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Ch 01 entrepreneurship

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Ch 01 entrepreneurship

  1. 1. The Foundations ofThe Foundations of Entrepreneurship Entrepreneurship Prof Purshottam Patil
  2. 2. The World of the Entrepreneur  Every year in the U.S., entrepreneurs launch 850,000 new businesses.  Entrepreneurial spirit - the most significant economic development in recent history.  GEM study: 11.3 percent of adult population in the U.S. is actively involved in trying to start a new business.Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 2
  3. 3. The World of the Entrepreneur  GEM study  Globally 9.4 percent of adults are actively engaged in trying to start a business.  Men are twice as likely as women to start a business (exactly the opposite trend in the U.S., however).  Nearly one-third of global entrepreneurs are between the ages of 25 and 44.Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 3
  4. 4. 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.Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 4
  5. 5. Characteristics of Entrepreneurs  Desire for responsibility  Preference for moderate 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 moneyChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 5
  6. 6. 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).Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 6
  7. 7. Benefits of Entrepreneurship The 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 itChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 7
  8. 8. Drawbacks of Entrepreneurship  Uncertainty of income  Risk of losing your entire investment  Long hours and hard workChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 8
  9. 9. Small Business Owners Work Week Number of Hours Worked per Week More than 60 hours Less than 30 hours 17% 11% 30 to 40 hours 24% 51 to 60 hours 20% 41 to 50 hours 28%Source: Adapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report, 2002, p. 35.
  10. 10. 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 establishedChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 10
  11. 11. Entrepreneurs Age at Business Formation 55 - 64 O ver 65 18 - 24 6.7% 1.0% 12.0% 45 - 54 17.4% 25 - 34 32.3% 35 - 44 30.6%Source: 2004 Global Entrepreneurship Monitor.
  12. 12. 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  DiscouragementChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 12
  13. 13. Feeding the Entrepreneurial Fire  Entrepreneurs as heroes  Entrepreneurial education  Demographic and economic factors  Shift to a service economy  Technological advancements  Independent lifestyle  E-commerce and the World Wide WebChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 13
  14. 14. U.S. Retail E-Commerce Revenues $250.0 $232.1 $199.3 $200.0 $169.5 Revenues (in Billions) $142.5 $150.0 $117.7 $94.0 $100.0 $50.0 $- 2003 2004 2005 2006 2007 2008 YearSource: eMarketer, 2005.
  15. 15. Feeding the Entrepreneurial Fire  Entrepreneurs as heroes  Entrepreneurial education  Demographic and economic factors  Shift to a service economy  Technological advancements  Independent lifestyles  E-commerce and the World Wide Web  International opportunitiesChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 15
  16. 16. The Cultural Diversity of Entrepreneurship  Young entrepreneurs  Women entrepreneursChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 16
  17. 17. Why Women Start Businesses Frustrated with Other reasons "glass ceiling" at 7% big companies Gain control over 23% my schedule 46% Saw a market opportunity and decided to pursue it 24%Source: Center for Women’s Business Research, 2004.
  18. 18. The Cultural Diversity of Entrepreneurship  Young entrepreneurs  Women entrepreneurs  Minority-owned enterprises  Immigrant entrepreneurs  Part-time entrepreneursChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 18
  19. 19. The Cultural Diversity of Entrepreneurship  Home-based businesses  Family businesses  Copreneurs  Corporate castoffs  Corporate dropoutsChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 19
  20. 20. Small Business by Industry O the r Fina nce 7.3% 8.0% M a nufacturing Serv ice 5.8% 39.2% Who les ale 7.4% C o ns tructio n 11.8% R eta il 20.5%Source: U.S. Small Business Administration, 2005.
  21. 21. Small Businesses...  Employ 51 percent of the nation’s private sector workforce.  Create more jobs than big businesses.  Are leaders in offering training and advancement opportunities to workers.Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 21
  22. 22. Small Businesses...  Produce 51 percent of the nation’s private GDP.  Account for 47 percent of business sales.  Create 13X more innovations per employee than large companies.  Zipper, FM radio, laser, air conditioning, escalator, light bulb, personal computer, automatic transmission, and many more!Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 22
  23. 23. Small Business Survival Rate 100% 100% 90% % of Small Firms Surviving 81% 80% 70% 65% 60% 54% 50% 46% 40% 40% 36% 32% 29% 30% 27% 25% 20% 10% 0% New 1 2 3 4 5 6 7 8 9 10 # of Years in BusinessSource: NFIB Business Policy Guide, 2003, p. 16.
  24. 24. 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 planChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 24
  25. 25. Ten Deadly Mistakes of Entrepreneurship 6. Uncontrolled growth 7. Poor location 8. Improper inventory control 9. Incorrect pricing 10. Inability to make the “entrepreneurial transition”Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 25
  26. 26. 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.Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 26
  27. 27. 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  Keep in tune with yourselfChapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 27

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