2. Entrepreneurship and New Ventures
οPlanning aheadβstudy questions
β What is entrepreneurship?
β What is special about small businesses?
β How does one start a new venture?
β What resources support entrepreneurship and
business development?
3. What is entrepreneurship?
οEntrepreneurship
β Strategic thinking and risk-taking behavior that
results in the creation of new opportunities for
individuals and/or organizations.
οEntrepreneurs
β Risk-taking individuals who take actions to
pursue opportunities and situations others may
fail to recognize or may view as problems or
threats
4. What is entrepreneurship?
ο Entrepreneurs are β¦
β Founders of businesses that become large-scale
enterprises.
β People who:
β’ Buy a local franchise outlet
β’ Open a small retail shop
β’ Operate a self-employed service business
β People who introduce a new product or
operational change in an existing organization.
5. What is entrepreneurship?
ο Typical characteristics of entrepreneurs:
β Internal locus of control
β High energy level
β High need for achievement
β Tolerance for ambiguity
β Self-confidence
β Action-oriented
β Desire for independence
6. What is entrepreneurship?
ο Typical entrepreneurial backgrounds and
experiences:
β Parents were entrepreneurs or self-employed.
β Families encouraged responsibility, initiative, and
independence.
β Try more than one business venture.
β Relevant personal or career experience.
β Become entrepreneurs between 22 and 45 years of age.
β Seeks independence and sense of mastery.
7. What is entrepreneurship?
ο Common myths about entrepreneurs:
β Entrepreneurs are born, not made.
β Entrepreneurs are gamblers.
β Money is the key to entrepreneurial success.
β You have to be young to be an entrepreneur.
β You must have a degree in business to be an
entrepreneur.
8. What is entrepreneurship?
ο Reasons for women becoming
entrepreneurs:
β Being motivated by an entrepreneurial idea.
β Having a new idea.
β Doing for themselves what they were already
doing for other employers.
β Prior employer not taking them seriously.
β Glass ceiling issues.
9. What is special about small businesses?
ο Small businesses β¦
β Ones with 500 or fewer employees.
β Independently owned and operated.
β Constitute 99 percent of American businesses.
β Are established by:
β’ Starting a new business.
β’ Buying an existing business.
β’ Buying and running a franchise.
10. What is special about small businesses?
ο Entrepreneurship and the Internet β¦
β The Internet offers numerous entrepreneurial
opportunities that are limited only by personal
creativity.
β Over 85 percent of small firms are expected to
conduct business via the Internet by 2002.
β Business-to-business ventures are risky for
small ventures.
11. What is special about small businesses?
ο International business entrepreneurship β¦
β Provides strategic opportunities for small
businesses.
β Creates exporting opportunities.
β Is supported through appropriate governmental
and non-governmental organizations.
12. What is special about small businesses?
ο Family businesses β¦
β Owned and financially controlled by family
members.
β Largest percentage of businesses worldwide.
β Can provide an ideal business situation.
β Problems unique to family businesses:
β’ Family business feud
β’ Succession problem
13. What is special about small businesses?
ο Reasons for small business failures:
β Lack of experience
β Lack of expertise
β Lack of strategy and strategic leadership
β Poor financial control
β Growing too fast
β Lack of commitment
β Ethical failure
14. How does one start a new venture?
ο Important issues in new venture creation:
β Does the entrepreneur have good ideas and the courage to give
them a chance?
β Is the entrepreneur prepared to meet and master the test of strategy
and competitive advantage?
β Can the entrepreneur identify a market niche that is being missed
by other established firms?
β Can the entrepreneur identify a new market that has not yet been
discovered by existing firms?
β Can the entrepreneur generate first-mover advantage by exploiting
a niche or entering a market before competitors?
15. How does one start a new venture?
ο Questions that keep a new venture customer focused β¦
β Who is your customer?
β How will you reach key customer market segments?
β What determines customer choices to buy or not buy this product
or service?
β Why is your product or service a compelling choice for the
customer?
β How will you price your product or service for the customer?
β How much does it cost to make and deliver your product or
service?
β How much does it cost to attract a customer?
β How much does it cost to support and retain a customer?
16. How does one start a new venture?
ο Life cycle of entrepreneurial firms
β Acceptance stage
β Breakthrough stage
β Maturity stage
ο Each stage poses different managerial
challenges and requires different managerial
competencies.
17. How does one start a new venture?
ο Basic items that should be included in a business plan:
β Executive summary
β Industry analysis
β Company description
β Product and services description
β Market description
β Marketing strategy
β Operations description
β Staffing description
β Financial projection
β Capital needs
18. How does one start a new venture?
ο Forms of legal ownership
β Sole proprietorship
β Partnership
β’ General partnership
β’ Limited partnership
β’ Limited liability partnership
β Corporation
19. How does one start a new venture?
ο Financing the new venture
β Sources of outside financing
β’ Debt financing
β’ Equity financing
β Equity financing alternatives
β’ Venture capitalists
β’ Initial public offerings
β’ Angel investors
20. What resources support entrepreneurship
and business development?
ο Promoting entrepreneurship in large
enterprises
β Intrapreneurship
β Skunkworks
ο Business incubators
ο Small business development centers
21. Opportunities of new venture
ο Economic objective
ο Social objectives
ο Human considerations
22. Economics Objective
1. Profit Making: main objective, needed for expansions
& diversification demand for more wages self financing.
2. Production Of Goods & services
3. Creation Of Consumers
4. Innovation
23. Social Objective
1. Provision of employment
2. Production Of Goods Of Best Quality
3. Proper Use Of National resources