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Entrepreneurship
Entrepreneurship involves individuals who establish and manage businesses, accepting financial risks in pursuit of profit, while fostering innovation, economic development, and job creation. Key attributes of successful entrepreneurs include vision, determination, self-confidence, and the ability to take calculated risks, with family background often playing a significant role in shaping these traits. Additionally, intrapreneurship within larger organizations supports innovation by empowering employees to act entrepreneurially while maintaining stability in established companies.
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Entrepreneurship
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- 2. Definition of anEntrepreneur An entrepreneur is someone “who sets up a business or businesses, taking on financial risks in the hope of profit”. (Oxford Dictionaries definition)
- 3. Continued… Capacity totake risks Ability to own and organize Desire and capability to innovate and diversify (Stepanek, 1962) Person conducting own business (Webster) Person who sets up business deals in order to make profits (Collins Cobuild) Organizer of an economic venture, one who owns, organizes, manages, and assumes the risks of the business (Chandrashekhar)
- 4. Role of theEntrepreneur An innovator who combines technical innovations and financial finesses. Important role in producing competitive products, processes, and services. Generation of new employment Local and regional economic development Improved allocation of resources and transfer of technologies
- 5. The Entrepreneur Websterdictionary – one who organizes, manages and assumes the risks of a business or enterprise. Richard Cantillion – an entrepreneur is someone who takes the risk of running an enterprise by paying a certain price for securing and using resources to make a product and reselling the product for an uncertain price.
- 6. Joseph Schumpeter- an innovator playing the role of a dynamic businessman adding material growth to economic development Timmons - Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled
- 7. Entrepreneur as anEconomic Pioneer Introduction of new goods and products Introduction of new processes and methods of production Opening up of new markets Opening up of new sources of supply Industrial re-organization
- 8. Entrepreneurs V. Intrapreneurs Entrepreneurs are people that notice opportunities and take the initiative to mobilize resources to make new goods and services. Intrapreneurs also notice opportunities and take initiative to mobilize resources, however they work in large companies and contribute to the innovation of the firm. Intrapreneurs often become entrepreneurs.
- 9. Reasons for Growthof Entrepreneurship Industry Structure New technologies Deregulation and privatization Formation of new business communities Increasing demand for variety Government incentives and subsidies Increasing flow of information
- 10. Easier accessto resources Entrepreneurial education Return on innovation Entrepreneur as a Hero Self-employment is highly valued Rising dissatisfaction at job Acceptance of ex-entrepreneurs in the job market
- 11. Intrapreneurship Learning organizationsencourage intrapreneurship. Organizations want to form: Product Champions: people who take ownership of a product from concept to market. Skunkworks: a group of intrapreneurs kept separate from the rest of the organization. New Venture Division: allows a division to act as its own smaller company. Rewards for Innovation: link innovation by workers to valued rewards.
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- 13. Traits of anEntrepreneur Clear Vision Ambition Determination Realistic Approach Self Confidence Flexibility Problem Solving capabilities. Tolerance for ambiguity Rule breaking
- 15. Characteristics of Entrepreneurs Successful Entrepreneurs Key Personal Attributes GoodTechnical Skills Strong Managerial Competencies
- 16. Key Personal Attributes Entrepreneurs are Made, Not Born! Many of these key attributes are developed early in life, with the family environment playing an important role Entrepreneurs tend to have had self employed parents who tend to support and encourage independence, achievement, and responsibility Firstborns tend to have more entrepreneurial attributes because they receive more attention, have to forge their own way, thus creating higher self-confidence
- 17. Key Personal Attributes(cont.) Entrepreneurial Careers The idea that entrepreneurial success leads to more entrepreneurial activity may explain why many entrepreneurs start multiple companies over the course of their career Corridor Principle- Using one business to start or acquire others and then repeating the process Serial Entrepreneurs- A person who founds and operates multiple companies during one career
- 18. Key Personal Attributes(cont.) Need for Achievement A person’s desire either for excellence or to succeed in competitive situations High achievers take responsibility for attaining their goals, set moderately difficult goals, and want immediate feedback on their performance Success is measured in terms of what those efforts have accomplished McClelland’s research
- 19. Key Personal Attributes(cont.) Desire for Independence Entrepreneurs often seek independence from others As a result, they generally aren’t motivated to perform well in large, bureaucratic organizations Entrepreneurs have internal drive, are confident in their own abilities, and possess a great deal of self-respect
- 20. Key Personal Attributes(cont.) Self-Confidence Because of the high risks involved in running an entrepreneurial organization, having an “upbeat” and self-confident attitude is essential A successful track record leads to improved self- confidence and self-esteem Self-confidence enables that person to be optimistic in representing the firm to employees and customers alike
- 21. Key Personal Attributes(cont.) Self-Sacrifice Essential Nothing worth having is free Success has a high price, and entrepreneurs have to be willing to sacrifice certain things
- 22. Technical Proficiency Manyentrepreneurs demonstrate strong technical skills, typically bringing some related experience to their business ventures For example, successful car dealers usually have lots of technical knowledge about selling and servicing automobiles before opening their dealerships Especially important in the computer industry NOT ALWAYS NECESSARY
- 23. Planning Business Plan– A step-by-step outline of how an entrepreneur or the owner of an enterprise expects to turn ideas into reality.
- 24. Questions To KeepIn Mind What are my motivations for owning a business? Should I start or buy a business? What and where is the market for what I want to sell? How much will all this cost me? Should my company be domestic or global?
- 25. Motivations Deciding whatyour motivations are will direct you toward what type of business fits you best. Types: 1. Lifestyle Venture 2. Smaller Profit Venture 3. High Growth Venture
- 26. 1. Lifestyle Venture Small company that provides its owner independence, autonomy, and control. Is often run out of household Provides flexibility (hours, meeting places, attire) Aligns your personal interests and hobbies with your desire to make a profit.
- 27. 2. Smaller ProfitVenture Small company not concentrated on pushing the envelope and growing inordinately large. Making millions of dollars not important. Content with making a decent living. Ex. Mom and Pop Stores
- 28. 3. High GrowthVentures Goal is maximum profit and growth. Concentrated on pushing envelope and growing as large as possible. Focus on innovation
- 29. Start or Buy? Start – cheapest, but very difficult -requires most planning/research Buy – expensive – may be out or reach -requires less planning and research Franchise (middle ground) – a business run by an individual (the franchisee) to whom a franchiser grants the right to market a certain good or service.
- 30. The Market??? Planning& Research essential Extensive market surveys (family, friends, neighbors…) Magazines and Polls offer some information on the market -Businessweek, Harris Poll
- 31. What about thecost? Plan realistically, not optimistically Don’t overestimate your profits Don’t underestimate your costs Sources of Funds Banks Venture Capitalists – filthy rich, high risk investors looking for a many-times-over yield Angels – seem to have altruistic motives and less stringent demands than venture capitalists
- 32. Domestic or Global? Drawbacks to Global – more research and less accessible connections in startup phase, more travel time required, more considerations. Advantages to Global – more human resources, more demand, more financing, easier to start global than go from domestic to global.
- 33. Entrepreneurship: Growth Pressures Entrepreneursoften find that as their business grows, they feel more pressure to use formal methods to lead their organizations. Although this formalization process may compromise some entrepreneurs spirit, it often leads to more focus, organization, and greater financial returns. Basically, it’s a movement from a “seat-of-the-pants” operation to a more structured, legitimate and recognizable business.
- 34. Entrepreneurship: Growth Pressures Business Dimension Entrepreneurial Organization Formal Organization Strategicorientation Seeks opportunity Controls resources Commitment to opportunity Revolutionary Short duration Evolutionary Long duration Commitment to resources (capital, people, and equipment) Lack of stable needs and resource bases Systematic planning systems Control of resources Lack of commitment to permanent ventures Power, status, financial rewards for maintaining status quo Management Structure Flat Many informal networks Clearly defined authority and responsibility Compensation policy Unlimited; based on team’s accomplishments Short-term driven; limited by investors
- 35. Entrepreneurship: Growth Pressures GoingGlobal…. From domestic to worldwide expansion, globalization can be extremely rewarding for entrepreneurs. THINK: Money and Business Exposure However, it is a huge undertaking. Adapting your business to operate in the global market can lead to a decrease in ownership, and a forced focus on raising money to keep your business alive. THINK: Selling out, Private to Public (Initial Public Offering, IPO)
- 36. Entrepreneurship: Managing aFamily Business Two reasons not to go into business with your family or friends.… Families fight Friends fight. Often, it involves money. So a business environment could potentially breed arguments, disagreements, and feuds. Fighting can occur during early developmental stages when hours are long and pay is low. Or, after success has been achieved.
- 37. Entrepreneurship: Managing aFamily Business Six steps to help lead you to a successful Family Business: Clear job responsibilities Clear hiring criteria Clear plan for management transition Agreement on whether and when to sell business Commitment to resolving conflicts quickly Outside advisors are used to mediate conflicts. Clarity is key…. but NO GUARANTEE.
- 38. Entrepreneurship: Managing aFamily Business Operational vs. Survival Issues…. Operational = Decisions about the economics of the business and how to balance that with rational and family obligation criteria. THINK: Day-to-day grind. Survival = Develop out of a lack of attention on the operational issues within the business. THINK: Festering problems; ultimately compromise livelihood.
- 39. Entrepreneurship: Managing aFamily Business FAMILY FEUD: Severed relationships Divorce Poor business performance Low morale, motivation
- 40. Entrepreneurship: Corporate INTRA- preneurs Intrapreneur= someone in an existing organization who turns new ideas into profitable realities. Not every employee has the ability to become a successful intrapreneur. It takes well-developed strategic action, teamwork and communication abilities.
- 41. Entrepreneurship: Corporate INTRA- preneurs Organizationsthat redirect themselves through innovation have the following characteristics: Commitment from senior management Flexible organization design Autonomy of the venture team Competent/Talented people with entrepreneurial attitudes Incentives and rewards for risk taking Appropriately designed control system
- 42. Entrepreneurship: Corporate INTRA- preneurs Inorder to for this type of forward thinking to reap long-term benefits, top management must allow it to flourish in the day-to-day operations of the business…. This is known as “skunkworks” Skunkworks = Islands of intrapreneurial activity within an organization. REMEMBER: On the island, formal rules and policies of the organization often DO NOT apply.