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L'entrepreneur aujourd'hui: évolution,

défis et opportunités
~~~~~~
Session 2
The Challenges of the
Entrepreneur
October 24, 2009

R a n d y M . A ta id e
Pro fe sso r o f E n tre p re n e u rsh ip
RandyAtaide@pointloma.edu
Cohérence partenaires pour le développement
The Challenges of the
Entrepreneur
O v e rv ie w

1. The Illusions of Entrepreneurship


2. Entrepreneurship in France
3. The E-Myth and other challenges
4. Overcoming the challenges
5.
6.
7.
8.
The Challenges of the
Entrepreneur
T h e Illu sio n s o f
E n tre p re n e u rsh ip
R e ce n t d a ta sh o w s th a t p e rce p tio n s
o f e n tre p re n e u rs a re o fte n co n sid e ra b ly
d iffe re n t th a n th e re a lity. T h e se a re
re fe rre d to a s “ e n tre p re n e u ria lillu sio n s.”
C o m m o n illu sio n s a re :
* That entrepreneurs are unique and
rare .
*That entrepreneurs are born and not
made .
*That entrepreneurs focus on high -
The Challenges of the
Entrepreneur
T h e Illu sio n s o f
E n tre p re n e u rsh ip
T h e illu sio n s h o ld s tru e fo r n e a rly a ll
d e ve lo p e d e co n o m ie s. In th e U . S ., d a ta *
sh o w s th a t:
* America is declining in
entrepreneurship.
*The typical start-up has a single
employee.
*Start-up capital averages $25 , 000 .
*Only about 4 % of start-ups survive
10 years.
The Challenges of the
Entrepreneur
E n tre p re n e u rsh ip in F ra n ce
T h e re se a rch a lso sh o w s th a t
e n tre p re n e u rsh ip in Fra n ce is e ve n m o re
ch a lle n g in g th a n o th e r sim ila rly d e ve lo p e d
W e ste rn ( O E C D ) e co n o m ie s.
It h a s b e e n a rg u e d th a t a d istin ctive
ch a lle n g e fo r Fre n ch e n tre p re n e u rs is
attitudinal : Unlike “heroic” notions of
entrepreneurs, many French view
entrepreneurs as similar to “traditional”
activities such as simple trades or
crafts.*
The Challenges of the
Entrepreneur
E n tre p re n e u rsh ip in F ra n ce
S e lf- E m p lo ym e n t R a te in O E C D C o u n trie s
( 2002 )
Country 2002 1992
Turkey 30.0 29.7
Portugal 24.5 26.5
Belgium 14.5 14.1
United Kingdom 11.2 12.9
Canada 9.7 9.2
France 8.8 12 . 3
United States 7.2 8.6
Luxembourg 6.1 8.4
The Challenges of the
Entrepreneur
Entrepreneurship in France
New & Young Firm Ownership by Population
%
Country <1 yr.> <3 yr.>
China 9.40 14.10
Switzerland 3.70 9.70
Ireland 4.70 8.10
Italy 2.30 6.40
United States 5.20 4.70
Germany 2.70 4.20
France 0 . 70 2 . 30
South Africa 1.70 1.30
The Challenges of the
Entrepreneur
Entrepreneurship in France

What is going on here? What possible


explanations do we have for the
relatively low rates of entrepreneurship
and young and new companies in France?
While the answers are complicated there
are some potential explanations.

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2.
3.
The Challenges of the
Entrepreneur
Entrepreneurship in France

Challenge #1* – France is much more


policy friendly towards large start-
ups and existing businesses than the
typical entrepreneur small business
start-up.

*”Entrepreneur Means Little In France.” Anu Partanen , Fortune


Magazine, April 9, 2009.

1.
The Challenges of the
Entrepreneur
Entrepreneurship in France

Challenge #2* – France is not very


tolerant of business failures, and
the stigma of bankruptcy is much
more powerful in France than many
other developed nations.

*”Entrepreneur Means Little In France.” Anu Partanen , Fortune


Magazine, April 9, 2009.

1.
The Challenges of the
Entrepreneur
Entrepreneurship in France

Challenge #3*– French Universities


generally lag behind other major
Western Universities in
entrepreneurship research, publishing
and academic programs.

*Lasch, Frank, and Yami, Said. The nature and focus of


entrepreneurship research in France over the last decade: a French
touch? Entrepreneurship Theory and Practice, March 2008.
The Challenges of the
Entrepreneur
Entrepreneurship in France

However, the primary reason that


entrepreneurship has declined in France
is the same reason that the same trend
has developed in other developed
economies, although at a lesser rate than
in France.

1.
2.
3.
The Challenges of the
Entrepreneur
Entrepreneurship in France

“When countries get wealthier and real


wages (wages net of the effects of
inflation) rise, the opportunity cost of
running your own business goes up because
the amount of money that you could have
earned working for someone else
increases. As a result, the proportion of
the population starting companies
decreases.”
*Shane, Scott. The Illusions of Entrepreneurship (2008); Yale
University Press.
The Challenges of the
Entrepreneur
Entrepreneurship in France

Thus, it is important for us to


realize that the challenges that the
entrepreneur in France faces has more in
common with other developed economies
than is often believed.
And the “ E - Myth ” is universal in
serving as a formidable challenge to the
entrepreneur.

1.
2.
The Challenges of the
Entrepreneur
The E - Myth
“The problem is not that the owners of
small businesses in this country don’t
work; the problem is that they’re doing
the wrong work.”

The “E-Myth” is the contention of


author Michael Gerber who states that
most entrepreneurs are not actually
entrepreneurs. He believes that many
supposed entrepreneurs do not properly
understand the actual business that
they are engaged in.
The Challenges of the
Entrepreneur
The E - Myth
For example, simply because one is a
good cook, or is a competent house
painter, or a physician, does not mean
that they are competent to own a
restaurant, own a house painting business,
or operate a medical practice.
Gerber’s point is that these are two
completely separate competencies and is a
leading factor of the failure of
entrepreneurs.
The Challenges of the
Entrepreneur
The E - Myth
Gerber claims that the typical small
business owner is actually:
*10 % Entrepreneur
* 20 % Manager
* 70 % Technician

Technical superiority is rarely a


primary driver of entrepreneurial success.
This is because such superiority is
usually very short - lived .
The Challenges of the
Entrepreneur
The E - Myth
While there are a few businesses
that may need this high combination of
technical skills, Gerber argues that the
more valuable skills are
entrepreneurial passion and
managerial competencies , and less
technical expertise.
And research and experience shows
that even vast amounts of capital cannot
ensure entrepreneurial success. Let’s look
at a “sure-thing” business of online
grocery shopping and the company known as
Webvan.
The Challenges of the
Entrepreneur
Overcoming the Challenges

The Story of Webvan
The Challenges of the Entrepreneur
Overcoming the Challenges

The Challenges of the
Entrepreneur

Overcoming the Challenges


Auction puts the gavel down on a dot-
bomb
 Kathleen Pender, Chronicle Staff Writer Wednesday, October 31, 2001

“Some people came out of curiosity -- to
see how dot-coms lived back in the glory
days before investors shut off the money
spigot. "We wanted to see what it takes to
blow 850 million bucks," said Randy Ataide
of Mountain View Cold Storage, a produce
distributor in Fresno County that used to
do business with Webvan. "It's just a
The Challenges of the Entrepreneur
Overcoming the Challenges
 “Ataide and his colleague Tom
Bruner came to the auction hoping to
pick up a few PCs, laser printers and
servers for their firm. "These guys
had the opposite of our business
plan," Ataide said. Their business plan
was "field of dreams: Build it and
they will come," Bruner said. " Our
business plan : Start small and
get bigger ," Ataide added.”

The Challenges of the Entrepreneur
Overcoming the Challenges
$82 , 500 , 000 Webvan Was Not Alone

$250 , 000 , 000

$50 , 000 , 00
0
The Challenges of the Entrepreneur
Overcoming the Challenges

What is the lesson of Webvan? It
is very simple.“Don’t spend a dollar
(or Euro) when a dime (10 cents) will
do”

This starting small and getting


bigger is known in the U.S. as “ boot -
strapping .”
The Challenges of the Entrepreneur
Overcoming the Challenges

Starting small helps you by:
 *Limiting your risk .

 *Learning resource discipline


early.

 *Helps you to be able to fail


fast.

 Entrepreneurs need to remember a


useful rule of thumb with their
capitalization:

The Challenges of the Entrepreneur
Overcoming the Challenges
 Expect your business idea to do the
following:

 *Cost twice as much to start than you


estimate.

 *Have half the revenue that you hope


for.

 *Take twice as long as you plan to


turn a profit.
The Challenges of the
Entrepreneur
O v e rco m in g th e C h a lle n g e s

Coupling boot-strapping with the proper


identification of your own unique mix of
entrepreneur, manager and technician will
increase your chances of succeeding as an
entrepreneur, regardless of the country
in which you do business.
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2.
The Challenges of the
Entrepreneur
O v e rco m in g th e C h a lle n g e s

My goal is very simple for you in


addressing the challenges of being an
entrepreneur. I do not want to see you be
just one more person or company who does:
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2.
3.
The Challenges of the Entrepreneur
Overcoming the Challenges