The Winning Hand of Entrepreneurship part 1 Entrepreneurship and Small Business 1 The Winning Hand of Entrepreneurship PowerPoint Presentation by Charlie Cook 12e Copyright © 2003 South-Western College Publishing. All rights reserved.

Looking Ahead After studying this chapter, you should be able to: Discuss the availability of entrepreneurial opportunities and give examples of highly successful businesses started by entrepreneurs. Explain the entrepreneurial challenges presented by e-commerce and global changes. Explain the nature of entrepreneurship and how it is related to small business. Identify three motivators or rewards of entrepreneurial careers. Copyright © by South-Western College Publishing. All rights reserved.

Looking Ahead (cont’d) Describe the various types of entrepreneurs and entrepreneurial ventures. Identify ways to gain a potential competitive edge for small entrepreneurial firms. Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career. Copyright © by South-Western College Publishing. All rights reserved.

Entrepreneurial Opportunities Entrepreneurial Opportunity A value creating innovation with market potential A desirable and timely innovation that creates value for interested buyers and end users. Success stories Marketplace Holdings Auntie Anne’s RotoZip® Tool Corporation Copyright © by South-Western College Publishing. All rights reserved.

Who Are Entrepreneurs? Entrepreneurs are: Persons who starts and/or operates a business. Individuals who discover market needs and launch new firms to meet those needs. Risk takers who provide an impetus for change, innovation, and progress. All active owner-managers (founders and/or managers of small businesses). Copyright © by South-Western College Publishing. All rights reserved.

Entrepreneurial Challenges E-Commerce An outgrowth and part of the Information Age that is producing the new economy. Globalization The trend toward a global economy creates new competition and opportunities. Copyright © by South-Western College Publishing. All rights reserved.

What Is a Small Business? Criteria for Defining Smallness in Business Financing supplied by one person or small group Localized business operations (except marketing) Business’ size small relative to larger competitors Fewer than 100 employees Copyright © by South-Western College Publishing. All rights reserved.

Entrepreneurial Incentives Profit Freedom from the limits of standardized pay for standardized work Independence Freedom from supervision and rules of bureaucratic organizations Escape from an oppressive culture Personal Fulfillment Freedom to achieve a satisfying way of life Escape from routine and unchallenging work Rewards of Entrepreneurship Make Money Be Your Own Boss Enjoy a Satisfying Life Fig. 1.2 Copyright © by South-Western College Publishing. All rights reserved.

Entrepreneurial Refugees Foreign refugee Corporate refugee Parental refugee Feminist refugee Housewife refugee Society refugee Educational refugee Copyright © by South-Western College Publishing. All rights reserved.

Varieties of Entrepreneurship Founder (“Pure” Entrepreneur) A person who brings a new firm into existence. Administrative Entrepreneur An entrepreneur who overseas the operations of a ongoing business Franchisee An entrepreneur whose power is limited by the contractual relationship with a franchising organization. Entrepreneurial Team Two or more people who work together as entrepreneurs. Copyright © by South-Western College Publishing. All rights reserved.

Small Businesses, Growth, and Profits High-Potential Venture (Gazelle) A small firm that has great prospects for growth. Attractive Small Firm A small firm that provides substantial profits to its owner. Microbusiness A small firm that provides minimal profits to its owner. Copyright © by South-Western College Publishing. All rights reserved.

Characteristics of Artisan Entrepreneurs Technical training Paternalistic approach Reluctance to delegate Narrow view of strategy Personal sales effort Short planning horizon Simple record keeping Copyright © by South-Western College Publishing. All rights reserved.

Characteristics of Opportunistic Entrepreneurs Broad-based education Scientific approach to problems Willing to delegate Broad view of strategy Diversified marketing approach Longer planning horizon Sophisticated accounting and financial control Copyright © by South-Western College Publishing. All rights reserved.

Women Entrepreneurs More Women Entrepreneurs Women own 38% of all U.S. businesses. Employment at female-owned firms has grown 108% since 1992. Women are moving into nontraditional industries. Problems Facing Female Entrepreneurs Newness of entrepreneurial role Lack of access to credit Lack of personal networking connections in the established business community Copyright © by South-Western College Publishing. All rights reserved.

Competitive Advantages of Entrepreneurial Firms Customer Focus Lack of bureaucracy Quality Performance Quality is not limited to large firms Integrity and Responsibility A solid reputation builds loyal customers Innovation Small firms are the leading source of innovation. Low-Cost Production Sound management can lead to lower operating costs. Copyright © by South-Western College Publishing. All rights reserved.

Age Concerns in Starting a Business Early Career Concerns 1. Getting an education 2. Gaining work experience 3. Acquiring financial resources Late Career Concerns 1. Fulfilling family responsibilities 2. Attaining seniority in employment 3. Earning investment in a retirement program 25 35 45 20 Fig 1.3 Copyright © by South-Western College Publishing. All rights reserved.

Characteristics of Successful Entrepreneurs Strong commitment to the business (tenacity) Strong internal locus of control (self-reliant) Moderate risk takers (financial, career, psychic risks) Copyright © by South-Western College Publishing. All rights reserved.

Types of Entrepreneurial Career Opportunities Opportunity Level of Risk Starting a business High risk Buying a business Medium risk Opening a franchised business Medium risk Entering a family business Variable risk Copyright © by South-Western College Publishing. All rights reserved.

Taking the Plunge Precipitating Event An event, such as losing a job, that moves an individual to become an entrepreneur. Copyright © by South-Western College Publishing. All rights reserved.