01The Winning Hand of Entrepreneurship

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PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

Copyright Copyright © © 2003 South-Western College Publishing.2003 South-Western College Publishing. All rights reserved.All rights reserved.

The Winning The Winning Hand of Hand of EntrepreneurshipEntrepreneurship

The Winning The Winning Hand of Hand of EntrepreneurshipEntrepreneurship

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Entrepreneurship and Small Business

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Copyright © by South-Western College Publishing. All rights reserved. 1–2

Looking AheadLooking AheadLooking AheadLooking Ahead

After studying this chapter, you should be able to:

1. Discuss the availability of entrepreneurial opportunities and give examples of highly successful businesses started by entrepreneurs.

2. Explain the entrepreneurial challenges presented by e-commerce and global changes.

3. Explain the nature of entrepreneurship and how it is related to small business.

4. Identify three motivators or rewards of entrepreneurial careers.


Looking Ahead (cont’d)Looking Ahead (cont’d)Looking Ahead (cont’d)Looking Ahead (cont’d)

5. Describe the various types of entrepreneurs and entrepreneurial ventures.

6. Identify ways to gain a potential competitive edge for small entrepreneurial firms.

7. Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career.


Entrepreneurial OpportunitiesEntrepreneurial OpportunitiesEntrepreneurial OpportunitiesEntrepreneurial Opportunities

• Entrepreneurial Opportunity–A value creating innovation with market potential–A desirable and timely innovation that creates

value for interested buyers and end users.

• Success stories–Marketplace Holdings–Auntie Anne’s–RotoZip® Tool Corporation


Who Are Entrepreneurs?Who Are Entrepreneurs?Who Are Entrepreneurs?Who Are Entrepreneurs?

• Entrepreneurs are:–Persons who starts and/or operates a business.–Individuals who discover market needs and launch

new firms to meet those needs.–Risk takers who provide an impetus for change,

innovation, and progress.–All active owner-managers (founders and/or

managers of small businesses).


Entrepreneurial Challenges Entrepreneurial Challenges Entrepreneurial Challenges Entrepreneurial Challenges

• E-Commerce–An outgrowth and part of the Information Age that

is producing the new economy.

• Globalization–The trend toward a global

economy creates new competition and opportunities.


What Is a Small Business?What Is a Small Business?What Is a Small Business?What Is a Small Business?

• Criteria for Defining Smallness in Business–Financing supplied by one person or small group–Localized business operations (except marketing)–Business’ size small relative to larger competitors–Fewer than 100 employees


Profit

Freedom from the limits

of standardized pay for

standardized work

Independence

Freedom from supervision

and rules of bureaucraticorganizations

Escape from anoppressive culture

Personal Fulfillment

Freedom to achieve a

satisfying way of life

Escape from routine

and unchallenging work

Rewards of Entrepreneurship

Fig. 1.2

Entrepreneurial IncentivesEntrepreneurial IncentivesEntrepreneurial IncentivesEntrepreneurial Incentives

MakeMakeMoneyMoney

Be YourBe YourOwn BossOwn Boss

Enjoy a Enjoy a Satisfying Satisfying

LifeLife


Entrepreneurial RefugeesEntrepreneurial RefugeesEntrepreneurial RefugeesEntrepreneurial Refugees

• Foreign refugee• Corporate refugee• Parental refugee• Feminist refugee• Housewife refugee• Society refugee• Educational refugee


Varieties of EntrepreneurshipVarieties of EntrepreneurshipVarieties of EntrepreneurshipVarieties of Entrepreneurship

• Founder (“Pure” Entrepreneur)–A person who brings a new firm into existence.

• Administrative Entrepreneur–An entrepreneur who oversees the operations of a

ongoing business

• Franchisee–An entrepreneur whose power is limited by the

contractual relationship with a franchising organization.

• Entrepreneurial Team–Two or more people who work together as

entrepreneurs.


Small Businesses, Growth, and ProfitsSmall Businesses, Growth, and ProfitsSmall Businesses, Growth, and ProfitsSmall Businesses, Growth, and Profits

• High-Potential Venture (Gazelle)–A small firm that has great prospects for growth.

• Attractive Small Firm–A small firm that provides

substantial profits to its owner.

• Microbusiness–A small firm that provides

minimal profits to its owner.


Characteristics ofCharacteristics ofArtisan EntrepreneursArtisan Entrepreneurs

Characteristics ofCharacteristics ofArtisan EntrepreneursArtisan Entrepreneurs

• Technical training• Paternalistic approach• Reluctance to delegate• Narrow view of strategy• Personal sales effort• Short planning horizon• Simple record keeping


Characteristics ofCharacteristics ofOpportunistic EntrepreneursOpportunistic Entrepreneurs

Characteristics ofCharacteristics ofOpportunistic EntrepreneursOpportunistic Entrepreneurs

• Broad-based education• Scientific approach to problems• Willing to delegate• Broad view of strategy• Diversified marketing approach• Longer planning horizon• Sophisticated accounting

and financial control


Women EntrepreneursWomen EntrepreneursWomen EntrepreneursWomen Entrepreneurs

• More Women Entrepreneurs–Women own 38% of all U.S. businesses.–Employment at female-owned firms has grown

108% since 1992.–Women are moving into nontraditional industries.

• Problems Facing Female Entrepreneurs–Newness of entrepreneurial role–Lack of access to credit–Lack of personal networking

connections in the established business community


Competitive Advantages ofCompetitive Advantages ofEntrepreneurial FirmsEntrepreneurial Firms

Competitive Advantages ofCompetitive Advantages ofEntrepreneurial FirmsEntrepreneurial Firms

• Customer Focus–Lack of bureaucracy

• Quality Performance–Quality is not limited

to large firms

• Integrity and Responsibility–A solid reputation

builds loyal customers

• Innovation–Small firms are the

leading source of innovation.

• Low-Cost Production–Sound management

can lead to lower operating costs.


Age

Early Career Concerns

1. Getting an education

2. Gaining work experience

3. Acquiring financial resources

Late Career Concerns

1. Fulfilling familyresponsibilities

2. Attaining seniorityin employment

3. Earning investment ina retirement program

25 35 4520

Fig 1.3

Age Concerns in Starting a BusinessAge Concerns in Starting a BusinessAge Concerns in Starting a BusinessAge Concerns in Starting a Business


Characteristics ofCharacteristics ofSuccessful EntrepreneursSuccessful Entrepreneurs

Characteristics ofCharacteristics ofSuccessful EntrepreneursSuccessful Entrepreneurs

• Strong commitment to the business(tenacity)

• Strong internal locus of control (self-reliant)

• Moderate risk takers(financial, career, psychic risks)


Opportunity Level of Risk

Starting a business High risk

Buying a business Medium risk

Opening a franchised businessMedium risk

Entering a family business Variable risk

Types of EntrepreneurialTypes of EntrepreneurialCareer OpportunitiesCareer Opportunities

Types of EntrepreneurialTypes of EntrepreneurialCareer OpportunitiesCareer Opportunities


Taking the PlungeTaking the PlungeTaking the PlungeTaking the Plunge

• Precipitating Event–An event, such as losing

a job, that moves an individual to become an entrepreneur.

01The Winning Hand of Entrepreneurship

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