Chapter 6. Starting Your Own Business: The Entrepreneurship Alternative
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1 Chapter 6 Starting Your Own Business: The Entrepreneurship Alternative
2 What is Entrepreneurship? An entrepreneur is a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business. Differ from many small-business owners in their strong desire to make their business expand and grow. Differ from managers through their overriding responsibility to use the resources of the organization to accomplish their goals. Willing to take risks.
3 Categories of Entrepreneurs Classic Entrepreneurs identify business opportunities and allocate available resources to tap those markets. Serial Entrepreneurs start one business, run it, and then start and run additional businesses in succession. Social Entrepreneurs recognize a societal problem and use business principles to develop innovative solutions.
4 Why People Become Entrepreneurs
5 Why Entrepreneurship? Being Your Own Boss Self-management is the motivation that drives many entrepreneurs. Make all important decisions. Engage much of the communication related to your business (See Business Etiquette) Financial Success Entrepreneurs are wealth creators. Many start their ventures with the specific goal of becoming rich or at least financially successful.
6 Why Entrepreneurship? Job Security Over the past ten years, large companies have eliminated more jobs than they have created. Quality of Life Starting a business gives the founder some choice over when, where, and how to work. A lifestyle entrepreneur is a person who starts a business to gain flexibility in work hours and control over his or her life. But this does not mean working fewer hours or with less intensity. Generally it is the opposite people who start their own businesses often work longer and harder than ever before, at least in the beginning.
7 The Environment for Entrepreneurship Factors supporting and expanding opportunities for entrepreneurs
8 Globalization The rapid globalization of business has created many opportunities for entrepreneurs. Entrepreneurs market their products abroad and hire international talent. Among the fastest-growing small U.S. companies, almost two of every five have international sales.
9 Education / IT Education 100 U.S. colleges and universities offer entrepreneurship majors. Universities are helping students launch businesses. Many programs teach entrepreneurship to young people. Information Technology Technology has given entrepreneurs tools that help them compete with large companies. Information technology helps entrepreneurs work quickly and efficiently, provide immediate and attentive customer service, increase sales, and project professional images. Social networking has further transformed the business environment for entrepreneurs. According to a recent study, more than 90 percent of successful companies now use at least one social media tool. New terms: Infopreneurship, Homepreneurship, Telecommuting
10 Demographic and Economic Trends Aging of U.S. population. Emergence of Hispanics as nation s largest ethnic group. Growth of two-income families. Examples: Convenience products for busy parents, foods that cater to ethnic preferences, and services designed specifically for older consumers all enjoy an opportunity for success. During times when consumers are less willing to spend money, a shoe-repair shop is likely to have an increase in business.
11 Characteristics of Entrepreneurs
12 Entrepreneurial Characteristics Vision - entrepreneurs begin with an overall idea for how to make their business ideas successful High Energy Level - a willingness to work hard Need to Achieve - entrepreneurs work hard because they want to excel Self-Confidence - fearlessness in the face of difficult odds Tolerance for Failure - entrepreneurs are not easily discouraged Creativity - entrepreneurs devise innovative ways to overcome difficult problems and situations Tolerance for Ambiguity - entrepreneurs take in stride uncertainties Internal Locus of Control - entrepreneurs believe they can control their own fates
13 Entrepreneurial Quiz
14 Starting a New Venture Selecting a Business Idea Find something you love to do and are good at doing Can your idea satisfy a need in the marketplace? Entrepreneurs must be sure that the idea they choose has interest in the marketplace. Business Plan
15 Increasing the Likelihood of Entrepreneurial Success Creating a Business Plan Written documentation that provides orderly statement of goals, methods, and purpose Discusses the company s mission and vision Analyzes unique advantage, customers, and competition
16 Creating a Business Plan 58% of the most recent Inc. CEOs did not create a formal written plan. But business plans do help entrepreneurs prepare enough resources and stay focused on key objectives.
17 Buying an Existing Business Advantages: Established customers Deal with familiar suppliers Good/service known in marketplace Necessary permits and licenses are already secured Financing may be easier
18 Creating a Franchise Advantages: Less risky than establishing entirely new firm Firms in franchises showing growth
19 Intrapreneurship Promoting innovation within organizational structures An idea to promote creativity Companies promote in a variety of ways Skunkworks (A loosely organized research and development team or facility)
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