EntrepreneurshipEntrepreneurship

What Is Entrepreneurship?What Is Entrepreneurship?

1.2 What is the Entrepreneurial Process1.2 What is the Entrepreneurial Process

What you will learn . . .What you will learn . . .

� The History of Entrepreneurship

� The Entrepreneurial Start-up Process

� New Business Success and Failure� New Business Success and Failure

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The History of EntrepreneurshipThe History of Entrepreneurship

� Started with the American Revolution and the innovative colonists who created new products and services.

� Small businesses were the norm and provided for basic needs.

� The Industrial Revolution brought the rise of large companies in steel, railroads and manufacturing.

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The History of Entrepreneurship, The History of Entrepreneurship,

cont.cont.

� 1960’s – large companies were common. Job security was provided due to lack of overseas competition. Employees spent entire lives with one company.entire lives with one company.

� 1970’s – inflation, high prices, high interest rates caused borrowing and spending to slow. International competition occurred. Technology caused whole product categories to become obsolete.

EntrepreneurshipEntrepreneurship

The History of Entrepreneurship, The History of Entrepreneurship,

cont.cont.

� 1980’s – “Decade of Entrepreneurship” Large companies were suffering and new, smaller companies were stepping in. Outsourcing became popular and new jobs Outsourcing became popular and new jobs became available.

� 1990’s – The Internet has changed how businesses operated and instigated many new entrepreneurial ventures.

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The Entrepreneurial EvolutionThe Entrepreneurial Evolution

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The Entrepreneurial StartThe Entrepreneurial Start--up up

ProcessProcess

� Five key components

� All work together to create the new business

� The entrepreneur� The entrepreneur

� The environment

� The opportunity

� Start-up resources

� The new venture organization

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The EntrepreneurThe Entrepreneur

� The driving force behind the start-up process.

� Recognizes the opportunity.

� Pulls together the resources.

� Creates the company.

� Is the calculated risk taker.

� Has the passion and persistence to see the venture through.

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The EnvironmentThe Environment

� Four categories of environmental variables affect a new venture’s ability to start and grow� The nature of the environment (uncertain, fast-� The nature of the environment (uncertain, fast-

changing, unstable, or competitive)

� Availability of resources (labor, capital)

� Ways to realize value (taxes, good markets)

� Incentives to create new businesses (Enterprise Zones provide tax benefits or grants to start)

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The OpportunityThe Opportunity

� An idea that has commercial value

� Customers must be willing and ready to buy

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StartStart--up Resourcesup Resources

� Capital

� Skilled labor

� Management expertise� Management expertise

� Legal and financial advice

� Facility

� Equipment

� Customers

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The New Venture OrganizationThe New Venture Organization

� The infrastructure of the business

� The foundation that supports all of the products, processes and services of the business

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New Business Success and New Business Success and

FailureFailure

� 50/50 chance of surviving five years or more.

� The Small Business Administration (SBA) reports that 66 percent of small businesses survive the first two years.

� Drops to about 40 percent by six years.

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Facts About Business FailureFacts About Business Failure

� A business that has stopped operating with a loss to creditors.

� Loses money for creditors (the people how lent it money and investors).

� Discontinuance – a business that is operating under a new name – closed or changed with no harm to creditors.

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How Entrepreneurs Can SucceedHow Entrepreneurs Can Succeed

� Effective planning and management

� Recognize opportunity in the marketplace, assemble a team with the necessary expertise to execute the business concept.

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Entrepreneurs tend to . . .Entrepreneurs tend to . . .

� be passionate about achieving their goals � have a spirit of adventure (in fact, the word "adventure" is derived from

the Latin word meaning "to venture") � have a strong need to achieve and seek personal accomplishment � be self-confident and self-reliant � be goal-oriented � be goal-oriented � be innovative, creative, and versatile � be persistent � be hardworking and energetic � have a positive attitude � be willing to take initiative � have a strong sense of commitment

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