Starting Your Own Business: The Entrepreneurship Alternative

Chapter 6

An entrepreneur is a person who seeks a

profitable opportunity and takes the necessary

risks to set up and operate a business.

Differ from many small-business owners in their

strong desire to make their business expand and

grow.

Differ from managers through their overriding

responsibility to use the resources of the

organization to accomplish their goals.

Willing to take risks.

What is Entrepreneurship?

Categories of Entrepreneurs

Classic Entrepreneurs identify business opportunities and

allocate available resources to tap those markets.

Serial Entrepreneurs start one business, run it, and then start

and run additional businesses in succession.

Social Entrepreneurs recognize a societal problem

and use business principles to develop innovative solutions.

Why People Become Entrepreneurs

Being Your Own Boss Self-management is the motivation that drives many entrepreneurs.

Make all important decisions.

Engage much of the communication related to your business (See Business Etiquette)

Financial Success Entrepreneurs are wealth creators.

Many start their ventures with the specific goal of becoming rich—or at least financially successful.

Why Entrepreneurship?

Job Security Over the past ten years, large companies have eliminated more jobs than they have created.

Quality of Life Starting a business gives the founder some choice over when, where, and how to work.

A lifestyle entrepreneur is a person who starts a business to gain flexibility in work hours and control over his or her life.

But this does not mean working fewer hours or with less intensity. Generally it is the opposite—people who start their own businesses often work longer and harder than ever before, at least in the beginning.

Why Entrepreneurship?

The Environment for Entrepreneurship

Factors supporting and expanding opportunities for entrepreneurs

The rapid globalization of business has created many

opportunities for entrepreneurs.

Entrepreneurs market their products abroad and hire

international talent.

Among the fastest-growing small U.S. companies, almost

two of every five have international sales.

Globalization

Education 100 U.S. colleges and universities offer entrepreneurship majors.

Universities are helping students launch businesses.

Many programs teach entrepreneurship to young people.

Information Technology Technology has given entrepreneurs tools that help them compete

with large companies.

Information technology helps entrepreneurs work quickly and

efficiently, provide immediate and attentive customer service,

increase sales, and project professional images.

Social networking has further transformed the business

environment for entrepreneurs. According to a recent study, more

than 90 percent of successful companies now use at least one

social media tool.

New terms: Infopreneurship, Homepreneurship, Telecommuting

Education / IT

Aging of U.S. population.

Emergence of Hispanics as nation’s largest ethnic group.

Growth of two-income families.

Examples:

• Convenience products for busy parents, foods that cater to ethnic

preferences, and services designed specifically for older consumers

all enjoy an opportunity for success.

• During times when consumers are less willing to spend money, a

shoe-repair shop is likely to have an increase in business.

Demographic and Economic Trends

Characteristics of Entrepreneurs

Vision - entrepreneurs begin with an overall idea for how to

make their business ideas successful

High Energy Level - a willingness to work hard

Need to Achieve - entrepreneurs work hard because they

want to excel

Self-Confidence - fearlessness in the face of difficult odds

Tolerance for Failure - entrepreneurs are not easily

discouraged

Creativity - entrepreneurs devise innovative ways to overcome

difficult problems and situations

Tolerance for Ambiguity - entrepreneurs take in stride

uncertainties

Internal Locus of Control - entrepreneurs believe they can

control their own fates

Entrepreneurial Characteristics

Entrepreneurial Quiz

Selecting a Business Idea

Find something you love to do and are good at

doing

Can your idea satisfy a need in the marketplace?

Entrepreneurs must be sure that the idea

they choose has interest in the marketplace.

Business Plan

Starting a New Venture

Creating a Business Plan

Written documentation that provides orderly

statement of goals, methods, and purpose

Discusses the company’s mission and vision

Analyzes unique advantage, customers, and

competition

Increasing the Likelihood of Entrepreneurial Success

58% of the most recent Inc. CEOs did not create a

formal written plan.

But business plans do help entrepreneurs prepare

enough resources and stay focused on key

objectives.

Creating a Business Plan

Advantages:

Established customers

Deal with familiar suppliers

Good/service known in marketplace

Necessary permits and licenses are

already secured

Financing may be easier

Buying an Existing Business

Advantages:

Less risky than establishing entirely new

firm

Firms in franchises showing growth

Creating a Franchise

Promoting innovation within

organizational structures

An idea to promote creativity

Companies promote in a variety

of ways

Skunkworks (A loosely organized

research and development team or

facility)

Intrapreneurship