Chapter 1 Introduction to Entrepreneurship Bruce R Barringer

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Chapter Objectives 1 of 2 1. Describe entrepreneurs, corporate entrepreneurship, and the characteristics of entrepreneurial firms. 2. Discuss three main reasons people decide to become entrepreneurs. 3. Identify four main characteristics of successful entrepreneurs. 4. Explain five common myths regarding entrepreneurship. 5. Describe three types of start-up firms. Copyright © 2016 Pearson Education Ltd. 1 -3

Chapter Objectives 2 of 2 6. Discuss the changing demographics of entrepreneurs in the United States. 7. Discuss the positive effects of entrepreneurship and entrepreneurial firms on economies and societies. 8. Explain the entrepreneurial process. Copyright © 2016 Pearson Education Ltd. 1 -4

Indications of Increased Interest in Entrepreneurship • Books – Amazon. com lists over 36, 900 books dealing with entrepreneurship and 89, 900 focused on small business. • College Courses – In 1985, there were about 250 entrepreneurship courses offered across all colleges in the United States. – Today, more than 2, 000 colleges and universities in the United States offer at least one course in entrepreneurship. Copyright © 2016 Pearson Education Ltd. 1 -5

What is Entrepreneurship? Who are the Entrepreneurs? • Academic Definition (Stevenson & Jarillo) – Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control. • Venture Capitalist (Fred Wilson) – Entrepreneurship is the art of turning an idea into a business. • Entrepreneurs: – People who take risk and put useful ideas into practice. Copyright © 2016 Pearson Education Ltd. 1 -6

The difference between a Businessman and an Entrepreneur • Businessman 1. a person who starts a business on an old concept or idea. 2. makes his place in the market with his efforts and dedication • Entrepreneur 1. A person who brings his unique idea to run a startup company is known as an entrepreneur 2. creates the market for his own business. Copyright © 2016 Pearson Education Ltd. 1 -7

The difference between a Businessman and an Entrepreneur • Businessman 3. businessman is a market player. • Entrepreneur 3. Entrepreneur is a market leader because he is the first to start such a kind of enterprise. 4. A businessman is 4. an entrepreneur is a oriented towards profit, people focused in essence, he gives more importance to its Copyright © 2016 Pearson Education Ltd. employees, customers 1 -8

The difference between a Businessman and an Entrepreneur • Businessman • Entrepreneur 5. The risk factor is low 5. Takes risks and they but faces a huge may competitors later competition from the but they will remain rivals due to similarity of untouched. products or services. Copyright © 2016 Pearson Education Ltd. 1 -9

Corporate Entrepreneurship 2 of 2 Entrepreneurial Firms • Proactive, Initiative • Innovative • Risk taking Conservative Firms • Take a more “wait and see” position • Less innovative • Risk averse Copyright © 2016 Pearson Education Ltd. 1 -10

Why Become an Entrepreneur? The three primary reasons that people become entrepreneurs and start their own firms Desire to be their own boss Desire to pursue their own ideas Financial rewards Copyright © 2016 Pearson Education Ltd. 1 -11

Characteristics of Successful Entrepreneurs 1 of 3 Four Primary Characteristics Copyright © 2016 Pearson

Characteristics of Successful Entrepreneurs 2 of 3 • Passion for the Business – This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. – 1 - Ex. John Wood, Leaving Microsoft to change the world. Room to Read educational company. • Room to Read had built over 1, 440 schools and distributed over 9. 4 million books in developing parts of the world. Now in 2019, they provide education for 16. 8 million children worldwide. 1 -13

Characteristics of Successful Entrepreneurs 2 of 3 • Product/Customer Focus – An entrepreneur’s strong focus on products and customers typically come from the fact that most entrepreneurs are, at heart of people. – “The computer is the most remarkable tool we’ve ever built. . . but the most important thing is to get them in the hands of as many people as possible. ” Steve Jobs – Steve jobs journey to Xerox in 1980 s. They decided to create a more user-friendly computers called “Macintosh”. 1 -14

Characteristics of Successful Entrepreneurs 3 of 3 • Tenacity Despite Failure – Because entrepreneurs are typically trying something new, the failure rate is naturally high. Entrepreneurship is a marathon – A defining characteristic for successful entrepreneurs is their ability to continue through problems and failures. – Ex. “Roomba Vacuuming by IRobot "tenacity for success. • Execution Intelligence – The ability to shape a solid business idea into a viable business is a key characteristic of successful entrepreneurs. – “ Ideas are easy, its execution is that’s hard” Jeff Bezos 1 -15 amazon founder.

Common Myths About Entrepreneurs 1 of 7 • Myth 1: Entrepreneurs Are Born, Not Made – This myth is based on the mistaken belief that some people are born to be entrepreneurs. – No one is “born” to be an entrepreneur; but, everyone has the potential to become one. – Whether someone does or doesn’t become an entrepreneur is a function of their environment, life experiences, and personal choices. 1 -16

Common Myths About Entrepreneurs 4 of 7 • Myth 2: Entrepreneurs Are Motivated Primarily by Money – While it is unacceptable to think that entrepreneurs don’t seek financial rewards, but money is rarely the reason entrepreneurs start new firms. – In fact, some entrepreneurs warn that the pursuit of money can be distracting. – “If you think money is a real big deal, you’ll be too scared of losing it to get it” Ted Turner, Founder of CNN. Copyright © 2016 Pearson Education Ltd. 1 -17

Common Myths About Entrepreneurs 5 of 7 • Myth 3: Entrepreneurs Should Be Young and Energetic – The most active age range for entrepreneurship is between (35 -46). • What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, reputation. • These criteria favor older rather than younger entrepreneurs. Copyright © 2016 Pearson Education Ltd. 1 -18

Common Myths About Entrepreneurs 6 of 7 Copyright © 2016 Pearson Education Ltd. 1

Common Myths About Entrepreneurs 7 of 7 • Myth 4: Entrepreneurs Love the Spotlight – While some entrepreneurs are showy, the vast majority of them do not attract public attention. – As evidence of this, consider the following question: “How many entrepreneurs could you name? ” • Most of us could come up with Jeff Bezos of Amazon. com, Mark Zuckerberg of Facebook, Steve Jobs of Apple, and maybe Larry Page and Sergey Brin of Google. • But few could name the founders of Twitter, You. Tube, Netflix, or DIRECTV, even though we frequently use those firms’ services. Copyright © 2016 Pearson Education Ltd. 1 -20

Types of Start-Up Firms Copyright © 2016 Pearson Education Ltd. 1 -21

Economic Impact of Entrepreneurial Firms • Innovation – Is the process of creating something new, which is central to the entrepreneurial process. There will be new products produced or served by firms. • Job Creation – When new firms are created, they will also create new job opportunities for the unemployed people. In return, this will reduce the unemployment rate. Copyright © 2016 Pearson Education Ltd. 1 -22

Entrepreneurial Firms’ Impact on Society and Larger Firms • Impact on Society – Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us in new ways, Healthcare, Mobile phones, PCs, E-Shopping, and microwave oven. • Impact on Larger Firms – Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective. – Ex. In Pharmaceutical firms, discovering and marketing drugs. Copyright © 2016 Pearson Education Ltd. 1 -23

The Entrepreneurial Process Consists of Four Steps Step 1: Deciding to become an entrepreneur. Chapter 1 Step 2: Developing successful business ideas. Chapter 2 -6 Step 3: Moving from an idea to an entrepreneurial firm. Chapter 7 -10 Step 4: Managing and growing the entrepreneurial firm. Chapter 1115 Copyright © 2016 Pearson Education Ltd. 1 -24