read and write 111

382742

ch06.ppt

Home >English homework help >read and write 111

Starting Your Own Business:
The Entrepreneurship Alternative

www.wileybusinessupdates.com

Chapter Six

Learning Objectives

Define entrepreneur

Identify the different categories of entrepreneurs

Explain why people choose entrepreneurship as a career path

Discuss the environment for entrepreneurs

Identify the characteristics of entrepreneurs

Summarize the process of starting a new venture

Explain intrapreneurship

What is an Entrepreneur?

A risk taker in the private enterprise system, who seeks a profitable opportunity, and takes the necessary risks to set up and operate a business
They differ from many small-business owners in their strong desire to expand and grow their business
Entrepreneurs differ from managers through their overriding responsibility to use the resources of the organization to accomplish their goals

Resources: www.entrepreneur.com and www.inc.com

Categories of Entrepreneurs

Classic Entrepreneurs
Identify business opportunities and allocate available resources to tap those markets
Serial Entrepreneurs
Start one business, run it, and then start and run additional businesses in succession
Social Entrepreneurs
Recognize a societal problem and use business principles to develop innovative solutions
Lifestyle Entrepreneur
Starts a business to gain flexibility in work
hours

Entrepreneurship as a Career

In a recent year, 505,473 new businesses were created in the United States
The past two decades have shown a heightened interest in entrepreneurial careers
People choose entrepreneurship for many reasons:
Dissatisfaction with traditional work
To fill a gap in goods or services they could use themselves
Financial necessity
Heightened publicity surrounding celebrity entrepreneurs

Why People Become Entrepreneurs

Freedom to make decisions and self-management
Being first to bring an idea for a superior product to market can translate to financial gains as creators of wealth
Working for a large company does not guarantee job security
Freedom to decide when, where, and how to work

The Environment for Entrepreneurship

Globalization
Education
Demographic & Economic Trends
Information Technology

Figure 6.2

Globalization

Figure 6.3 shows the highest levels of entrepreneurship activity in various countries
Factor Driven Economies
Zambia, Nigeria, and Malawi
Efficiency Driven Economies
Ecuador, Indonesia, Chile, and Colombia
Innovation-Driven Economies
USA, Canada, Singapore, and Israel

The Environment for Entrepreneurs
(cont.)

Education

U.S. colleges and universities: entrepreneurship majors

Universities are helping students launch businesses

Teaching entrepreneurship to young people

Information Technology

Technology has provided entrepreneurs tools to compete

Entrepreneurs have used IT to revolutionize industries

Demographic and Economic Trends

Aging of U.S. population

Increasingly diverse ethnic groups

Growth of two-income families

Characteristics of Entrepreneurs

Entrepreneurial Characteristics

Vision - how to make business ideas successful

High Energy Level - a willingness to work long and hard

Need to Achieve competitive drive and desire to excel

Self-Confidence – optimism and fearlessness

Tolerance for Failure - not easily discouraged

Creativity –overcoming difficult problems and situations

Tolerance for Ambiguity – uncertainties taken in stride

Internal Locus of Control - control of their own destiny

Figure 6.5 Entrepreneurial Quiz

Starting a New Venture

Considerations for choosing an idea for your business:

Find something you love to do and are good at doing

Determine whether your idea can satisfy a need in the marketplace

Do what makes you happy and be true to yourself

Choosing a Business Idea

Consider the following guidelines:
List your interests and abilities, values, beliefs, goals and dreams
List the types of businesses which match your interests and abilities
Read, Read, Read to identify trends and ideas of future needs for products
Evaluate ways to improve existing goods and services
Conduct market research to determine customer interest in your idea or venture
Become an industry expert by reading about your industry

Buying an Existing Business

Established businesses may be less risky than starting a new one

Employees and suppliers are in-place to serve established customers

The company’s good or service is well known in marketplace

Necessary permits and licenses are already secured

In some cases, financing may be easier for an existing business

Seller may be willing to finance

There are many available resources for entrepreneurs considering the purchase of a business

Buying a Franchise

A less risky way to begin a new business than establishing an entirely new firm

A franchise usually means better brand recognition

Firms in franchises showing growth include those targeting children and parents, such as photography, tutoring, and security

Franchise fees can be costly

See chapter 5 for more about franchising

Creating a Business Plan

In the past, many entrepreneurs did not always create a business plan when starting a new venture

Although flexibility is crucial for any startup, particularly in quickly changing markets, planning is essential

Entrepreneurs typically solve problems as they arise, and change course as necessary

If seeking funds from outside sources, some planning is necessary

Part of the planning effort includes research needed to create a business plan, or a road map of sorts

Business Plan Resources

Finding Financing

Finding financing remains a key issue for most startups
Seed capital, funds to launch a company, is a key issue for most startups
There are two types of financing:
Debt Financing – money borrowed to be repaid
Equity Financing – a share of ownership is exchanged for money supplied

Startup Funding Sources

Debt Financing

Money borrowed that must be repaid
Sources include: banks, finance companies, families & friends, and credit cards
Very few startups are financed through bank loans, which are difficult to secure in today’s environment
Applying for a bank or SBA-backed loan requires careful preparation, planning and analysis
Entrepreneur’s credit history will be important
A professional and detailed business plan is necessary
A track record of profits may make it easier to obtain bank financing

Equity Financing

Entrepreneurs exchange a share of ownership in their company for money supplied by investors
Sources of equity financing include family and friends, business partners, venture capital firms, and private or angel investors
Venture Capitalists
Business organizations or groups of private individuals that invest in early-stage, high-potential growth companies
Angel Investors
Wealthy individuals who invest money directly in new ventures in exchange for equity, are a larger source of investment capital for start-up firms

Government Support for New Ventures

Federal, state, and local governments support new ventures

The SBA, state and local agencies, and business incubators all offer information, resources, and access to financing

Enterprise Zones - Entrepreneurship is also encouraged through specific geographic areas designated for economic revitalization

Enterprise zones encourage investment, often in distressed areas, by offering tax advantages and incentives to businesses

Government Legislation

Immigration Act of 1990

Intrapreneurship

Promoting innovation within the organizational structures of established companies

An idea to promote creativity and innovation in order to maintain a competitive advantage in a fast-changing business climate

Skunkworks is a form of intrapreneurship whereby an employee conceives of an idea and convinces management to provide resources for potential commercialization

30 percent of large firms now allocate funds toward intrapreneurship