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2. 1 The Foundations of Entrepreneurship
Section 1: The Challenge of Entrepreneurship 1
The Foundations
of Entrepreneurship
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Learning Objectives
Define the role of the entrepreneur in business in the United States and around the world.
Describe the entrepreneurial profile.
Describe the benefits of entrepreneurship.
Describe the drawbacks of entrepreneurship.
Explain the forces that are driving the growth of entrepreneurship.
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Learning Objectives
(continued)
Explain the cultural diversity of entrepreneurship.
Describe the important role that small businesses play in our nation’s economy.
Put failure into the proper perspective.
Explain how an entrepreneur can avoid becoming another failure statistic.
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Entrepreneurship 
The process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire
Creativity:
Something new and somehow valuable is formed. The created item may be intangible such as an idea, a scientific theory, ….
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6. The World of the Entrepreneur
Every month U.S. entrepreneurs launch 514,000 new businesses (One reason the U.S. economy has been so successful over time ).
Entrepreneurial spirit - the most significant economic development in recent history.
GEM study: 12.7% (one in eight people) of adult population in the United States is actively involved in trying to start a new business.
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7. Entrepreneurial Activity Across the Globe
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8. Entrepreneurial Activity Across the Globe
The Total Entrepreneurial Activity Index (TEA index) is the sum of the number of persons starting a business (starting entrepreneurs) and the number of owners of businesses that were established less than 3.5 years before the reference date (young entrepreneurs), as a percentage of the labor force.
The TEA is an index for the degree of new entrepreneurship by country and is calculated as the percentage of people who undertake such activities in comparison to the labor force (population aged years)
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9. Entrepreneurial Activity Across the Globe
Factor-driven economy:
Countries compete primarily on the use of unskilled labor and natural resources and companies compete on the basis of price as they buy and sell basic products or commodities.
Examples: Egypt, Algeria, Palestine, Pakistan
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10. Entrepreneurial Activity Across the Globe
Efficiency-driven economy:
Growth is based on the development of more efficient production processes and increased product quality.
Examples: Croatia, Brazil, China, Russia, Tunisia
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11. Entrepreneurial Activity Across the Globe
Innovation-driven economy:
Companies compete by producing and delivering new and different products and services by using the most sophisticated processes.
Examples: USA, United Kingdom, Japan, Republic of Korea.
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12. Entrepreneurship-Friendly Nations
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13. The World of the Entrepreneur
Global Entrepreneurship Monitor (GEM) study:
Men are twice as likely to start a business as women.
Entrepreneurs are most likely to launch businesses when they are between the ages of 35 and 44.
Most people see entrepreneurial activity as a good career choice.
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Global Entrepreneurship Monitor (GEM):
A global study conducted by a consortium of universities
It aims to analyze the level of entrepreneurship occurring in a wide basket of countries.
It measures entrepreneurship through both surveys and interviews to field experts , conducted by the teams of each country.
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15. What Is an Entrepreneur?
One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.
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16. Percentage of Start-Up Companies in the United States
Entrepreneurs are essential change agents in the global economy, but unfortunately, in the United States, the percentage of private companies that are start-ups has been declining since the 1970s.
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17. Characteristics of Entrepreneurs
Desire for responsibility
Preference for moderate levels of risk: risk eliminators
Self-reliance
Confidence in their ability to succeed
Determination
Desire for immediate feedback
High level of energy
Future orientation
Opportunity entrepreneurs
Necessity entrepreneurs
Serial entrepreneurs
Skilled at organizing
Value achievement over money
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18. Characteristics of Entrepreneurs
Opportunity entrepreneurs: start businesses because they spot an opportunity in the marketplace.
Necessity entrepreneurs: start businesses because they cannot find work any other way.
Serial entrepreneurs: repeatedly start businesses and grow them to a sustainable size before striking out again.
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19. Characteristics of Entrepreneurs
Entrepreneurs tend to exhibit:
A high degree of commitment
Tolerance for ambiguity (غموض)
Creativity
Flexibility
Resourcefulness
Bootstrapping is a strategy that involves conserving money and cutting costs during start-up so that entrepreneurs can pour every available dollar into their businesses
A willingness to work hard
Tenacity (الاصرار والعناد)
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20. Most Important Qualities of an Entrepreneur
الشغف
المرونة
الاستباقية
No single set of characteristics describes successful entrepreneurs. Anyone can become an entrepreneur.
متصلب الرأي
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Entrepreneurship
One characteristic of entrepreneurs stands out: diversity!
Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should).
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22. Benefits of Entrepreneurship
The opportunity to:
Create your own destiny (المستقبل).
Make a difference.
Reach your full potential.
Reap (يجني) impressive profits.
Contribute to society and to be recognized for your efforts.
Do what you enjoy and to have fun at it.
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23. Drawbacks of Entrepreneurship
Uncertainty of income
The entrepreneur is the last one to be paid, as employees must be paid first
Risk of losing your entire investment
Long hours and hard work
Lower quality of life until the business gets established
High levels of stress
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24. Sources of Stress for Entrepreneurs
Starting and managing your own business can be a very rewarding experience, but it can also be highly stressful!
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25. Drawbacks of Entrepreneurship
(continued from 1-16)
Uncertainty of income
Risk of losing your entire investment
Long hours and hard work
Lower quality of life until the business gets established
High levels of stress
Complete responsibility
Discouragement
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26. Feeding the Entrepreneurial Fire
Some of the most significant factors that have led to this age of entrepreneurship include:
Entrepreneurs as heroes (as model to follow)
Entrepreneurial education
Universities and colleges should include it in course study
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27. Feeding the Entrepreneurial Fire
Demographic and economic factors
Many people start their business in age of
Economic growth that spanned most of the 80s created significant amount of wealth among people of this age group and many business opportunities
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28. Feeding the Entrepreneurial Fire
Shift to a service economy
In US service sector (low start-up cost) produce 80% of the jobs and 64% of GDP (Gross Domestic Product)
GDP:
a monetary measure  of the market value of all final goods and services produced in a period (quarterly or yearly). Used to determine the economic performance of a whole country or region, and to make international comparisons.
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29. Feeding the Entrepreneurial Fire
Technology advancements
Technology has changed the ways to do business, such as computers, voice mail, e-commerce, fax,…..
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30. Feeding the Entrepreneurial Fire
Independent lifestyle
The Internet (www), cloud computing, and mobile marketing
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Cloud computing: Internet-based subscription or pay-per-use software services that allow business owners to use a variety of business applications, from database management and inventory control to customer relationship management and accounting
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U.S. Online Retail Sales
Currently, about 60 percent of small business have Web sites.
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33. Feeding the Entrepreneurial Fire
(continued from 1-19)
Entrepreneurs as heroes
Entrepreneurial education
Demographic and economic factors
Shift to a service economy
Technology advancements
Independent lifestyle
The Internet, cloud computing, and mobile marketing
International opportunities
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34. The Cultural Diversity of Entrepreneurship
Young entrepreneurs
Women entrepreneurs
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35. Characteristics of Women-Owned Businesses
For many women, the best way to break the “glass ceiling” is through entrepreneurship. The number of women-owned businesses is growing 1.5 times faster than the national average.
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36. The Cultural Diversity of Entrepreneurship
(continued from 1-22)
Young entrepreneurs
Women entrepreneurs
Minority-owned enterprises
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37. Growth of New Entrepreneurs by Minority Group
Minority-owned businesses have grown significantly over the last two decades, but still have a long way to go.
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38. The Cultural Diversity of Entrepreneurship
(continued from 1-24)
Young entrepreneurs
Women entrepreneurs
Minority-owned enterprises
Immigrant entrepreneurs
Part-time entrepreneurs
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39. The Cultural Diversity of Entrepreneurship
(continued)
Home-based businesses
Family businesses
Copreneurs
entrepreneurial couples who work together as co- owners of their businesses.
Corporate castoffs
Corporate dropouts
Retiring baby boomers
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40. The Cultural Diversity of Entrepreneurship
Corporate castoffs:
Those individuals who are unemployed and are highly educated and skilled, and had corporate executive jobs.
Corporate dropouts:
Executives who leave the corporate to pursue their own dreams and aspirations by starting their own businesses.
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41. The Cultural Diversity of Entrepreneurship
Retiring baby boomers
Baby boomer is a group of people who were born between 1946 and 1964.
Labeled so because during this period of time , there was a statistically significant increase in the number of births that occurred.
During the 22-year period , 76.4 million people were born (one quarter of US population)
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42. Entrepreneurial Activity by Age Group
One advantage that older entrepreneurs have is the wisdom that comes from experience.
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43. The Power of Small Businesses
Small businesses (employs less than 100 people).
Capital: in Jordan defined that business with a capital less than 25-30JD
Make up 99.7% of the 27.8 million businesses in the United States
Employ 49.2% of the nation’s private sector workforce
Create more jobs than big businesses
Created 64% of net new jobs over the last decade
5% of small companies create 67% of net new jobs in the economy
Gazelles
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44. The Power of Small Businesses
Gazelles are small companies that are growing at 20 percent or more per year with at least $100,000 in annual sales; they create 70 percent of net new jobs in the economy
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45. Small Businesses by Industry
The majority of small businesses are concentrated in the service, construction, and retail industries.
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46. The Power of Small Businesses
(continued from 1-29)
Small businesses:
Produce 46% of the nation’s private GDP.
Account for 47% of business sales.
Create 16 times more patents per employees than large companies.
Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more!
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47. Putting Failure into Perspective
Entrepreneurs are not paralyzed by the prospect of failure.
Failure: a natural part of the creative process.
Successful entrepreneurs learn to fail intelligently.
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48. Small Business Failure Rate
Failure isn’t necessarily bad! New companies that replace old ones with better ideas, market approaches, and products are a sign of a healthy entrepreneurial economy.
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49. Avoiding the Pitfalls of Small Business Failure
Know your business in depth
Build a viable business model – and test it
Develop a solid business plan
Understand financial statements
Manage financial resources
Learn to manage people effectively
Set your business apart from the competition
Maintain a positive attitude
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50. Avoiding the Pitfalls of Small Business Failure
The Ten Deadly Mistakes of Entrepreneurship:
Management mistakes
Lack of experience
Poor financial control
Weak marketing efforts
Failure to develop a strategic plan
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51. Avoiding the Pitfalls of Small Business Failure
6. Uncontrolled growth
7. Poor location
8. Improper inventory control
9. Incorrect pricing
10. Inability to make the “entrepreneurial transition”
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Conclusion
Entrepreneurs:
Are an important part of the free enterprise system
Are a diverse and talented group of people
Represent a cross-section of society as a whole
Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience
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What Is Ahead?
Chapter 2: Ethics and Social Responsibility Chapter 3: Inside the Entrepreneurial Mind: From Ideas to Reality Section 2: The Entrepreneurial Journey Begins Section 3: Launching a Business Section 4: Growing the Business
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