Unit 1-1.2 The Entrepreneurial Process Entrepreneurship Unit 1-1.2 The Entrepreneurial Process

History of Entrepreneurship In the early years of the U.S economy, small businesses were the norm. The Industrial Revolution brought about the growth of large companies. Ex. Steel, railroads, manufacturing

History of Entrepreneurship Large companies were common No international competition Produced job security 1970’s International Competition low labor costs Technology Revolution Personal Computers Volatile economic climate High interest rates

History of Entrepreneurship Known as the Decade of Entrepreneurship Large companies were suffering Smaller companies were able to adapt to changes Outsourcing New service jobs created to address needs Government regulation 1990’s No job security and fewer benefits Move towards a more service-based economy Influenced by internet and network technologies.

The Entrepreneurial Evolution 1960s 1990s 1970s 1980s Large diversified companies Volatile economic climate; beginning of technology revolution No job security; move to service-based economy influenced by technology More government regulation; smaller companies emerge

The Start-up Process 5 Components Entrepreneur Environment Opportunity Startup resources New venture organization

1. The Entrepreneur Driving force Recognizes opportunity Pulls together the resources Brings the entire process together with life experience Calculated risk taker Passion

2. The Environment Variables that affect the venture but are not controlled by the entrepreneur. 4 categories affect a new venture’s ability to start and grow: The nature of the environment, whether it’s uncertain, fast-changing stable, or highly competitive. The availability of resources, such as skilled labor, start-up capital and sources of assistance. Ways to realize value, such as favorable taxes, good markets and supportive governmental policies. Incentives to create new businesses. Such as tax benefits and local, state and federal grants.

3. The Opportunity An opportunity is an idea that has commercial value only when customers are willing and able to buy it. New businesses are founded on recognized opportunities in the environment.

4. Start-up Resources Being able to pull together the necessary people and capital. Examples Capital, Skilled labor Management expertise Legal and financial advice Facility Equipment Customers

5. The New Venture Organization The execution of the new business concept New venture organization is the infrastructure of the business. The foundation that supports all of the products, processes and services of the business.

Success and Failure Business failure is a business that has stopped operating with a loss to creditors A discontinuance is a business that is operating under a new name or the owner closed it and opened a new one. Not considered a failure. About half of all new establishments survive 5 years or more, and about 1/3 survive 10 years or more.

Understanding the Numbers In 2011 there were 28.2 million small businesses. Small businesses make up: 99.7%of U.S. employer firms 63% of net new private-sector jobs 48.5% of private-sector employment 37% of high-tech employment 98% of firms exporting goods