Entrepreneurs difficult to identify and reach SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004 CM 4.02 Am I An Entrepreneur

Shortcomings of Enterprise Development (continued)
#2 Fragmented and Categorical “Creaming” – we need more than a quarterback #3 Too Little Focus on Execution Various gurus crisscross the country – then go home Gap between ideas and education #4 The Broken Learning Cycle Best practices vs. successful practices SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004 CM 4.02 Am I An Entrepreneur

Shortcomings of Enterprise Development (continued)
#5 Focus on the Business, not the Entrepreneur #6 Missing Function: Responsibility for the Community’s Supply of Entrepreneurs #7 Funders, not Clients, Drive the Program #8 Impact is not Scalable Community-wide impact SOURCE: Lichtenstein, Lyons, Kutzhanova, 2004 CM 4.02 Am I An Entrepreneur

Successful Entrepreneurial(?) Communities
Acceptance of Controversy Ability to Depersonalize Politics Surplus Income to Invest Willingness to Take Risks Ability to Define Community More Broadly Networking Ability Emphasis on Academics Flexible, Dispersed Leadership SOURCE: Flora and Flora CM 4.02 Am I An Entrepreneur

SOURCES FOR THIS PRESENTATION
Lichtenstein, Lyons, Kutzhanova “Building Entrepreneurial Communities: The Appropriate Role of Enterprise Development Activities” Journal of the Community Development Society, 2004 Emery, Wall, Macke “From Theory to Action: Energizing Entrepreneurship (E2), Strategies to Aid Distressed Communities Grow Their Own” Journal of the Community Society, 2004 CM 4.02 Am I An Entrepreneur

Entrepreneurs We Know

Do you know who they are? Stan Clark Frank Epperson Fred Smith
Bill Bowerman & Philip Knight Dr. John Pemberton & Asa Chandler CM 4.02 Am I An Entrepreneur

Do you know who they are? Jeff Bezos Cohen and Greenfield Ray Kroc
CM 4.02 Am I An Entrepreneur Do you know who they are? Jeff Bezos Cohen and Greenfield Ray Kroc Tom Monaghan Bill Gates Howard Schultz Howard Schultz - Starbucks CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

All are not equal, nor do they want to be!!
Entrepreneurs All are not equal, nor do they want to be!!

Entrepreneurs People who create and grow enterprises
Aspiring entrepreneurs Survival entrepreneurs Lifestyle entrepreneurs Growth entrepreneurs Serial entrepreneurs Social entrepreneurs SOURCE: WK Kellogg Foundation CM 4.02 Am I An Entrepreneur

Family Business Names Wal-Mart Ford Weyerhaeuser Michelin Gap
Anheuser-Busch Tyson Foods Dillards Cargill Koch Industries Ikea Cox Communication Enterprise Rent-A-Car Hallmark Levi Strauss Kohler CM 4.02 Am I An Entrepreneur

Family Businesses Generate 62% of nonfarm business receipts - $16.8 trillion in 1996 Even greater impact in midwest economy Dominate form in agriculture, retail, wholesale, and distribution sectors Employ 54.8% of workforce – 69.5 million Provide higher than average household income and net worth Only 1% of households are poor vs. 11% overall CM 4.02 Am I An Entrepreneur

Sustainable Family Business Model
Available Resources and Constraints PROCESSES Time of Stability Interpersonal Transactions Resource Constraints Times of Change Resource Transactions Achievements Objective Success Subjective Success BUSINESS Disruptions in Family/Business Transactions Responses to Disruptions in Family/Business Sustainability Time of Change CM 4.02 Am I An Entrepreneur

More info www.hce.osu.edu/fambus http://www.human.cornell.edu/ne167/

Home-based Business Names
Hewlet-Packard Nike Coke Mrs. Fields Cookies Microsoft Dell CM 4.02 Am I An Entrepreneur

Home-based Business Facts
Nine-state study (1988) Typical home-based worker 44 year old male, married, with children, 14 yrs. education, & a homeowner Mean gross business income - $53,164 Mean net business income - $15,628 Mean household income - $42,263 Had medical insurance from some other source As # children increased, number of work hours decreased (1 day per child on average) Had greater longevity in the community CM 4.02 Am I An Entrepreneur

Copreneurs Defined – Couples in business together
31% of family businesses Have more children, lower educational levels, rural location, business manager earns less per year, more likely home-based, and have fewer employees Make significantly less business income and business profits (by factor of 5) & feel business is less successful Copreneurs more likely to view business as a way of life as opposed to a way to earn income CM 4.02 Am I An Entrepreneur

Copreneurs cont. More likely to intermingle money between business and family – More often family to business Also use more ways of intermingling Approximately 20% of couples discontinued the copreneurial relationship (but stayed together as a couple) in a 3-year period Made less money & saw the business as less successful. Another 20% started a copreneurial relationship Made most money of all 3 groups, run by older men with more education, had fewer dependents, and spouse worked fewer hours in business. CM 4.02 Am I An Entrepreneur

Value-Added Opportunities

Value-Added Defined: Adding consumer-desired features to raw materials
Done by: Additional processing Marketing - change from the current method of distribution Use existing resources to produce a new, more valued product/service Some combination CM 4.02 Am I An Entrepreneur

Marketing Strategies for Farmers & Ranchers
Reap New Profits: Marketing Strategies for Farmers & Ranchers

Farmers Markets CM 4.02 Am I An Entrepreneur

Pick Your Own “People don’t come all the way out here to get
cheap food. They come because it’s fun and the berries are absolutely fresh.” -- Earnie Bohner, Persimmon Hill Berry Farm Pick Your Own CM 4.02 Am I An Entrepreneur

ENTERTAINMENT FARMING CM 4.02 Am I An Entrepreneur

Community supported agriculture (CSA)
OTHER OPTIONS Farm Stands Community supported agriculture (CSA) Cooperatives Restaurant sales Mail order/ Internet/ Direct marketing CM 4.02 Am I An Entrepreneur

CM 4.02 Am I An Entrepreneur Resources: USDA Sustainable Agriculture Research and Education (SARE) – Farmers Markets - Alternative Farming Systems Info Ctr USDA Farmer Direct Marketing North American Direct Marketing Assn. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Minorities and Women

General Information Small business ownership rates for women and minorities are increasing faster than for white males – Still men start new businesses at twice the rate of women Women – 9.8% own businesses Translates to over 50% of all businesses Minorities – Ranges from 5% (Blacks) to 10.4% (Asian) Firm receipts average about 2/3 of all bus. Proprietor income averages about 50% of all other businesses Firms employee fewer people CM 4.02 Am I An Entrepreneur

Special Issues Access to capital Acceptance by business community
Acceptance by family and friends Networks are smaller and more family-focused Most often in retail or service industries Industries with highest failure rates and lowest profits CM 4.02 Am I An Entrepreneur

Barriers to Entrepreneurship

A lack of: Steady stream of “want-a-be’s”
“Can-do” attitude held by the entrepreneur and the community Coordinated, accessible, long-term support network Coaches and mentors Capital Available human capital Multi-faceted healthy community Supportive regulatory environment CM 4.02 Am I An Entrepreneur

The man who makes no mistakes does not usually make anything."
Edward John Phelps, American lawyer and diplomat ( ) "Nothing great was ever achieved without enthusiasm." Ralph Waldo Emerson CM 4.02 Am I An Entrepreneur

Highlights

Highlights Entrepreneurship is an ever-continuing, growing trend
Entrepreneurs contribute to their household and to their community Entrepreneurship is a learned talent Entrepreneurs form our economic base Entrepreneurship allows people to remain in a community Communities can encourage entrepreneurship CM 4.02 Am I An Entrepreneur

- Are innovative in developing that opportunity through creativity
Entrepreneurs: - See opportunity - Are innovative in developing that opportunity through creativity and resource gathering - Seek gain while accepting risk and uncertainty CM 4.02 Am I An Entrepreneur

One Last Myth The key to success is a great idea
CM 4.02 Am I An Entrepreneur One Last Myth The key to success is a great idea The keys are: Good idea Great plan So how do you reach success? As mentioned in the myths, people will not typically beat a path to your door if you have the greatest idea. Your idea needs to be good in the sense it must meet people’s needs by offering them the benefits they want – not the features but the benefits. What is more important is that a great plan be built around the good idea. Parts of the plan include where and how to market the product or service, the “right” price, record keeping, locating other professionals to be part of your team, etc. Finally the owner need commitment – to continue on when nothing seems to be going right or sitting all day without one customer entering the door. Passion! CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

How Extension can help? CM 4.02 Am I An Entrepreneur

Awareness of other programs
CM 4.02 Am I An Entrepreneur Awareness of owner’s priorities Comfort with subject matter One-on-one Mentoring Advocating Partnering Community support Awareness of other programs Education So what can you do? First, undertand the owner’s priorities - Understand where they are at and their goals. Is this something to fill-in-the-gaps or are they aiming for the next Microsoft. - Fit your assistance and program to that - Help them understand it is a business. If a person is just interested in operating a hobby (best defined as not interested in making a profit), they will provide little spark to the local economy. - Assist in pricing - Help them understand the business must pay market-rate compensation for owner’s time - How can decrease costs (example, buying at the market or wholesale) - Assist in formalizing business - feasibility assessment - marketing and promotion How you do any of the above depends on your comfort in answering the question, the other resources you have at hand, and the owner’s specific need? We can do general education and develop community support to ensure our community has a flow of new entrepreneurs. However once in business, often the owner’s needs require one-on-one assistance immediately either by yourself or through some partnering/mentoring program. CM 4.02 Am I An Entrepreneur Instructor: Janie S. Torain

Resources Southern Rural Development Center http://srdc.msstate.edu/
Kansas City Federal Reserve Bank Center for the Study of Rural America Rural Policy Research Institute (RUPRI) CM 4.02 Am I An Entrepreneur

Resources cont. Adult Cashing In On Business Opportunities
NeXt Level/Fasttrac/other commercial OSU Putting It All Together Food Based Business: The Owner’s Guide An Exploration of Entrepreneurship Visual Merchandising Educational program Demonstration program Mapping Your Marketing Future Magazines, i.e. Entrepreneur CM 4.02 Am I An Entrepreneur

Resources cont. Youth General Mini-Society
Be the E: Entrepreneurship (4-H CCS) - clearinghouse General CM 4.02 Am I An Entrepreneur

Glenn Muske Micro Business Specialist Oklahoma State University
Entrepreneurship Glenn Muske Micro Business Specialist Oklahoma State University

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