CHAPTER

6
Entrepreneurship & Starting a Small Business
LECTURE OUTLINE
Concept of Entrepreneurship and Entrepreneur
Common Myths about Entrepreneurs
Sources of Entrepreneurial Motivation and New-Business Ideas
Differences between Micropreneurs & Home-Based Business
Reasons for growth of Home-Based Businesses
Entrepreneurship within Firms
Concept of Small Business
Major Failures and Success Rate of Small Business
How to Manage a Small Business

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WHAT IS ENTREPRENEURSHIP?
 Entrepreneurship
 Strategic thinking & risk taking behavior
 Process of initiating a business venture
 Organizing the necessary resources

 Entrepreneurs
 Risk-taking individuals
 take actions to pursue opportunities and situations others may
fail to recognize or may view as problems or threats.
 Not all business owners and managers are entrepreneurs.

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ENTREPRENEURS

High Need for

Achievement
Competitive Inquisitive

Creative Who are Energetic

Entrepreneurs?

Flexibility Goal Oriented

Self Confident Independent

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COMMON MYTHS ABOUT
ENTREPRENEURS
 Entrepreneurs are born, not made.

 Entrepreneurs are gamblers.

 Money is the key to entrepreneurial success.

 You have to be young to be an entrepreneur.

 You must have a degree in business to be an

entrepreneur.

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 SOURCES OF ENTREPRENEURIAL MOTIVATION
AND NEW-BUSINESS IDEAS

Source of New-Business Ideas

In-depth Understanding
37% of Industry
36% Market Niche Spotted

Reasons for Starting a Business 7% Brainstorming

4% Copying Someone Else

Joined Family 41% 4% Hobby
Business
To Control My Future 36%
11% Other
To Be My Own Boss 27%
To Fulfill a Dream 25%
Downsized/Laid Off 5
%

Source: “The Rewards,” Inc. State of Small Business, 2001, May 29 2001, 50-51; and Leslie Brokaw, “How To Start an Inc. 500 Company,” Inc. 500, 1994, 51-65.

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ENTREPRENEURIAL TEAM
 A group of experienced people from different areas of business.
 Form a managerial team.
 Merge skills needed to develop, make & market a new product.

 Larry Page & Sergey Brin of

 Steve Jobs, Steve Wozniak, and Ronald Wayne of

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MICROPRENEURS & HOME-BASED
BUSINESS
 Micropreneurs
 Willing to accept the risk of starting & managing small
business.
 Do the work they want to do.
 Maintain a balanced lifestyle.

 Many micropreneurs are home based business

owners.
 Micropreneurs include Consultants, Video
Producers, Architects, Graphic Designers etc.
 Web Based Business- business that operates on the
Internet.
 www.odesk.com, www.prothom-alojobs.com
www.ekhanei.com

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REASONS FOR GROWTH OF HOME-
BASED BUSINESSES
 Flexible work hours
 Quality lifestyle
 Doing the work of individual’s choice
 Technology
 Self-motivation
 Tax Advantages
 Attitudes

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HOME-BASED BUSINESS

Challenges
• New Customers
• Time Management
• Work Life Balance Focus
• Managing Risk
• Find Opportunity
• Profit vs. Paycheck
• New Ideas
• Long Term vs. Short Term

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ENTREPRENEURSHIP WITHIN FIRMS
 Intrapreneurs are creative people who work as entrepreneurs within
corporations.
 Use company’s existing resources.
 New Product Innovation, New Process Innovation or Organizational
Innovation.
 Generate New Profit.
 e.g. First fighter Jet in 1943 & Stealth Fighter by Lockheed Martin Corporation.

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SMALL BUSINESS
 Independently owned & operated.
 Not dominant in its field.
 In current market price, the replacement cost of
plant, machinery and other parts, fixtures,
support utility, and associated technical
services by way of capitalized costs etc,
excluding land and building, were to up to Tk.
15 million (Manufacturing)
 If it has less than 25 workers, in full-time
equivalents (Non-Manufacturing)

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MAJOR CAUSES OF FAILURE
 Plunging in without first testing
 Too little capital
 Little/no experience
 Borrowing money without planning
 Trying to do too much with too little
 Buying too much on credit
 Expanding credit too freely and rapidly
 Incomplete and/or inaccurate records
 Not understanding business cycles
 Forgetting about taxes, insurances, etc.

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SITUATIONS FOR SUCCESS
 Personal attention
 Products not easily made by mass production
 Sales are not large enough for a large firm
 Unattractive neighborhood
 Franchising
 Paying attention to new competitors
 The business is in a growth industry

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MANAGING A SMALL BUSINESS
 Business Plan

 Adequate Funding

 Professional Advice/Help

 Know Your Customer

 Manage Human Resources

 Keep Good Records

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