Transcript Chapter 1:The Foundations of Entrepreneurship

ENTREPRENEURSHIP
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CHAPTER 1:
The Foundations of
Entrepreneurship
Zimmerer, T. W and Scarborough, N.
M. Essentials of Entrepreneurship
and Small Business Management
(3rd ed.) Prentice Hall © 2002.
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The World of the Entrepreneur
A new business is born every 11 seconds in the U.S.
Study of influential Americans – the defining issue of the 21st
Century: Entrepreneurship!
One of 12 Americans is actively involved in trying to start a
new business.
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Entrepreneurial Activity Across
the Globe
Percentage of Adult Population Working to Start a New Business
8.5%
Unit ed St at es
6.8%
Canada
5.4%
Country
Israel
3.4%
It aly
3.3%
Great Brit ain
2.2%
Germany
2.0%
Denmark
France
Japan
Finland
0.0%
1.8%
1.6%
1.4%
2.0%
4.0%
6.0%
8.0%
10.0%
Percent
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What is an Entrepreneur?
One who creates a new business in the face of risk and
uncertainty for the purpose of achieving profit and growth by
identifying opportunities and assembling the necessary
resources to capitalize on them.
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Characteristics of Entrepreneurs
Desire for responsibility
Preference for moderate risk
Confidence in their ability to succeed
Desire for immediate feedback
High level of energy
Future orientation
Skilled at organizing
Value achievement over money
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Benefits of Small Business
Ownership
The opportunity to:
create your own destiny
make a difference
reach your full potential
reap unlimited profits
contribute to society and to be recognized for your efforts
do what you enjoy and to have fun at it
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Drawbacks of Small Business
Ownership
Uncertainty of income
Risk of losing your entire investment
Long hours and hard work
Lower quality of life until the business gets established
High levels of stress
Complete responsibility
Discouragement
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Feeding the
Entrepreneurial Fire
Entrepreneurs as heroes
Entrepreneurial education
Demographic and economic factors
Shift to a service economy
Technological advancements
Independent lifestyles
E-Commerce and the World Wide Web
International opportunities
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The Cultural Diversity of
Entrepreneurship
Young Entrepreneurs
Women
Minority-owned enterprises
Immigrant entrepreneurs
Part-time entrepreneurs
Home-based businesses
Family businesses
Copreneurs
Corporate castoffs
Corporate dropouts
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Small Business by Industry
Financial
8.0%
Other
7.3%
Services
39.2%
Construction
11.8%
Manufacturing
5.8%
Wholesale
7.4%
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Retail
20.5%
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Small Businesses...
make up 99% of all the businesses in the U.S.
employ 53% of the nation's private sector workforce.
create more jobs than big businesses.
are leaders in offering training and advancement
opportunities to workers.
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Small Businesses...
produce 51% of the nation's private GDP.
account for 47% of business sales.
create 4X more innovations per R & D dollar spent than
medium-sized firms and 24X as many as large companies.
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% of Small Firms
Surviving
Small Business Survival Rate
100%
80%
60%
40%
20%
0%
New
2
4
6
8
10
# of Years in Business
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The Small Business
Failure Record
24% of new businesses fail after two years.
51% fail within four years.
63% fail within six years.
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Nine Deadly Mistakes of
Entrepreneurship
Management incompetence
Lack of experience
Poor financial control
Failure to develop a strategic plan
Uncontrolled growth
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Nine Deadly Mistakes of
Entrepreneurship
Poor location
Improper inventory control
Incorrect pricing
Inability to make the “entrepreneurial transition”
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Avoiding the Pitfalls of
Small Business Failure
Know your business in depth
Develop a solid business plan
Manage financial resources
Understand financial statements
Learn to manage people effectively
Keep in tune with yourself
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