Starting and Growing Your Business

Part 2
Starting and
Growing Your
Business
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 6
Starting Your Own
Business: The
Entrepreneurship
Alternative
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Define the term entrepreneur and distinguish among
entrepreneurs, small-business owners, and managers.
2. Identify three different types of entrepreneurs.
3. Explain why people choose to become entrepreneurs.
4. Discuss conditions that encourage opportunities for
entrepreneurs.
5. Describe the role of entrepreneurs in the economy.
6. Identify personality traits that typically characterize
successful entrepreneurs.
7. Summarize the process of starting a new venture.
8. Explain how organizations promote intrapreneurship.
6-3 Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Overview
 People are increasingly choosing the path of

entrepreneurship
 To become an entrepreneur, learn as much
as possible by:
Completing academic programs
Gaining practical experience working
Reading newspaper and magazine articles
and biographies of successful
entrepreneurs
What Is An Entrepreneur?
 A person who seeks a profitable opportunity
and takes the necessary risks to set up and
operate a business.
 Websites
Entrepreneurial Leadership
Entrepreneur
EntreWorld
Categories of Entrepreneurs
 Classic entrepreneurs—person who

identifies a business opportunity and
allocates available resources to tap that
market.
 Intrapreneur—entrepreneurially oriented
person who develops innovations within the
context of a large organization.
 Change Agent—manager who tries to

revitalize an established firm to keep it
competitive.
 Why People Become Entrepreneurs
Reasons to Choose Entrepreneurship
as a Career Path
 Desire to Be Your Own Boss
Self-management is the motivation of many
entrepreneurs
 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
Growing percentage of Americans create
their own by starting their own firms
 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
 Factors Supporting and Expanding Opportunities
for Entrepreneurs
The Environment for Entrepreneurs
 Globalization
Creates many opportunities for
entrepreneurs
Allows products to be sold overseas
Provides international talent pool
 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
 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
 Demographic and Economic Trends

Demographic trends create opportunities
for new goods and services
 Entrepreneurship around the World

Growth of entrepreneurship is a worldwide
phenomenon
Level of entrepreneurship varies
considerably even among industrialized
nations
 Levels of Entrepreneurial Activity in 10 Countries
Influence of Entrepreneurs on
the Economy
 Influence of Entrepreneurs on the Economy
the Economy
 Innovation
Entrepreneurs:
 Create new products
 Build new industries
 Bring new life to old industries
Since WWII, behind:
 2/3rds of Inventions
 95% of major innovations
the Economy
 Job Generation
Vital source of new jobs
Typically hire small numbers of employees
per firm . . . spread over many companies
See potential employees where
established firms overlook them
Gazelles
the Economy
 Diversity
Entrepreneurship offers excellent
economic opportunities for women and
minorities
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
 Need to Achieve
Need to work hard because they want to
excel
 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
 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
 Think You Might Be a Good Entrepreneur?
Starting a New Venture
 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
 Buying a Franchise
Another less risky
way to begin a business
 Creating a Business Plan
Online Resources for Preparing a Business
Plan
 Finding Financing
Seed Capital—initial funding needed to
launch a new venture.
Debt Financing—borrowed funds that

entrepreneurs must repay.
Equity Financing—funds invested in new
ventures in exchange for part ownership.
Venture Capitalists—business firm or

group of individuals who invest in new and
growing firms.
Angel Investors—wealthy individuals who
invest directly in a new venture in
exchange for an equity stake.
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
Intrapreneurship practiced in:
 3M (e.g. skunkworks)
 Thermo Electron
 Xerox
 Intuit

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Part 2

 People are increasingly choosing the path of

 Classic entrepreneurs—person who

 Change Agent—manager who tries to

 Demographic and Economic Trends

 Entrepreneurship around the World

 Internal Locus of Control

 Selecting a Business Idea

 Buying an Existing Business

Debt Financing—borrowed funds that

Venture Capitalists—business firm or

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