Entrepreneurial Environment PDF

MODULE 1: The Concept of Entrepreneurial Environment Corporate Entrepreneurship ★ Involves creative new ventures or business units 2 Variations of Entr...

MODULE 1: The Concept of Entrepreneurial Environment Corporate Entrepreneurship ★ Involves creative new ventures or business units 2 Variations of Entrepreneurs within a large corporation Tech Wizard ★ Focuses on leveraging corporate resources, ★ Major in computer science infrastructure, and expertise to drive innovation and ★ Might be a drop out after getting a billion-dollar idea growth ★ Can include spin-offs or new divisions Pedigreed Business Major ★ Knows everything about the business world Lifestyles Entrepreneurship ★ May or may not have an MBA ★ Focuses on creating a business that aligns with ★ The more prestigious the school, the better personal lifestyle goals rather than aiming for rapid growth Entrepreneur ★ Emphasizes personal satisfaction, work-life balance, ★ Came from the French verb entreprendre, meaning and flexibility “to undertake” ★ Often involves small-scale operations with steady, ★ An individual who creates a new business, bearing manageable growth most of the risks and enjoying most of the rewards ★ Commonly seen as an innovator, source of new Small and Medium Enterprises (SMEs) ideas, goods, services, and business/or procedures ★ Businesses that fall within certain size limits ★ People who enter into new and pioneering ventures regarding revenue and number of employees, ★ The whole-brained typically defined by local regulations ○ he/she uses both the left brain (logical) and ★ Serve local or niche markets, often owner-managed right brain (creative) with a focus on steady growth and stability ★ They invest, transform and make profit of loss ★ Can play a significant role in job creation and local companies Entrepreneurship ★ Small Enterprises ★ The ability and readiness to develop, organize and ○ Less than 50 employees and lower revenue run a business enterprise, along with any of its threshold uncertainties in order to make a profit ○ Focus on local markets and personal service ★ The most prominent example of entrepreneurship is ★ Medium Enterprises the starting of new businesses ○ Between 50 and 250 employees and have moderate revenue ○ Might expand into regional or national Entrepreneur vs Entrepreneurship vs Enterprise markets but still maintain a more ★ Entrepreneur is someone who locate the needs of personalized approach compared to large society and tries to meet the same, with his/her corporations innovative idea ★ Entrepreneurship is the process of establishing a Tech Entrepreneurship business entity, intending to get profit, as a return in ★ Focuses on ventures driven by technological the future innovation and digital solutions ★ Enterprise is the outcome of the entrepreneurs ★ Involves high-tech products, software, and digital through the process of entrepreneurship platforms ★ Often requires significant R&D and investment Type of Entrepreneurship Innovative Entrepreneurship Key Take Aways of Being an Entrepreneur ★ High emphasis on research and development (r&d), Undertakes the risk creativity, and innovation Creates a firm ★ Often involves significant risk but can lead to Important driver of economic growth substantial regards High risk, high reward ★ Focuses on creating new products, services, or technologies that disrupt existing markets or create entirely new ones 3 THINKERS: CENTRAL TO IDEAS OR ENTREPRENEURS Imitative Entrepreneurship ★ Involves replicating or adapting existing business Joseph Schumpeter models or products in new markets or regions ★ Entrepreneurs were responsible for the creation of ★ Lower risk compared to innovative entrepreneurship new things in the search of profit as it builds proven ides ★ Focuses on improving or localizing existing Frank Knight solutions  ★ Entrepreneurs as the bearers of uncertainty and ★ Opportunity to do what you enojy doing believed they were responsible for risk premiums in ★ Opportunity to contribute to society and be financial markets recognized for your efforts ★ Opportunity to gain control over your own destiny Israel Kirzner ★ Entrepreneurship as a process that led to the Characteristics of Entrepreneurs discovery ★ Initiative ★ Sees and acts on opportunities 7 Characteristics of Successful Entrepreneurs ★ Persistence Self-Motivation ★ Information seeking Understand What You Offer ★ Concern for high quality work and output – increased Take Risks productivity Know How to Network ★ Commitment to ork contract Basic Money Management Skills and Knowledge ★ Efficiency orientation Flexibility ★ Systematic and organized planning Passion ★ Problem solving ★ Self confidence Magic (soft skills) ★ Assertiveness – negotiation with suppliers and ★ Creative thinking customers ★ Time management ★ Persuasive & Influential – peers and stakeholders ★ Networking ★ Inspirational – employees ★ Teamwork ★ Effective Communicator – external & internal of ★ Conflict resolution organization Logic (hard or legal issues) Three Masteries for an Entrepreneur ★ Employment ★ Torts ★ Mastery of Self ○ Wrongful act or infringement of rights ★ Mastery of Opportunity ★ Anti trust ○ Develop an effective business map ○ Refers to a group of businesses that team up ○ Constant & strategic innovation or form a monopoly in order to dictate ○ Optimization of available resource pricing in a particular market ○ Identify raving fan customers ★ Fraud ○ Recognize the distribution channels ○ Wrongful or criminal deception intended to ★ Mastery of the Enterprise result in financial or personal gain ○ Means how to run a business ★ Contracts ○ Different enterprise disciplines: ○ A legally binding agreement between 2 or Creating the business more persons or entities Marketing management – when you start a venture, start with George Gilder (The Spirit of the Enterprise) marketing. Marketing is creating a ★ “It is making the world forever new. It is taking promise. aggressive actions.” Operations Management – operation is keeping the promise Joseph Schumpeter and how to make the perception a ★ “It is destroying the old order and creating new reality ones.” Financial Management – the best way to protect your invention or It is about: technology is to put a small margin ★ New on your product ○ Business ideas Risk Management – have the ○ Products ability to take measure or calculate ○ Processes hazards involved ★ Entrepreneurship ○ A mindset Mastery of Self: 10 D’s of Entrepreneur Traits ○ About a forever innovating mindset Dream Determined Benefits of Entrepreneurship Details ★ Opportunity to make a difference Dollar (peso, in our case) ★ Opportunity to reach your full potential Decision ★ Opportunity to get unlimited profits Doer  Distribute Destiny Invest in Multiple Businesses Devotion ★ Most self-made billionaires are people who invested Dedication in many different business opportunities at once instead of focusing on just one idea ★ While there are also plenty of business owners wh Mastery of Self: 9 F’s have focused on one idea and succeeded, it is harder Founder to do this and if you fail, many more of your Faith resources are lost Focused Frugal Angel Investors Fast ★ These investors are becoming more popular than Fun venture capitalists in some industries, and the money Flexible that comes from them generally has far fee strings Flat attached or expectations than bank loans and money Forever improving from venture capitalists ★ These investors can be great resources for the entrepreneur looking to stress less about funding and Mastery of Self: Anatomy of an Entrepreneur focus on product and customer loyalty and service The Entrepreneurial Mind Frame ★ Allows the entrepreneur to see things in a very The Social Power of the Internet positive and optimistic light in the midst of crisis or ★ Strategically placing your business and brand in the difficult situations center of conversations and creating a culture around your brand will effectively separate your business The Entrepreneurial Heart Flame from your competition’s by truly connecting to ★ About emotional intelligence or EQ, which is often customers on issues they care about manifested in the entrepreneurs efforts to nurture relationships with customers, employees, and Foreign Markets suppliers ★ Especially the Chinese one, have seen exponential growth in the past few years. The Entrepreneurial Gut Game ★ Any startup owners that know how to recognize this ★ The ability of the entrepreneurs to sense without opportunity for what it truly is – access to the largest using the five senses market on earth – will be thanking themselves all ★ Also known as the intuition the way to the bank ★ Lakas ng loob (strong intestinal fortitude) 7 Awesome Opportunities for Entrepreneurs Entrepreneurial Strategy: Timeless Strategies That Drive Successful Crowdfunding Entrepreneurship ★ It is possible for entrepreneurs to circumvent the need for traditional loans and investors and instead go Study the competition straight to their customers to inquire about interest Conserve cash no matter how good business is level and garner the funds necessary to produce Research new products and services Don’t tackle huge markets at first Startup Incubators Listen to customer feedback and adapt ★ They provide many resources for to begin its journey Respond to change with very few strings attached and kickback expected in return ★ They can provide other much-needed services like MODULE 2: Planning in the Real World of Entrepreneur office space, professional seminars, access to industry professionals, or access to industry professionals, or Entrepreneurial Mindset access to the means of production to give startups of ★ It is a way of thinking that enables you to all kinds an opportunity to accomplish their mission overcome challenges, be decisive, and accept responsibility for your outcomes. Quality Content ★ Its is a constant need to improve your skills, learn ★ The networking websites allow for quality designers from your mistakes, and take continuous action on and filmmakers to sell their work to businesses your ideas looking to creatively reach out and connect with their customers Growth Mindset vs Fixed Mindset ★ Producing good content is an opportunity that every startup owner should be jumping on to give his/her Growth Mindset business an edge ★ “Failure is an opportunity to grow”  ★ “I can learn to do anything I want” Dependence ★ “Challenges help me grow” ★ Too many companies fail because they were overly dependent on one thing. Maybe that’s a highly Fixed Mindset valuable customer. Maybe it’s a very talented and ★ “Failure is the limit of my abilities” experienced worker. ★ “I’m either good at it or I’m not” ★ Maybe it’s just an environment condition that allows ★ “My abilities are unchanging” for the company to be successful. SELF-DOUBT Kills many dreams The Venture Idea in Entrepreneurship Biggest killer of the entrepreneurial mindset BUSINESS IDEA ★ It is a concept that can be used for financial gain that Factors Affecting an Entrepreneurial Mindset is usually centered on a product or service that can be Decisiveness offered for money To gain the ability to look at a problem or situation ★ An idea is the base of the pyramid when it comes to the business as a whole Confidence It can be learned through constant practice Characteristics of a Promising Business Idea Innovative Accountability ★ Creating new ideas, product development through Taking responsibility for your actions and outcomes research and development, or improving existing services Resilience ★ Usually more efficient, cost-effective, and Deal with making mistakes and failing productive ★ Successful innovation should be built into business Humility strategy Freedom from pride and arrogance Uniques Selling Proposition ★ The factor that makes a company or a product stand Common Pitfalls for New Enterprise out from it’s competitors through Insufficient Capital ○ Pricing ★ Startups usually have trouble finding the resources to ○ Quality start for tourism & hospitality related businesses — ○ Customer service either finding funding, attaining credit or pooling ○ Innovation personal financial resources to try and make ends meet Problem Solving ★ Business ideas that solve problems are fundamental Poor Growth Speed to developing the world and companies ★ Not growing fast enough means you’ll be expending ★ Always find solutions in all aspects of your business lots of money, but you won’t have the customer or the revenue to exceed it Profitability ★ Growing too fast comes with a different set of ★ The ability to generate earnings compared to its problems — demand becomes too high, resources costs over a certain period of time become overworked ★ Most important aspect of any business idea in the long term Competition Woes ★ Profitable ideas needs a strong revenue stream ★ Competition can crush your business totally if you against its costs and this tends to create the success of aren’t careful the business ★ Competition isn’t necessarily a bad thing, but you need to make sure you differentiate yourself in a way BUSINESS PLAN that makes your company seem like the more it is a decision-making tool appealing service The content and format of the business plan are determined by the goals and audience Internal Strife Preparing the business plan draws ok a wide range of ★ If there is a disagreement between department heads knowledge from many different business disciplines over the direction of the company, the entire ○ Finance enterprise could be thrown in turmoil, and customers could suffer as a result ELEVATOR PITCH It is a short summary of the plan’s executive summary  This is often used as a teaser to awaken the interest ★ Industry Background of potential investors, customers, or strategic ○ Enables a company to understand its partners position relative to other companies that It is as such because it is supposed to be a content produce similar products or services. While that can be explained to someone else quickly in an taking into account the strategic planning elevator process, a company has to specifically Should be between 30-60 seconds understand the forces at work in the overall industry ○ Helps them focus their resources on developing unique capabilities which can Typical Structure for a Business Plan for a Start Up help then to gain competitive advantage Venture ★ Competitor Analysis ★ Cover Page & Table of Contents ○ This means assessing and analyzing the ★ Executive Summary comparative strengths and weaknesses of ○ A short document or section of a document competitors; may include their current and produced for business purposes potential product or service development ○ It summarizes a longer report or proposal and marketing strategies or a group or related reports in such a way ○ You need to know: that readers can rapidly become acquainted What markets or market segments with a large body of material without having your competitors serve to read it all ★ Market Analysis ○ Intended as an aid to decision-making by ○ It is a quantitative and qualitative managers and has been described as the assessment of a market. It looks into the most important part of a business plan size of the market both in volume and in ★ Mission Statement value, the various customer segments and ○ Includes a short statement of why an buying patterns, the competition, and the organization exists, what its overall goal is, economic environment in terms of barriers identifying the goal of its operations; what to entry and regulation kind of product or service it provides, its ○ When assessing the size of the market, your primary customers or market, and its approach will depend on the type of geographical region of operations business you are selling to investors ○ Includes a short statement of such ★ Marketing Plan fundamental matters as the organization’s ○ The marketing plan section of the business values or philosophies, a business’ main plan explains how you’re going to get your competitive advantages, or a desired future customers to buy your product or services state — “the vision” ○ Marketing plan will include these sections: ○ Not simply a description of an organization Products and services & your by an external party, but an expression, unique selling proposition made by its leaders, of their desires and Pricing strategy intent for the organization Sales and distribution plan ★ Business Description Advertising and promotions plan ○ It is a description that provides an overview ★ Operations Plan of key aspects of your business, like what ○ It describes the physical necessities of your you do and what makes your business business’ operation, such as your physical unique location, facilities, and equipment ○ Anyone reading your business description ○ Depending on what kind of business you’ll should have no problem understanding the be operating, it may also include scope of your business information about inventory requirements, ★ Business Environment Analysis suppliers, and a description of the ○ It will identify all the external and internal manufacturing process elements, which can affect the ○ Operation Plan Section includes: organization’s performance Production Workflow ○ The analysis entails assessing the level of Industry Association Memberships threat or opportunity the factors might Supply Chains present Quality Control ○ These evaluations are later translated into ★ Management Summary the decision-making process ○ This part describes how your business is ★ SWOT Analysis structured, introduces who is involved, ○ The primary objective of it is to help outlines external resources and explains how organizations develop a full awareness of the business is managed all the factors involved in making a ○ Business Summary includes: business decision Business Structure  Management Team Monopoly with One Producer Other Personnel ★ It is the exact opposite form of market system as Personnel Growth Plan perfect competition ★ Financial Plan ★ In a pure monopoly, there is only one producer of a ○ This part determines whether or not your particular good or service, and generally no business idea is viable and will be the focus reasonable substitute of any investors who may be attracted to ★ In such a market system, the monopolist is able to your business idea charge whatever price they wish due to the absence ○ It is composed of three financial statements: of competition, but their overall revenue will be The income statement limited by the ability or willingness of customers to The cash flow projection pay their price The balance sheet It should also include a brief Oligopoly with a Handful of Producers explanation ★ An oligopoly is similar in many ways as to a ★ Achievements and Milestones monopoly. The primary difference is that rather than ○ These are concrete, specific achievements, having only one producer of a good or service, there such as a product launch, some number of are a handful of producers, or at least a handful of customers, opening of a new location, producers that make up a dominant majority of the number of reviews, presence in some list production in the market system and overcoming some legal hurdle ★ While oligopolists do not have the same pricing power as monopolists, it is possible, without diligent government regulation, that oligopolists will collude Typical Questions Addressed by a Business Plan for a with one another to set prices in the same way a Start Up Venture monopolist would 1. What problem does the company’s product or service solve? Monopolistic Competition with Numerous Competitors 2. What niche will it fit? ★ Monopolistic competition is a type of market system 3. What is the company’s solution to the problem? combining elements of a monopoly and perfect 4. Who are the company’s customers, and how will the competition company market and sell its products to them? ★ Like a perfectly competitive market system, there are 5. What is the size of the market for this solution? numerous competitor in the market 6. What is the business model for the business (how will ★ The difference is that each competitor is sufficiently it make money)? differentiated from the others that some can charge 7. Who are the competitors and how will the company greater prices than a perfectly competitive firm maintain a competitive advantage? 8. How does the company plan to manage its operations Monopsony with One Buyer as it grows? ★ Market systems are not only differentiated according 9. Who will run the company plan and what makes to the number of suppliers in the market them qualified to do so? ★ They may also be differentiated according to the 10. What are the risks and threats confronting the number of buyers. Whereas a perfectly competitive business, and what can be done to mitigate them? market theoretically has an infinite number of buyers 11. What are the company’s capital and resource and sellers, a monopsony has only one buyer for a requirements? particular good or service, giving that buyer 12. What are the company’s historical and projected significant power in determining the price of the financial statements? products produced MODULE 3: The Market Research Factors to Consider Before Choosing a Business Structure 5 Different Types of Market Systems You need to consider your startup’s financial needs, risk and Perfect Competition with Infinite Buyers & Sellers ability to grow. It can be difficult to switch your legal structure ★ It is a market system characterized by many different after you’ve registered your business, so give it careful buyers and sellers analysis in the early stages of forming your business. ★ In the classic theoretical definition of perfect competition, there are an infinite number of buyers Flexibility and sellers ★ Where is your company headed, which type of legal ★ With so many market players, it is impossible for any structure allows for the growth you envision? one participant to alter the prevailing price in the ★ Turn to your business plan to review your goals, and market see which structure best aligns with those objectives. ★ If they attempt to do so, buyers and sellers have ★ Your entity should support the possibility for growth infinite alternatives to pursue and change, not hold it back from its potential. Complexity Stages of Enterprise Development ★ When it comes to startup and operational complexity, nothing is more simple than a sole proprietorship STAGE 1: Incubation or Pre-Start Up ★ You simply register your name, start doing business, ★ Has a product/service or venture idea report the profits, and pay taxes on it as personal ★ Needs further development or commercialization income such as: ★ However, it can be difficult to procure outside ○ product/service testing funding. Partnerships, on the other hand, require a ○ Design or refinement signed agreement to define the roles and percentages ○ Packaging of profits ★ Enterprise has no official status in the marketplace ★ An entity perception is on the drawing board Liability ★ No paid employees and no production activities ★ A corporation carries the least amount of personal ★ Business formation may require: liability since the law holds that it is its own entity ○ Acquiring business partners ★ This means that creditors and customers can sue the ○ Preparing business plan corporation, but they cannot gain access to any ○ Gathering venture capital personal assets or the officers or shareholders ○ Mapping start up strategies Taxes STAGE 2: Start Up Stage ★ All profit is considered personal income and taxed ★ Begins with official registration and incorporation of accordingly at the end of the year the undertaking ★ Individuals in a partnership also claim their share of ★ For some cases it will take a year the profit as personal income ★ The primary activity is offering a product or service ★ A corporation files its own tax returns each year, to potential buyers paying taxes on profits after expenses, including ★ Many worked their way from a planned loss to break payroll even point ★ Acquiring financial and human resources Control ★ Establishing their place in the market ★ If you want sole or primary control of the business ★ Becoming operational and its activities, a sole proprietorship might be the best choice for you. You can negotiate such control in STAGE 3: Development Stage a partnership agreement as well ★ Generally occurs during its second or third year ★ A corporation is constructed to have a board of ★ Be able to attract more external financing directors that makes the major decisions that guide ★ Management at this stage remains essentially a the company, especially at its inception, but as it hands-on operation grows, so, too, does the need to operate it as a ★ The company settle into a comfortable position, board-directed entity directing their efforts to maintaining the marketplace Capital Investment STAGE 4: Growth Stage ★ If you need to obtain outside funding, such as from ★ Firmly established in the marketplace an investor, venture capitalist, or bank, you may be ★ Occurs generally during the fourth and fifth year of better off establishing a corporation. Corporations operation have an easier time obtaining outside funding than ★ Primary objectives are to build physical asset to sole proprietorships increase sales ★ Corporations can sell shares of stock and secure ★ Management is marked by greater establishment of additional funding for groth, while sole proprietors more professionally inclined systems can only obtain funds through their personal ★ Human resources capability are built up, preparing accounts, using their personal credit or taking on the firm for future expansion partners STAGE 5: Expansion Stage License, Permit, and Regulations ★ Can fall everywhere between sixth to tenth year ★ The structures discussed here only apply to for-profit ★ Managers have high degree of professionalism and businesses. If you’ve done your research and you’re decision making still unsure which business structure is right for you ★ Very hands on tyle of management is strictly ★ Places have different requirements for different observed business structures ★ Every asse must be carefully saved and utilized ENTERPRISE DEVELOPMENT ★ Every business moves through several stages of Key Roles of Entrepreneurs in Society growth Entrepreneurs are Innovators ★ Entrepreneurs observe these changes and step in to fill the voids.  ★ They see the negative consequences and the losses of Entrepreneurs Change the Community some occupations caused by technology, but they ★ The new company reduces unemployment by hiring sense opportunities n the new landscape employees who spend their income in local stores, ★ They create new products and services that advances generating more business for those owners. The in technology have made possible success of one business drives the progress of other ★ Innovators look for consumers’ needs and find ways organizations. to fulfill them. It’s this innovation that creates ★ Entrepreneurs invest in community projects by giving employement. to local charities, volunteering for food drives, working at soup kitchens and building houses. They Entrepreneurs Create Jobs sponsor cleanups to create green spaces and parks. ★ As entrepreneurs start new businesses, they need to ★ These community-minded businessmen may even hire employees. These new companies become continue to make donations for park and roadway engines of job creation. maintenance. Over time, these entrepreneurs become ★ Entrepreneurs create entirely new industries and active members in the chamber of commerce and opportunities for employment. encourage other business people to develop and grow ★ Entrepreneurs are at the leading edge of the their community economy. They are the source of the energy that drives economic growth. Entrepreneurs Help Other Entrepreneurs ★ Entrepreneurs have an enthusiasm and passion for Entrepreneurs Raise Standards of Living their businesses that they like to share with other ★ Entrepreneurs see a need in the marketplace and use aspiring innovators. their innovative talents to find a solution. They start a ★ Seasoned entrepreneurs can tell newcomers about the new business and hire employees. The workers earn mistakes they made that could have been avoided if an income, which they spend in the local economy. forewarned by someone already experienced in a ★ When one company comes out with a better product startup. When guided by a mentor, a neophyte can or service, the competition has to improve its game or avoid wasting time on mistakes as a result of go out of business. The increased competition forces ignorance or business immaturity. everyone to become mor eefficient and better at their ★ They form local groups that meet to discuss the jobs. problems of starting a business, finding employees and overcoming the hurdles of introducing new Entrepreneurship Creates Economic Growth markets for products and services. These ★ It starts with new businesses generating wealth for entrepreneurial booster groups serve as motivators. the population. New markets add wealth to the Success breeds success. economy when entrepreneurs invest their own money to develop innovative products and services. ★ Lenders and other investors contribute more capital to the new ventures to put more funds at work ★ Businesses pay taxes on their profit, and employees pay taxes on their income. The government takes this added income and spends it to stimulate the economy. ★ The gross domestic product is a measure of the economic status and improvement of a country. A stronger economy increases the gross domestic product per capital of the country. ★ An improving gross domestic product is an important goal for economic development because it means that each individual is becoming more productive and earning more money. Entrepreneurs are Philanthropists ★ Entrepreneurs give back to their communities. They not only earn money for themselves and their employees, they donate to local organizations and charities too. ★ Other recipients of entrepreneurs’ generosity are libraries, veterans’ groups, homeless shelters, and health organizations. None of this would be possible if entrepreneurs didn’t start new businesses and hire employees.