Entrepreneurial Mind Study Guide

THE ENTREPRENEURIAL MIND Reasons for Growth of Entrepreneurship “Hand-outs” 1. Industry Structure Prepared by: 2. New technologies EXUR M. BUENAF...

THE ENTREPRENEURIAL MIND Reasons for Growth of Entrepreneurship “Hand-outs” 1. Industry Structure Prepared by: 2. New technologies EXUR M. BUENAFLOR 3. Deregulation and privatization 4. Formation of new business communities 5. Increasing demand for variety Module 1: 6. Government incentives and subsidies Topic 1: Understanding Entrepreneurship 7. Increasing flow of information Topic 2: Role of Entrepreneurship in Economic 8. Easier access to resources Development 9. Entrepreneurial education Topic 3: Ethics in Entrepreneurship 10. Return on innovation 11. Entrepreneur as a Hero Definition of Entrepreneurship: 12. Self-employment is highly valued "Entrepreneurship is the purposeful activity of an 13. Rising dissatisfaction at job individual or a group of associated individuals, 14. Acceptance of ex-entrepreneurs in the job undertaken to initiate, maintain or aggrandize profit market by production or distribution of economic goods and Reasons for Entrepreneurial Failure services" 1. Lack of experienced management "Entrepreneurship is based on purposeful and 2. Few trained or experienced human resource systematic innovation. It included not only the 3. Poor financial management independent businessman but also company directors 4. Rapid growth and managers who actually carry out innovative 5. Lack of business linkages functions." 6. Weak marketing efforts Concept of Entrepreneurship 7. Lack of information Various views about an 'Entrepreneur’: 8. Incorrect pricing - as a risk bearer 9. Improper inventory control - as an organizer 10. Short term outlook - as an innovator Impacts of Entrepreneurial Firms - Entrepreneurship is related to: Job Creation - coordination, innovation and performance Economic growth of the entrepreneur. New Technology - a system of creating new business. Serving small markets - referred to the various activities, done for Entrepreneurs v/s Managers the establishment and operation of an enterprise. - Entrepreneur refers to a person who creates an Entrepreneurial Traits enterprise, by taking financial risk in order to get 1. Innovation - does something new and different, profit. seeking to do something different and unique, try to - Manager is an individual who takes the responsibility meet the changing requirements of customers. of controlling and administering the organization. 2. Risk – Bearing - must be able to assume the risk involved in the enterprise, needs to be a risk taker not an avoider, should have ability of risk bearing 3. Passion for the Business - This passion typically stems from the entrepreneur's belief that the business will positively influence people's lives. 4. Product/Customer Focus - An entrepreneur's keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople. 5. Execution Intelligence - The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs. Who are entrepreneurs? 6. Achievement motivated – Original thinkers 7. Alert to opportunities – Risk takers 8. Creative – Take responsibility for own actions 9. Decisive – Feel competent and capable 10. Energetic – Set high goals and enjoy working toward them 11. Has a strong work ethics Common traits 12. A networker Self-employed parents 13. Initiative Taker Firstborns 14. Lengthy Attention Span Between 30-50 years old 15. Optimistic disposition Well-educated – 80% have college degree and 16. Persuasive 1/3 have a graduate level degree 17. Responsive to criticism Key Personal Attributes: 18. Self-confident and self-starter 1. Entrepreneurs are Made, not Born! 19. Tenacious - Many of these attributes are developed in early life, 20. Tolerant of Ambiguity with the family environment playing an important 21. Visionary role. - Entrepreneurs tend to have had self-employed 4. Teamwork parents who tend to support and encourage 5. Evangelicalism (faith in GOD) , Selling, Negotiation, independence, achievement, and responsibility and Motivation through Influence and Persuasion - Firstborns tend to have more entrepreneurial 6. Oral and Written Communication attributes because they receive more attention, must 7. Basics of Start-Up Finance, Accounting and Law forge their own way, thus creating higher self- Entrepreneurial Attitudes confidence. 1. Comfortable with lifestyle changes 2. Entrepreneurs Careers: 2. Willingness to break / bend / stretch laws - The idea that entrepreneurial success leads to more 3. Patience to start small entrepreneurial activity may explain why many 4. Prepared to make enemies entrepreneurs start multiple companies over the 5. Comfort with confrontations course of their career 6. Dealing with failure - Corridor Principle – using one business to start or 7. Willingness to learn acquire others and then repeating the process Entrepreneurs Vs. Intrapreneurs - Serial Entrepreneurs – a person who founds and - Entrepreneurs are people that notice opportunities operates multiple companies during one career. and take the initiative to mobilize resources to make 3. Need for Achievement: new goods and services. - A person’s desire either for excellence or to succeed - Intrapreneurs also notice opportunities and take in competitive situations. initiative to mobilize resources, however they work in - High achievers take responsibility for attaining their large companies and contribute to the innovation of goals, set moderately difficult goals, and want the firm. immediate feedback on their performance - Intrapreneurs often become entrepreneurs. - Success is measured in terms of what those efforts Successful and Unsuccessful Entrepreneurs: have accomplished. Successful: 4. Desire for Independence: Creative and Innovative - Entrepreneurs often seek independence from other Position themselves in shifting or new others. markets - As a result, they generally aren't motivated to Create new products perform well in large, bureaucratic organizations & Create new processes Entrepreneurs have internal drive, are confident in Create new delivery their own abilities, and possess a great deal of self- Unsuccessful: respect. Poor Managers 5. Self-Confidence: Low work ethic - Because of the high risks involved in running an Inefficient entrepreneurial organization, having an "upbeat" and Failure to plan and prepare self-confident attitude is essential Poor money managers - A successful track record leads to improved self- Technical Proficiency confidence and self-esteem - Many entrepreneurs demonstrate strong technical - Self-confidence enables that person to be optimistic skills, typically bringing some related experience to in representing the firm to employees and customers their business ventures alike - For example, successful car dealers usually have lots 6. Self-Sacrifice: of technical knowledge about selling and servicing - Essential automobiles before opening their dealerships - Nothing worth having is free Business Plan - a step-by-step outline of how an - Success has a high price, and entrepreneurs must be entrepreneur or the owner of an enterprise expects to willing to sacrifice certain things turn ideas into reality. Characteristics of Entrepreneurs: - Planning * Successful Entrepreneurs Key Personal Attributes: - To look ahead, Allocate resources, - Good technical skills - Focus on key points, and - Strong managerial competencies - Prepare for problems and opportunities. Accdg; to Bianchi (1993): - Business plans is for Starting anew business 1. being an offspring of self-employed parents; - Applying for business loans 2. being fired from more than one job; - Running a business 3. being an immigrant or a child of immigrants; - Optimize growth and development according to 4. previous employment in a firm with more than 100 priorities. people; Steps in the Entrepreneurial Process 5. being the oldest child in the family; and - Once the decision to become an entrepreneur is 6. being a college graduate. taken, the entrepreneurial process begins. Accdg; to Timmons (1996): The 5 stages of entrepreneurial process are; 1. commitment and determination; 1. Discovery: The stage in which the entrepreneur 2. leadership; generates ideas, recognizes opportunities, and 3. opportunity obsession; studies the market. 4. tolerance of risk, ambiguity and uncertainty; 2. Concept Development: Develop a business plan: a 5. creativity, self-reliance and ability to adapt; and detailed proposal describing the business idea 6. motivation to excel. 3. Resourcing: The stage in which the entrepreneur Development of Entrepreneurial Skills identifies and acquires the financial, human, and 1. Creativity and Opportunity Evaluation capital resources needed for the venture startup, etc. 2. Real-time Strategy and Decision Making 3. Comfort with Change and Chaos 4. Actualization: The stage in which the entrepreneur Copyright is the exclusive right to perform, operates the business and utilizes resources to display, copy, or distribute an artistic work. achieve its goals/objectives. A patent is the exclusive right to make, use, or 5. Harvesting: The stage in which the entrepreneur sell a device or process. decides on business's future growth/ development, or A trademark is a symbol that indicates that demise. the use of a brand or brand name is legally protected Role Of Entrepreneurship in Economic and cannot be used by other businesses. Development - A conflict of interest exists when personal - Entrepreneurship is one of the most important input considerations and professional obligations interfere in the economic development of a country. with each other. - The entrepreneur acts as a trigger head to give spark - Confidentiality involves respecting the privacy of to economic activities by his entrepreneurial others. decisions. Corporate Social Responsibility - The entrepreneur plays a pivotal role not only in the - Corporate social responsibility means that development of industrial sector of a country but also businesses act in ways that balance profit and growth in the development of farm and service sector. with the good of society. - The crucial role played by the entrepreneurs in the - Corporate social responsibility often translates into development of the Western countries has made the profits. This advantage for business is sometimes people of underdeveloped countries too described as "doing well by doing good.” - much conscious of the significance of - One type of socially-responsible corporate behavior - entrepreneurship for economic development. is ethical sourcing, which means buying from Ethics & Social Responsibility of Entrepreneurs suppliers who provide safe working conditions and What Are Ethics? respect workers' rights - Individual values form the basis of ethics, a set of 1. Responsibility to the Individuals moral principles that govern decisions and actions. - Corporate social responsibility affects employees, - To act ethically is to behave in ways that are in customers, investors, and creditors. keeping with certain values. - Entrepreneurs have legal obligations to provide a - Universal values are values that are shared by all safe workplace and fair employment policies. cultures throughout history. - Business owners are bound by law to treat - Business ethics are moral principles applied to customers fairly. business issues and actions. - Acting responsibly toward suppliers or vendors - Entrepreneurs have considerable influence on their results in making the best choices of materials and company's business ethics. using them wisely. Why Practice Business Ethics? - Investors and creditors provide the money to start - The main reason for behaving ethically, in business and run a business. They must believe in both the idea or in any area of life is simply that it's the right thing behind the business and the entrepreneur. to do. 2. Responsibility to the Environment - Three practical reasons why you should practice - Sustainable Design - Sustainable products meet the business ethics: planet's current needs while preserving resources for - Customers are more confident when buying goods future generations. and services from an ethical company. - Alternative Energy - Researchers are working to - An ethical workplace motivates employees. make fossil-fuel alternatives such as solar, wind, and - Ethical behavior also prevents legal problems. hydrogen power more efficient. Establishing an Ethical Workplace - Organics - Organic produce, grains, and meats make - Universal values establish a strong foundation for up a small but steadily growing segment of the food society and are also a good basis for running your market. business - Fair Trade - This is a way of doing business based on - To deter unethical behavior, companies try to create principles of social and environmental responsibility transparency, or openness and accountability in and promoting sustainable growth. business decisions and actions. 3. Responsibility to the Community - To enhance transparency, companies today are using - Businesses support disadvantaged and needy social media, which are interactive electronic forms of people, either for financial gain or because "It's the communication such as blogs and message boards. right thing to do." - Universal values establish a strong foundation for - Cause-related marketing is a partnership between a society and are also a good basis for running your business and a nonprofit group for the benefit of both. business It increases sales for the business and raises money - To deter unethical behavior, companies try to and awareness for the nonprofit group. create transparency, or openness and accountability - Sponsorship is when a business sponsors a in business decisions and actions. community event or service in exchange for - To enhance transparency, companies today are advertising. using social media, which are interactive electronic - With facilitated giving, a business makes it easier for forms of communication such as blogs and message customers to contribute to a cause. boards. - Philanthropy occurs when business leaders donate Ethical Issues for Entrepreneurs money and other resources for socially beneficial - When faced with an ethical decision, it's best to rely causes. on your own strong personal values to help guide your response. - Intellectual property is artistic and industrial creations of the mind.