Entrepreneurs The Driving Force Behind Small Business Chapter

The World of the Entrepreneur In the U. S. , entrepreneurs start nearly 6 million businesses a year! n Global Entrepreneurship Monitor (GEM) n Ø Approximately 10. 5% of U. S. population is actively involved in trying to start a new business. Ø Approximately 12% of people in 37 GEM countries studied are involved in starting a new business. Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 2

Source: 2002 Global Entrepreneurship Monitor. Copyright 2006 Prentice Hall Publishing Company 3

What is an Entrepreneur? 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. Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 4

What Is an Entrepreneur? An entrepreneur is someone who is willing to work 16 hours a day to keep from working 8 hours a day for someone else!

Copyright 2006 Prentice Source: Dun & Bradstreet 19 th Annual Small Business Survey, 2000.

Characteristics of Entrepreneurs Desire to take initiative n Preference for moderate risk n Confidence in their ability to succeed n Self-reliance n Perseverance n Desire for immediate feedback n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 7

Characteristics of Entrepreneurs High level of energy n Competitiveness n Future orientation n Ø Serial entrepreneurs Skilled at organizing n Value achievement over money n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 8

Entrepreneurship One characteristic of entrepreneurs stands out: Diversity! n Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 9

Benefits of Small Business Ownership The opportunity to: n Create your own destiny n Make a difference n Reach your full potential n Reap impressive profits n Contribute to society and to be recognized for your efforts n Do what you enjoy and to have fun at it Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 10

Drawbacks of Small Business Ownership n n n Uncertainty of income Risk of losing your entire investment Long hours and hard work Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 11

Copyright. Survey, 2006 Prentice Source: Dun & Bradstreet 21 st Annual Small Business 2002. Hall Publishing Company 12

Drawbacks of Small Business Ownership n n Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 13

Copyright 2006 Hall Publishing Company Source: National Federation of Independent Businesses and Prentice Wells

Drawbacks of Small Business Ownership n n n n Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established High levels of stress Complete responsibility Discouragement Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 15

Feeding the Entrepreneurial Fire n n n n Chapter 1 Entrepreneurship Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E-Commerce and the World Wide Web Copyright 2006 Prentice Hall Publishing Company 16

Feeding the Entrepreneurial Fire n n n n Chapter 1 Entrepreneurship Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E-Commerce and the World Wide Web International opportunities Copyright 2006 Prentice Hall Publishing Company 17

The Cultural Diversity of Entrepreneurship n Young entrepreneurs Chapter 1 Entrepreneurship Copyright 2006 Prentice

Source: Milken Institute, 2003. Copyright 2006 Prentice Hall Publishing Company 19

The Cultural Diversity of Entrepreneurship Young entrepreneurs n Women entrepreneurs n Chapter 1 Entrepreneurship

Copyright 2006 Prentice Hall Publishing Company Source: National Federation of Women Business Owners, 2003.

The Cultural Diversity of Entrepreneurship Young entrepreneurs n Women entrepreneurs n Minority-owned enterprises n Immigrant entrepreneurs n Part-time entrepreneurs n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 22

The Cultural Diversity of Entrepreneurship Home-based business owners n Family business owners n Copreneurs n Corporate castoffs n Corporate dropouts n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 23

Source: Small Business Administration, 2002. Copyright 2006 Prentice Hall Publishing Company 24

Small Businesses. . . n n n Make up 98. 5% of all the businesses in the U. S. Employ 52% of the nation’s private sector workforce. Pay 45 % of total private payroll. Create more jobs than big businesses. Are leaders in offering training and advancement opportunities to workers. Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 25

Small Businesses. . . n n n Produce 51% of the nation’s private GDP. Account for 47% of business sales. Create 4 X more innovations per R & D dollar spent than medium-sized firms and 24 X as many as large companies. Ø Create two-thirds of all new inventions. Ø Produce 13 X to 14 X more patents per employees than large companies. Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 26

Copyright 2006 Prentice Hall Guide Publishing Company Source: National Federation of Independent Businesses Business

Eleven Deadly Mistakes of Entrepreneurship 1. 2. 3. 4. 5. 6. Chapter 1 Entrepreneurship Management incompetence Lack of experience Forcing a flawed idea Undercapitalization Poor cash management Failure to develop a strategic plan Copyright 2006 Prentice Hall Publishing Company 28

Eleven Deadly Mistakes of Entrepreneurship 7. 8. 9. 10. 11. Chapter 1 Entrepreneurship Weak marketing effort Uncontrolled growth Poor location Lack of inventory control Inability to make the “entrepreneurial transition” Copyright 2006 Prentice Hall Publishing Company 29

Putting Failure Into Perspective Entrepreneurs are not paralyzed by the prospect of failure. n Failure – a natural part of the creative process. n Successful entrepreneurs learn to fail intelligently. n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 30

Avoiding the Pitfalls of Small Business Failure Know your business in depth n Prepare a solid business plan n Manage financial resources n Understand financial statements n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 31

Avoiding the Pitfalls of Small Business Failure Learn to manage people effectively n Set your business apart from the competition n Keep in tune with yourself n Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 32