PowerPoint Presentation by Charlie Cook, The University of West Alabama © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. The Entrepreneurial Life PART 1 Entrepreneurship: A World of Opportunity

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–2 1.Distinguish between an entrepreneur and a small business owner. 2.Explain the characteristics of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs. 3.Describe some motivators or rewards of entrepreneurial careers. 4.Identify the various types of entrepreneurs and entrepreneurial ventures. 5.Identify five potential competitive advantages of small entrepreneurial companies as compared to large firms. 6.Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career. 7.Explain the concept of an entrepreneurial legacy and the challenges involved in crafting a worthy legacy. Looking Ahead After studying this chapter, you should be able to:

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–3 Who Are Entrepreneurs? Entrepreneurs are:Entrepreneurs are:  A person 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). Entrepreneurial OpportunityEntrepreneurial Opportunity  An economically attractive and timely opportunity that creates value for interested buyers or end users

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–4 What Is a Small Business? Criteria for Defining Smallness in BusinessCriteria for Defining Smallness in Business 1. Business’ size small relative to larger competitors (fewer than 100 employees) 2. Localized business operations (except marketing) 3. Financing supplied by one person or small group 4. Has the potential to become more than a “one-person show”

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–5 The Contributions of Small Business Small Businesses:Small Businesses:  Comprise 99.7% of all firms with employees.  Employ over 50% of employees in the private sector.  Account for 45% of private payrolls.  Generated 60 to 80% of net new jobs in past decade.  Create more than half of the country’s GDP.  Hire 40% of high-tech employees  Represent 97.3% of all exporters.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–6 Exhibit 1.2 Entrepreneurial Incentives

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–7 Why People Become Entrepreneurs Reluctant EntrepreneurReluctant Entrepreneur  A person who becomes an entrepreneur as a result of some severe hardship. RefugeeRefugee  A person who becomes an entrepreneur to escape an undesirable situation.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–8 Commitment and Determination Leadership Motivation to Excel Creativity, Self- Reliance, and Adaptability Opportunity Obsession Tolerance of Risk, Ambiguity, and Uncertainty Attitudes and Behaviors of Entrepreneurs Entrepreneurial Characteristics (Timmons and Spinelli)

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–9 The Many Varieties of Entrepreneurship Founder (“Pure” Entrepreneur)Founder (“Pure” Entrepreneur)  A person who brings a new firm into existence Administrative EntrepreneurAdministrative Entrepreneur  An entrepreneur who overseas the operations of a ongoing business FranchiseeFranchisee  An entrepreneur whose power is limited by the contractual relationship with a franchising organization Entrepreneurial TeamEntrepreneurial Team  Two or more people working together as entrepreneurs

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–10 Small Business Growth Potential and Profits High-Potential Venture (Gazelle)High-Potential Venture (Gazelle)  Has great prospects for growth Attractive Small FirmAttractive Small Firm  Provides substantial profits to its owner MicrobusinessMicrobusiness  Provides minimal profits to its owner Lifestyle BusinessLifestyle Business  Permits the owner to follow a desired pattern of living

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–11 Artisan Entrepreneurs Artisan EntrepreneurArtisan Entrepreneur  A person with primarily technical skills and little business knowledge who starts a business Characteristics:Characteristics:  Take a paternalistic approach  Are reluctant to delegate  Use few sources of capital  Have a traditional marketing strategy  Focus on personal sales effort  Have a short planning horizon

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–12 Opportunistic Entrepreneurs Opportunistic EntrepreneurOpportunistic Entrepreneur  A person with both sophisticated managerial skills and technical knowledge who starts a business Characteristics:Characteristics:  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

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–13 The Competitive Edge of Entrepreneurship Customer Focus Quality Performance Innovation and Globalization Integrity and Responsibility Special Niche Competitive Advantages of Entrepreneurial Firms

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–14 Age 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 Getting Started Age and Entrepreneurial OpportunityAge and Entrepreneurial Opportunity

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–15 Millennial Entrepreneurs Have no fear of technologyHave no fear of technology Are idealistic and optimisticAre idealistic and optimistic Are more collaborativeAre more collaborative Build elements of community in the businessBuild elements of community in the business Start companies while studying entrepreneurshipStart companies while studying entrepreneurship Fail fast, learn a lot, and keep goingFail fast, learn a lot, and keep going

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–16 Getting Started (cont’d) Characteristics of Successful Entrepreneurs Strong Commitment to the Business (Tenacity) Moderate Risk Takers (Financial, Career, Psychic Risks) Strong Internal Locus of Control (Self-Reliance)

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–17 How to Fail as an Entrepreneur 1.Overestimate what you can do 2.Lack an understanding of the market 3.Hire mediocre people 4.Fail to be a team player 5.Be a domineering manager 6.Not share ownership in the business in an equitable way

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–18 The Importance of Mentors MentorMentor  A knowledgeable person who can offer guidance from their experience in a given field.  The “Go-To” Team

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–19 Success in Business and Success in Life Beginning with the End in MindBeginning with the End in Mind  Proper values and actions lead to a good exit.  Evaluating accomplishments Winning the Wrong GameWinning the Wrong Game  The nature of the entrepreneurial endeavor reflects personal goals and values. Crafting a Worthy Entrepreneurial LegacyCrafting a Worthy Entrepreneurial Legacy  The tangible items and intangible qualities passed on not only to heirs but also to the broader society.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. 1–20 Key Terms entrepreneur entrepreneur small business small business entrepreneurial opportunity entrepreneurial opportunity bootstrapping bootstrapping reluctant entrepreneur reluctant entrepreneur refugee refugee founder founder franchisee franchisee high-potential venture (gazelle) high-potential venture (gazelle) attractive small firm attractive small firm microbusiness microbusiness lifestyle business lifestyle business artisan entrepreneur artisan entrepreneur opportunistic entrepreneur opportunistic entrepreneur entrepreneurial team entrepreneurial team niche market niche market internal locus of control internal locus of control external locus of control external locus of control mentor mentor entrepreneurial legacy entrepreneurial legacy