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The Entrepreneurial Life

The Entrepreneurial Life. PART 1 Entrepreneurship: A World of Opportunity. Looking Ahead After studying this chapter, you should be able to:. Distinguish between an entrepreneur and a small business owner.

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The Entrepreneurial Life

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  1. The Entrepreneurial Life PART 1 Entrepreneurship: A World of Opportunity

  2. Looking AheadAfter studying this chapter, you should be able to: Distinguish between an entrepreneur and a small business owner. Explain the characteristics of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs. Describe some motivators or rewards of entrepreneurial careers. Identify the various types of entrepreneurs and entrepreneurial ventures. Identify five potential competitive advantages of small entrepreneurial companies as compared to large firms. Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career. Explain the concept of an entrepreneurial legacy and the challenges involved in crafting a worthy legacy.

  3. Who Are Entrepreneurs? • Entrepreneurs are: • A person 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 Opportunity • An economically attractive and timely opportunity that creates value for interested buyers or end users

  4. What Is a Small Business? • Criteria for Defining Smallness in Business • Business’ size small relative to larger competitors (fewer than 100 employees) • Localized business operations (except marketing) • Financing supplied by one person or small group • Has the potential to become more than a “one-person show”

  5. The Contributions of Small Business • Small Businesses: • Comprise 99.7% of all firms with employees. • Employ over 50% of employees in the private sector. • Account for 45% of private payrolls. • Generated 60 to 80% of net new jobs in past decade. • Create more than half of the country’s GDP. • Hire 40% of high-tech employees • Represent 97.3% of all exporters.

  6. Exhibit 1.2Entrepreneurial Incentives

  7. Why People Become Entrepreneurs • Reluctant Entrepreneur • A person who becomes an entrepreneur as a result of some severe hardship. • Refugee • A person who becomes an entrepreneur to escape an undesirable situation.

  8. Entrepreneurial Characteristics(Timmons and Spinelli) Commitment and Determination Motivation to Excel Leadership Attitudes and Behaviors of Entrepreneurs Opportunity Obsession Creativity, Self-Reliance, and Adaptability Tolerance of Risk, Ambiguity, and Uncertainty

  9. The Many Varieties of Entrepreneurship • Founder (“Pure” Entrepreneur) • A person who brings a new firm into existence • Administrative Entrepreneur • An entrepreneur who overseas 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 working together as entrepreneurs

  10. Small Business Growth Potential and Profits • High-Potential Venture (Gazelle) • Has great prospects for growth • Attractive Small Firm • Provides substantial profits to its owner • Microbusiness • Provides minimal profits to its owner • Lifestyle Business • Permits the owner to follow a desired pattern of living

  11. Artisan Entrepreneurs • Artisan Entrepreneur • A person with primarily technical skills and little business knowledge who starts a business • Characteristics: • Take a paternalistic approach • Are reluctant to delegate • Use few sources of capital • Have a traditional marketing strategy • Focus on personal sales effort • Have a short planning horizon

  12. Opportunistic Entrepreneurs • Opportunistic Entrepreneur • A person with both sophisticated managerial skills and technical knowledge who starts a business • Characteristics: • 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

  13. The Competitive Edge of Entrepreneurship Customer Focus Special Niche Quality Performance Competitive Advantages of Entrepreneurial Firms Integrity and Responsibility Innovation and Globalization

  14. Early Career Concerns 1. Getting an education 2. Gaining work experience 3. Acquiring financial resources Late Career Concerns 1. Fulfilling family responsibilities 2. Attaining seniority in employment 3. Earning investment in a retirement program 20 25 35 45 Age Getting Started • Age and Entrepreneurial Opportunity

  15. Millennial Entrepreneurs • Have no fear of technology • Are idealistic and optimistic • Are more collaborative • Build elements of community in the business • Start companies while studying entrepreneurship • Fail fast, learn a lot, and keep going

  16. Getting Started (cont’d) Strong Commitmentto the Business(Tenacity) Strong Internal Locus of Control (Self-Reliance) Characteristics of Successful Entrepreneurs Moderate Risk Takers(Financial, Career, Psychic Risks)

  17. How to Fail as an Entrepreneur • Overestimate what you can do • Lack an understanding of the market • Hire mediocre people • Fail to be a team player • Be a domineering manager • Not share ownership in the business in an equitable way

  18. The Importance of Mentors • Mentor • A knowledgeable person who can offer guidance from their experience in a given field. • The “Go-To” Team

  19. Success in Business and Success in Life • Beginning with the End in Mind • Proper values and actions lead to a good exit. • Evaluating accomplishments • Winning the Wrong Game • The nature of the entrepreneurial endeavor reflects personal goals and values. • Crafting a Worthy Entrepreneurial Legacy • The tangible items and intangible qualities passed on not only to heirs but also to the broader society.

  20. entrepreneur small business entrepreneurial opportunity bootstrapping reluctant entrepreneur refugee founder franchisee high-potential venture (gazelle) attractive small firm microbusiness lifestyle business artisan entrepreneur opportunistic entrepreneur entrepreneurial team niche market internal locus of control external locus of control mentor entrepreneurial legacy Key Terms

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