Part 2

The Opportunity

The Opportunity
• Screen and choose opportunities with great care. • Venture capital investors fund no more than 1 or 2 percent of the ventures they review. • Good opportunities have risks and problems. • The perfect deal has yet to be seen. • Take steps to eliminate problems early during opportunity screening.

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Chapter 3

The Entrepreneurial Process

holistic in approach. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. former Vice Provost for Entrepreneurship and Global Management at Babson College. (This definition of entrepreneurship has evolved over the past three decades from research by Jeffry A. and leadership balanced for the purpose of value creation and capture.Entrepreneurship Defined • Entrepreneurship – a way of thinking. Jr. reasoning. 3-4 . Timmons at Babson College and the Harvard Business School and has recently been enhanced by Stephen Spinelli. and current President of Philadelphia University). and acting that is opportunity obsessed.

3-5 .Entrepreneurship Results • Value: • • • • Creation Enhancement Realisation Renewal • For: • Owners • Stakeholders • All Participants © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.

© McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. 3-6 . • Balancing risks with rewards.Entrepreneurship Results • Willingness to take risks: • Personal • Financial • Calculated • Shift the odds of success.

• Can occur and fail to occur: • • • • • • In old and new firms.Entrepreneurship is NOT just ‘Start-Ups Only’ • It includes companies and organisations: • All types. All stages of a nation‘s development. Small and large firms. Private. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. All geographic points. 3-7 . not-for-profit and public sectors. • At all stages. Fast and slow growing firms.

Skill and ingenuity to find and control resources. • Qualities of a startup company: • • • • Strong leadership from the main entrepreneur.Classic Entrepreneurship: The Startup • Raw startup company—an innovative idea that develops into a high growth company. Complementary talents and outstanding teamwork of team members. 3-8 . © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Financial backing to chase opportunity.

3-9 . © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Digital Equipment Corporation. • Large companies face shrinking payroll while new ventures add jobs. have been reduced in size and scope by waves of entrepreneurial ventures. • New entrepreneurial rivals are changing the pace of ‗business as usual‘. AT&T) once thought to be invincible. Sears.Beyond Startups • Giant firms of the past (IBM.

‘— Ewing M. Leaders set aspirations and continually work at success.‘People Want to be Led!’ ‗People don‘t want to be managed. Visy •Characteristics of giant firms: • • • Hierarchical in structure Leadership as managing and administering from the top down Rewards for ―the largest‖ (assets. Very few are both. budgets. 3-10 . Kauffman ‗There are managers and leaders. etc.‘ —Richard Pratt.) © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. They want to be led.

3-11 .The Fall of the Giants • Slow to change archaic strategy (average 6 years). © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. • Slow to recognise and incorporate: • • • entrepreneurship entrepreneurial leadership and entrepreneurial reasoning. • Slow to change outdated culture (average 10 to 30 years).

© McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. 3-12 . • Working to instill the culture and practices of ‗entrepreneurial reasoning‘.Signs of Hope for Corporations • Launching experiments and strategies to recapture the lost entrepreneurial spirit. • Applying entrepreneurial thinking to invent their futures.

chess © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. sports (golf). 3-13 .Metaphors for Entrepreneurship • • • • • • • Improvisational Quick Clever Creative Resourceful Inventive Complex – compare to music (jazz or symphony conductor).

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one must relinquish wealth. • To make money you have to first lose money. • To succeed. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.Paradoxes of Entrepreneurship (1 of 3) • An opportunity with no or very low potential can be an enormously big opportunity. one first has to experience failure. • To create and build wealth. 3-16 .

• Entrepreneurship requires a bias toward action and a sense of urgency. preparation. yet is basically an unplannable event. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. rigor and discipline must accompany the process. 3-17 .Paradoxes of Entrepreneurship (2 of 3) • Entrepreneurship requires considerable thought. and planning. but also demands patience and perseverance. • For creativity and innovativeness to prosper.

Paradoxes of Entrepreneurship (3 of 3) • The greater the organisation. you have to forgo the temptations of short-term profitability. became a seed of self-destruction and loss of leadership to upstart competitors. the less you will control your ultimate destiny. 3-18 . orderliness. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. • Adhering to management best practice (especially staying close to the customer that created industry leaders in the 1980s). discipline. • To realise the long-term equity value. and control.

growth. Entrepreneurship should not be a job substitute. Getting the odds in your favour. changes when the ventures reaches a size of 10-30 people with $2-$3 million in revenues. and a higher level of success.Think Big for Higher Potential Ventures • • • • Don‘t think too small. Smaller often means higher failure odds. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. 3-19 . • Odds for survival.

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• Venture Capital backing: • • Venture capital backing in Australia and New Zealand limited Not essential for startup.• Promise of growth: • • Expansion and building of long term value. 3-21 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Durable cash flow streams. nor a guarantee of success. . • Private investors: • Often harvested entrepreneurs.

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dependability. Exhibits integrity.The Entrepreneurial Team An entrepreneurial leader: • • • • Learns and teaches—faster. better. Deals with adversity. honesty. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Builds entrepreneurial culture and organisation. 3-26 . is resilient.

Tolerance of risk. 3-27 . and persistence. Commitment.The Entrepreneurial Team Quality of the Team: • • • • • Relevant experience and track record. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Creativity. determination. ambiguity. and uncertainty. Motivation to excel.

3-28 . Opportunity obsession. Adaptability.The Entrepreneurial Team Quality of the Team: • • • • • Team focus of control. Leadership. © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. Communication.

© McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al. By understanding these factors. 3-29 .Sustainability as a Base • • • • Achieving economic. Without compromising the same opportunity for future generations. environmental and social goals. the entrepreneur builds a firmer base girding the venture for the long term. Driven by many factors.

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