Abdm4223 week 01 intro


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Introduction to Entrepreneurship

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  • Abdm4223 week 01 intro

    1. 1. ABDM4233 ENTREPRENEURSHIP The Foundations of Entrepreneurship by Stephen Ong Principal Lecturer (Specialist)Visiting Professor, Shenzhen University
    2. 2. The World of the Entrepreneur Every year U.S. entrepreneurs launch 550,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. GEM study: 18.7% of adult population in the U.S. is actively involved in trying to start a new business. 1-2
    3. 3. TEA (2011)Malaysia = 4.9% Japan = 5.2%Singapore = 6.6% UK = 7.3% USA = 12.3%Thailand = 19.5% China = 24% 1-3
    4. 4. The World of the Entrepreneur Global Entrepreneurship Monitor (GEM) study reports:  Men are twice as likely to start a business as women.  Most entrepreneurs turn to family members and friends for capital.  Entrepreneurs are most likely to launch businesses when they are between the ages of 25 and 44. 1-4
    5. 5. Global Entrepreneurship Monitor (GEM) 2011 Report Estimated 388 million entrepreneurs actively engaged in starting and running new businesses in 2011. Early-stage entrepreneurs comprised of :  163 million women  165 million between the ages of 18 and 35 years  141 million expecting to create at least five new jobs in the next five years  65 million expecting to create 20 or more new jobs in the next five years  69 million with innovative products and services that are new to customers and with few other competitors  18 million selling at least 25% of their products and services internationally 1-5
    6. 6. What is Entrepreneurship? Academic Definition (Stevenson & Jarillo)  Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control. Venture Capitalist (Fred Wilson)  Entrepreneurship is the art of turning an idea into a business. Explanation of What Entrepreneurs Do  Entrepreneurs assemble and then integrate all the resources needed – the money, the people, the business model, the strategy – to transform an invention or an idea into a viable business. 1-6
    7. 7. What is an Entrepreneur?One who creates a new business in the faceof risk and uncertainty for the purpose ofachieving profit and growth by identifyingopportunities and assembling the necessaryresources to capitalize on them. 1-7
    8. 8. Why Become an Entrepreneur? The three primary reasons that people become entrepreneurs and start their own firms Desire to be their own boss Desire to pursue their own ideas Financial rewards 1-8
    9. 9. Characteristics of Successful Entrepreneurs 1 of 3 Four Primary Characteristics 1-9
    10. 10. Characteristics of Successful Entrepreneurs 2 of 3 Passion for the Business  The number one characteristic shared by successful entrepreneurs is a passion for the business.  This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. Product/Customer Focus  A second defining characteristic of successful entrepreneurs is a product/customer focus.  An entrepreneur’s keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople. 1-10
    11. 11. Characteristics of Successful Entrepreneurs 3 of 3 Tenacity Despite Failure  Because entrepreneurs are typically trying something new, the failure rate is naturally high.  A defining characteristic for successful entrepreneurs is their ability to persevere through setbacks and failures. Execution Intelligence  The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs. 1-11
    12. 12. Common Myths About Entrepreneurs 1 of 5 Myth 1: Entrepreneurs Are Born, Not Made  This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs.  The consensus of many studies is that no one is “born” to be an entrepreneur; everyone has the potential to become one.  Whether someone does or doesn’t become an entrepreneur is a function of their environment, life experiences, and personal choices. 1-12
    13. 13. Common Myths About Entrepreneurs 2 of 5 Although no one is “born” to be an entrepreneur, there are common traits and characteristics of successful entrepreneurs• A moderate risk taker • Optimistic disposition• A networker • Persuasive• Achievement motivated • Promoter• Alert to opportunities • Resource assembler/ leverager• Creative • Self-confident• Decisive • Self-starter• Energetic • Tenacious• Has a strong work ethic • Tolerant of ambiguity• Lengthy attention span • Visionary 1-13
    14. 14. Common Myths About Entrepreneurs 3 of 5 Myth 2: Entrepreneurs Are Gamblers  Most entrepreneurs are moderate risk takers.  The idea that entrepreneurs are gamblers originates from two sources:  Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs.  Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking. 1-14
    15. 15. Common Myths About Entrepreneurs 4 of 5 Myth 3: Entrepreneurs Are Motivated Primarily by Money  While it is naïve to think that entrepreneurs don’t seek financial rewards, money is rarely the reason entrepreneurs start new firms.  In fact, some entrepreneurs warn that the pursuit of money can be distracting. 1-15
    16. 16. Common Myths About Entrepreneurs 5 of 5 Myth 4: Entrepreneurs Should Be Young and Energetic  Entrepreneurial activity is fairly easily spread out over age ranges.  While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important 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. 1-16
    17. 17. Characteristics of Entrepreneurs Desire for responsibility Preference for moderate levels of risk – risk eliminators Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation – serial entrepreneurs Skilled at organizing Value achievement over money 1 - 17
    18. 18. Entrepreneurship One characteristic of entrepreneurs stands out: Diversity! Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). 1 - 18
    19. 19. Benefits of EntrepreneurshipThe opportunity to: Create your own destiny 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 1 - 19
    20. 20. Drawbacks of Entrepreneurship 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 1 - 20
    21. 21. Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyle E-commerce and the Internet 1 - 21
    22. 22. FIGURE 1.3 U.S. Retail E-Commerce Revenues Source: Based on Forrester Research, 2008. 1 - 22
    23. 23. The Cultural Diversity of Entrepreneurship  Young entrepreneurs Jerry Yang, 29 David Filo, 31Xiaofeng Peng, 33 1 - 23
    24. 24. Young Entrepreneurs Interest among young people in entrepreneurial careers is high. According to a Harris Interactive survey, 40% of people 8 to 21 years old said they’d like to start their own business someday. A total of 59% of the 8- to 21- year olds said they know someone who has started their own business. 1-24
    25. 25. 1 - 25
    26. 26. The Cultural Diversity of Entrepreneurship (continued)  Women entrepreneursTian Wen Hua ,66 Wu Ying, 26 1 - 26
    27. 27. Women Entrepreneurs There were 6.2 million women-owned businesses in 2002 (the most recent statistics available) This number was up 20% from 1997. There are a growing number of organizations that support and advocate for women-owned businesses. 1-27
    28. 28. FIGURE 1.4 Why Women Start BusinessesSource: U.S. Small Business Administration, 2007. 1 - 28
    29. 29. Senior Entrepreneurs The percentage of U.S. entrepreneurs who are seniors jumped from 15% to 23% from 1996 to 2010. The increase is attributed to corporate downsizing, a desire among older workers for more fulfillment in their lives, a need for additional income, and similar factors. 1-29
    30. 30. The Cultural Diversity of Entrepreneurship (continued) Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs + = US$2.9 B 1 - 30
    31. 31. The Cultural Diversity of Entrepreneurship (continued) Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts Social entrepreneurs Retiring Baby Boomers 1 - 31
    32. 32. Economic Impact of Entrepreneurial Firms Innovation  Is the process of creating something new, which is central to the entrepreneurial process.  Several studies have found that small businesses outperform their larger counterparts in terms of obtaining patents. Job Creation  Small businesses are the creators of most new jobs in the U.S., and employ half of all private sector employees.  According to a Kauffman Foundation survey, 92% of Americans say entrepreneurs are critically important to job creation. 1-32
    33. 33. Small Businesses ... Make up 99.7% of the 30.14 million businesses in the U.S. Employ 51% of the nation’s private sector workforce. Create more jobs than big businesses.  60% to 80% of net new jobs over the last decade Are leaders in offering training and advancement opportunities to workers. 1 - 33
    34. 34. Entrepreneurial Firms’ Impact on Society and Larger Firms Impact on Society  The innovations of entrepreneurial firms have a dramatic impact on society.  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 Firms  Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective. 1-34
    35. 35. Small Businesses ... (continued) Produce 51% of USA’s private GDP. Account for 47% of business sales. Create 13 times more patents per employees than large companies.  Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more! 1 - 35
    36. 36. Malaysia SME Services 37% of GDP (2010)FIGURE 1.5 Small Business by IndustrySource: U.S. Small Business Administration, 2007. 1 - 36
    37. 37. Ten Deadly Mistakes of Entrepreneurship1. Management mistakes2. Lack of experience3. Poor financial control4. Weak marketing efforts5. Failure to develop a strategic plan 1 - 37
    38. 38. Ten Deadly Mistakes of Entrepreneurship1. Uncontrolled growth2. Poor location3. Improper inventory control4. Incorrect pricing5. Inability to make the “entrepreneurial transition” 1 - 38
    39. 39. Putting Failure Into Perspective Entrepreneurs are not paralyzed by the prospect of failure. Failure – a natural part of the creative process. Successful entrepreneurs learn to fail intelligently. 1 - 39
    40. 40. Avoiding the Pitfalls of Small Business Failure Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Set your business apart from the competition Maintain a positive attitude 1 - 40
    41. 41. The Entrepreneurial ProcessThe Entrepreneurial Process Consists of 4 StepsStep 1: Deciding to become an entrepreneur.Step 2: Developing successful business ideas.Step 3: Moving from an idea to an enterprise.Step 4: Managing and growing the enterprise. 1-41
    42. 42. ConclusionEntrepreneurs: Are an important part of the free enterprise system Are a diverse and talented group of people Represent a cross-section of society as a whole Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience 1 - 42
    43. 43. Tutorial Case Study 1Rovio & Angry Birds Prepare answers to all questions before class. Selected member of group to answer one question in class. Submit hardcopy answers filed in a personal plastic folder with  Full Name  Student ID #  Tutorial Class ID #  Course Code & Title  Contact Email 1 - 43
    44. 44. Further Reading Barringer, Bruce R. & Ireland, R. Duane, 2011 Entrepreneurship – Successfully launching new ventures 4th edition, Pearson. Scarborough, Norman, M. 2011. Essentials of Entrepreneurship and Small Business Management. 6th edition. Pearson. Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Entrepreneurship and Small Business. 3rd Asia Pacific edition. John Wiley. 1 - 44