Starting Your Own Business: The Entrepreneurship Alternative Week 6 Starting Your Own Business: The Entrepreneurship Alternative

Learning Goals Identify personality traits that typically characterize successful entrepreneurs. Summarize the process of starting a new venture. Explain how organizations promote intrapreneurship. Define the term entrepreneur and distinguish among entrepreneurs, small-business owners, and managers. Identify the different types of entrepreneurs. Explain why people choose to become entrepreneurs. Discuss factors that support and expand opportunities for entrepreneurs. 1 5 6 2 7 3 4

What is Entrepreneurship? An entrepreneur is a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business. Differ from many small-business owners in their strong desire to make their business grow. Differ from managers through their overriding responsibility to use the resources of the organization to accomplish their goals. Willing to take risks. Entrepreneurs differ from managers. Entrepreneurs differ from small-business owners/managers. Entrepreneurs differ from managers as they are willing to assume risk.

Categories of Entrepreneurs Classic Entrepreneurs Serial Entrepreneurs Social Entrepreneurs Entrepreneurs range from classic entrepreneurs who pursues business opportunities and allocate resources to a serial entrepreneur who starts one business runs it, and then runs additional businesses in succession. Social entrepreneurs focus on solving society’s challenges through their business.

Entrepreneurship as a Career More than 11% of Americans run their own business. In an average month, Americans start approximately 465,000 new businesses. The past two decades have shown a heightened interest in entrepreneurial careers. People choose entrepreneurship for many reasons Dissatisfaction with traditional work Their ideas fulfill customer needs The number of Americans choosing entrepreneurship as a career is growing. People decide to become entrepreneurs for a variety of reasons.

Why People Become Entrepreneurs Many entrepreneurs want to be their own bosses, and self-management is their motivation. Entrepreneurs are wealth creators. Many entrepreneurs start ventures with the specific goal of creating a profitable business to reap financial rewards. As large companies continue to layoff employees, entrepreneurs find job security in their own ventures. Finally, quality of life provides an attractive option for people to gain independence, freedom and control.

Why Entrepreneurship? Being your Own Boss Financial Success Self-management is the motivation that drives many entrepreneurs. Financial Success Entrepreneurs are wealth creators. Job Security Over the past ten years, large companies have eliminated more jobs than they have created. Quality of Life Starting a business gives the founder some choice over when, where, and how to work.

The Environment for Entrepreneurship Globalization, education, information technology, and demographic and economic trends create many opportunities for entrepreneurs. Growth in entrepreneurship is a worldwide phenomenon.

Globalization Entrepreneurship activity across the world is growing. The rapid globalization of business has created many opportunities for entrepreneurs

Education/IT/Demographic & Economic Trends One hundred U.S. colleges and universities offer entrepreneurship majors. Universities are helping students launch businesses. Many programs teach entrepreneurship to young people. Information Technology Technology has given entrepreneurs tools that help them compete. Entrepreneurs have used information technology to revolutionize industries. Demographic and Economic Trends Aging of U.S. population. Emergence of Hispanics as nation’s largest ethnic group. Growth of two-income families. Educational opportunities have grown for entrepreneurs and information technology has provided a big boost for entrepreneurs. Trends like the aging population, the emergence of Hispanics and the growth of two-income families create abundant opportunities for entrepreneurs.

Characteristics of Entrepreneurs There are key characteristics that make up the entrepreneurial personality.

Entrepreneurial Characteristics Vision - entrepreneurs begin with an overall idea for how to make their business idea a success High Energy Level - a willingness to work hard Need to Achieve - entrepreneurs work hard because they want to excel Self-Confidence - fearlessness in the face of difficult odds Tolerance for Failure - entrepreneurs are not easily discouraged Creativity - entrepreneurs devise innovative ways to overcome difficult problems and situations Tolerance for Ambiguity - entrepreneurs take in stride uncertainties. Internal Locus of Control - entrepreneurs believe they can control their own fate The combination of these characteristics are important to an entrepreneur who is willing to take risks. These eight traits are especially important for people who want to succeed as entrepreneurs.

Starting A New Venture Business Plan Selecting a Business Idea Find something you love to do and are good at doing Can your idea satisfy a need in the marketplace? Entrepreneurs must be sure that the idea they choose has interest in the marketplace There are a lot of ways to think about who you are and how that might translate into a business. You will also want to think about buying an existing business or operating a franchise. Business Plan

Creating a Business Plan 58% of the most recent Inc. CEOs did not create a formal written plan. But business plans do help entrepreneurs prepare enough resources and stay focused on key objectives. Click the list of business resources to go to All Business’ website.

Finding Financing Debt Financing Equity Financing Credit Cards Family and Friends Bank Loans (SBA backed) Equity Financing Venture Capitalists Angel Investors How much money do you need to start your business and where will you get it. Explain that debt financing is a “debt”. You owe someone back. Equity financing is the sale of ownership. You have sold investors a piece of your firm. They are invested in your success and rewarded accordingly.

Government Support for New Ventures Business Incubators is a key way government supports new ventures Clean Energy Incubator (CEI) Enterprise Zones Encourage entrepreneurship in specific geographic areas Government Legislation The Immigration Act of 1990 In addition to the SBA, the government makes a variety of efforts to support new ventures. Business Incubators help build new ventures. Enterprise Zones help build entrepreneurship in specific localities. Government legislation serves to address specific issues impacting new ventures.

Research Research an Entrepreneur Google = top 100 entrepreneurs Write a 2 paragraph statement about: How did they get started? What is their business about? History of the person (Age, Hobbies, Education) Why did you select this person? Many companies want to retain entrepreneurial spirit within their organizations. Many organizations encourage intrapreneurship and can benefit from the practice. 3M and the post-it note is a great example. 3M encourages creativity in their employees.