1. Introduction to entrepreneurship AND Becoming an entrepreneur
CHAPTER 1
Introduction to entrepreneurship AND Becoming an entrepreneur

2. Learning Objectives Define entrepreneurship.
Explain the role of entrepreneurship in economic growth.
Distinguish entrepreneurial ventures from small businesses in terms of their purpose and goals.
Describe the evolution of entrepreneurship as a field of study since the 1960s.
Identify today’s broad trends in the field of entrepreneurship.

3. Learning Objectives (Cont’d)
Dispel myths about entrepreneurs.
Understand the many pathways to entrepreneurship.
Prepare to become an entrepreneur.

4. Definition of Entrepreneurship
“The process by which individuals—either on their own or in organizations—pursue opportunities without regard to the resources they currently control.” ~ Stevenson
Entrepreneurship is a mindset that is:
Opportunity-focused
Risk taking
Innovative
Growth-oriented

5. The Role of Entrepreneurship
Three schools of thought:
An integrated input/output model
The career assessment approach
The new venture creation process
Affected by three categories of variables:
The entrepreneur and what he/she brings to process
The environment (external variables)
The organization (strategic aspects of the new venture)

6. New Venture Creation Process

7. Economic Growth Technological innovation Globalization
Shift of lower-skilled jobs outside U.S.
China and India

8. Entrepreneurship and Technological Change

9. New Industry Formation
New industries are born when technological change produces a novel opportunity that an enterprising entrepreneur seizes.
Industry life cycles: birth, growth, decline

10. The Industry Life Cycle
Source: Adapted from M. R. Darby and L. G. Zucker, “Growing by Leaps and Inches: Creative Destruction, Real Cost Reduction, and Inching Up,” Economic Inquiry (January 2003), pp

11. Job Creation
Small businesses represent 99.7 percent of all employers and pay more than 45 percent of the total U.S. private payroll.
Small businesses have generated 65 percent of net new jobs over the past 15 years.

12. Job Creation (cont’d)
Economic development in three categories of countries:
Factor-driven economies
Created out of necessity and rely on unskilled labor and extraction of natural resources
Efficiency-driven economies
Growing and in need of improving their production processes and quality of goods produced
Innovation-driven economies
The most advanced and where business compete based on innovation and entrepreneurship

13. The Nature of Entrepreneurial Startups
An entrepreneurial venture brings something new to the marketplace.
Three primary characteristics:
Innovative
Value-creating
Growth-oriented

14. New Business Formation
Entrepreneurs use identifiable milestones to measure their progress:
Deciding to start a business
Researching the concept
Preparing for launch
Securing the first customer
Obtaining the business license
Other activities which signal the business is in operation

15. Social, Political, and Economic Context of the Entrepreneurial Process
Source: From Paul D. Reynolds, “National Panel of U.S. Business Start-ups: Background and Methodology,” in Databases for the Study of Entrepreneurship, edited by J.A. Katz, pp. 153–227. Copyright © 2000, with permission from Elsevier. Modified by Launching New Ventures author to reflect the concept of the fuzzy front end and its associated probabilities.

16. Business Failure
Not all entrepreneurs succeed in growing their startup into an established business.
Survival has been attributed to sufficient capital, having employees, and the entrepreneur’s intention in starting the business.

17. Starts and Closures of Employer Firms, 2004-2008
Category
2004
2005
2006
2007
2008
Births
628,917
644,122
670,058
633,100e
627,200e
Closures
541,047
565,745
599,333
571,300e
595,600e
Bankruptcies
34,317
39,201
19,695
28,322
43,546
eEstimate using percentage changes in similar data provided by the U.S. Department of Labor, Employment and Training Administration.
Sources: U.S. Bureau of the Census; Administrative Office of the U.S. Courts; and U.S. Department of Labor, Employment and Training Administration.

18. The Entrepreneurial Revolution
United States founded on the principle of free enterprise.
The term entrepreneur didn’t come into popular use until the 1980s.

19. The Entrepreneurial Evolution

20. Entrepreneurial Trends
Global economic turmoil
Green power
The women’s market
The internet, social media, and mass mingling

21. Seven Myths Entrepreneurs start businesses solely to make money
It takes a lot of money to start a business
It takes a great idea
The bigger the risk, the bigger the reward
A business plan is required for success
Entrepreneurship is for the young and reckless
Entrepreneurship cannot be taught

22. Paths to Entrepreneurship
The home-based entrepreneur
The serial or portfolio entrepreneur
The nonprofit entrepreneur
The corporate entrepreneur

23. The Corporate Entrepreneur
Entrepreneurial mindset in large corporations:
Senior management commitment
A champion or several champions
Corporate interoperability
Clearly defined stages and metrics
A superior team
Spirit of entrepreneurship

24. Challenges and Opportunities with the Entrepreneur Career Path
Table 2.1
Challenges and Opportunities with the Entrepreneur Career Path

25. Preparing for Entrepreneurship
Figure 2.1

26. Build a Professional Network
Networking
The exchange of information and resources among individuals, groups, or organizations whose common goals are to mutually benefit and create value for the members
Strong ties – close friends and family
Weak ties – acquaintances and business contacts
Brokering

27. Understand Personality and Business Preferences
Barriers to self-employment:
Lack of confidence
Financial needs
Startup logistics
Personal or family issues
Time constraints
Lack of skills

28. Critical Entrepreneurial Skills
Table 2.4
Analysis and critical thinking
Persuasion and negotiation
Opportunity recognition
Written and oral communication
Resource gathering
Leadership and people management
Organizational and time management
Decision making
Calculated risk taking
Storytelling