01 Intro to Entreneurship

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Chapter1

Introduction toEntrepreneurship

Bruce R. BarringerR. Duane Ireland


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Chapter Objectives1 of 2

1.Explain entrepreneurship and discuss itsimportance.

2.Describe corporate entrepreneurship and its use

in established firms.

3.Discuss three main reasons people decide tobecome entrepreneurs.

4.Identify four main characteristics of successful

entrepreneurs.

5.Explain five common myths regardingentrepreneurship.


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Chapter Objectives2 of 2

1.Explain how entrepreneurial firms differ fromsalary-substitute and lifestyle firms.

2.Discuss the changing demographics of

entrepreneurs in the United States.

3.Discuss the impact of entrepreneurial firms oneconomies and societies.

4.Identify ways in which large firms benefit from

the presence of smaller entrepreneurial firms.

5.Explain the entrepreneurial process.


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Introduction to Entrepreneurship

There is tremendousinterest in

entrepreneurship in theU.S. and around the

world.

According to the 2007GEM

study, 9.6% of Americans

are actively engaged instarting a business or arethe owner/manager of a

business that is less thanthree years old.


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Entrepreneurial Revolution

We are in the midst of a silent revolution a triump of thecreative and entrepreneurial spirit of humankind throughoutthe world.

I believe its impact on the 21stcentury will equal or exceed

that of the Industrial Revolution on the 19thand 20th.Jeffry A. Timmons

The Entrepreneurial Mind, 1989

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Entrepreneurial Revolution

> 7 Million American Millionaires are self-madeentrepreneur.

The poor become rich due to entrepreneurialprocess. Building entrepreneurial community is the priority

of the new E-Generation.

Secret weapon of the American economy !1-6


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Mega Entrepreneurs/Founders

Arthur M. Blank The Home Depot, Inc. Ely R. Callaway Callaway Golf Richard Branson Virgin Group of Comp. Paul Fireman Reebok Anita Roddick The Body Shop Frederik W. Smith Federal Express Phil Knight Nike Akio Morita - Sony Liz Claiborne ? Walt Disney - ?

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Mega Entrepreneurs/Founders

Jeff Bezos Amazon.Com Sergey Brin & Larry Page- Google Kenneth H. Olsen Digital Equipment Corp Bill Gates & Paul Allen - Microsoft Larry Ellison - Oracle Steve Jobs & Steve Wozniak - Apple Computer Mitch Kapor - Lotus Dev Corp Michael Dell - Dell Computer Marc Andressen Netscape Mark Zuckerberg - Facebook Heinz Nixdorf Nixdorf Computer AG

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Entrepreneurial Impact Old & New Companies

Sales Workers Capital(2000) (2000) (2001)$Billion Thousands $Bilion

General Motors 185 386 34 Ford 163 365 45

Crysler 151 464 43Total 499 1215 122 Intel 29 67 179 Microsoft 22 31 362 Cisco 15 21 121

Total 66 119 662

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Indications of Increased Interestin Entrepreneurship

Books & Magazineso Amazon.com lists over 45,000 books dealing with

entrepreneurship and 118,000 focused on small business. College Courses

o In 1985, there were about 250 entrepreneurship courses offeredacross all colleges in the United States.

o Today, more than 5,000 entrepreneurship courses are offered intwo-year and four-year colleges and universities in the UnitedStates.

o National Commision on Entrepreneurshipo Ernst & Young Award & PECIPTA & Enterprise 50o 3.5 Million of100 Million Americans are Millionaires


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What is Entrepreneurship?

The word entrepreneur derives fromthe French words entre, meaningbetween, and prendre, meaning totake. The word was originally used todescribe people who take on the riskbetween buyers and sellers or whoundertake a task such as starting anew venture.

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What is Entrepreneurship?

Academic Definition (Stevenson & Jarillo)o Entrepreneurship is the process by which individuals

pursue opportunities without regard to resources theycurrently control.

Venture Capitalist (Fred Wilson)o Entrepreneurship is the art of turning an idea into a

business. Explanation of What Entrepreneurs Do

o

Entrepreneurs assemble and then integrate all theresources neededthe money, the people, thebusiness model, the strategyneeded to transform aninvention or an idea into a viable business.


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Corporate Entrepreneurship1 of 2

Corporate Entrepreneurshipo Is the conceptualization of entrepreneurship at the

firm level.o All firms fall along a conceptual continuum that

ranges from highly conservative to highlyentrepreneurial.

o The position of a firm on this continuum is referred toas its entrepreneurial intensity.


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Corporate Entrepreneurship2 of 2

Entrepreneurial Firms Conservative Firms

Proactive Innovative Risk taking

Take a more wait andsee

posture Less innovative Risk adverse


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Why Become an Entrepreneur?

The three primary reasons that people becomeentrepreneurs and start their own firms

Desire to be their ownboss

Financial rewards

Desire to pursue theirown ideas

aracter st cs o uccess u


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aracter st cs o uccess uEntrepreneurs

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Four Primary Characteristics

Ch t i ti f S f l


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Characteristics of SuccessfulEntrepreneurs

Passion for the Business

o The number one characteristic shared by successful entrepreneurs isa passion for the business.

o This passion typically stems from the entrepreneurs belief that thebusiness will positively influence peoples lives.The most important thing about starting a business is to be

passionate about what you do. I think it is very difficult to enter abusiness you dont understand and have passion for - OlegTschltzoff, Fotolia, NY.The key is to have passion and never give up. This is imperative

because it creates a drive to solve business problems - PeterFlint, Trulia.ComDo what youve passionate about. In the startup world, if yourebored, you might as well be dead - Chris Shaw, ProtechMy Photos


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Product/Customer Focus

o A second defining characteristic of successfulentrepreneurs is a product/customer focus.

o An entrepreneurs keen focus on products andcustomers typically stems from the fact that most

entrepreneurs are, at heart, craftspeople.The computer is the most remarkable tool weve ever built.. but the most important thing is to get them in the hands

as many people as possible. - Steven Jobsgood products with the capability to satisfy customers.

Ch t i ti f S f l


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Tenacity/Determined Despite Failure

Because entrepreneurs are typically trying somethingnew, the failure rate is naturally high.

The litmus test for entrepreneurs is their ability topersevere through setbacks and failures.

Characteristics of Successful


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Execution Intelligence

o The ability to fashion a solid business idea into a viablebusiness is a key characteristic of successfulentrepreneurs.

o In many cases, Execution Intelligence is the factor that det. whether

a start-up is successful or fails.o The ability to exec a business idea means developing a business

model, putting tog a new venture team, raising money, establishingpartnerships, managing finances, leading & motivating employeesetc.To open a business is very easy, to keep it open is verydifficult.- Chinese sayingIdeas are easy. Its execution that s hard. - Jeff Bezos,

Amazon.com


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Common Myths About Entrepreneurs1 of 5

Myth 1: Entrepreneurs Are Born Not Made

o This myth is based on the mistaken belief that somepeople are genetically predisposed to beentrepreneurs.

o The consensus of many studies is that no one is bornto be an entrepreneur; everyone has the potential tobecome one.

o

Whether someone does or doesnt become anentrepreneur, is a function of the environment, lifeexperiences, and personal choices.


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Although no one is born to be an entrepreneur, there are common

traits and characteristics of successful entrepreneurs

Achievement motivated Alert to opportunities Creative Decisive

Energetic Has a strong work ethic Is a moderate risk taker Is a networker Lengthy attention span

Optimistic disposition Persuasive Promoter Resourceassembler/leverager Self-confident Self-starter Tenacious Tolerant of ambiguity Visionary


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Myth 2: Entrepreneurs Are Gamblerso Most entrepreneurs are moderate risk takers.o The idea that entrepreneurs are gamblers originates

from two sources:

Entrepreneurs typically have jobs that are less structured, andso they face a more uncertain set of possibilities than people intraditional jobs.

Many entrepreneurs have a strong need to achieve and setchallenging goals, a behavior that is often equated with risktaking.


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Myth 3: Entrepreneurs Are Motivated Primarilyby Money.o While it is nave to think that entrepreneurs dont seek

financial rewards, money is rarely the reason

entrepreneurs start new firms.o In fact, some entrepreneurs warn that the pursuit of

money can be distracting.

C


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Myth 4: Entrepreneurs Should Be Young andEnergetic.o The most active age for business ownership is 35 to

45 years old.o While it is important to be energetic, investors often

cite the strength of the entrepreneur as their mostimportant criteria in making investment decisions. What makes an entrepreneur strong in the eyes of an

investor is experience, maturity, a solid reputation, and a track

record of success. These criteria favor older rather than younger entrepreneurs.


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Types of Start-Up Firms


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Changing Demographics of


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Changing Demographics ofEntrepreneurs

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Minority Entrepreneurs Senior Entrepreneurs

Minorities owned roughly

18%of U.S. businesses in 2002. This number was up 10%

from

1997.

Although statistics are not

kepton senior entrepreneurs, there istrong evidence that the numbeof older people choosing

entrepreneurial careers is rapidlincreasing.

Changing Demographics of


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Changing Demographics ofEntrepreneurs

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Young Entrepreneurs

Interest among young people in entrepreneurialcareers is

growing.

According to a Gallop study, 7 out of 10 high schoolstudents

want to start their own business. Over 2,000 two-year and four-year colleges and

universitiesoffer entrepreneurship courses.

Economic Impact of Entrepreneurial


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Economic Impact of EntrepreneurialFirms

Innovationo Is the process of creating something new, which is

central to the entrepreneurial process.o Small firms are twice as innovative per employee as

large firms. Job Creationo In the past two decades, economic activity has moved

in the direction of smaller entrepreneurial firms, whichmay be due to their unique ability to innovate and

focus on specialized tasks.

Entrepreneurial Firms Impact on


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Entrepreneurial Firms Impact onSociety and Larger Firms

Impact on Societyo The innovations of entrepreneurial firms have a

dramatic impact on society.o 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.

Impact on Larger Firmso Many entrepreneurial firms have built their entire

business models around producing products andservices that help larger firms become more efficientand effective.


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The Entrepreneurial Process

The Entrepreneurial Process Consists of Four StepsStep 1: Deciding to become an entrepreneur.Step 2: Developing successful business ideas.Step 3: Moving from an idea to an entrepreneurial

firm.Step 4: Managing and growing the entrepreneurialfirm.Step 5: Exiting the venture.

Steps in the Entrepreneurial Process


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Steps in the Entrepreneurial Process1 of 2

Step 1 Step 2Developing Successful Business Ideas

Steps in the Entrepreneurial Process


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Steps in the Entrepreneurial Process2 of 2

Step 3 Step 4


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All rights reserved. No part of this publication may be reproduced, storedin a retrieval system, or transmitted, in any form or by any means,

electronic, mechanical, photocopying, recording, or otherwise, withoutthe prior written permission of the publisher. Printed in the United States

of America.Copyright 2010 Pearson Education, Inc.

publishing as Prentice Hall

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01 Intro to Entreneurship