The

The Foundations
Foundations
of
of
Entrepreneurship
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.

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 2

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.

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 4

 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.

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 5

 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

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 6

 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).

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 7

 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
Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 8
 Drawbacks of
Entrepreneurship
Uncertainty of income
Risk of losing your entire
investment
Long hours and hard work

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 9

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

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 11

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

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 13

 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

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 14

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
Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 16
 The Cultural
Diversity of
Entrepreneurship
Young entrepreneurs
Women entrepreneurs

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 17

Source: Center for Womens Business Research, 2004.
 The Cultural
Diversity of
Entrepreneurship
Young entrepreneurs
Women entrepreneurs
Minority-owned enterprises

Immigrant entrepreneurs

Part-time entrepreneurs

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 19

 The Cultural
Diversity of
Entrepreneurship
Home-based businesses
Family businesses
Copreneurs
Corporate castoffs
Corporate dropouts

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 20

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.

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 22

 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!

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 23

 Small Business Survival Rate

100%
100%
90%
% of Small Firms Surviving

81%
80%
70% 65%
60% 54%
50% 46%
40%
40% 36%
32% 29%
30% 27% 25%
20%
10%
0%
New 1 2 3 4 5 6 7 8 9 10
# of Years in Business

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

 Ten Deadly Mistakes of
Entrepreneurship
1. Management mistakes
2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic
plan

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 25

 Ten Deadly Mistakes of
Entrepreneurship
6. Uncontrolled growth
7. Poor location

8. Improper inventory control

9. Incorrect pricing

10. Inability to make the

entrepreneurial transition

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 26

 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.

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 27

 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

Chapter 1: Entrepreneurship Copyright 2008 Prentice Hall Publishing 28