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Lecture Notes Entrepreneurial Perspective

By Larry Greene,2014-07-09 15:03
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Lecture Notes Entrepreneurial Perspective ...

     1

     250-387 Entrepreneurship

Lecture 1 [Chap. 1 & 2]

    09/04/01

    Introduction

    The Entrepreneurial Perspective

In the year 2000, people who took collegiate

    entrepreneurship courses were: ? 34% more likely to start their own businesses

    than people who did not

    ? 798% more likely to be successful in their

    business than those graduates who did not

    take entrepreneurship course(s)

     2

Age of entrepreneurial economy (?), in 1998

    (Wells Fargo/NFIB)

    ? 5,744,000 start-ups, about 40% are

    subsidiaries of existing businesses, this means

    about 1% of the U.S. population applied for a

    business license

    ? 1,799,000 businesses purchased

    ? 1,333,000 businesses closed for various

    reasons

    ? Highest incidence of start-ups is in the

    southeast

    ? About 50% of start-ups were in the service

    industries

    ? About 60% profitable within the first year ? However, the number of self-employed

    persons fell about 10% between 1994 and

    1999 while their income increased 35%

     3

Entrepreneurial business vs. Small business

    Small Business defined - any business that is independently owned and operated and is not

    dominant in its field

    (Small Business Act of 1953)

Committee for Economic Development

    1. Independent ownership

    2. Owner supplied capital

    3. Mainly local operation

    4. Relatively small size in the industry

Entrepreneurship vs. Intrapreneurship

    Entrepreneurship is a way of thinking, reasoning, and acting that is opportunity

    obsessed, holistic in approach, and leadership

    balanced (Timmons)

    or

     4

    Entrepreneurship is the process of creating something new, with value, by devoting the

    necessary time and effort, assuming the

    accompanying financial, psychic, and social

    risks, and receiving the resulting rewards of monetary and personal satisfaction and

    independence.

Four basic aspects of entrepreneurship

    1. Creating something new of value

    2. Organization (devotion of time and effort)

    3. Assuming the risks

    4. Rewards (growth)

    Entrepreneur - French, literally “between

     taker” or “go-between”

Entrepreneur defined - a person who takes

    responsibility for a business project, organizes the resources it requires, and assumes the risk it entails.

     5

    Venture Capitalist - a professional money manager who makes risk investments from a

    pool of equity capital to obtain a high rate of

    return on the investments.

    “New Venture Creation” or “Greenfield Startup”

Creative acts

    ? a new product or service

    ? new methods or technology

    ? new markets

    ? new sources of raw materials and resources

    ? new forms of industrial organization

BUSINESSES SELDOM START BIG

     6 Entrepreneurial process - no magic formula

    BIG THREE

    1. Idea & an opportunity

    ? 90% of opportunities arise from your

    employment

    ? 8-10 years of experience typical

    2. Champion you, and often a team

    3. Resources

    ? Build an organization

    ? You do need money, but not necessarily a

    lot of money, to get started

Factors effecting the entrepreneurial

    decision

    No Go Go Financial obligations Financial resources Need for security Self-actualization Family obligations Family support Inexperience Relevant experience

     7

What do entrepreneurs “look” like

    1. Calculated risk-takers

    2. Need for achievement

    3. Sense of independence

    4. Internal locus of control

    5. Tolerance for ambiguity

    6. Most love what they do

    7. Community leaders

Demographic of entrepreneurs in 1998

    ? 70% of businesses are started by one person ? 36% of businesses are started by women ? 70% attended college or technical school ? 63% were married

    ? Median household income was $40,000

    $60,000

    ? 77% were employed at time of start-

    up/purchase

     8

Reason given for starting a business, 1998

    ? 26% grow business

    ? 37% decent living

    ? 29% supplemental income

    ? 4% until something better come along

    vs.

    Why “people” go into business 1. Positives

    ? Want own show, independence (part illusion -

    employees, suppliers, govt. & customers)

    ? Financial security/success, need income

    ? Need to do it better - job satisfaction

    ? Being in control/want something to do

    2. Negatives

    ? Long hour, 12+

    ? Uncertain income & loss of capital

    ? Family comes second

    ? Quality of life suffers, no benefits

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Business types from an owner’s perspective

    1. Job substitutes - a living, hard to realize a

     capital gain

    2. Lifestyle firm - more than a living,

     but basically a family business

    3. Foundation company new business area,

     rarely goes public (Gore)

    4. High potential venture - new Netscape

    Most important contribution of entrepreneurs and small business - offers the opportunities for

    success and independence to anyone and

    everyone (Horatio Alger, our national heritage)

    ? >50% of new businesses are started by women

    ? increasing minority startups

    ? result of downsizing

    ? spinoffs

     10 Strong economies need entrepreneurs & entrepreneurs need a strong economy

    ? 52% of GNP

    ? 54% of all private jobs

    ? >50% of all new high paying jobs

    ? 65% of all initial jobs are in small business

    ? >50% of all major inventions in past 30 years

International Entrepreneurship

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