The Entrepreneurial Life Part 1 Entrepreneurship: A World of Opportunity

Looking Ahead After studying this chapter, you should be able to: Discuss the availability of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs. Explain the nature of entrepreneurship and how it is related to small business. Identify some motivators or rewards of entrepreneurial careers. Describe the various types of entrepreneurs and entrepreneurial ventures. Identify five potential advantages of small entrepreneurial firms. Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career. Explain the concept of an entrepreneurial legacy and the challenges involved in crafting a worthy legacy. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Entrepreneurial Opportunity and Success An entrepreneurial opportunity is a desirable and timely innovation that creates value for interested buyers and end users. Exciting entrepreneurial opportunities exist for those who recognize them. However, a true opportunity exists only for those who have the interest, resources, and capabilities required to succeed. SLR Contracting and Service Company, FlavorX, and Auntie Anne’s are examples of highly successful businesses started by entrepreneurs. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Entrepreneurial Firms Entrepreneurs are individuals who discover market needs and launch new firms to meet those needs. Owner-managers who buy out founders of existing firms, franchisees, and second-generation operators of family firms may also be considered entrepreneurs. Definitions of small business are arbitrary, but this book focuses on firms of fewer than 100 employees that have mostly localized operations and are financed by a small number of individuals. Most entrepreneurial firms are small when they begin, but a few grow (some very quickly) into large businesses. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Why People Become Entrepreneurs Researchers have identified up to 38 different reasons for self-employment. Entrepreneurial motivators or rewards include profit, independence, freedom (escaping from a bad situation), personal satisfaction, and personal fulfillment (contributing to one’s community). Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Types of Entrepreneurs Founders of firms are “pure” entrepreneurs, but those who acquire established businesses and franchisees may also be considered entrepreneurs. A few entrepreneurs start high-potential ventures (gazelles); other entrepreneurs operate attractive small firms and microbusinesses. Entrepreneurial teams consist of two or more individuals who combine their efforts to function as entrepreneurs. Based on their backgrounds and management styles, entrepreneurs may be characterized as artisan entrepreneurs or opportunistic entrepreneurs. The number of women entrepreneurs is growing rapidly, and they are entering many nontraditional fields. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Advantages of Entrepreneurial Firms Entrepreneurial managers get to know their customers well which helps them focus on meeting their needs. By emphasizing quality in products and services, small firms can build a competitive advantage. Independent business owners can build a culture of integrity and responsibility that strengthen the firm’s position in a competitive environment. Many small firms and operators have a superior talent for finding innovative products and developing better ways of doing business. Small firms that find a special niche of some type can gain an advantage in the marketplace. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Who Are Entrepreneurs? The period between the mid-20s and mid-30s appears to be when a person’s education, work experience, family situation, and financial resources are most likely to enable him or her to become an entrepreneur. There is no well-defined entrepreneurial profile, but many entrepreneurs have such helpful characteristics as a passion for their business, strong self-confidence, and a willingness to assume moderate risks. Successful entrepreneurs are also thought to possess leadership skills, a strong focus on opportunities, creativity and adaptability, and motivation to excel. Entry into entrepreneurial careers is often triggered by a precipitating event, such as losing a job. Once a business is launched, the entrepreneur must manage growth of the business and issues related to its ongoing operation. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

The Rewards of Entrepreneurship An entrepreneur’s legacy includes not only money and material possessions but also nonmaterial things such as personal relationships and values. Part of the legacy is the contribution of the business to the community. A worthy legacy includes a good balance of values and principles important to the entrepreneur. Errors in choosing or applying goals and values can create a defective legacy. Building a legacy is an ongoing process that begins at the launch of the firm and continues throughout its operating life. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.

Key Terms entrepreneurial opportunity entrepreneur reluctant entrepreneur refugee founder franchisee high-potential venture (gazelle) attractive small firm microbusiness lifestyle business entrepreneurial team artisan entrepreneur opportunistic entrepreneur internal locus of control external locus of control precipitating event entrepreneurial legacy Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved.