The Entrepreneurial Revolution / Evolution
The Entrepreneurial Revolution / EvolutionThe Entrepreneurial Revolution / Evolution
The World of the EntrepreneurThe World of the Entrepreneur
A new business is born every 11 seconds in the United States
Entrepreneurship will be the defining economic issue of the 21st Century
One in 12 Americans is actively involved in trying to launch a new business.
Pervasiveness of New Ventures Pervasiveness of New Ventures in the Economyin the Economy
Entrepreneurial Activity: Growth in Small Entrepreneurial Activity: Growth in Small BusinessesBusinesses
– There are over 25 million small businesses; the number There are over 25 million small businesses; the number continues to grow 2% annually.continues to grow 2% annually.
– New business incorporations have averaged over New business incorporations have averaged over 600,000 per year over the past decade.600,000 per year over the past decade.
– Small business (< 500 employees) employ 53% of the private work force and account for 47% of sales and 51% of private sector gross domestic product (GDP)
Entrepreneurial Firms’ ImpactEntrepreneurial Firms’ Impact
Entrepreneurial firms make two indispensable contributions to the U.S. economy:
– First, they are an integral part of the renewal process that pervades and defines market economies.
– Second, they are the essential mechanism by which millions enter the economic and social mainstream of American society.
Entrepreneurial Activity Across the Entrepreneurial Activity Across the GlobeGlobe
1.4%
1.6%
1.8%
2.0%
2.2%
3.3%
3.4%
5.4%
6.8%
8.5%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Percent
Finland
J apan
France
Denmark
Germany
Great Britain
Italy
Israel
Canada
United States
Co
un
try
Percentage of Adult Population Working to Start a New Business
The Age of GazellesThe Age of Gazelles
A “gazelle” is a business establishment with at least 20% sales growth every year (for five years), starting with a base of at least $100,000.
Gazelles - InnovationGazelles - Innovation
Gazelles are leaders in innovation. Gazelles produce twice as many product
innovations per employee as do larger firms.
New Businesses - GrowthNew Businesses - Growth
By the year 2010, demographers estimate, 30 million firms will exist in the United States, up significantly from the 22.5 million firms existing in 2000.
New Businesses - SurvivalNew Businesses - Survival
The common myth is that 85% of all firms fail in the first year.
The more accurate statement is that about half of all start-ups last between 5 and 7 years.
Entrepreneurial Entrepreneurial OpportunitiesOpportunities
Self-Employment, 1967-2007Self-Employment, 1967-2007
ThousandsThousands
2,0002,000
4,0004,000
6,0006,000
8,0008,000
10,00010,000
12,00012,000
14,00014,000
AgricultureAgriculture
Non-agricultureNon-agriculture
2,1362,136
5,9915,991
8,1278,127
1,6461,646
5,7835,783
7,4287,428
1,4471,447
7,8817,881
9,3279,327 1,5181,518
8,9718,971
10,49010,4901,5191,519
10,09610,096
11,61511,615
What is an Entrepreneur?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.
Characteristics of EntrepreneursCharacteristics of Entrepreneurs
Desire for responsibilityPreference for moderate riskConfidence in their ability to succeedDesire for immediate feedbackHigh level of energyFuture orientationSkilled at organizingValue achievement over money
Rewards of Being an EntrepreneurRewards of Being an Entrepreneur
High degree of independence—freedom from constraints
Get to use a variety of skills and talents
Freedom to make decisions
Accountable to only yourself
Opportunity to tackle challenges
Feeling of achievement and pride
Potential for greater financial rewards
Feeding the Entrepreneurial FireFeeding the Entrepreneurial Fire
Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E-Commerce and the World Wide Web International opportunities
Challenges of BeingChallenges of Beingan Entrepreneuran Entrepreneur
Must be comfortable with change and uncertainty
Must make a bewildering number of decisions
Need many different skills and talents
May face tough economic choices
Must be comfortable with taking risks
Must be comfortable with the potential for failure
The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship
Young entrepreneurs Women Minority-owned enterprises Immigrant entrepreneurs Family businesses Corporate castoffs Corporate dropouts Part-time entrepreneurs Home-based businesses
(Sometimes) Fatal Errors of (Sometimes) Fatal Errors of EntrepreneurshipEntrepreneurship
1. Management incompetence
2. Lack of experience
3. Poor financial control
4. Failure to develop a strategic plan
5. Uncontrolled growth
(Sometimes) Fatal Errors of (Sometimes) Fatal Errors of EntrepreneurshipEntrepreneurship
6. Poor location
7. Improper inventory control
8. Incorrect pricing
9. Inability to make the “entrepreneurial transition”
Entrepreneurs vs. Entrepreneurs vs. Small Business Owners: A DistinctionSmall Business Owners: A Distinction
EntrepreneursEntrepreneurs– Focus their efforts on start-up, innovation, Focus their efforts on start-up, innovation,
profitability and rapid growthprofitability and rapid growth
Small Businesses OwnersSmall Businesses Owners– Manage their businesses by expecting stable Manage their businesses by expecting stable
sales, profits, and growthsales, profits, and growth
Small Business by Industry
Services39.2%
Retail20.5%
Wholesale7.4%
Manufacturing5.8%
Construction11.8%
Financial8.0%
Other7.3%
Benefits of Small Business OwnershipBenefits of Small Business Ownership
The opportunity to: create your own destiny make a difference reach your full potential reap unlimited profits contribute to society and be recognized for
your efforts do what you enjoy and have fun at it
Drawbacks of Small Business Drawbacks of Small Business OwnershipOwnership
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
The Small Business Failure RecordThe Small Business Failure Record
24% of new businesses fail after two years.
51% fail within four years.63% fail within six years.
0%
20%
40%
60%
80%
100%
% o
f Sm
all F
irm
s S
urv
ivin
g
New 2 4 6 8 10
# of Years in Business
Small Business Survival Rate
To Avoid Small Business To Avoid Small Business Failure:Failure:
Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Like what you do
Produce 51% of the nation's private GDP. Account for 47% of business sales. Create 4X more innovations per R & D
dollar spent than medium-size firms and 24X as many as large companies.
Small BusinessesSmall Businesses
Small BusinessesSmall Businesses
Create more jobs than big businesses. Are leaders in offering training and
advancement opportunities to workers. Employ 53% of the nation's private sector
workforce. Make up 99% of all businesses in the
United States.
Evolving Entrepreneurial
Concepts
Evolving Entrepreneurial
Concepts
The Evolution of EntrepreneurshipThe Evolution of Entrepreneurship
Entrepreneur is derived from the French entreprendre, meaning “to undertake”.
Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject.
A Summary Description A Summary Description of Entrepreneurshipof Entrepreneurship
Entrepreneurship:Entrepreneurship:
The dynamic process of creating The dynamic process of creating incremental wealth.incremental wealth.
– This wealth is created by individuals who assume major This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of risks in terms of equity, time, and/or career commitment of providing value for a product or service. providing value for a product or service.
– The product or service itself may or may not be new or The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources.securing and allocating the necessary skills and resources.
Definition of an EntrepreneurDefinition of an Entrepreneur
An entrepreneur is an innovator or developer who recognizes and seizes opportunities; converts those opportunities into workable, marketable ideas; adds value through time, effort, money or skills; assumes the risks of the competitive marketplace to implement these ideas; and realizes the rewards from these efforts.
Who is the Entrepreneur?
Inventor Entrepreneur
PromoterManager,
administrator
High
Low High
Creativity& Innovation
General management skills, business know-how, networks
In What Ways Do Entrepreneurs ThinkIn What Ways Do Entrepreneurs ThinkDifferently Than Other People?Differently Than Other People?
What Do Entrepreneurs Do What Do Entrepreneurs Do Differently Than Other People?Differently Than Other People?
They Positively Frame Business Challenges They Understand That the Success of their Business
Starts With Themselves They Passionately Seek New Opportunities They Pursue Opportunities With Enormous Discipline
What Do Entrepreneurs Do Differently What Do Entrepreneurs Do Differently Than Other People?Than Other People?
Entrepreneurs Pursue Only the Very Best Opportunities and Avoid Exhausting Themselves By Chasing Every Option
Entrepreneurs Focus On Execution
Entrepreneurs Create and Sustain Networks of Relationships Rather Than Going It Alone
Entrepreneurs Get People Excited and Keep People Excited About Their Businesses and Their Ideas
The Myths of EntrepreneurshipThe Myths of Entrepreneurship
Myth 1: Entrepreneurs Are Doers, Not Thinkers
Myth 2: Entrepreneurs Are Born, Not Made
Myth 3: Entrepreneurs Are Always Inventors
Myth 4: Entrepreneurs Are Academic and Social Misfits
Myth 5: Entrepreneurs Must Fit the “Profile”
The Myths of EntrepreneurshipThe Myths of Entrepreneurship
Myth 6: All Entrepreneurs Need Is Money
Myth 7: All Entrepreneurs Need Is Luck
Myth 8: Entrepreneurship is Unstructured and Chaotic
Myth 9: Most Entrepreneurial initiatives Fail
Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)
Entrepreneurs—Challenging the Entrepreneurs—Challenging the UnknownUnknown
EntrepreneursEntrepreneurs
– Recognize opportunities Recognize opportunities where others see chaos or where others see chaos or confusionconfusion
– Are aggressive catalysts for Are aggressive catalysts for change within the change within the marketplacemarketplace
– Challenge the unknown and Challenge the unknown and continuously create the continuously create the future future
An Integrated DefinitionAn Integrated Definition
EntrepreneurshipEntrepreneurship– A dynamic process of vision, change, and creation.A dynamic process of vision, change, and creation.
• Requires an application of energy and passion towards the Requires an application of energy and passion towards the creation and implementation of new ideas and creative creation and implementation of new ideas and creative solutions.solutions.
– Essential ingredients include:Essential ingredients include:• The willingness to take calculated risksThe willingness to take calculated risks——in terms of time, in terms of time,
equity, or career.equity, or career.
• The ability to formulate an effective venture team; the The ability to formulate an effective venture team; the creative skill to marshal needed resources.creative skill to marshal needed resources.
• The fundamental skills of building a solid business plan.The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see chaos, The vision to recognize opportunity where others see chaos, contradiction, and confusion.contradiction, and confusion.
Macro View: External Locus of Macro View: External Locus of ControlControl
The Environmental School of ThoughtThe Environmental School of Thought– Considers the external factors that affect a potential Considers the external factors that affect a potential
entrepreneur’s lifestyle. entrepreneur’s lifestyle.
The Financial/Capital School of ThoughtThe Financial/Capital School of Thought– Based on the capital-seeking processBased on the capital-seeking process—t—the search for he search for
seed and growth capital. seed and growth capital.
The Displacement School of Thought The Displacement School of Thought (Alienation drives entrepreneurial pursuits)(Alienation drives entrepreneurial pursuits)
• Political displacement (laws, policies, and Political displacement (laws, policies, and regulations)regulations)
• Cultural displacement (preclusion of social groups)Cultural displacement (preclusion of social groups)
• Economic displacement (economic variations)Economic displacement (economic variations)
Micro View: Internal Locus of Micro View: Internal Locus of Control Control (cont’d)(cont’d)
The Entrepreneurial Trait School of ThoughtThe Entrepreneurial Trait School of Thought– Focuses on identifying traits common to Focuses on identifying traits common to
successful entrepreneurs.successful entrepreneurs.• Achievement, creativity, determination, and technical Achievement, creativity, determination, and technical
knowledge knowledge
The Venture Opportunity School of ThoughtThe Venture Opportunity School of Thought– Focuses on the opportunity aspect of venture Focuses on the opportunity aspect of venture
developmentdevelopment—t—the search for idea sources, the he search for idea sources, the development of concepts, and the implementation development of concepts, and the implementation of venture opportunities.of venture opportunities.
Micro View… Micro View… (cont’d)(cont’d)
The Strategic Formulation School of ThoughtThe Strategic Formulation School of Thought– Emphasizes the planning process in successful Emphasizes the planning process in successful
venture development.venture development.
EntrepreneursEntrepreneursin the United Statesin the United States
Reasons for the exceptional entrepreneurial Reasons for the exceptional entrepreneurial activity in the U.S. include:activity in the U.S. include:
– A national culture that supports risk taking and seeking A national culture that supports risk taking and seeking opportunities.opportunities.
– Americans’ alertness to unexploited economic Americans’ alertness to unexploited economic opportunity and a low fear of failure.opportunity and a low fear of failure.
– U.S. leadership in entrepreneurship education at both U.S. leadership in entrepreneurship education at both the undergraduate and graduate level.the undergraduate and graduate level.
– A high percentage of individuals with professional, A high percentage of individuals with professional, technological or business degrees who are likely to technological or business degrees who are likely to become entrepreneurs.become entrepreneurs.