Copyright 2016 Pearson Education Inc 1 1 1

Copyright © 2016 Pearson Education, Inc. 1 1 -1

Section 1: The Challenge of Entrepreneurship 1 The Foundations of Entrepreneurship Copyright © 2016 Pearson Education, Inc. 1 -2

Learning Objectives v Define the role of the entrepreneur in business in the United States and around the world. v Describe the entrepreneurial profile. v Describe the benefits of entrepreneurship. v Describe the drawbacks of entrepreneurship. v Explain the forces that are driving the growth of entrepreneurship. Copyright © 2016 Pearson Education, Inc. 1 -3

Learning Objectives (continued) v Explain the cultural diversity of entrepreneurship. v Describe the important role that small businesses play in our nation’s economy. v Put failure into the proper perspective. v Explain how an entrepreneur can avoid becoming another failure statistic. Copyright © 2016 Pearson Education, Inc. 1 -4

The World of the Entrepreneur v Every month U. S. entrepreneurs launch 514, 000 new businesses. v Entrepreneurial spirit - the most significant economic development in recent history. v GEM study: 12. 7% of adult population in the United States is actively involved in trying to start a new business. Copyright © 2016 Pearson Education, Inc. 1 -5

Entrepreneurial Activity Across the Globe Copyright © 2016 Pearson Education, Inc. 1 -6

Entrepreneurship-Friendly Nations Copyright © 2016 Pearson Education, Inc. 1 -7

The World of the Entrepreneur v. Global Entrepreneurship Monitor (GEM) study: v Men are twice as likely to start a business as women. v Entrepreneurs are most likely to launch businesses when they are between the ages of 35 and 44. v Most people see entrepreneurial activity as a good career choice. Copyright © 2016 Pearson Education, Inc. 1 -8

What Is an Entrepreneur? v Entrepreneur: v One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. Copyright © 2016 Pearson Education, Inc. 1 -9

Percentage of Start-Up Companies in the United States Copyright © 2016 Pearson Education, Inc. 110

Characteristics of Entrepreneurs v Desire for responsibility v Preference for moderate levels of risk: risk eliminators v Self-reliance v Confidence in their ability to succeed v Determination v Desire for immediate feedback v High level of energy v Future orientation v Opportunity entrepreneurs v Necessity entrepreneurs v Serial entrepreneurs v Skilled at organizing v Value achievement over money Copyright © 2016 Pearson Education, Inc. 1 - 11

Characteristics of Entrepreneurs v Entrepreneurs tend to exhibit: v A high degree of commitment v Tolerance for ambiguity v Creativity v Flexibility v Resourcefulness v A willingness to work hard v Tenacity Copyright © 2016 Pearson Education, Inc. 1 - 12

Most Important Qualities of an Entrepreneur Copyright © 2016 Pearson Education, Inc. 113

Entrepreneurship v One characteristic of entrepreneurs stands out: diversity! v Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). Copyright © 2016 Pearson Education, Inc. 1 - 14

Benefits of Entrepreneurship v The opportunity to: v Create your own destiny. v Make a difference. v Reach your full potential. v Reap impressive profits. v Contribute to society and to be recognized for your efforts. v Do what you enjoy and to have fun at it. Copyright © 2016 Pearson Education, Inc. 1 - 15

Drawbacks of Entrepreneurship v Uncertainty of income v Risk of losing your entire investment v Long hours and hard work v Lower quality of life until the business gets established v High levels of stress Copyright © 2016 Pearson Education, Inc. 1 - 16

Sources of Stress for Entrepreneurs Copyright © 2016 Pearson Education, Inc. 1 - 17

Drawbacks of Entrepreneurship (continued from 1 -16) Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established v High levels of stress v Complete responsibility v Discouragement v v Copyright © 2016 Pearson Education, Inc. 1 - 18

Feeding the Entrepreneurial Fire v v v v Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyle The Internet, cloud computing, and mobile marketing Copyright © 2016 Pearson Education, Inc. 1 - 19

U. S. Online Retail Sales Copyright © 2016 Pearson Education, Inc. 120

Feeding the Entrepreneurial Fire (continued from 1 -19) Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyle The Internet, cloud computing, and mobile marketing v International opportunities v v v v Copyright © 2016 Pearson Education, Inc. 1 - 21

The Cultural Diversity of Entrepreneurship v. Young entrepreneurs v. Women entrepreneurs Copyright © 2016 Pearson Education, Inc. 1 - 22

Characteristics of Women. Owned Businesses Copyright © 2016 Pearson Education, Inc. 123

The Cultural Diversity of Entrepreneurship (continued from 1 -22) v. Young entrepreneurs v. Women entrepreneurs v. Minority-owned enterprises Copyright © 2016 Pearson Education, Inc. 1 - 24

Growth of New Entrepreneurs by Minority Group Copyright © 2016 Pearson Education, Inc. 125

The Cultural Diversity of Entrepreneurship (continued from 124) v. Young entrepreneurs v. Women entrepreneurs v. Minority-owned enterprises v. Immigrant entrepreneurs v. Part-time entrepreneurs Copyright © 2016 Pearson Education, Inc. 1 - 26

The Cultural Diversity of Entrepreneurship (continued ) v. Home-based businesses v. Family businesses v. Copreneurs v. Corporate castoffs v. Corporate dropouts v. Retiring baby boomers Copyright © 2016 Pearson Education, Inc. 1 - 27

Entrepreneurial Activity by Age Group Copyright © 2016 Pearson Education, Inc. 128

The Power of Small Businesses v Small businesses: v Make up 99. 7% of the 27. 8 million businesses in the United States v Employ 49. 2% of the nation’s private sector workforce v Create more jobs than big businesses v Created 64% of net new jobs over the last decade v 5% of small companies create 67% of net new jobs in the economy v Gazelles Copyright © 2016 Pearson Education, Inc. 1 - 29

Small Businesses by Industry Copyright © 2016 Pearson Education, Inc. 130

The Power of Small Businesses (continued from 1 -29) v. Small businesses: v Produce 46% of the nation’s private GDP. v Account for 47% of business sales. v Create 16 times more patents per employees than large companies. v. Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more! Copyright © 2016 Pearson Education, Inc. 1 - 31

Putting Failure into Perspective v Entrepreneurs are not paralyzed by the prospect of failure. v Failure: a natural part of the creative process. v Successful entrepreneurs learn to fail intelligently. Copyright © 2016 Pearson Education, Inc. 1 - 32

Small Business Failure Rate Copyright © 2016 Pearson Education, Inc. 133

Avoiding the Pitfalls of Small Business Failure v. Know your business in depth v. Build a viable business model – and test it v. Develop a solid business plan v. Understand financial statements v. Manage financial resources v. Learn to manage people effectively v. Set your business apart from the competition v. Maintain a positive attitude Copyright © 2016 Pearson Education, Inc. 1 - 34

Conclusion v. Entrepreneurs: v. Are an important part of the free enterprise system v. Are a diverse and talented group of people v. Represent a cross-section of society as a whole v. Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience Copyright © 2016 Pearson Education, Inc. 1 - 35

What Is Ahead? Chapter 2: Ethics and Social Responsibility Chapter 3: Inside the Entrepreneurial Mind: From Ideas to Reality Section 2: The Entrepreneurial Journey Begins Section 3: Launching a Business Section 4: Growing the Business Copyright © 2016 Pearson Education, Inc. 1 - 36

Copyright © 2016 Pearson Education, Inc. 1 - 37