EP 2150 Entrepreneurship Chapter 1 Foundations of Entrepreneurship

EP 2150 - Entrepreneurship Chapter 1 – Foundations of Entrepreneurship Fall 2016 Peter Robertson Fall 2016 Ch. 1: The Foundations of Entrepreneurship

EP 2150 - Entrepreneurship Fall 2016 Ch. 1: The Foundations of Entrepreneurship 2

EP 2150 - Entrepreneurship Learning Objectives For Today ØDefine the role of the entrepreneur in. ØDescribe the entrepreneurial profile and evaluate your potential as an entrepreneur. ØDescribe the benefits and drawbacks of entrepreneurship. ØExplain the forces that are driving the growth in entrepreneurship. ØExplain the cultural diversity of entrepreneurship. ØDescribe the important role small business plays in a nation’s economy. ØPut failure into the proper perspective. ØExplain how entrepreneurs can avoid becoming another failure statistic. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 3

The World of the Entrepreneur ØEvery year U. S. entrepreneurs launch 565, 000 new businesses. ü Most of those will fail! EP 2150 - Entrepreneurship ØEntrepreneurial Spirit ü Is the most significant economic development in recent history. ü GEM study: 12. 3% of adult population in the U. S. is actively involved in trying to start a new business. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 -4

EP 2150 - Entrepreneurship Entrepreneurial Activity Across the Globe Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 -5

EP 2150 - Entrepreneurship https: //thegedi. org/countries Fall 2016 Ch. 1: The Foundations of Entrepreneurship 6

EP 2150 - Entrepreneurship-Friendly Nations Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 -7

Entrepreneurship in Qatar ØEntrepreneurship and the 2030 Vision: ►From Carbon based to Knowledge based EP 2150 - Entrepreneurship ► 20, 000+ SME’s ►Enterprise Qatar - 100 m QR Investment Fund ►Q Business Incubator Center – QDB & SDC ►Establish an Entrepreneurial Eco-System. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 -8

EP 2150 - Entrepreneurship 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. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 -9

EP 2150 - Entrepreneurship Characteristics of Entrepreneurs ØDesire for responsibility ØPreference for moderate levels of risk – risk eliminators ØConfidence in their ability to succeed ØDesire for immediate feedback Ray Kroc (1902 -1984) Mc. Donald’s ØHigh level of energy ØFuture orientation – opportunity, necessity, and serial entrepreneurs ØSkilled at organizing Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 10

Characteristics of Entrepreneurs Ø Entrepreneurs tend to have: ► A high degree of commitment EP 2150 - Entrepreneurship ► Tolerance for uncertainty ► Flexibility ► A willingness to work hard ► Determination You. Tube Video: 25 Common Characteristics of Successful Entrepreneurs 15 Characteristics of Entrepreneurs https: //www. youtube. com/watch? v=s. Oje. QV 5 p. Hh 4#t=94. 2174401 Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 11

EP 2150 - Entrepreneurship Sources of Entrepreneurial Success Fall 2016 Ch. 1: The Foundations of Entrepreneurship 112

Benefits of Entrepreneurship The opportunity to: ►Create your own destiny EP 2150 - Entrepreneurship ►Make a difference ►Reach your full potential ►Reap impressive profits ►Contribute to society and to be recognized for your efforts ►Do what you enjoy and to have fun at it Fall 2016 1 - 13

EP 2150 - Entrepreneurship Drawbacks of Entrepreneurship ØUncertainty of income ØRisk of losing your entire investment ØLong hours and hard work ØLower quality of life until the business gets established ØHigh levels of stress ØComplete responsibility ØDiscouragement Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 14

EP 2150 - Entrepreneurship Feeding the Entrepreneurial Fire? ØEntrepreneurs as heroes ØEntrepreneurial education ØDemographic and economic factors ØShift to a service economy ØTechnology advancements Independent lifestyles ØThe Internet and cloud computing ØInternational opportunities Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 15

Entrepreneurship EP 2150 - Entrepreneurship ØWho can be an Entrepreneur? ØAnyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur… (although not everyone should). Stuff Entrepreneurs Say Richard Branson - Advice for Entrepreneurs Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 16

EP 2150 - Entrepreneurship The Cultural Diversity of Entrepreneurship ØYoung entrepreneurs ØWomen entrepreneurs ØMinority-owned enterprises ØExpatriate [Immigrant] entrepreneurs ØPart-time entrepreneurs ØHome-based businesses ØFamily businesses ØCopreneurs ØCorporate castoffs ØCorporate dropouts Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 17

Small Businesses. . . Ø 28 million businesses in U. S. – 99. 7% SMALL ØEmploy 50% U. S. private sector workforce. EP 2150 - Entrepreneurship ØCreate more jobs than BIG businesses. ► 65% of net new jobs over the last decade Ø 3% SMALL companies create 70% of net new jobs in the economy. Ø 90% SMALL have fewer than 20 employees. ØProduce 46% U. S. GDP. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 18

EP 2150 - Entrepreneurship Small Businesses by Industry Fall 2016 Ch. 1: The Foundations of Entrepreneurship 119

Small Business Failure Rates EP 2150 - Entrepreneurship Failure Rate* * Headd, B. Redefining Business Success: Distinguishing Between Closure and Failure, 2002 # Shane, S. Startup Failure Rates – The Real Numbers, 2008 Phillips & Kirchhoff. Small Business: Critical Perspectives 1989 Fall 2016 Ch. 1: The Foundations of Entrepreneurship Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8 Y 9 Y 10 25 % 36 % 44 % 50 % 55 % 60 % 63 % 66 % 69 % 71 % http: //www. statisticbrain. com/startup-failure-byindustry/Research Date: 1. 1. 2014 120

EP 2150 - Entrepreneurship Ten Deadly Mistakes of Entrepreneurship 1. Management mistakes 2. Lack of experience 3. Poor financial control 4. Weak marketing efforts 5. Failure to develop a strategic plan 6. Uncontrolled growth 7. Poor location 8. Improper inventory control 9. Incorrect pricing 10. Inability to make the “entrepreneurial transition” Ch. 1: The Foundations of Entrepreneurship 1 - 21

Putting Failure Into Perspective ØEntrepreneurs are not paralyzed by the prospect of failure. EP 2150 - Entrepreneurship ØFailure – a natural part of the creative process. ØSuccessful entrepreneurs learn to fail intelligently. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 22

Avoiding the Pitfalls of Small Business Failure ØKnow your business in depth ØDevelop a solid business plan EP 2150 - Entrepreneurship ØManage financial resources ØUnderstand financial statements ØLearn to manage people effectively ØSet your business apart from the competition ØMaintain a positive attitude Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 23

Recap ►What is an Entrepreneur? ►What are the Benefits & Drawbacks of Entrepreneurship? EP 2150 - Entrepreneurship ►What is feeding the Entrepreneurial fire? ►Cultural diversity of Entrepreneurship. ►Avoiding the pitfalls of Small Business failure. Fall 2016 Ch. 1: The Foundations of Entrepreneurship 24

Suggested Readings ØEntrepreneur? Characteristics of… p 20 -24 EP 2150 - Entrepreneurship ØEntrepreneurship, Benefits/ Drawbacks… p 25 -29 ØFeeding the Entrepreneurial fire… p 30 -32 ØGroups leading development of Entrepreneurship… p 3440 ØPitfalls of business failure… p 45 -47 Fall 2016 Ch. 1: The Foundations of Entrepreneurship 1 - 25