THE ENTREPRENEURIAL

PROCESS
 LEARNING OBJECTIVES
 Critical Factor for starting a new Enterprise

 Evaluating Opportunities for new Business

 Determining Resource need and acquiring Resources

 Ingredients for Successful new Business

 ENTREPRENEUR
 A Person who perceive an opportunity and creates an
Organization to peruse it.

 The Entrepreneurial process includes all the functions,

activities, and actions that are part of perceiving
opportunities and creating organizations to pursue them.
CRITICAL FACTORS FOR STARTING A
NEW ENTERPRISE

 Some factors like personal, sociological, organizational

and environmental give birth to a new enterprise and
influence how it develops from an idea to a viable
enterprise.
CRITICAL FACTORS FOR STARTING A
NEW ENTERPRISE
 A person gets an idea for a new business through a
deliberate search or a chance encounter.
 Whether or not he or she pursue that idea depends on
factors such as
 Alternative career prospects

 Family

 Friends

 Role models

 The state of the economy

 Availability of resources
A MODEL OF THE ENTREPRENEURIAL
PROCESS
 TRIGGERING EVENT

 School drop out

 Laid off or fired from an organization

 Couldn’t find supplier

 Deliberate career choice

 TRIGGERING EVENT
 Where do would-be entrepreneurs get their ideas???

 A study found that-

 57% of the founders got the idea for their new venture in
the industry they worked in
 23% got it in the related industries
 80% of all new high-potential businesses are founded in
the industries in which the entrepreneur has previous
experiece.
PERSONAL
ATTRIBUT
ES

Do you have the

right stuff to be
an entrepreneur?
THE 10 DS
 ENVIRONMENTAL FACTORS
 Economy
 Competition

 Resource

 Incubator

 Government Policy

 Investors

 Customers

 Opportunities
 ENVIRONMENTAL FACTORS
 Silicon Valley is a nickname for the southern portion of the San Francisco
Bay Area, which is located in part of the U.S. state of California known as
Northern California. It is home to many of the world's largest high-tech
corporations, as well as thousands of startup companies. Geographically, it
encompasses all of the Santa Clara Valley, the southern half of the San
Francisco Peninsula, and southern portions of the East Bay. It includes parts
or most of Santa Clara County, San Mateo County, and Alameda County.
 Silicon Valley is a leading hub and startup ecosystem for high-tech
innovation and development, accounting for one-third of all of the venture
capital investment in the United States. It was in the Valley that the silicon-
based integrated circuit, the microprocessor, and the microcomputer, among
other key technologies, were developed. As of 2013, the region employed
about a quarter of a million information technology workers.
 SOCIOLOGICAL FACTORS
 Family Responsibilities
 Trade off between age & Experiences

 Careful estimate of sales revenue

 Host of contacts

 Networks of friends

 Small Business Administration (SBA)

EVALUATING OPPORTUNITIES FOR NEW
BUSINESS
EVALUATING OPPORTUNITIES FOR NEW
BUSINESS

 The crucial ingredients for entrepreneurial success are a

superb entrepreneur with a first-rate management team
and an excellent market opportunity.

 In entrepreneurship, as in any other profession, luck is

where preparation and opportunity meet.
 THE OPPORTUNITY
 The idea in itself is not what is important. In
entrepreneurship, ideas really are a dime a dozen.

 Developing the idea, implementing it and building a

successful business are the important things.
 THE CUSTOMER
 Would-be entrepreneurs who are unable to name a
customer are not ready to start a business. They have
found an idea but have not yet identified a market need.
 THE TIMING
 Time plays a crucial role in many potential opportunities.
 Example- VCRs and DVD

 Restaurant Business
 THE TIMING
 If the window of opportunity appears to be very brief, it
may be that the idea is a consumer fad that will quickly
pass away. It takes a very skilled entrepreneur indeed to
make money out of a fad.
THE TIMING
 THE ENTREPRENEUR & THE
MANAGEMENT TEAM
 Regardless of how right the opportunity may seem to be,
it will not become a successful business unless it is
developed by a person with strong entrepreneurial and
management skill.
 THE ENTREPRENEUR & THE
MANAGEMENT TEAM
 First and foremost, entrepreneurs should have experience
in the same industry or a similar one.
 If would-be entrepreneurs do not have the right
experience, they should either get it before starting their
new venture or find partners who have it.
 RESOURCES
 Entrepreneurial frugality requires-
 Low overhead

 High productivity

 Minimum ownership of capital assets

 DETERMINING RESOURCE NEEDS &
ACQUIRING RESOURCES
 In order to determine the amount of capital that a
company needs to get started, an entrepreneur should
first asses what resources are crucial for the company’s
success in the marketplace.

 Some resources bare more critical than others.

Entrepreneur will have to find out where it should put a
disproportionate share of its very scarce resources.
 DETERMINING RESOURCE NEEDS &
ACQUIRING RESOURCES
 A complete set of sources includes everything the
business will need, but a business does not have to do all
of its work in-house with its own employees. It is more
effective to subcontract the work.
 That way it doesn’t need to own or lease its own
manufacturing plant and equipment or to worry about
recruiting and training production workers.
 DETERMINING RESOURCE NEEDS &
ACQUIRING RESOURCES
 Startup companies can get amazingly good terms from
outside suppliers.

 Marginal cost is the cost of producing one extra unit

beyond what is presently produced.

 Smart entrepreneurs find ways of controlling critical

resources without owning them.
 STARTUP CAPITAL
 There are two types of startup capital.

 Debt
 Equity

o Most startup entrepreneurs do not have much flexibility

in their choice of financing.
 STARTUP CAPITAL
 Sweat equity
 Business Angels

 Cash flow
INGREDIENTS FOR A SUCCESSFUL NEW
BUSINESS
THE MYTHS OF ENTREPRENEUR
 Myth 1: entrepreneurs are doers not thinkers
 Myth 2: Entrepreneurs are born, not made

 Myth 3: Entrepreneurs are always inventors

 Myth 4: Entrepreneurs must fit the “Profile”

 Myth 5: All entrepreneurs need is money

 Myth 6: All entrepreneurs need is Luck

 Myth 7: Ignorance is bliss for entrepreneurs

 Myth 8: Entrepreneurs are extreme risk takers

(Gamblers)
THAN YOU FOR PATIENCE