Entrepreneurship: Definition, Impact, Characteristics, and Starting a Business, Slides of Business Management and Analysis

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What, exactly is entrepreneurship

• The process of:

– Initiating a business venture

– Organizing the necessary resources

– Assuming the risks and enjoying the rewards

• The exploitation of an opportunity in order to

create value

The Impact of Entrepreneurship

• Innovation
  • Small firms account for 95% of the radical innovations (Cognetics, Inc.)
  • All new businesses represent innovation
  • Product or service
  • Way to make a product
  • Way to deliver a product or service
• Diversity
  • A way for women and people of color to excel in the US economy
  • 6.4 million women owned businesses, providing jobs for 18. million people

Characteristics of an Entrepreneur

• They have a vision
• Unique personality traits
  • Internal locus of control
  • High energy level
  • Need to achieve
  • High level of self confidence
  • Tolerance for Ambiguity
  • Awareness of passing time-do it now.
• Demographic characteristics
  • Tend to be first born
  • Parents were entrepreneurs
  • Children of immigrants
  • Young (25-40)

A Balancing Act

Team

Opportunity^ Resources

Founder

The glue that holds the driving forces

together

• Concept of fit and balance
  • Fit for the needs of the entrepreneur
  • Maintaining balance among the three driving

forces

Ideas and Opportunities

• Where do Ideas come from?
• A new business idea comes from anywhere.
  • Staples – a guy couldn’t find printer cartridges on a Saturday
  • Consumer needs
  • Existing companies-Improve competitive products; satisfy a niche that isn’t being done yet.
  • Distribution channels
  • The Federal and State Governments
  • Family
  • Friends

Catch a Blue Marble

Anchors that Define the Opportunity as a

Superior business

3. Possess robust market, margins, moneymaking characteristics

a. Large enough market (at least $50 million) b. High enough growth rate ( 20% per year) c. High gross margins d. Strong and early free cash flow e. High Profit Potential (10-15 % after tax) f. Attractive, realizable returns for investors (25-30 percent IRR)

The Resources

• Minimize and Control vs. Maximize and own.

• Creativity is needed to get the resources you

need.

• Types of resources

– Financial

– Assets

– People

– A business plan

• Think Cash Last

The Team

• Quality of the team
  • Relevant experience and track record
  • Motivation to excel
  • Commitment, determination, presistence
  • Tolerance for risk, ambiguity, uncertainty
  • Creativity
  • Team focus of control
  • Adaptability
  • Obsessed with the opportunity
  • Leadership
  • Communications

Tactics of Starting an

Entrepreneurial Firm

Legal Forms

• Proprietorship-No separation between the

entrepreneur and the business

• 70% of businesses in the U.S.

• Easy to arrange, few legal requirements

• Liability is unlimited.

Partnership- unincorporated business

with two or more owners

• Feels less alone in the beginning
• If successful, there could be problems down

the road