Entrepreneurship

LEARNING OBJECTIVES Define entrepreneurship. Discuss characteristics and types of entrepreneurs. Discuss the applicability of entrepreneurship principles in the profession of pharmacy. Given an “opportunity concept,” apply the process of entrepreneurship to evaluate, pursue, execute, and harvest the venture

WHAT IS ENTREPRENEURSHIP One commonly used definition is “the process by which individuals pursue opportunities without regard to resources they currently control.” A process means that is cam be repeated analyzed and improved

WHO IS AN ENTREPRENEUR? Some of the common characteristics of entrepreneurs include: A high level of achievement motivation An internal locus of control A tolerance for ambiguity. They are not necessarily experts in all areas of business They are very good at establishing networks of people who can help them in areas that are not their strengths

Types of Entrepreneurs Personal Achievers Need for feedback Need for achievement Strong commitment Internal locus of control Expert Idea Generators Build venture around new products Involved with high-tech companies Desire to innovate Intelligence as source of competitive advantage

Super Sales People Capacity to understand others, empathize Belief that social processes are important Good at external relationship building Belief in sales force Real Managers Desire to take charge, compete, be decisive, stand out Desire to be corporate leader, desire for power Positive attitude towards authority

THE ENTREPRENEURIAL PROCESS Learning entrepreneurship is important because it provides a structured approach that can be repeated, analyzed, and improved on.

Identifying an Opportunity Ideas can come in many different forms and from many different places Entrepreneurs often generate and maintain an opportunity register The entrepreneur must be disciplined in the selection of opportunities to pursue because resources likely will be limited and pursuit of an opportunity requires focus, perseverance, and dedication.

Identify an opportunity Changing demographics Emergence of new market segments Process needs New technologies Incongruities Regulatory change Social change

Developing the Concept Determining which idea to pursue and how to execute the opportunity are key decisions for the entrepreneur to make. To guide these decisions, the entrepreneur often will perform a feasibility analysis Extensive research is performed on the product/service, industry, market, organizational feasibility, and financial feasibility of the opportunity.

Develop the Concept New products New services New processes New markets New organizational structure/forms New technologies New sales / distribution channels

Determining the Required Resources Entrepreneurs typically will not have all the resources needed to pursue the identified opportunity This step in the process, which can be a part of the feasibility analysis, will help to identify what resources are needed and help to determine if the entrepreneur can obtain those needed resources Identify the extent to which financial resources need to be acquired and at what stage in the business-development timeline they are needed In entrepreneurship compares equity to manure The more manure is piled up, the more it smells, but the more it is spread around (on a field), the more it helps things to grow.

Determine the required resources Skilled employees General management expertise Marketing and sales expertise Technical expertise Financing Distribution channels Sources of supply Production facilities Licenses, patents, and legal protection

Acquiring the Necessary Resources Once the entrepreneurial idea and venture have been well defined and researched through the feasibility analysis, resources are acquired to pursue the idea To help get others to invest, the entrepreneur will have to put some of his or her own money into the development Grants and small-business loans are used often, but grants can take longer to acquire than other methods. “sweat equity” (time put into developing the business without receiving payment for the time put in) required

Acquire the necessary resources Debt Equity Leveraging Outsourcing Leasing Contract labor Temporary staff Supplier financing Joint ventures Partnerships Barter Gifts

Implement and Manage Decision-making abilities and experience are two of the most important attributes for success in this process. Degrees , training and during work experience are ways of gaining of these skills Training for entrepreneurship the BEL( Bernelli Entrepreneurial Learning) Method identifies five stages of development and provides initially for exposure and hands-on experience.

The key to implementing and managing the opportunity will center on cash flow. First, acquiring capital to get the business started and then, once the business is started, balancing the expenditure of money with the need to obtain more to keep the business going. Businesses often fail because they do not have enough cash when they start. It is recommended that a business have enough cash to support it for 3 years when it is started. However, this is often difficult to obtain. Additionally it is typical for the business to pursue rounds of funding.

Implement and manage Implementation of concept Monitoring of performance Payback of resource providers Reinvestment Expansion Achievement of performance goals

Harvest the Venture How the entrepreneur will reap the rewards of the endeavor selling the business to someone else, passing the business on to someone in the family, licensing the rights of the intellectual property developed in the business copyrights , trademarks and patents going public with the business shutting the business down.

To maximize the reward of the opportunity, it is important to develop the exit strategy or list of potential exit strategies early on in the concept-development process

Copyright protection is the easiest and least costly to acquire Copyright protection is the easiest and least costly to acquire. However, it also generally provides the least amount of protection. This protection does not protect the ideas, processes, or methods of the intellectual property. It only protects the form, or original work, which is the end result of the ideas, processes or methods. Trademarks are used to protect names, brands, logos, and other marketing devices that are distinctive. Trademarks are somewhat more expensive. It is also possible to do a trademark search on your own on the Internet It is also possible to pay attorneys Patents offer the highest level of protection. They take the most time and money to acquire, usually taking at least 2 years and $4,000 to file. It is generally necessary to hire intellectual property attorneys to assist with the filing and defense of the patent. Patents protect the idea, method, and design of products and businesses

INCUBATORS Incubators bring all or many of the necessary areas together (e.g., accounting, business plan development, legal, capital acquisition, etc.) to help entrepreneurs bring their ideas to market Incubators usually take significant equity of the business to get started entrepreneur must assess how much is really needed and how much the incubator is going to contribute before signing on

TIMING AND COMPETITION Timing is everything First-movers, the first person to bring a concept to market, can have what is called first-mover advantage, allowing them to gain the rewards of early entry into a market. At other times, the second person into the market can gain the advantage because the first mover has had to go to all the effort to train and educate the market about the concept.

SELLING THE CONCEPT The entrepreneur must be able to quickly communicate the value proposition associated with the product, service, or business. In entrepreneurship circles, this is referred to as the elevator pitch. the ability to pitch the concept to a potential investor in the amount of time it takes to get on an elevator and then get off

1. Describe the importance of networking for entrepreneurs, and identify methods of networking in the profession, community, and business world. 2. What, in your opinion, is the most difficult step in the process of entrepreneurship? Describe and explain why? 3. Describe an approach to financing an entrepreneurial venture. Include a discussion of the pros and cons of debt acquisition, using personal and “friends and family” funds, and venture capital. 4. After identifying an opportunity, develop a 30- second elevator pitch that clearly communicates the value of the concept

Quizze 1. What are three common characteristics of entrepreneurs? 2. What are the four types of entrepreneur personalities, which one do you most identify with, and what leads you to identify yourself with this characterization?