Foundations of Entrepreneurship

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					The Foundations of
 Entrepreneurship
              The World of the Entrepreneur
            Every year in the U.S., entrepreneurs launch
             850,000 new businesses.
            Entrepreneurial spirit - the most significant
             economic development in recent history.
            GEM study: 11.3 percent of adult population
             in the U.S. is actively involved in trying to
             start a new business.



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                                   Entrepreneurial Activity Across the Globe
                             Persons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity
                          45.0
                          40.0
  Total Entrepreneurial
   Activity (TEA) Index




                          35.0
                          30.0                                                                         TEA Index
                          25.0
                          20.0                                                                         Global TEA
                          15.0                                                                         Average
                          10.0
                           5.0
                           0.0
                                   Ecuador




                                        Hong




                                       South
                                         Italy
                                  Hungary
                                  Australia




                                        Peru
                                 Singapor


                                       Spain

                                      United
                                      United
                                   Finland
                                       Brazil




                                       Israel
                                  Belgium


                                    Croatia




                                     France




                                   Norway
                                  Denmark
                                 Argentina




                                         New




                                  Slovenia
                                 Germany




                                      Japan
                                    Iceland
                                     Ireland
                                    Greece
                                   Canada




                                 Netherlan




                                   Sweden
                                                            Country




Source: 2004 Global Entrepreneurship Monitor.
              The World of the Entrepreneur
            GEM study
                Globally 9.4 percent of adults are actively
                 engaged in trying to start a business.
                Men are twice as likely as women to start a
                 business (exactly the opposite trend in the U.S.,
                 however).
                Nearly one-third of global entrepreneurs are
                 between the ages of 25 and 44.



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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 – risk
                      eliminators
                     Confidence in their ability to succeed
                     Desire for immediate feedback
                     High level of energy
                     Future orientation – serial entrepreneurs
                     Skilled at organizing
                     Value achievement over money

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                              Entrepreneurship
            One characteristic of entrepreneurs stands
             out:
                               Diversity!
            Anyone – regardless of age, race, gender,
             color, national origin, or any other
             characteristic – can become an entrepreneur
             (although not everyone should).



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                  Benefits of Entrepreneurship
               The opportunity to:
                Create your own destiny
                Make a difference
                Reach your full potential
                Reap impressive 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 Entrepreneurship
              Uncertainty of income
              Risk of losing your entire investment
              Long hours and hard work




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                                            Small Business Owners' Work Week
                                                       Number of Hours Worked per Week


                        More than 60 hours                                                             Less than 30 hours
                               17%                                                                            11%


                                                                                                                        30 to 40 hours
                                                                                                                              24%


        51 to 60 hours
              20%


                                                                                   41 to 50 hours
                                                                                         28%




Source: Adapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report, 2002, p. 35.
           Drawbacks of Entrepreneurship
              Uncertainty of income
              Risk of losing your entire investment
              Long hours and hard work
              Lower quality of life until the business gets
               established




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                                   Entrepreneurs' Age at Business Formation



                                                55 - 64   Over 65   18 - 24
                                                 6.7%      1.0%      12.0%
                     45 - 54
                     17.4%




                                                                              25 - 34
                                                                              32.3%

                                      35 - 44
                                      30.6%




Source: 2004 Global Entrepreneurship Monitor.
           Drawbacks of Entrepreneurship
              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 lifestyle
                  E-commerce and the World Wide
                   Web

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                                                 U.S. Retail E-Commerce Revenues


                              $250.0
                                                                                                       $232.1



                                                                                            $199.3
                              $200.0

                                                                                  $169.5
     Revenues (in Billions)




                                                                $142.5
                              $150.0

                                                     $117.7


                                         $94.0
                              $100.0




                               $50.0




                                $-
                                       2003        2004       2005              2006       2007      2008
                                                                         Year

Source: eMarketer, 2005.
                                  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 entrepreneurs




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                                                      Why Women Start Businesses




                        Frustrated with Other reasons
                       "glass ceiling" at    7%
                        big companies                                              Gain control over
                             23%                                                     my schedule
                                                                                         46%



                                       Saw a market
                                      opportunity and
                                     decided to pursue
                                             it
                                           24%



Source: Center for Women’s Business Research, 2004.
                              The Cultural Diversity of
                                 Entrepreneurship
                Young entrepreneurs
                Women entrepreneurs
                Minority-owned enterprises

                Immigrant entrepreneurs

                Part-time entrepreneurs




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                              The Cultural Diversity of
                                 Entrepreneurship
                    Home-based businesses
                    Family businesses
                    Copreneurs
                    Corporate castoffs
                    Corporate dropouts




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                                                    Small Business by Industry




                                                       Other
                                          Finance      7.3%
                                            8.0%
               M anufacturing                                                    Service
                    5.8%                                                          39.2%




                  Wholesale
                    7.4%

                      Construction
                         11.8%
                                                                Retail
                                                                20.5%




Source: U.S. Small Business Administration, 2005.
                              Small Businesses...
              Make up 99.7 percent of all
               businesses in the U.S.
              Employ 51 percent 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 percent of the nation’s
                    private GDP.
                   Account for 47 percent of business
                    sales.
                   Create 13X more innovations per
                    employee than large companies.
                             Zipper, FM radio, laser, air
                              conditioning, escalator, light bulb,
                              personal computer, automatic
                              transmission, and many more!

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                                                   Small Business Survival Rate

                                        100%
                                 100%
                                 90%
    % of Small Firms Surviving




                                               81%
                                 80%
                                 70%                 65%
                                 60%                       54%
                                 50%                               46%
                                                                          40%
                                 40%                                              36%
                                                                                          32%   29%
                                 30%                                                                  27%   25%
                                 20%
                                 10%
                                  0%
                                        New    1      2    3       4       5       6      7     8     9     10
                                                                 # of Years in Business




Source: NFIB Business Policy Guide, 2003, p. 16.
                              Ten Deadly Mistakes of
                                Entrepreneurship
             1.        Management mistakes
             2.        Lack of experience
             3.        Poor financial control
             4.        Weak marketing efforts
             5.        Failure to develop a strategic plan




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                              Ten Deadly Mistakes of
                                Entrepreneurship
               6.         Uncontrolled growth
               7.         Poor location
               8.         Improper inventory control
               9.         Incorrect pricing
               10.        Inability to make the “entrepreneurial
                          transition”



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            Putting Failure into Perspective

                   Entrepreneurs are not paralyzed by the
                    prospect of failure.
                   Failure – a natural part of the creative
                    process.
                   Successful entrepreneurs learn to fail
                    intelligently.



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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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