part

Entrepreneurship and Small Business

1
The Winning Hand of Entrepreneurship

PowerPoint Presentation by Charlie Cook

12e

Copyright 2003 South-Western College Publishing. All rights reserved.

Looking Ahead
After studying this chapter, you should be able to:
1. Discuss the availability of entrepreneurial opportunities

and give examples of highly successful businesses started by entrepreneurs.

2. Explain the entrepreneurial challenges presented by

e-commerce and global changes.

3. Explain the nature of entrepreneurship and how it is

related to small business.

4. Identify three motivators or rewards of entrepreneurial

careers.

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Looking Ahead (contd)

5. Describe the various types of entrepreneurs and

entrepreneurial ventures.
6. Identify ways to gain a potential competitive edge for

small entrepreneurial firms.

7. Discuss factors related to readiness for

entrepreneurship and getting started in an entrepreneurial career.

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Entrepreneurial Opportunities
Entrepreneurial Opportunity
A value creating innovation with market potential A desirable and timely innovation that creates value for interested buyers and end users.

Success stories
Marketplace Holdings Auntie Annes RotoZip Tool Corporation

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Who Are Entrepreneurs?

Entrepreneurs are:
Persons 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).

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Entrepreneurial Challenges
E-Commerce
An outgrowth and part of the Information Age that is producing the new economy.

Globalization
The trend toward a global economy creates new competition and opportunities.

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What Is a Small Business?

Criteria for Defining Smallness in Business
Financing supplied by one person or small group Localized business operations (except marketing) Business size small relative to larger competitors Fewer than 100 employees

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Entrepreneurial Incentives

Rewards of Entrepreneurship

Profit
Freedom from the limits of standardized pay for standardized work

Independence
Freedom from supervision and rules of bureaucratic organizations Escape from an oppressive culture

Personal Fulfillment
Freedom to achieve a satisfying way of life Escape from routine and unchallenging work

Make Money

Be Your Own Boss

Enjoy a Satisfying Life

Fig. 1.2
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Entrepreneurial Refugees
Foreign refugee Corporate refugee Parental refugee Feminist refugee Housewife refugee Society refugee Educational refugee

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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 who work together as entrepreneurs.
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Small Businesses, Growth, and Profits

High-Potential Venture (Gazelle)
A small firm that has great prospects for growth.

Attractive Small Firm

A small firm that provides substantial profits to its owner.

Microbusiness
A small firm that provides minimal profits to its owner.

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111

Characteristics of Artisan Entrepreneurs

Technical training Paternalistic approach Reluctance to delegate Narrow view of strategy Personal sales effort Short planning horizon Simple record keeping

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Characteristics of Opportunistic Entrepreneurs

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
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Women Entrepreneurs
More Women Entrepreneurs
Women own 38% of all U.S. businesses. Employment at female-owned firms has grown 108% since 1992. Women are moving into nontraditional industries.

Problems Facing Female Entrepreneurs

Newness of entrepreneurial role Lack of access to credit Lack of personal networking connections in the established business community
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Competitive Advantages of Entrepreneurial Firms

Customer Focus
Lack of bureaucracy

Innovation
Small firms are the leading source of innovation.

Quality Performance
Quality is not limited to large firms

Low-Cost Production
Sound management can lead to lower operating costs.

Integrity and Responsibility

A solid reputation builds loyal customers

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115

Age Concerns in Starting a Business

Early Career Concerns

Late Career Concerns

1. Getting an education
2. Gaining work experience 3. Acquiring financial resources

1. Fulfilling family responsibilities

2. Attaining seniority in employment 3. Earning investment in a retirement program 25 Age
Fig 1.3

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35

45

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Characteristics of Successful Entrepreneurs

Strong commitment to the business (tenacity) Strong internal locus of control (self-reliant) Moderate risk takers (financial, career, psychic risks)

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Types of Entrepreneurial Career Opportunities

Opportunity
Starting a business
Buying a business Entering a family business

Level of Risk
High risk
Medium risk Variable risk

Opening a franchised business Medium risk

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Taking the Plunge

Precipitating Event
An event, such as losing a job, that moves an individual to become an entrepreneur.

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