The Foundations of Entrepreneurship

The World of the Entrepreneur

Every year in the U.S., entrepreneurs launch 850,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. GEM study: 11.3 percent of adult population in the U.S. is actively involved in trying to start a new business.

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Entrepreneurial Activity Across the Globe

Persons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity
45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0
Argentina Australia Belgium Brazil Canada Croatia Denmark Ecuador Finland France Germany Greece Hong Hungary Iceland Ireland Israel Italy Japan Netherlan New Norway Peru Singapor Slovenia South Spain Sweden United United Total Entrepreneurial Activity (TEA) Index

TEA Index Global TEA Average

Country

Source: 2004 Global Entrepreneurship Monitor.

The World of the Entrepreneur

GEM study
Globally 9.4 percent of adults are actively engaged in trying to start a business. Men are twice as likely as women to start a business (exactly the opposite trend in the U.S., however). Nearly one-third of global entrepreneurs are between the ages of 25 and 44.

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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.

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Characteristics of Entrepreneurs

Desire for responsibility Preference for moderate risk risk eliminators Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation serial entrepreneurs Skilled at organizing Value achievement over money
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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).

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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

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Drawbacks of Entrepreneurship

Uncertainty of income Risk of losing your entire investment Long hours and hard work

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Small Business Owners' Work Week

Number of Hours Worked per Week More than 60 hours 17% Less than 30 hours 11% 30 to 40 hours 24%

51 to 60 hours 20% 41 to 50 hours 28%

Source: Adapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report, 2002, p. 35.

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

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Entrepreneurs' Age at Business Formation

55 - 64 6.7% 45 - 54 17.4%

Over 65 1.0%

18 - 24 12.0%

25 - 34 32.3% 35 - 44 30.6%

Source: 2004 Global Entrepreneurship Monitor.

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

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Feeding the Entrepreneurial Fire

Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyle E-commerce and the World Wide Web
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U.S. Retail E-Commerce Revenues

$250.0

$232.1

$199.3

$200.0
$169.5

Revenues (in Billions)

$150.0
$117.7 $94.0

$142.5

$100.0

$50.0

$2003 2004 2005 2006 2007 2008

Year
Source: eMarketer, 2005.

Feeding 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
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The Cultural Diversity of Entrepreneurship

Young entrepreneurs Women entrepreneurs

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Why Women Start Businesses

Frustrated with Other reasons 7% "glass ceiling" at big companies 23%

Gain control over my schedule 46%

Saw a market opportunity and decided to pursue it 24%

Source: Center for Womens Business Research, 2004.

The Cultural Diversity of Entrepreneurship

Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs

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The Cultural Diversity of Entrepreneurship

Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts

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Small Business by Industry

Finance 8.0% M anufacturing 5.8%

Other 7.3% Service 39.2%

Wholesale 7.4% Construction 11.8% Retail 20.5%

Source: U.S. Small Business Administration, 2005.

Small Businesses...

Make up 99.7 percent of all businesses in the U.S. Employ 51 percent of the nations private sector workforce. Create more jobs than big businesses. Are leaders in offering training and advancement opportunities to workers.

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Small Businesses...

Produce 51 percent of the nations private GDP. Account for 47 percent of business sales. Create 13X more innovations per employee than large companies.

Zipper, FM radio, laser, air conditioning, escalator, light bulb, personal computer, automatic transmission, and many more!
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Small Business Survival Rate

100% 100% 81% 65% 54% 46% 40% 36% 32% 29% 27%

% of Small Firms Surviving

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New

25%

10

# of Years in Business

Source: NFIB Business Policy Guide, 2003, p. 16.

Ten Deadly Mistakes of Entrepreneurship

1.
2. 3. 4. 5.

Management mistakes Lack of experience Poor financial control Weak marketing efforts Failure to develop a strategic plan

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Ten Deadly Mistakes of Entrepreneurship

6.
7. 8.

9.
10.

Uncontrolled growth Poor location Improper inventory control Incorrect pricing Inability to make the entrepreneurial transition

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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.

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Avoiding the Pitfalls of Small Business Failure

Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Keep in tune with yourself

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