Japanese proverb: IF ONE CAN DO IT,YOU TOO CAN DO IT, IF NONE CAN DO IT, YOU MUST DO IT.

The Nature & Importance of Entrepreneurs

Chapter One

(American Entrepreneur)

(English entrepreneur)

Do the profile of these people fit your perception of the career of an entrepreneur? What does it takes to start and operate a successful business To understand this better, learn about

Historical Evolution Of Entrepreneurship

Earliest Period Middle Ages 17th Century 18th Century 19th & 20th Century

Earliest Period
Go-Between is Marco Polo Sign contract with a money person(Venture capitalist) to sell his goods Loan the Merchant Adventurer at a 22.5% rate VC passive risk bearer MA took active role in trading- active risk bearer (Physical, emotional) MC completes trip successfully profits were divided- VC taking 75% & MA 25%

Middle Ages
Actor & person who managed large production projects Individual didnt take risks but only managed the project using the resources provided Usually by the Govt of the Country

17th Century
Re-emergent connection of risk with entrepreneurship developed

E person who entered into contractual

agreement with the government to perform a service or to supply products

18th Century Person with capital was differentiated from the one who needed capital E was distinguished from the capital provided(Venture capitalist) One reason for differentiation was the industrialization occurring throughout the world Invention developed during this time were reaction to the changing world
VC- professional money manager who makes risk investments from a pool of equity to obtain high ROR on the investments

19th & 20th Century E were viewed from Economic Perspective E organizes & operates an enterprise for personal gain Pays prices for material consumed in the business, for land, personal services he employs, capital he requires 20th Century- Notion of an E as an innovator was established

Process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks; & receiving the resulting rewards of monetary and personal satisfaction

The process of initiating a new business venture, organizing the necessary resources and assuming the associated risks and rewards

STARTING AN ENTREPRENEURIAL FIRMEntrepreneurial process

New business idea/opportunity analysis
Business plan

Manage the resources/Legal form Manage the resulting enterprise

All definitions of entrepreneurship includes

Newness, organizing, creating, wealth and risk taking Thus,Entrepreneurs are found in all professions

Def stresses on Four basic aspects

1. Creation process creating something new
value to entrepreneur & audience for which it is developed

2. Entrepreneurship requires the devotion of the necessary time and effort

time & effort to create something new & make it operational

3. Risk take a variety of forms, depending on the effort of the entrepreneur 4. rewards of being entrepreneur independence- personal satisfaction- for profit entrepreneurs, monetary reward also comes into play

Poor sales

Financial Risk Intense competition Emotional risk Lack of managerial Lack of talent capital What then causes a person to make this difficult decision ?

 Individuals have difficulty bringing their ideas to the market & creating a new venture Yet entrepreneurial decisions have resulted in several new businesses through out the world Despite recession- inflation- high interests rate, lack of infrastructure-economic uncertainty & high probability of failure

Deciding to become an entrepreneur by leaving present activity

Changing from present life style

Work Environment
Disruption

Change Environment Not easy to leave career

Two work environments 1. R&D : individuals develop new product ideas & leave to form their own companies when these ideas are not accepted by their employers 2. Marketing : become familiar with customers unfilled needs & wantsstart enterprise

Disruption
Negative force retired Who have been fired 12% new business listings in the yellow pages increased during layoff period Student who is not promoted after receiving an MBA or other professional-frustrated & start new company

What causes this personal disruption to result in a new company being formed ?
WHEN INDIVIDUAL PERCEIVES THAT FORMING A NEW ENTERPRISE IS BOTH Desirable
Aspects of a situation that make it desirable to start a new company

Possible
Factors making It possible to create a new venture

Possibility of New Venture Formation

Government
Provides infrastructure to help/support a new venture Give roads-communication systems-transportation systemutilities- & economic stability TAX RATE can suppress company formation-since Co wont have money to start & grow
E must have necessary background-Education, previous business experience skills needed to form & manage a new enterprise Entrepreneurs are not born: they develop Presence of market of sufficient size- must also be a level of marketing know-how to put together the best total package of product, price, distribution & promotion needed for successful product launching A Co. is more easily formed when the driving force is more from market demand than a technology push

Background Marketing
Finance

Financial resources must be readily available Most start ups comes from personal savings-credit-friendsrelatives, there is often a need for additional seed capital
see someone else succeed makes it easier to picture yourself engaged in a similar activity Frequent comment of E if that person could do it, so can I

Role Models

The future of Entrepreneurship

In spite of the difference conceptual perspectives, there are common aspects: risk taking, creativity, independence & rewards and future is all about the above. The future for E is bright we are living in the age of entrepreneurship.

Class Discussion

Thanks