Entrepreneurship PDF

1-1 Introduction to Entrepreneurship Dr. Asmaa Abo Alkomsan Bruce R. Barringer & R. Duane Ireland What Is Entrepreneurship? ❖ Entrepreneurship is the art of turning an idea into a business. ❖ Is the process of designing, launching and running a new business, initially a sma...

1-1 Introduction to Entrepreneurship Dr. Asmaa Abo Alkomsan Bruce R. Barringer & R. Duane Ireland What Is Entrepreneurship? ❖ Entrepreneurship is the art of turning an idea into a business. ❖ Is the process of designing, launching and running a new business, initially a small business, offering a product, process or service for sale or hire. The people who create these businesses are called Entrepreneur. Explanation Of What Entrepreneurs Do Entrepreneurs assemble and then integrate all the resources needed – the money, the people, the business model, the strategy – to transform an invention or an idea into a viable business. Corporate Entrepreneurship Entrepreneurial Conservative Firms Firms Proactive Take a more “wait and see” posture Innovative Less innovative Risk taking Risk averse Why Become An Entrepreneur? The three primary reasons that people become entrepreneurs and start their own firms Desire to be their own boss Desire to pursue their own ideas Financial rewards Characteristics Of Successful Entrepreneurs Four Primary Characteristics Characteristics of Successful Entrepreneurs Passion for the Business The number one characteristic shared by successful entrepreneurs is a passion for the business. This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. While entrepreneurs should have passion, they should not wear rose-colored glasses. Reason Passion Is Important: The ability to learn A willingness to work hard for an extended period of time Ability to overcome setbacks and “no’s” The ability to listen to feedback on the limitations of your organization and yourself Perseverance when the going gets tough Characteristics of Successful Entrepreneurs Product/Customer Focus A second defining characteristic of successful entrepreneurs is a product/customer focus. While it’s important to think about management, marketing, finance, and the like, none of those functions makes any difference if a firm does not have good products with the capability to satisfy customers. (Ex: Uber’s founder and CEO Travis Kalanick) Characteristics of Successful Entrepreneurs Tenacity Despite Failure Because entrepreneurs are typically trying something new, the failure rate is naturally high. Developing a new business idea may require a certain degree of experimentation before a success is attained. Characteristics of Successful Entrepreneurs Execution Intelligence As Jeff Bezos, the founder of Amazon.com, once said, “Ideas are easy. It’s execution that’s hard.” The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs.  An ancient Chinese saying warns, “To open a business is very easy; to keep it open is very difficult.” The ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money, establishing partnerships, managing finances, leading and motivating employees, and so on. Mostafa Hemdan Recyclobekia  THE TOP 10 REASON FOR BUSINESS FAILURE 1. Failure To Understand Your Market And Customers 2. Opening A Business In An Industry That Isn’t Profitable 3. Failure Is To Understand And Communicate What You Are Selling 4. Inadequate Financing 5. Failure To Anticipate Market Reactions and/or Market Change 6. Overdependence on A Single Customer 7. No Customer Strategy 8. Not Knowing When To Say “NO” 9. Poor Management 10. No Planning Common Myths About Entrepreneurs Myth 1: Entrepreneurs Are Born, Not Made Myth 2: Entrepreneurs Are Gamblers Myth 3: Entrepreneurs Are Motivated Primarily by Money Myth 4: Entrepreneurs Should Be Young and Energetic Myth 5: Entrepreneurs Love the Spotlight Common Myths About Entrepreneurs Myth 1: Entrepreneurs Are Born, Not Made Whether someone does or doesn’t become an entrepreneur is a function of their environment, life experiences, and personal choices. Although no one is “born” to be an entrepreneur, there are common traits and characteristics of successful entrepreneurs such as (Creativity, Networking, Optimism…etc) Myth 2: Entrepreneurs Are Gamblers Most entrepreneurs are risk takers. The idea that entrepreneurs are gamblers originates from two sources: Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs. Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking. Myth 3: Entrepreneurs Are Motivated Primarily By Money While it is naïve to think that entrepreneurs don’t seek financial rewards, money is rarely the reason entrepreneurs start new firms. In fact, some entrepreneurs warn that the pursuit of money can be distracting. Myth 4: Entrepreneurs Should Be Young And Energetic Entrepreneurial activity is fairly easily spread out over age ranges. While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important criteria in making investment decisions. What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success. These criteria favor older rather than younger entrepreneurs. Common Myths About Entrepreneurs Myth 5: Entrepreneurs Love The Spotlight While some entrepreneurs are Showy, the vast majority of them do not attract public attention. As evidence of this, consider the following question: “How many entrepreneurs could you name?” Most of us could come up with Jeff Bezos of Amazon.com, Mark Zuckerberg of Facebook, Steve Jobs of Apple, and maybe Larry Page and Sergey Brin of Google. But few could name the founders of Twitter, YouTube, Netflix, or DIRECTV, even though we frequently use those firms’ services. TYPES OF START-UP FIRMS  1- Salary-substitute Firms Are small firms that yield a level of income for their owner or owners that is similar to (Or Slightly Larger) what they would earn when working for an employer. Dry cleaners, restaurants, accounting firms, retail stores, and hairstyling salons are examples of salary-substitute firms. The vast majority of small businesses fit into this category. Salary-substitute firms offer common, easily available and not particularly innovative products or services to customers. 2- Lifestyle Firms Provide their owner or owners the opportunity to seek a particular lifestyle and earn a living while doing so. Lifestyle firms include: Personal trainers, golf and tennis pros, and tour guides. These firms are not innovative, nor do they grow quickly. Commonly, lifestyle companies promote a particular sport, or hobby, and may employ only the owner or just a handful of people. 3- Entrepreneurial Firms Entrepreneurial firms bring new products and services to market by creating and then seizing opportunities. Dropbox, Facebook, and LinkedIn are well-known, highly successful examples of entrepreneurial firms.  3- Entrepreneurial Firms (Con.) The essence of entrepreneurship is creating value and then disseminating that value to customers. In this context, value refers to worth, importance, or utility. Having recognized an opportunity, the entrepreneurs leading companies of this type create products and services that have worth, are important to their customers, and provide a measure of utility to their customers that they wouldn’t have otherwise. CHANGING DEMOGRAPHICS OF ENTREPRENEURS Women Entrepreneurs While men are more likely to start businesses than women, the number of women-owned businesses is increasing. There were 8.6 million women-owned businesses in the United States in 2013, generating over $1.3 trillion in revenue and employing nearly 7.8 million people. In some industries, women control a significant share of the business. Women-owned businesses account for 52% of all businesses in health care. Laila Atef Sedki Senior Entrepreneurs The numbers of seniors (those 50 years old and older) starting businesses is substantial and growing. In 2012, 20% of new businesses were started by people between 50 and 59 years old, while another 12.5 % were founded by individuals 60 years old and older. This increase is attributed to corporate downsizing, an increasing desire among older people for more personal fulfillment in their lives, growing worries about the cost of health care, and similar factors. The Entrepreneurial Process What Is An Opportunity? Essentially, entrepreneurs recognize an opportunity and turn it into a successful business. Opportunity A favorable set of circumstances that creates a need for a new product, service, or business. Opportunity Recognition The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that an entrepreneur wants to make and sell. FOUR ESSENTIAL QUALITIES OF AN OPPORTUNITY Three Ways To Identify An Opportunity  First Approach: Observing Trends Observing Trends Trends create opportunities for entrepreneurs to pursue. The most important trends are: - Economic forces - Social forces - Technological advances - Political and regulatory change It’s important to be aware of changes in these areas. Second Approach: Solving A Problem Solving a Problem Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity.  Example For Converting Problem To Opportunity For example, in 1991, Jay Sorensen dropped a cup of coffee in his lap because the paper cup was too hot. This experience led Sorensen to invent an insulating cup sleeve and to start a company to sell it. Since launching his venture, the company, Java Jacket, has sold over four billion cup sleeves.  Example For Converting Problem To Opportunity Similarly, after watching countless women walk home barefoot after a long night in heels, New York University finance students Katie Shea and Susie Levitt started a company named CitySlips to make easily portable, comfortable shoes. They created a pair of flats that fold up to fit into a pocket-size zip pouch, which easily fits into most women’s purses. When a woman pops on the shoes, the pouch unfurles into a tote bag to carry the high heels. The two began selling CitySlips in 2009; today, their product is carried in over 500 stores 2-52  Example For Converting Problem To Opportunity Advances in technology often result in problems for people who can’t use the technology in the way it is sold to the masses. For example, some older people find traditional cell phones hard to use: the buttons are small, the text is hard to read, and it’s often difficult to hear someone on a cell phone in a noisy room. To solve these problems, GreatCall, Inc. is producing a cell phone called the Jitterbug, which is designed specifically for older users. The Jitterbug features a large keypad that makes dialing easy, powerful speakers that deliver clear sound, easy-to-read text, and simple text-messaging capability. 2-53 Example For Converting Problem To Opportunity Another company, Firefly Mobile, has created a cell phone designed specifically for kids and tweens. The phone weighs only 2 ounces, and is designed to fit in a kid’s hand. The phone includes a full-color screen, built-in games, built-in parental controls that allow parents to restrict incoming and outgoing calls as well as limit or restrict texting, and special speed dials for mom and dad. The Same Like GPS Tracking Watch. 2-54