The Nature of Entrepreneurship

Entrepreneurship
 The process of creating and managing a business to
achieve desired objectives
 Entrepreneurship movement is accelerating, and many new
small businesses are emerging

 Technology is now easier to obtain by a small business

 Websites, podcasts, online videos, social media, cellular phones,
and expedited delivery services

 Growing trend among small businesses is social

entrepreneurship
 Social entrepreneurs are individuals who use entrepreneurship to
address social problems
Great Entrepreneurs of Innovative Companies
Company Entrepreneur
Hewlett-Packard Bill Hewlett, David Packard
Walt Disney Productions Walt Disney
Starbucks Howard Schultz
Amazon.com Jeff Bezos
Dell Michael Dell
Microsoft Bill Gates
Apple Steve Jobs
Walmart Sam Walton
Google Larry Page, Sergey Brin
Ben & Jerry’s Ben Cohen, Jerry Greenfield
Ford Henry Ford
General Electric Thomas Edison
 Women- and Minority-Owned
Businesses

Women-owned Businesses
Responsible for employing millions of workers
Women own more than 9 million businesses nationwide

Minority-owned Businesses
Growing faster than other classifiable firms
Represent 28.6% of all small businesses
 Innovation
 Small firms produce more than
half of all innovations
 Small firms make up
approximately 2% of franchises
 Many of today’s largest
businesses started off as small
firms that used innovation to

© Matthew Chattle/Alamy Stock Photo

achieve success
 Entrepreneurs provide fresh
ideas and usually have greater
flexibility to change than large
E-commerce site Etsy sells homemade
firms and vintage items. This small firm
became publicly traded in 2015 and was
valued at over $3 billion.
 Industries that Attract Small Business
Retailing and Wholesaling
Retailers acquire goods from producers or wholesalers
and sell them to consumers
Wholesalers supply products to industrial, retail, and
institutional users for resale or for use in making other
products
Services
Service sector includes businesses that do not actually
produce tangible goods (80% of U.S. jobs)
Manufacturing
Manufacturing goods can provide unique opportunities for
small businesses (like customizing products for customers)
High Technology
High technology describes businesses that depend heavily
on advanced scientific and engineering knowledge
 Sharing Economy
Sharing Economy
 An economic model involving the sharing of
underutilized resources
 Entrepreneurs earn income by renting out an
underutilized resource such as lodging or vehicles
 Uber is an example
 Referred to as the “gig economy”
 Are workers independent contractors or
employees?
Small-Business Ownership
 Advantages of Independence

Independence
 To do better for themselves than they could do by
remaining with their current employer or by changing
jobs
 To choose whom they work with, the flexibility of
where/when to work, and the option to work in a
family setting
 Advantages of Costs

Costs
 Spend less money on wages/salaries, rent, utilities,
etc.
 Use external firms to handle accounting, advertising,
and legal counseling
 Friends and family volunteer time to work on projects
Advantages of Flexibility, Focus, and Reputation
Flexibility
 Small size allows flexibility to adapt to changing
market demands
 Usually only one layer of management (the owner) so
decisions can be made and executed quickly
Focus
 Focus efforts on a precisely defined market niche (a
specific group of customers
Reputation
 Because of capacity to focus on narrow niches, can
develop enviable reputations for quality and service
High Stress Level
High Failure Rate
The Business Plan
Franchising
Advantages Disadvantages of Franchises
Technological and Economic Trends
 Internet usage continues to provide new opportunities
 Increase in service exports
• Creates new opportunities to expand operations abroad
 Economic turbulence provides both opportunities and
threats
• Can react quickly to change and can stay close to their
customers
 Deregulation of the energy market and alternative fuels
• Worldwide energy markets are valued in the hundreds of
billions of dollars
 TEMPO GELATO – A Successful Franchise with
an Old-Fashioned Drive-in Experience
Tempo Gelato, the gelato food chain, offers customers a dose of nostalgia with its
1950s-style curbside speakers and others. It was started as a sole proprietorship, then
became a partnership, and today is a successful franchise. Tempo franchisees have the
benefit of getting a business that already has a local reputation and a national
advertising campaign. They also get training and support from the franchiser. However,
franchisees must work hard to make their restaurants a success. Franchisees must build
their locations; purchase equipment; hire excellent employees; make certain the
products live up to Tempo’s reputation; maintain a clean, inviting facility; and much more.
Franchisees also have rules to follow. In the case of Tempo, franchisees must pay
royalty fees, have excellent financial credentials, have prior restaurant/entrepreneurial
experience, and be operationally able to open others. Despite these costs, successful
Tempo franchises have been able to capitalize on the Tempo business model and brand
equity.
1. What is Tempo’s competitive advantage over other food franchises?
2. What are the advantages of becoming a Tempo franchisee?
3. What are the disadvantages of buying into the Tempo franchise?

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