ch06 10-11-2023

Chapter 6
Starting Your Own

Business: The
Entrepreneurship
Alternative
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Learning Objectives
1. Define entrepreneur.
2. Identify the different categories of entrepreneurs.
3. Explain why people choose entrepreneurship as
a career path.
4. Discuss the environment for entrepreneurs.
5. Identify the characteristics of entrepreneurs.
6. Summarize the process of starting a new
venture.
7. Explain intrapreneurship
6-3 Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
What Is An Entrepreneur?
Definition:
A person who seeks a profitable opportunity and
takes the necessary risks to set up and operate a
business.
Example: SAM WALTON, BEN FRANKLIN Variety Store to

WALMART’s FOUNDER (USA)
What Is An Entrepreneur?
◼ Entrepreneurs are visionaries.
◼ Entrepreneurs own and run their businesses with
the goal of building significant firms that create
wealth and add jobs.
Entrepreneurs and Small Business Owners:
1. Both possess the same drive, creative energy, and
desire to become big-business owners.
2. Most small business owners (versus
entrepreneurs) are content to operate a business
that provides a comfortable living.
Difference:Typical entrepreneurs try to make the
business expansion and growth.
Categories of Entrepreneurs
Classic Entrepreneur
Serial Entrepreneur
Social Entrepreneur
1.Classic entrepreneur:
◼ A classic entrepreneur starts a new company by
identifying a business opportunity and allocating
resources to tap a new market
2. Serial Entrepreneur:
◼ Person who start one business, run it, and then
start and run additional businesses in succession.
◼ Elon Musk, the founder of such businesses as
PayPal, Tesla Motors, Solar City, and SpaceX, is
a serial entrepreneur
3. Social entrepreneur:
◼ Person who recognize a societal problem and use
business principles to develop innovative
solutions.
◼ Social entrepreneurs are pioneers of innovations
that benefit humanity.
Reasons to Choose Entrepreneurship as a
Career Path
Reasons to Choose Entrepreneurship
as a Career Path
◼ Desire to Be Your Own Boss
✓Self-management is the motivation of many
entrepreneurs
✓Freedom in decisions
✓Freedom in communication with vendors,
customers and the like.
◼ Financial Success
✓Entrepreneurs:
Are wealth creators
Believe they won’t get rich working for others
✓Path to riches can be long and uncertain
Reasons to Choose Entrepreneurship
as a Career Path
◼ Job Security
✓Many workers lack job security
✓Downsizing
✓Dissatisfaction with current employment situation
◼ Quality of Life
✓Gives the founder some choice over when, where,
and how to work
✓Many work extraordinarily long hours . . . often at
the whim of their customers
Lifestyle entrepreneur person who starts a
business to gain flexibility in work hours and control
over his or her life.
The Environment for Entrepreneurs
1. Globalization
✓Creates many opportunities for entrepreneurs
✓Allows products to be sold overseas
✓Provides international talent pool
✓Entrepreneurs are also forming business
partnerships with foreign partners with similar
business goals.
2. Education
✓Tremendous growth in educational opportunity
for would-be entrepreneurs via:
College Classes
Business schools helping students start
businesses
Other organizations like the Center for
Entrepreneurial Leadership
3. Information Technology
✓Provided a big boost for entrepreneurs
✓Helps entrepreneurs work quickly and efficiently,
provide attentive customer service, increase sales,
and project a professional image
✓Has created demand for new products
✓Internet is also a challenge for entrepreneurs
✓Customers can go online, quickly get needed
information, and buy from anywhere in the world
4. Demographic and Economic Trends
✓Demographic (Aging) trends create opportunities
for new goods and services
✓ Older entrepreneurs will also have access to their
retirement funds and home equity for financing.
Many Boomers also plan to work after retirement
from traditional jobs or careers, either because
they want to continue to work or in order to boost
income and savings
Characteristics of Entrepreneurs
◼ Vision
✓Have an overall idea for how to make a business
inspiration a success
◼ High Energy Level
✓Willingly work hard to realize their visions
✓Founder do more
◼ Need to Achieve
✓Need to work hard because they want to excel to
achieve their goals
◼ Self-Confidence and Optimism
✓Believe in ability to succeed, and they instill their
optimism in others
◼ Tolerance for Failure
✓Entrepreneurs view setbacks and failures as
learning experiences
✓Not easily discouraged or disappointed when
things don’t go as planned
◼ Creativity
✓Entrepreneurs typically conceive new ideas for
goods and services
✓Devise innovative ways to overcome difficult
problems and situations
◼ Tolerance for Ambiguity
✓Take the uncertainties associated with launching a
venture in stride
✓They are not gamblers, but are willing to take risks
even when conditions are uncertain or ambiguous.
✓They manage ambiguity by remaining close to
their customers, so they can adjust accordingly.
◼ Internal Locus of Control
✓Believe that they control their own fates
✓Take personal responsibility for the success or
failure of their actions rather than believing in
luck or fate
Starting a New Venture
1. Selecting a Business Idea
✓Finding something you love to do and are good
at doing
✓Determining whether your idea can satisfy a
need in the market
✓Success also depends on your offering being
appealing to the marketplace
◼ Buying an Existing Business
✓Some prefer not to assume the risks of starting a
new firm
✓Advantage: employees already in place, serve
established customers, deal with familiar
suppliers, the good or service is already known
in the marketplace, necessary permits and
licenses are already secured
◼ Buying a Franchise
✓Another less risky
way to begin a business
2. Creating a Business Plan
✓Online Resources for Preparing a Business Plan
◼ Finding Financing
✓Seed Capital—initial funding needed to launch a
new venture.
✓Vast majority of entrepreneurs rely on personal
financing: personal savings: credit cards advances,
retirement savings, refinancing of assets money
from partners, family, and friends
✓Debt Financing—borrowed funds that

entrepreneurs must repay.
✓Bank Loans, Finance companies, Family, Friends
are sources of debt financing
✓Equity Financing—funds invested in new
ventures in exchange for part ownership.
✓Not to re pay equity funds as investors become
co-owners of the startups.
Drawbacks include:
1. Investment partners may not agree on future
direction of the business
2. If agreement cannot be reached, one partner
may have to buy out the other
✓Venture Capitalists—business firm or group of

individuals who invest in new and growing firms.
✓Expect high and quick return rates and stakes in
the company
✓Tend to invest in technology and
communications efforts e.g. high technology
industries such as biotechnology
✓Angel Investors—wealthy individuals who
invest directly in a new venture in
exchange for an equity stake.
✓Invest more money and more frequently in
startups than venture capitalists
✓Typically successful entrepreneurs
themselves
Intrapreneurship
◼ Intrapreneurship—process of promoting
innovations within the structure of an existing
organization.
✓Helps retain employees who might
otherwise leave to start their own
businesses
✓Establishing company-wide policies and
procedures that give employees freedom
to explore new products and technologies.
Intrapreneurship
Skunkworks: A project initiated by an
employee who conceives an idea, convinces
top management of its potential, and then
recruits human and other resources from
within the company to turn the idea into a
commercial project
✓Intrapreneurship practiced in:
3M (e.g. skunkworks)
Coca-Cola Company
GE
Google
Assignment No. 3
Please explore and write name of ten famous

entrepreneurs in Pakistan and also briefly
give the business/ company details i.e. name
and product/services.
Total Marks: 10
Due Date: 17-11-2023
Quiz No. 3
◼ Chapter No. 6
◼ Starting Your Own Business:
The Entrepreneurship Alternative
◼ Due Date: 17-11-2023

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Chapter 6

Starting Your Own

Example: SAM WALTON, BEN FRANKLIN Variety Store to

✓Debt Financing—borrowed funds that

✓Venture Capitalists—business firm or group of

Please explore and write name of ten famous

Due Date: 17-11-2023

◼ Starting Your Own Business:

The Entrepreneurship Alternative

◼ Due Date: 17-11-2023

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