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Starting Your Own Business: The Entrepreneurship Alternative
Chapter 6
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.
What is Entrepreneurship?
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.
Why People Become Entrepreneurs
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.
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.
Why Entrepreneurship?
The Environment for Entrepreneurship
Factors supporting and expanding opportunities for entrepreneurs
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.
Globalization
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
Education / IT
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.
Demographic and Economic Trends
Characteristics of Entrepreneurs
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
Entrepreneurial Characteristics
Entrepreneurial Quiz
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
Starting a New Venture
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
Increasing the Likelihood of Entrepreneurial Success
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.
Creating a Business Plan
Advantages:
Established customers
Deal with familiar suppliers
Good/service known in marketplace
Necessary permits and licenses are
already secured
Financing may be easier
Buying an Existing Business
Advantages:
Less risky than establishing entirely new
firm
Firms in franchises showing growth
Creating a Franchise
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)
Intrapreneurship