NATURE & IMPORTANCE OF ENTREPRENEURS

Learning Objectives 1. To introduce the concept of entrepreneurship and its historical development. 2. To explain the entrepreneurial decision process. 3. To identify the basic types of start-up ventures. 4. To explain the role of entrepreneurship in economic development. 5. To discuss the ethics and racial responsibility of entrepreneurship.

Entrepreneurial Careers & Education

Overall Objectives for a Course in Entrepreneurship
Understand the role of new & smaller firms in the economy Understand the relative strengths & weaknesses of different types of enterprises Know the general characteristics of an entrepreneurial process Asses the students own entrepreneurial skills Understand the entrepreneurial process and product planning & development process Know alternative methods for identifying and evaluating business opportunities and the factors that support and inhibit creativity Develop an ability to form, organize and work in interdisciplinary teams Know the general correlates of success and failure in innovation and new venture creation Know the generic entry strategies for new venture creation Understand the aspects of creating and presenting a new venture business plan Know how to identify, evaluate and obtain resources Know the essentials of Marketing planning, Financial planning, Operations planning, Organization planning, Venture Launch planning Know how to manage and grow a new venture Know the managerial challenges and demands of a new venture launch Understand the role of entrepreneurship in existing organizations

Nature & Development of Entrepreneurship

Entrepreneurship The process of planning, organizing, operating, and assuming the risk of a business. Entrepreneur Someone who engages in entrepreneurship. Small Business A business that is privately owned by one individual or a small group of individuals; it has sales and assets that are not large enough to influence its environment.

History of Entrepreneurship
Entrepreneur Individual who takes risks and starts something new. Early period. Middle Ages.

17th Century.
18th Century. 19th and 20th Centuries.

Entrepreneur as an innovator An individual developing something unique.

Definition of Entrepreneur Today

Entrepreneur Someone who engages in entrepreneurship. Individual who takes risks and starts something new. An individual developing something unique. Entrepreneurship Process of creating something new and assuming the risks and rewards. Process of planning, organizing, operating, and assuming the risk of a business. The dynamic process of creating incremental wealth.

Definition of Entrepreneur Today

Initiative taking. Organizing & re-organizing of social & economic mechanisms to turn resources & situations to practical effect. Acceptance of risk of failure. Entrepreneurship the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Four basic aspects1) Creation process, 2) Devoting necessary time & effort, 3) Assuming necessary risks, 4) Receiving the rewards.

SHEILA C. JOHNSON Black Entertainment Television (BET)

The Job-Creating Power of Entrepreneurship

First African-American woman to become a billionaire and first to own three professional sports teams.
BET debuted in 1980.

Johnson developed many of the networks most successful shows like Teen Summit.
Now a part owner in Mistral and CEO of Salamander Hospitality.

What causes a person to make this difficult decision?

Let us look at the entrepreneurial decision process next.

The Entrepreneurial Decision Process

Entrepreneurial Decision Process Deciding to become an entrepreneur by leaving present activity. Change from present lifestyle Desirability of new venture formation Possibility of new venture formation

NOTABLE ENTREPRENEURS
The Job-Creating Power of Entrepreneurship

French immigrant lruthre Irne du Pont de Nemours started Du Pont in 1802. David McConnell borrowed $500 from a friend to start Avon. George Eastman started Kodak with a $3,000 investment in 1880. Jeff Bezos started Amazon.com with investments from his family and friends.

YOURE NEVER TOO YOUNG to be an ENTREPRENEUR

The Job-Creating Power of Entrepreneurship

Leanna Archer At 12 years old, she has her own hair care line.
Alexis Holmes Started baking for a fundraiser, now the 16-year-old owns her own bakery. Jack Short & Daniel Lyons The two medical students started Factory Green, a carbon neutral apparel company, as undergrads.

Mark Zuckerberg Launched Facebook as a Harvard freshman.

YOURE NEVER TOO OLD to be an ENTREPRENEUR EITHER!

The Job-Creating Power of Entrepreneurship Age Range 55 to 59 60 to 65 66 to 70 Percent Identified as Self-Employed 28% 36% 42%

SMALL BUSINESS STATISTICS

There are 26.8 million small businesses in the U.S. Of all nonfarm business in the U.S., almost 97% are considered small.

Small businesses account for over 50% of the GDP.

Small businesses generate 60-80% of new jobs. About 80% of U.S. workers first jobs were in small business.

BUSINESS FAILURES are LOWER THAN the REPORTS

Owner closing a business to start another is reported as a failure.
Changing forms of ownership is reported as a failure. Retirement is reported as a failure.

THEY DID WHAT?

Famous Business Failures
Tommy Hilfiger First store went bankrupt
Milton Hershey First confectionary failed

H.J. Heinz Company went bankrupt six years after start

Walt Disney First film company went bankrupt Henry Ford First two car companies failed L.L. Bean Almost went bankrupt in first year

Types of Start-ups
Lifestyle firm a small venture that supports the owners and usually does not grow. Foundation company a type of company formed from

research & development that usually does not go public.

High-potential venture a venture that has high growth potential and therefore receives great investor interest. Gazelles very high growth ventures.

Role of Entrepreneurship in Economic Development

Job Creation
Small business creates 80% of the new jobs in the U.S. Industry sectors dominated by small business have added the most jobs. Small business accounts for 38% of all jobs in high-technology sectors and for 96% of all U.S. exporters.

Innovation
Historically, major innovations are as likely to come from small businesses as from large firms. Much of what is created in the high-technology sectors comes from start-up companies.

Importance to Large Businesses

Most products made by large manufacturers are sold to customers by small businesses. Small businesses as suppliers provide large firms with essential services, supplies, and raw materials. Large businesses outsource many routine business operations such as packaging, delivery, and distribution to small businesses.

Role of Entrepreneurship in Economic Development

Product-evolution process process for developing & commercializing an innovation. Iterative synthesis the intersection of knowledge & social need that starts the product development process. Ordinary innovations new products with little technological change. Technological innovations new products with significant technological advancement. Breakthrough innovations new products with some technological change.

Role of Entrepreneurship in Economic Development

Three methods of bridging the gap between science and the marketplace. Government as an innovator a government active in commercializing technology. Technology transfer commercializing technology in laboratories into new products. Intrapreneurship Entrepreneurship within an existing organization. Entrepreneurship

Entrepreneurial Careers & Education

Types of Skills Required in Entrepreneurship
Technical Skills
Writing Oral communication Monitoring environment Technical business management Technology Interpersonal Listening Ability to organize Network building Management style Coaching Being a team player

Business Management Skills

Planning & goal setting Decision making Human relations Marketing Finance Accounting Management Control Negotiation Venture launch Managing growth

Personal Entrepreneurial Skills

Inner control / Discipline Risk taker Innovative Change oriented Persistent Visionary leader Ability to manage change

Ethics & Social Responsibility of Entrepreneurs

Ethics the study of whatever is right and good for humans. Business ethics the study of behavior and morals in a business situation or the study of business practices in the light of human values.

Ethics & Social Responsibility of Entrepreneurs

Faced with daily stressful situations & difficulties the possibility exists of the entrepreneur establishing a balance between ethical exigencies, economic expediency & social responsibility, a balance that may be different from that made by a business manager. A managers attitudes regarding CSR are related to the organizational climate , supportive of laws & professional code of ethics. An entrepreneur usually develops an internal ethical code dependent more on personal value systems.

The Future of Entrepreneurship

Entrepreneurship means different things to different people, even today. The common aspects are, however, risk taking, creativity, independence & rewards. The future for entrepreneurship appears very bright indeed as it is endorsed by

A) Educational institutions
Number of universities offering courses increasing each year Faculty teaching it increasing each year Several unique entrepreneurial education programs also increasing Academic research program on entrepreneurship is followed by training and education

The Future of Entrepreneurship

B) Governments
Increasing interest in promoting the growth of entrepreneurship Entrepreneurs provided with govt. support like tax incentives, industrial estates, communication, etc. Lawmakers understand that new enterprises create jobs & increase economic prosperity Venture capital availability is increasing both govt. & private in part due to measures like reduced capital gains tax, etc.

C) Society
Encourages entrepreneurial activity providing motivation & public support Media provides impetus by reaching success stories far & wide

D) Corporations
Increasing interest in intrapreneurship for their own growth

NATURE & IMPORTANCE OF ENTREPRENEURS

Class discussion
1. What should the content be for an Entrepreneurship course? 2. Should Ethics & Social Responsibility be a part of this course or is it just politically correct to have it? 3. What is the role of Government in Entrepreneurship? Should only the market reward / punish inappropriate behavior? 4. What excites you about being an entrepreneur? What are your major concerns?