1. The Entrepreneurial Life
PART 1 Entrepreneurship: A World of Opportunity

2. Looking Ahead After studying this chapter, you should be able to:
Distinguish between an entrepreneur and a small business owner.
Explain the characteristics of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs.
Describe some motivators or rewards of entrepreneurial careers.
Identify the various types of entrepreneurs and entrepreneurial ventures.
Identify five potential competitive advantages of small entrepreneurial companies as compared to large firms.
Discuss factors related to readiness for entrepreneurship and getting started in an entrepreneurial career.
Explain the concept of an entrepreneurial legacy and the challenges involved in crafting a worthy legacy.

3. The Contributions of Small Business
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.

4. Exhibit 1.1 The Independent Entrepreneur
Source: © Johnny Hart/Creators Syndicate Inc.

5. Who Are Entrepreneurs? 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).

6. What Is a Small Business?
Criteria for Defining Smallness in Business
Business’ size small relative to larger competitors (fewer than 100 employees)
Localized business operations (except marketing)
Financing supplied by one person or small group
Has the potential to become more than a “one-person show”

7. Entrepreneurial Opportunities
Entrepreneurial Opportunity
An economically attractive and timely opportunity that creates value for interested buyers or end users
Success Stories
Table Occasions (El Paso, Texas)
Life is Good (Boston, Massachusetts)
The Fruitguys (San Francisco, California)

8. Exhibit 1.2 Entrepreneurial Incentives

9. Why People Become Entrepreneurs
Reluctant Entrepreneur
A person who becomes an entrepreneur as a result of some severe hardship.
Refugee
A person who becomes an entrepreneur to escape an undesirable situation.

10. The Many Varieties of Entrepreneurship
Founder (“Pure” Entrepreneur)
A person who brings a new firm into existence
Administrative Entrepreneur
An entrepreneur who overseas the operations of a ongoing business
Franchisee
An entrepreneur whose power is limited by the contractual relationship with a franchising organization
Entrepreneurial Team
Two or more people working together as entrepreneurs

11. Small Business Growth Potential and Profits
High-Potential Venture (Gazelle)
Has great prospects for growth
Attractive Small Firm
Provides substantial profits to its owner
Microbusiness
Provides minimal profits to its owner
Lifestyle Business
Permits the owner to follow a desired pattern of living

12. Artisan Entrepreneurs
A person with primarily technical skills and little business knowledge who starts a business
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

13. Opportunistic Entrepreneurs
A person with both sophisticated managerial skills and technical knowledge who starts a business
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

14. Exhibit 1.3 Changes in U.S. Women-Owned Businesses between 2006 and 2008
Source: Center for Women’s Business Research, accessed January 31, 2007; and “New Numbers Show Women-Owned Firms Comprise Forty Percent of All Firms,” Center for Women’s Business Research, September 11, 2008, pp. 2 and 3, accessed September 30, 2008.

15. Women Entrepreneurs More Women Entrepreneurs
More women than men are starting new businesses
40% of all businesses are now majority female-owned
Movement of women into nontraditional industries
Problems Facing Female Entrepreneurs
Discrimination and difficulties related to gender
Lack of access to credit
Lack of networking connections
Balancing work and family life

16. Entrepreneurial Teams
Two or more people who work together as entrepreneurs on one endeavor
Becoming more common

17. The Competitive Edge of Entrepreneurship
Customer Focus
Special Niche
Competitive Advantages of Entrepreneurial Firms
Quality Performance
Innovation and Globalization
Integrity and Responsibility

18. Age and Entrepreneurial Opportunity
Getting Started
Age and Entrepreneurial Opportunity
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 25 35 45 20

19. Millennial Entrepreneurs
Have no fear of technology
Are idealistic and optimistic
Are more collaborative
Build elements of community in the business
Start companies while studying entrepreneurship
Fail fast, learn a lot, and keep going

20. Getting Started (cont’d)
Strong Commitment to the Business (Tenacity)
Strong Internal Locus of Control (Self-Reliance)
Characteristics of Successful Entrepreneurs
Moderate Risk Takers (Financial, Career, Psychic Risks)

21. Entrepreneurial Characteristics (Timmons and Spinelli)
Commitment and Determination
Motivation to Excel
Leadership
Attitudes and Behaviors of Entrepreneurs
Creativity, Self-Reliance, and Adaptability
Opportunity Obsession
Tolerance of Risk, Ambiguity, and Uncertainty

22. How to Fail as an Entrepreneur
Overestimate what you can do
Lack an understanding of the market
Hire mediocre people
Fail to be a team player
Be a domineering manager
Not share ownership in the business in an equitable way

23. The Importance of Mentors
A knowledgeable person who can offer guidance from their experience in a given field.
The “Go-To” Team

24. Success in Business and Success in Life
Beginning with the End in Mind
Proper values and actions lead to a good exit.
Evaluating accomplishments
Winning the Wrong Game
The nature of the entrepreneurial endeavor reflects personal goals and values.
Crafting a Worthy Entrepreneurial Legacy
The tangible items and intangible qualities passed on not only to heirs but also to the broader society.

25. Key Terms entrepreneur small business entrepreneurial opportunity
bootstrapping
reluctant entrepreneur
refugee
founder
franchisee
high-potential venture (gazelle)
attractive small firm
microbusiness
lifestyle business
artisan entrepreneur
opportunistic entrepreneur
entrepreneurial team
niche market
internal locus of control
external locus of control
mentor
entrepreneurial legacy