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01 entrepreneurship intro.ppt
- 1. ENTREPRENEURSHIP I Babs BaileyCarryer Fall 2002
- 2. 8/28/02 2 Goals ofcourse • To distinguish between an idea and a business opportunity – Inventor vs. entrepreneur • To understand the value of and know how to conduct market research to help identify a market opportunity – Marketplace advantage(s)
- 3. 8/28/02 3 Entrepreneurship • Whydo we care? – Creation of jobs » 5% of young and fast growing companies create 77% of new jobs » 15% of them account for 94% of all these new jobs » Fortune 500 employed 1 in 5 in 1980; now 1 in 14
- 4. 8/28/02 4 Entrepreneurship continued •70% of companies that are hiring ≤ 4 years old • 70-80% of jobs are with companies ≤ 20 people • > 95% of the wealth in America has been created by entrepreneurs since 1980 • Millionaires are self-made : > 80% accumulated their wealth in 1 generation
- 5. 8/28/02 5 PA entrepreneurship •PA: > 200K businesses – 98% = small (< 500) • + Almost 400K self employed • Women owned businesses increasing at 65% – 78% nationwide
- 6. 8/28/02 6 Large companies Smallbusinesses 1920 2000
- 7. 8/28/02 7 New venturecreation 0 200 400 600 800 1,000 1,200 1950s 1970s 1990s Growth of New Ventures Per Year (in 000s)
- 8. 8/28/02 8 Small businesses •Only 3% of US businesses > $10 million • Responsible for half of all innovation in the U.S. • Small businesses create 75%of all net new jobs • Very small (< 20) = 50% of this growth • Represent over 99% employers; 52% of workers
- 9. 8/28/02 9 Small businessescontinued • Provide 52% of private sector output • Represent 96% of all exporters of goods • Receive 28% of all federal contract $ • 53% are home based • 3% are franchises
- 10. 8/28/02 10 Business dissolutionrates Time Period All Firms Firms creating 1-4 jobs After 2 years 44% 8% After 4 years 50% 20% After 6 years 60% 24% After 8 years 71% 47%
- 11. 8/28/02 11 Survival rates Firms closing ineach year 92 93 94 95 Firms surviving until 96 All firms 7.3 6.7 5.8 4.7 75.5
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- 13. 8/28/02 13 Entrepreneurship = •Way of thinking • Spotting opportunity • Taking initiative • Implementation driven • Resource utilization • Acceptance of risk/failure
- 14. 8/28/02 14 Entrepreneur One whobrings resources, labor, material and other assets into combinations that make their value greater than before. An entrepreneur is also one who introduces changes, innovations and a new order. Thinkers who do.
- 15. 8/28/02 15 Entrepreneurship isthe dynamic process of creating incremental wealth. The wealth is created by individuals who assume the major risks in terms of equity, time and /or career commitment providing value for a product or service. The product or service may or may not be new or unique but value must somehow be infused by the entrepreneur.
- 16. 8/28/02 16 Examples • NolanBushnell - in 1972 founded Atari (electronic games) on $500. In 1976 he sold it to Warner Communications for $28 m • Ross Perot started EDS with $1K • Michael Dell started selling computer parts by mail order while a Freshman at the University of Texas
- 17. 8/28/02 17 The righttime to start a business Time Market Size
- 18. 8/28/02 18 Characteristics • Focus •Drive • Energy • Self confidence • Don’t start by wanting to get rich but to do something extremely well • Not seeking the trappings of success, but success itself
- 19. 8/28/02 19 Characteristics continued •Most have history of entrepreneurship • Sports • Expulsion or fired • 2/3 are 1st children • 40% were raised by self-employed parents (vs. 18% of general population) • Entrepreneurial test
- 20. 8/28/02 20 Entrepreneurs do •Seldom invent and market unique products but build ventures around incremental innovations and modifications • Enter industries in their growth phase, not infancy • Find fulfillment in their work • Start more than one company
- 21. 8/28/02 21 Entrepreneurial know-how •Resource utilization - entrepreneurs know how to do more with less • Selling ability • Recognize business opportunities: – Markets in flux – Industries with low capital requirements – Customers will pay for customization – Unit sale can support direct sales effort
- 22. 8/28/02 22 Risk tolerance •Entrepreneurs pick a relatively low level of risk and then come up with suggestions as to how to increase returns at the given level of risk • Bankers pick a return that they aspire to and then come up with ideas to reduce the risk involved at that level
- 23. 8/28/02 23 Innovation • Entrepreneursdon’t have common personalities but a commitment to innovation • Entrepreneurship refers not to an enterprise’s size or age, but to a certain kind of activity • Innovation is the effort to create purposeful, focused change in an enterprise’s economic or social potential
- 24. 8/28/02 24 How innovationoccurs • 1. Unexpected occurrences – IBM – Ford and Edsel • 2. Incongruities – Alcon – Steel – Shipping
- 25. 8/28/02 25 Innovation continued •3. Process needs – Media - Linotype and modern advertising • 4. Industry and market changes – Galt • 5. Demographic changes – Woolworths vs Walmart • 6. Changes in perception – Obsession with health in spite of improvements
- 26. 8/28/02 26 7. Newknowledge • Computer – Binary arithmetic – Calculating machine in early 19th C – Punch card for the U.S. census of 1890 – Audion tube, invented in 1906 – Symbolic logic, created between 1910 -1913 – Programming/feedback concepts from WWI efforts to develop anti-aircraft guns – The knowledge was available by 1918, but the 1st computer appeared in 1946
- 27. 8/28/02 27 Effective innovationsstart small. They are not grandiose. They try to do one specific thing. It may be the elementary idea of putting the same number of matches in a matchbox. This simple notion gave the Swedes a world monopoly on matches for half a century. Peter Drucker
- 28. 8/28/02 28 We succeeded(in the Normandy Invasion) because we didn’t know it was impossible. Winston Churchill