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Breaking Out or Breaking Through Wealth Building through Entrepreneurship

Breaking Out or Breaking Through Wealth Building through Entrepreneurship

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Breaking Out or Breaking Through Wealth Building through Entrepreneurship

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  1. Breaking Out or Breaking Through Wealth Building through Entrepreneurship Jeffrey Robinson, Ph.D. NYU-Stern School of Business 2005 NSBE National Convention Boston, Massachusetts March, 2005

  2. Agenda • Opportunities in Entrepreneurship • Becoming an Entrepreneur • 3 Myths • 1 Truth • Supporting Entrepreneurs • The Rest of the Story

  3. Opportunities for Entrepreneurship • Traditional Entrepreneurship • Social Entrepreneurship • Community and Economic Development • Franchises • Corporate Venture Capital • Private Equities • Venture Capital

  4. Traditional Entrepreneurship • Earl G. Graves, Black Enterprise Unlimited • Robert Johnson, BET • Oprah Winfrey, Harpo • Cheryl Mayberry McKissack, Nia Enterprises • Randal Pinkett, Ph.D. BCT Partners • Melanie Mosley, Light Dynamics • Winslow Sargent, Ph.D., XCelis

  5. Types of Ventures Life Style Business: less than $1 M in revenues (forged out of your passion) Growth Business: between $1 M and $20 M +

  6. Social EntrepreneurshipCommunity & Economic Development • Charter/Contract/New Schools • Edison Schools • Social Service/ Social Action • One Economy • Poverty Solutions • Underserved/Underrepresented • CitySoft • CityFresh Foods • Economic Development • Greyston Foundation (Greyston Bakery)

  7. Capital Side • Corporate Venture Capital • Private Equities • Venture Capital • Carthage Ventures

  8. Myth #1:“I need lots of money.”

  9. In terms of start-up capital, including personal assets, Inc. 500 companies started with little.* 23% (B) How Much Money They Had 14% (G) 13% (A) 13% (D) 13% (F) 12% (E) 12% (C) (A) Less than $1,000 (E) $50,001 to $100,000 (B) $1,000 to $10,000 (F) $100,001 to $300,000 (C) $10,001 to $20,000 (G) More than $300,000 (D) $20,001 to $50,000 *”Start-up capital” refers to funds raised before any product or service was delivered. “Personal assets” includes savings, mortgage or other personal loans, credit cards, 401(k), etc.

  10. The following sources of funds provided Inc. 500 start-up capital. 2% (G) 4% (F) 2% (H) 4% (E) Where the Money Came From 8% (D) SOURCE OF FUNDS 53% (A) 10% (C) 17% (B) (A) Personal assets (B) Other founders’ personal assets (C) Assets of family or friends (other than co-founders) (D) Commercial bank loan or line of credit (E) Private equity investment (F) Financing from a supplier, customer, or other business entity (G) SBA loan or funds from other government program (H) Formal venture capital

  11. CEOs taking home only five figures are in the small minority. Here’s a salary guide. 9% (D) Executive Compensation 40% (A) 22% (C) SALARY 28% (B) • More than $500,000 • $100,001 to $250,000 • $250,001 to $500,000 • (D) Less than $100,000

  12. of companies have raised venture capital. Since Start-up 17% of companies have raised private equity. 12%

  13. Myth #2:“I am destined to fail.”(a.k.a “The Odds Are Against Me!”

  14. Survivor

  15. Myth #3:“All the good ideas are gone.”

  16. The Opportunities are Here • Untapped Markets • Underserved Markets • Underdeveloped Markets • Unique Perspectives

  17. 3 Myths, 1 Truth • Myths • I have to have lots of money. • I am destined to failed. • All the good ideas are gone. • Truth • I can build wealth through entrepreneurship!

  18. Truth #1:“I can build wealth through entrepreneurship.” • Wealth Building • Fortune Magazine - 40 under 40 • 7 out of 10 millionaires are self employed • Fortune Study • 69% of top 1% of wealth are entrepreneurs (1998)

  19. What can you do now to prepare? • Write a business plan • Enter business plan competitions • Make contacts while you are in school or with local business schools • Volunteer to work with minority small business owners and entrepreneurs • Don’t give up on your dream!

  20. Breaking Through or Breaking Out to …. Entrepreneurship What are my options?

  21. Become a Second Job Entrepreneur Become an advisor or consultantto some entrepreneurs Become an investor Become a full-time entrepreneur 4 Options

  22. Second Job Entrepreneurs • 2 – 3 million people are doing this • Pro: Low risk, low or no capital required • Con: Can you do two things well at the same time

  23. Investing in Small Business • Private Equity Markets • Angel Investor Groups • Bridge capital • Venture Capital • Consider investing in industries and ideas you understand or know a significant amount about

  24. Support Strategies • Patronize and encourage the use of small minority owned business • Sit on advisory boards and boards of directors of social ventures and start-ups • Consult with minority entrepreneurs (leverage your MBA and your experience).