Introduction to Entrepreneurship

Introduction to Entrepreneurship

• Entrepreneurship is defined as the pursuit of opportunities beyond controlled resources.
• Entrepreneurship is a process of creating new ventures or businesses.
• Ways of starting a new business can involve creating a new business idea, new business with an existing idea, buying an existing business, buying a franchise or entering a family business.
• Entrepreneurship can be considered a powerful economic force for building value from seemingly nothing and creating new jobs and invigorating markets.

Objectives of the Course

• Explain the concept of entrepreneurship
• Outline the rewards and drawbacks of entrepreneurship
• Identify personal characteristics of successful entrepreneurs
• Identify supporting enabling factors (SEFs)
• Identify factors driving the growth of entrepreneurship
• Explain how to avoid the mistakes of entrepreneurship

What is Entrepreneurship?

• Entrepreneurship can manifest as creating a unique product or service, or as a new approach for an existing one.
• A style of management is critical for entrepreneurial success.
• A key factor is recognizing change and challenges as business opportunities.
• Defining characteristics include risk taking, initiative, and resource reorganization.

Definition of Entrepreneurship

• Creating value by assembling resources for a specific opportunity.
• A dynamic process for generating incremental wealth.

Key Principles of Entrepreneurship

• Creativity (thinking new things)
• Innovation (doing new things)
• Calculated risk taking (introducing a product to the market)
• Self-belief (confidence in one's ideas)
• Persistence and determination (using failures productively)
• Value creation (understanding the goal of entrepreneurship)
• Reaping/rewards (gaining benefits from the business)

Who is an Entrepreneur?

• An entrepreneur brings resources (labor, materials, other assets) together to combine and create more value than exist initially.
• Someone who recognizes an opportunity for something new and creates an organization to pursue it.

Reasons for Becoming an Entrepreneur

• Increase earnings
• Introduce a new creative idea
• Provide a needed service or product
• Enjoy success in a venture
• Be your own boss
• Independence, enjoyment, challenge, creativity, personal satisfaction, autonomy, freedom

Rewards of Entrepreneurship

• Control over one's destiny
• Reaching one's fullest potential
• Financial benefit
• Contributing to society and being recognized for efforts
• Freedom from supervision and bureaucratic rules
• Freedom from routine, boring, and unchallenging jobs
• Freedom from standardized pay

Drawbacks of Entrepreneurship

• Uncertainty of income
• Complete responsibility
• Risk of losing invested capital
• Long hours and hard work
• Emotional loneliness
• Disruptions to personal life
• Strong possibility of failure
• Lower quality of life until the business is established

How to Reduce the Drawbacks of Entrepreneurship

• Mental preparation
• Planning (thorough business plan)
• Research
• Training
• Start small
• Start and operate business on the side
• Start early

Key Elements in an Entrepreneur's Background

• Supportive childhood family environment
• Parent who is self-employed
• Education
• Work history (dissatisfaction with a previous job and technical knowledge)
• Age (22 to 45) when starting

Entrepreneur vs Inventor

• Inventors create something new for the first time.
• Entrepreneurs are driven by the new venture, not by the invention.
• Historians differentiate between the two groups in their approach.

Personal Entrepreneurial Characteristics (PECs)

• Committed to success
• High work standards
• Self-motivated
• Motivating others
• Enjoy sharing ideas
• Hardworking
• Enthusiastic and optimistic
• Accept responsibility
• Good leaders
• Analyze situations easily
• Make and implement decisions quickly
• Creative thinkers
• Identify positive trends
• Good planners and organizers
• Trustworthy, integrity
• Disciplined
• Determined
• Committed to their projects
• Self-confidence
• Enjoy challenges
• Energetic
• Information seekers
• Persuasive and good networkers

Supporting & Enabling Factors (SEFs)

• Factors outside of the entrepreneur's control that play a crucial role in success.
• Skills and factors include:
  • Prior business experience
  • Finance knowledge
  • International experience
  • Technical support
  • Outside support
  • Recession/crisis experience
  • Owning assets
  • Family support
  • Market growth

Entrepreneurship - The Fear of Failure

• Understanding failure as a learning experience
• Seeing failure not as a sign of defeat, but as a step towards success.

Factors Influencing the Growth of Entrepreneurship

• Ideas
• Technology
• People
• Capital
• Social Factors
  • Natural entrepreneurial spirit
  • Motivated by necessity
  • Desire to be your own boss
  • Desire for self-actualization
  • Wanting to be a "don"
• Cultural Factors
  • Ethnic groupings(Chinese, Jews, Indians)
  • Cultural penetration
  • Cable TV
• Economic Factors
  • Stable economy
  • High inflation
  • High unemployment
  • Interest rates
  • Exchange rates
• Technology
  • Information & Communications age
  • Technology replacing employees
  • Technology increasing business efficiency
  • Creativity, innovation & start-ups
  • Opportunities for high-tech businesses
• Globalization
  • Ongoing process of integration
  • Economic, technological, socio-cultural, political and biological components
  • Transnational dissemination of ideas, language, & culture
  • World becoming smaller
  • Paradigm shifts impacting expectations & possibilities
  • Technology to do things better & new things
  • Mobile technology
  • Internet marketing
  • Impact of globalization on markets (trade barriers)
  • Labor / Jobs mobility
• Regionalization
  • Regional trading blocks (CARICOM)
  • Free trade areas
  • Markets opening up (North America, Central America, South America, Caribbean)
• Political Factors
  • Capitalism
  • Private sector growth emphasis
  • Government promoting entrepreneurship
  • Facilitator and referee role of government
  • Business facilitation strategies (e.g. E-Gov & GovNet)
  • Technical assistance
  • Tax holidays for employment creation
  • National infrastructure improvements
  • Bilateral agreements
  • Access to loans and grants
  • Government policies (reducing ownership, privatization)

Mistakes Entrepreneurs Make

• Unclear goals
• Poor Management
• Lack of leadership ability
• Lack of knowledge
• Lack of experience
• Poor financial control
• Weak marketing efforts
• Failure to strategically plan
• Overconfidence
• Uncontrolled Growth
• Poor location
• Improper Inventory control
• Incorrect pricing
• Inability to make Entrepreneurial transition
• Losses of focus & direction

How to Avoid Pitfalls

• Deep knowledge of the business
• Clear goals
• Developing a business plan
• People management
• Financial management
• Understanding financial statements

Tutorial Activities (Suggestions for Student Activity)

• Evaluate your own PEC strengths and weaknesses
• Analyze the success of a local entrepreneur
• Examine the attributes of successful local entrepreneurs
• Determine whether you agree with the classification of Einstein as inventive genius and Ford as entrepreneurial genius.

Summary of the Entrepreneurial Process

• Detailed coverage of the theoretical concepts;
• Analysis of the economic factors involved; and
• Identification of potential issues.