Gies College of Business at Illinois

Department of Business Administration

What Does It Mean to

Be an Entrepreneur?
Module 1 Lesson 1

Tom Parkinson
Module 1 Lesson 1

What Does It Mean to Be

an Entrepreneur?
Who Is an Entrepreneur?

Business owner
Small business
Startups
High-technology
High-growth
Industry disruption
Why Become an Entrepreneur?

Be your own boss

Personal wealth creation
Solve big market problems
Solve big societal problems
Leave a legacy
Defining Entrepreneurship
“Entreprendre” meaning “undertaker”
One who undertakes a major project

Jean Baptiste Say (1800): “The

entrepreneur shifts economic resources
out of an area of lower and into an area
of higher productivity and greater yield”
Defining Entrepreneurship

Joseph Schumpeter (1942): “… reform or

revolutionize the pattern of production …
by exploiting an invention or … an untried
technological possibility …”
“Creative destruction”

Schumpeter, J.A., 1942. Capitalism, Socialism and Democracy. Harper and Brothers
Defining Entrepreneurship

Howard Stevenson (1983): “The pursuit of

opportunity without regard to resources
currently controlled”

Stevenson, H. 1983. A perspective on entrepreneurship. HBS Publishing.

Defining Entrepreneurship

Shane and Venkataraman (2000): “The

discovery, evaluation, and exploitation of
opportunities”

Shane, S. and S. Venkataraman. The promise of entrepreneurship as a field of

research. Academy of Management Review.
Key Concepts

Opportunity
Innovation
Enterprise development
Value creation
Ownership
Risk
Creativity

“The ability to transcend traditional ideas,

rules, patterns, relationships, or the like,
and to create meaningful new ideas,
forms, methods, interpretations, etc.”

Dictionary.com Unabridged. Retrieved May 13, 2018 from Dictionary.com website

http://www.dictionary.com/browse/creativity
Innovation

“… translating an idea or invention into a

good or service that creates value …1”
“… the application of better solutions that
meet new requirements, unarticulated
needs, or existing market needs2”

1http://www.businessdictionary.com/definition/innovation.html

2https://en.wikipedia.org/wiki/innovation
Entrepreneurship

“The discovery, evaluation and

exploitation of opportunities”
Leadership as the Bridge

Creativity + Leadership = Innovation

Innovation + Leadership = Entrepreneurship
The Entrepreneurial Mindset
Creative problem solver
Market aware
Action-oriented
Focused on value creation
Tolerance for risk and uncertainty
Willing and able to lead others
The Entrepreneurial Mindset

Able to listen and absorb new information

Able to learn from failure and move on
Able to focus on key success drivers – once
you learn what they are
Embracing Uncertainty
Key lean startup concepts:
A startup is not a business. It is a group of
people who are searching for a viable
business model
Startups are involved in continuous
experimentation: the build-measure-learn
feedback loop
Ries, E. 2011. The Lean Startup. Crown Business
The Dark Side

Entrepreneurs work 12-hour days1

Most startups fail
Failure is personal
Fear of failure can lead to paralysis and bad
decision making

Firestone, K., December 17, 2014. How Hard Do Company Founders Really Work?
Harvard Business Review.
The Light Side

Three reasons for becoming/supporting

an entrepreneur:
To make money
To make the world a better place
To have fun
The Light Side

The best entrepreneurs are the ones that

can do all three

But no money is no fun

 Gies College of Business at Illinois
Department of Business Administration

Where Do
Entrepreneurial Ideas
Come From?
Module 1 Lesson 2

Tom Parkinson
Module 1 Lesson 2

Where Do
Entrepreneurial Ideas
Come From?
Entrepreneurial Ideas

Definition of entrepreneurship:
“The discovery, evaluation, and
exploitation of opportunities”
Sources of Ideas

• A daily life or work experience

• An emerging trend
• A specific market gap
• A drive to help others in new ways
• A special skill or expertise

DiBaise, C. 2018. Start a Successful Business: Expert Advice to Take

Your Startup from Idea to Empire. Inc. Magazine and Amacom.
Experience

Median age of founders was 39 when they

started their tech companies
Twice as many were over 50 as were under 25
92% had bachelor’s degrees. 31% had master’s
degrees

Wadha, V., R. Freeman and B. Rissing. 2008. Education and Tech Entrepreneurship.
Kauffmann Foundation
Experience

57% of Inc. 500 entrepreneurs (2002) got their

new venture idea in the industry in which they
worked
27% more got their ideas in a related industry
In all, 80% of high-potential businesses were
started in an industry where the entrepreneurs
had previous experience
Bygrave, W. D. 2004. The Entrepreneurial Process. In “The Portable MBA in
Entrepreneurship.” Wiley.
Experience
With experience, entrepreneurs can:
• Have a better understanding of customer
needs
• Have a better understanding of competition
• Make better assumptions about revenue and
cost structures
• Use contacts to make market entry easier
Triggering Events

Job loss
Job dissatisfaction
Education
Lifestyle changes
Frustration with business or personal
challenges
Brainstorming

Take stock of what you do and what you know

What do you want or need?
Are there others like you with the same wants or
needs?
Where are technology or market shifts having
an impact?
Design Thinking

A methodology used by designers to solve

problems
Solution-focused and action-oriented
Creativity, leading to innovation
Engaging with customers to test and refine
solutions
Design Thinking

1. Define the problem

2. Ideate many solutions
3. Refine and test
4. Pick the winner, commit resources, and
execute
Design Thinking Exercise
1. Define a problem that you face on a regular
basis (business or personal)
2. With a diverse group of colleagues,
brainstorm to identify a range of potential
solutions
3. Narrow the list of solutions to three or four
that seem most feasible
Design Thinking Exercise
4. Test your proposed solutions with others
who have the same problem
5. Repeat the process, using feedback that you
have received
6. Pick the solution that seems most likely to
be accepted and identify the resources that
would be necessary to implement it
B2C Value Propositions
In general, Business-to-Consumer (B2C) value
propositions should:
1. Help customers save money
2. Help customers save time
3. Help customers enhance their status in
some way, or
4. Help customers gain personal fulfillment
B2B Value Propositions
In general, Business-to-Business (B2B) value
propositions should:
1. Help customers make more money
2. Help customers save money
3. Help customers save time, or
4. Help customers reduce a risk that threatens
their business in some way
Opportunity Drivers

Regulatory changes
Demographic changes
Value chain or distribution channel changes
Moore’s Law
Disruptive technologies
Models as Opportunities

Re-segmenting a market to identify a specific

niche in need of a high-value solution
Bringing a product that is successful in an
existing market to a new market
• Geography
• Demographics
• Industry
Self-Assessment

Your personal aspirations:

• Lifestyle
• Income
• Career
• Legacy
• Risk tolerance
Self-Assessment

Your capabilities:
• Expertise
• Access to your target market
• Ability to build a team
• Ability to assemble resources
 Gies College of Business at Illinois
Department of Business Administration

Pitching Your Idea

Module 1 Lesson 3

Tom Parkinson
Module 1 Lesson 3

Pitching Your Idea

Pitching: A Sales Process

Pitching, like sales, is a four-step

process:
1. Get your audience to listen
2. Get them to care
3. Get them to believe
4. Get them to take action
Understand Your Audience

Why are they interested?

What are their “hot buttons”?
What objections are they likely to raise?
Understand Your Audience

Why should they support you?

• To make money
• To make the world a better place
• To have fun
Which of these can you offer?
Storytelling

The #1 way to captivate your audience:

• People like stories
• They want to know the ending
• They relate to the characters
• It helps them understand your passion
• It helps them understand your market
Startup Mission

Describe the problem you’re solving

• Who has the problem?
• Why does it matter?
• Why did you choose to try to solve it?

This helps your audience understand the

context for the rest of the information that
you will provide
Value Proposition

A clear and concise description of what you do:

“We help X do Y by doing Z”

—Steve Blank
Detailed Value Proposition

Why will customers buy your product?

What pain are you addressing?
What gain are you enabling?
How are you better/faster/cheaper/easier?
Detailed Value Proposition

B2B: B2C:
• Make money • Save money
• Save money • Save time
• Save time • Enhance status
• Reduce risk • Personal fulfillment
Market Size

How big is your idea?

Will it create real value for investors?
Will it be big enough to provide a return?
Market Size

Total Available Market

Serviceable Available
Market
Serviceable Obtainable
Market or “Target Market”
Customers

Target customers

Early adopters:
• They know they have the problem
• They have the money (budget)
• They have tried to solve the problem before
• They can influence others
Who influences their decision to buy?
Channels
How will you reach your customers?
• Direct or indirect?
• Online or offline?
• Do you need a sales force?
What sort of relationship do you need?
How will you secure your early adopter
customers?
How will you scale?
Revenue Model

Recurring vs. non-recurring revenue

Two-sided markets
Third-party payers
Pricing strategy
Lifetime value of a customer
Financial Projections

Top-down vs. bottom-up revenue forecasting

Growth and profit drivers
Customer acquisition cost
Cash-to-cash cycle
Overhead costs
Competition

What are your customers doing now?

Existing vs. potential competitors
What are your competitive advantages?
Are they sustainable?
Team
Do you have the right people?
• Domain expert – knows the industry and
customers
• Product expert – can design and build the
product
• Operational expert – can manage the
company effectively
Credibility and chemistry
Advisors and mentors
Establishing Credibility

What have you achieved so far?

• Technology
• Customers
• Revenue
• Profits
Strategy for achieving key milestones
Conclusion and Call to Action
What will your audience remember?
Remind them why it’s important
Tell the conclusion to the story
The call to action:
• A follow-up meeting
• An introduction
• Feedback on the presentation