Entrepreneurship: Course Info & Chapter 1

Course Information

• Azkaa Waqar and Megan Benedict are the course TAs.
• All communication with course staff must occur through Canvas.
• The TAs cannot respond to emails.
• Office hours are Monday, Tuesday, and Thursday.
• Office hour meeting requests should be sent via Canvas Inbox to arrange.
• The TAs will not respond to messages regarding missing class sessions.
• They do not record attendance for grades.

Important Notice on Inclement Weather Policy

• Classes continue if the university remains open.
• Classes will proceed as scheduled since invigilators are scheduled for tests.
• Check the Ontario Tech app for university status updates before traveling to class in case of class cancellations.
• Class cancellations will be announced via Canvas the morning of the class, if applicable.

Agenda Items

• Course administration
• Questions
• Introduction to Entrepreneurship (Chapter 1)
• In-Class Exercises

In-Class Exercises - Week 2

• There is one required part: Canvas submission.

Entrepreneurial Characteristics Awareness Test

• An awareness test will be carried out regarding the entrepreneurial experience.

Poll Everywhere Quiz

• To participate, register at https://pollev.com/aishahusain555

Chapter 1: Introduction to Entrepreneurship

• Book: Entrepreneurship : Successfully Launching New Ventures, 7th Edition, by Bruce R. Barringer and R. Duane Ireland

Quote from Mitel

• "Great companies can be built, all the capital, technology, and latest information available cannot substitute for hard work and determination."

Mitel Example: Mike and Terry's Electric Lawnmowers

• Michael Cowpland and Terry Matthews are serial entrepreneurs.
• The company created an electric lawnmower and a telephony device that signaled the end of rotary phones.
• Mitel was a silicon chip foundry that created microprocessors and semiconductor devices.
• Michael Cowpland launched Corel, a software company.
• Terry Matthews founded Newbridge Networks and 65 other ventures.

Research on Entrepreneurs

• No single psychological model of entrepreneurship is supported by research.
• The eventual success of a venture depends greatly on the talent and behavior of the founder and venture team.
• Achievement, power, and affiliation are the motivators in the theory of psychological motivation.
• Entrepreneurs have a high need for achievement and power while also having a low need for affiliation.
• Other research has focused on the attitudes and behaviors of entrepreneurs.
• There are relationships between attitudes and behaviors of successful entrepreneurs, and various stages of company development.
• Entrepreneurs are unique and their motivations influence later performance of the venture.
• Entrepreneurs who plan are more likely to survive than those who do not.

Learning Objectives

• Explain the entrepreneurial process.
• Discuss the three main reasons people decide to become entrepreneurs.
• Identify the four main characteristics of successful entrepreneurs.
• Explain five common myths regarding entrepreneurship.
• Describe the three types of startup firms.
• Evaluate whether one is suited for entrepreneurship.

The Entrepreneurial Process

• Step 1: Decide to become an entrepreneur
• Step 2: Develop successful business ideas
• Step 3: Move from an idea to an entrepreneurial firm.
• Step 4: Manage and grow the entrepreneurial firm.

Reasons to Become an Entrepreneur

• Desire to be one's own boss
• Desire to pursue one's own ideas
• To pursue financial rewards

Research on Characteristics of Entrepreneurs

• 1848: John Stuart Mill stated entrepreneurs have risk bearing.
• 1917: Max Weber stated entrepreneurs had a source of formal authority.
• 1934: Joseph Schumpeter stated entrepreneurs were innovative and took initiative.
• 1954: Sutton observed entrepreneurs had a desire for responsibility.
• 1959: Hartman said a source of formal authority was a characteristic.
• 1961: McClelland noted entrepreneurs had risk taking and a need for achievement.
• 1963: Davids said entrepreneurs were ambitious, had a desire for independence, and self confidence.
• 1973: Winter stated entrepreneurs had a need for power.
• 1985: Gartner noted change and ambiguity in entrepreneurs.
• 1998: Caird observed entrepreneurs had drive.
• 2001: Lee and Tsang determined entrepreneurs had an internal locus of control.
• 2007: Stewart and Roth stated entrepreneurs had high achievement motivation.
• 2009: McCluskey and Ensign found social network astuteness was a characteristic.

Four Primary Characteristics of Successful Entrepreneurs

• Passion for the business
• Product/Customer focus
• Tenacity despite failure
• Execution intelligence

Passion for the Business

• Of successful entrepreneurs, the number one characteristic is a passion for business.
• This passion results from the entrepreneur's belief that the business will influence people's lives positively.

The Importance of Passion In Launching a Successful Entrepreneurial Venture

• The ability to learn and iterate
• A willingness to work hard for an extended time frame
• The ability to overcome setbacks and "no's"
• The ability to listen to feedback on the limitations of the organization and themselves
• Perseverance and persistence when the going gets tough

Tenacity Despite Failure

• Entrepreneurs try new things resulting in a high failure rate.
• A defining characteristic is the ability to persevere through setbacks and failures.

Execution Intelligence

• A key characteristic of successful entrepreneurs is the ability to turn a solid business idea into a viable business.

Common Myths about Entrepreneurs

• Myth 1: Entrepreneurs are Born, Not Made
  • Based on the mistaken belief that some people are genetically predisposed to be entrepreneurs.
  • The consensus of many studies is that no one is "born" to be an entrepreneur; everyone has the potential to become one.
  • Whether someone does or does not become an entrepreneur is a function of their environment, life experiences, and personal choices.
• Common Traits and Characteristics of Successful Entrepreneurs:
  • Moderate risk taker
  • Persuasive
  • Promoter
  • Resource assembler/leverager
  • Creative
  • Self-starter
  • Tenacious
  • Tolerant of ambiguity
  • Visionary
  • Optimistic disposition
  • A networker
  • Achievement motivated
  • Alert to opportunities
  • Self-confident
  • Decisive
  • Energetic
  • A strong work ethic
  • Lengthy attention span
• Myth 2: Entrepreneurs Are Gamblers
  • Most entrepreneurs are moderate risk takers.
  • The idea that entrepreneurs are gamblers originates from two sources:
    • They typically have jobs that are less structured.
    • Many have a strong need to achieve and set challenging goals, often equated with risk taking. -Myth 3: Entrepreneurs are Motivated Primarily by Money:
  • It is naive to think that entrepreneurs don't seek financial rewards. However, money is rarely the reason firms start new ones.
  • Some entrepreneurs find that the pursuit of money can be distracting.
• Myth 4: Entrepreneurs Should be Young and Energetic.
  • Entrepreneurial activity is spread out evenly through age ranges.
  • Investors cite strength as the most important criterion, which means experience, maturity, a solid reputation, and a track record of success.
  • These favor older rather than younger entrepreneurs.
• Myth 5: Entrepreneurs Love the Spotlight
  • Most entrepreneurs are not flamboyant and do not attract public attention.
  • Most people can name entrepreneurs like Jeff Bezos, Robert Johnson, Mark Zuckerberg, and Elon Musk but few can name the founders of Netflix, Spotify, Alibaba, Instagram, or Reddit.

Age Distribution of New Entrepreneurs

• The age distribution of new entrepreneurs according to a 2019 Kauffman study:
  • 20-34: 1996 (34.3%), 2018 (25.0%)
  • 35-44: 1996 (27.4%), 2018 (24.0%)
  • 45-54: 1996 (23.5%), 2018 (25.3%)
  • 55-64: 1996 (14.8%), 2018 (25.8%)
• A Statistics Canada survey on Entrepreneurship, 2020:
  • Less than 39: 14.3%
  • 40-49: 24.2%
  • 50-64: 46.9%
  • 65+: 14.6%

Entrepreneurs

• Steve Jobs
• Elon Musk
• Jeff Bezos
• Mark Zuckerberg
• Jack Ma (Founder of Alibaba)
• Reed Hastings (Co-founder of Netflix)
• Daniel Elk (Co-founder of Spotify)
• Kevin Systrom (Co-founder of Instagram)

Small and Medium-Sized Businesses in Canada

• 99.7% of Canadian companies are SMEs.
  • 97.9% have 1-99 employees.
  • 1.8% have 100-499 employees.
  • 0.3% have 500+ employees.

Types of Startup Firms

• Lifestyle Firms: Provide their owner or owners with the opportunity to pursue a particular lifestyle and earn a living at it.
• Salary-Substitute Firms: Provide their owner or owners with a level of income similar to what they could earn in a conventional job.
• Entrepreneurial Firms: Create new products and services for the market by creating and seizing opportunities regardless of their resources.

Business Development Bank of Canada (BDC)

• The BDC is a commercial bank owned by the government of Canada.
• It offers loans and financing to Canadian companies.
• The BDC does not compete with major commercial banks in personal banking.
• A questionnaire was prepared on the basis of research and observations of the characteristics of Canadian entrepreneurs in all industry sectors.
• On average, entrepreneurs tend to obtain overall results that are higher than those of the general population, and this for all characteristics.
• Obtaining or failing to obtain results in line with those of entrepreneurs is not enough to indicate your potential as an entrepreneur.
• Other factors come into play, including personal circumstances, milieu, experience, and timing. You can compare your answers to those of a group of entrepreneurs, and note where they are the same and where they are different.

Entrepreneurial Potential Self-Assessment

• There is no single profile for an entrepreneur.
• Entrepreneurs exhibit common attributes, abilities, and attitudes.
• Take the test at https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/business-assessments/self-assessment-test-your-entrepreneurial-potential
• It takes 10 minutes to complete.

General Profile of an Entrepreneur

• Motivations: Factors that determine behavior; the underlying reasons that induce someone to act.
  • Min score: 19, Average score: 62, Max score: 76.
• Aptitudes: Where one tends to lean with skills and abilities acquired along the way.
  • Min score: 20, Average score: 67, Max score: 80.
• Attitudes: Perceptions and feelings about something.
  • Min score: 11, Average score: 37, Max score: 44.
• The Need for Achievement: Translates into a desire to progress, excel, and perform.
  • Min score: 5, Average score: 17, Max score: 20.
• People Who Want Power and Control: Driven by a desire to lead and influence.
  • Min score: 5, Average score: 17, Max score: 20.
• Challenge and Ambition: Looking for ways to take on difficult projects and achieve their dreams.
  • Min score: 5, Average score: 16, Max score: 20.
• People Looking for Independence and Freedom: Want to be their own boss, make their own choices, and set their own constraints.
  • Min score: 4, Average score: 12, Max score: 16.
• Perseverance/Determination: Persisting in one's efforts with a constant determination to find solutions to problems.
  • Min score: 4, Average score: 14, Max score: 16.
• Self-Confidence/Enthusiasm: A belief in one's abilities that helps to take pride in oneself.
  • Min score: 4, Average score: 13, Max score: 16.
• Tolerance Towards Ambiguity/Resistance to Stress: The ability to handle and manage stress created by uncertainty.
  • Min score: 6, Average score: 19, Max score: 24.
• Creativity/Imagination: Emerges through the ability to be curious, anticipate things, and develop ways to solve problems.
  • Min score: 6, Average score: 21.
• Attitudes: Perceptions and feelings about something.
  • Min score: 11, Average score: 37, Max score: 44.
• Belief in One's Ability to Influence Destiny: Believing in the power to influence events through actions.
  • Min score: 6, Average score: 20, Max score: 24.
• Action-Oriented: An eagerness to act and a diligence to carry out those actions.
  • Min score: 5, Average score: 17, Max score: 20.

BDC: What Does Your Score Mean?

• The Entrepreneurial Quiz is not a predictor of potential success or failure.
• It can provide insight into one's attitudes, lifestyle, and behavior patterns consistent with successful entrepreneurship.
• High levels of agreement with the most desirable responses indicate the "right stuff' to succeed in an entrepreneurial career.
• Commitment, determination, and perseverance are important attributes for scoring well on the test.
• Commitment and determination to succeed convince others to "come along for the ride."

Week 2 In Class Exercise – January 14th

• Instructions:
  • In Canvas, go to the Module: In Class Exercise – January 14th
  • Go to www.bdc.ca and complete the self assessment to test your entrepreneurial potential.
  • Click the printer icon on the top right hand side and save your results as a pdf.
  • There are two deliverables in Canvas Quiz:
    • Upload a pdf of your self assessment results and
    • Provide a summary of your results containing:
      • Review in the following categories:
        • Your Motivation, Your Aptitudes, Your Attitudes, Your Need for Achievement/Success, The Lure of Power and Control
      • Detail how you score compared to average obtained by entrepreneurs, such as scores relative to the minimum, average, or maximum.
      • Provide a summary of your overall results that concludes whether you think you have entrepreneurial potential, and explain in a paragraph.

Next Class

• Recognizing Opportunities and Generating Ideas (Chapter 2)