What is an Entrepreneur?

1. What is an Entrepreneur? One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. Ch. 1: The Foundations of Entrepreneurship

2. What is an Entrepreneur? Critical Concepts: Create… not ‘Start’… not ‘Buy or Purchase’… not ‘Takeover’… not ‘Sign-up as a Distributor’… New Business… ‘not existing before’

3. Enterpreneur vs Sm. Bus. Owner Ch. 1: The Foundations of Entrepreneurship

4. The World of the Entrepreneur Every year U.S. entrepreneurs launch 565,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. GEM study: 12.3% of adult population in the U.S. is actively involved in trying to start a new business. Ch. 1: The Foundations of Entrepreneurship

5. Entrepreneurial Activity Across the Globe Ch. 1: The Foundations of Entrepreneurship

6. Entrepreneurship-Friendly Nations Ch. 1: The Foundations of Entrepreneurship

7. The World of the Entrepreneur • Global Entrepreneurship Monitor (GEM) study reports: • Men are twice as likely to start a business as women. • Most entrepreneurs turn to family members and friends for capital. • Entrepreneurs are most likely to launch businesses when they are between the ages of 35 and 44. Ch. 1: The Foundations of Entrepreneurship

8. Characteristics of Entrepreneurs Desire for responsibility Preference for moderate levels of risk – risk eliminators Confidence in their ability to succeed Determination Desire for immediate feedback High level of energy Future orientation – opportunity, necessity, and serial entrepreneurs Skilled at organizing Value achievement over money Ch. 1: The Foundations of Entrepreneurship

9. Characteristics of Entrepreneurs • Entrepreneurs tend to exhibit: • A high degree of commitment • Tolerance for ambiguity • Flexibility • A willingness to work hard • Tenacity Ch. 1: The Foundations of Entrepreneurship

10. Sources of Entrepreneurial Success Ch. 1: The Foundations of Entrepreneurship

11. Entrepreneurship One characteristic of entrepreneurs stands out: Diversity! Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). Ch. 1: The Foundations of Entrepreneurship

12. Benefits of Entrepreneurship The opportunity to: • Create your own destiny • Make a difference • Reach your full potential • Reap impressive profits • Contribute to society and to be recognized for your efforts • Do what you enjoy and to have fun at it Ch. 1: The Foundations of Entrepreneurship

13. Drawbacks of Entrepreneurship Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established High levels of stress Complete responsibility Discouragement Ch. 1: The Foundations of Entrepreneurship

14. Feeding the Entrepreneurial Fire Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyle The Internet and cloud computing Ch. 1: The Foundations of Entrepreneurship

15. U.S. Retail E-Commerce Revenues Ch. 1: The Foundations of Entrepreneurship

16. Feeding the Entrepreneurial Fire (continued) Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyles The Internet and cloud computing International opportunities Ch. 1: The Foundations of Entrepreneurship

17. The Cultural Diversity of Entrepreneurship Young entrepreneurs Ch. 1: The Foundations of Entrepreneurship

18. Entrepreneurial Activity by Age Group Ch. 1: The Foundations of Entrepreneurship

19. The Cultural Diversity of Entrepreneurship (continued) Young entrepreneurs Women entrepreneurs Minority-owned enterprises Ch. 1: The Foundations of Entrepreneurship

20. Growth in Minority–Owned Businesses since 2002 Ch. 1: The Foundations of Entrepreneurship

21. The Cultural Diversity of Entrepreneurship (continued) Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs Ch. 1: The Foundations of Entrepreneurship

22. The Cultural Diversity of Entrepreneurship (continued) Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts Social entrepreneurs Retiring baby boomers Ch. 1: The Foundations of Entrepreneurship

23. Small Businesses ... • Make up 99.7% of the 27.5 million businesses in the U.S. • Employ 50% of the nation’s private sector workforce. • Create more jobs than big businesses. • 65% of net new jobs over the last decade • 3% of small companies create 70% of net new jobs in the economy. Ch. 1: The Foundations of Entrepreneurship

24. Small Businesses ... 21.6 Million (78%) have no employees… just the owner. 5.9 Million (22%) have employees other than the owner 3.6 Million (13%) have 1-4 employees 1.04 Million (4%) have 5-9 employees 633 Thousand (2%) have 10-19 employees 526 Thousand (1.9%) have 20-99 employees 90 Thousand (.3%) have 100-499 employees 18.5 Thousand (.07%)have over 500 emps. Source: US Census Department Ch. 1: The Foundations of Entrepreneurship

25. Small Businesses by Industry Ch. 1: The Foundations of Entrepreneurship

26. Small Businesses ... (continued) • Produce 51% of the nation’s private GDP. • Account for 47% of business sales. • Create 13 times more patents per employees than large companies. • Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more! Ch. 1: The Foundations of Entrepreneurship

27. Putting Failure Into Perspective Out of 100 New Businesses: 70 survive 2 years or longer 50 survive 5 years or longer 33 survive 10 years or longer 25 survive 15 years or longer Source: US Census Department Ch. 1: The Foundations of Entrepreneurship

28. Putting Failure Into Perspective Entrepreneurs are not paralyzed by the prospect of failure. Failure – a natural part of the creative process. Successful entrepreneurs learn to fail intelligently. Ch. 1: The Foundations of Entrepreneurship

29. Putting Failure Into Perspective People who have gone Bankrupt: George Foreman filed for Bankruptcy in 1983 and eventually went on to have a Net Worth in excess of $300 Million dollars. William C. Durant, the Founder of General Motors, filed for Bankruptcy in 1936 and eventually went on to have a Net Worth in excess of $120 Million dollars. Henry Ford's early businesses ventures failed and left him broke... five times... before he founded the Ford Motor Company. Walt Disney was fired by his newspaper editor because, "he lacked imagination and had no good ideas." Next he started a series of businesses... none of which lasted too long and all of which ended in bankruptcy or simple failure. Ch. 1: The Foundations of Entrepreneurship

30. Business Starts and Closures Ch. 1: The Foundations of Entrepreneurship

31. What Rate of Growth is considered High Growth? < 20% / yr = Lifestyle 20-50% / yr = Mid Growth >50% / yr = High Growth Caveat: Size of Annual Revenues makes a difference. Source: Goldman Sachs 10,000 Small Businesses Workshop Ch. 1: The Foundations of Entrepreneurship

32. Four Growth Curves Rapid Incremental Sales Sales Time Time Plateau Episodic Sales Sales Time Time Ch. 1: The Foundations of Entrepreneurship

33. The Rapid Growth Curve Characteristics & Considerations: Right Product, Right Time, Right Price Macro and Micro economic forces are largely favorable. Competition is relatively little or restricted or company enjoys significant competitive advantage. Strong customer relationships. Rapid Sales Time Ch. 1: The Foundations of Entrepreneurship

34. The Incremental Growth Curve Characteristics & Considerations: More controlled growth. Leadership growth is in parallel with revenue growth. Each stage of growth is planned or constrained until resources are available to support next level. Incremental Sales Time Ch. 1: The Foundations of Entrepreneurship

35. The Episodic Growth Curve Characteristics & Considerations: Caused by a variety of reasons. Internal capabilities may be outstripped by growth demands causing regression of growth. Blips in sales, often losses of major customers, cause setbacks Episodic Sales Time Ch. 1: The Foundations of Entrepreneurship

36. The Plateau Growth Curve Characteristics & Considerations: Many firms experience plateaus Plateaus need not be permanent. Roadblocks become apparent and take time to identify and resolve. Plateaus in growth usually turn into long term decline if not reversed. Plateau Sales Time Ch. 1: The Foundations of Entrepreneurship

37. Avoiding the Pitfalls of Small Business Failure Know your business in depth Develop a solid business plan Manage financial resources Understand & use monthly financial statements Learn to manage people effectively Set your business apart from the competition Maintain a positive attitude Ch. 1: The Foundations of Entrepreneurship

38. Conclusion Entrepreneurs: Are an important part of the free enterprise system Are a diverse and talented group of people Represent a cross-section of society as a whole Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience Ch. 1: The Foundations of Entrepreneurship