1. Chapter 4 Creativity and the Business Idea
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives
To identify various sources of ideas for new venture
To know the methods available for generating new venture ideas
To discuss creativity and the techniques for creative problem solving
To discuss the aspects of the product planning and development process

3. Definitions Entrepreneur: Entrepreneurship:
Person whose goal is to create or capitalize on new economic opportunities through innovation
People who own, operate, and take the risk of a business venture
Entrepreneurship:
Process through which entrepreneurs create and grow enterprises
Instructions:  
This slide is meant to ensure that everyone is using the same terms in the same way. This will have implications later in the presentation with the data focusing on the self-employed (‘proprietors’ or ‘non-employers’) and small businesses or micro-enterprises.
Script:
“The definition for ‘entrepreneur’ on this slide is commonly accepted, but we are going to expand this definition for the purposes of our discussion today.
For our planning purposes, we will define ‘entrepreneurship’ broadly to include all types of self-employment and small businesses. Within the region, you might discover niches for serial entrepreneurs, lifestyle entrepreneurs, innovators, creatives, gazelles, and youth entrepreneurs. Until you have a clear idea of the best approach for your region, keeping all options open may be best.
Before we begin a discussion on how to create an entrepreneurial development plan, providing some working definitions may be helpful.
Entrepreneurs are people who create and grow enterprises.
Entrepreneurship is the process through which entrepreneurs create and grow enterprises.
Entrepreneurial communities are those where significant economic and social entrepreneurial activity exists and where an effective system of private and public support fosters entrepreneurship.
Entrepreneurship development refers to the process of building an infrastructure of public and private policies and practices that foster entrepreneurship.”
Time: 5 minutes
Source: Dabson, B., & Wilcox, M. (2010). Module 1: Introduction to Creating Entrepreneurial Communities. Creating a Rural Entrepreneurial System in Tennessee, UT Extension Online Learning (extOL).
Source: Based on Dabson and Wilcox (2012)

4. Why People Become Entrepreneurs
Many entrepreneurs want to be their own bosses, and self-management is their motivation. Entrepreneurs are wealth creators. Many entrepreneurs start ventures with the specific goal of creating a profitable business to reap financial rewards. As large companies continue to layoff employees, entrepreneurs find job security in their own ventures. Finally, quality of life provides an attractive option for people to gain independence, freedom and control.

5. Who are entrepreneurs? Common traits: Original thinkers
Risk takers
Take responsibility for own actions
Feel competent and capable
Set high goals and enjoy working toward them
Self employed parents
Firstborns
Between years old
Well educated – 80% have college degree and 1/3 have a graduate level degree

6. Characteristics of Entrepreneurs
Key Personal Attributes
Successful
Entrepreneurs
Strong Managerial Competencies
Good Technical Skills

7. Key Personal Attributes
Entrepreneurs are Made, Not Born!
Many of these key attributes are developed early in life, with the family environment playing an important role
Entrepreneurs tend to have had self employed parents who tend to support and encourage independence, achievement, and responsibility
Firstborns tend to have more entrepreneurial attributes because they receive more attention, have to forge their own way, thus creating higher self-confidence

8. The Successful Entrepreneur
Passion for the Business
Product/customer focus
Tenacity Despite Failure
Execution Intelligence
The Successful Entrepreneur

9. Entrepreneur Development
Components of Success
Networks,
Mentoring and Coaching
Training & Technical Assistance
Youth Entrepreneurship
Access to Capital
Supportive Environment
Instructions:
Considering the components listed on the slide from a regional perspective is important. Each community does not need to have each component, but the region as a whole will be stronger if all components exist.
Script:
“A successful entrepreneurship development strategy generally includes the five main components shown in this diagram:
Access to capital – Capital may be available, but the real question is accessibility. Capital, if it is available and accessible, should be in the form most useful for the stage of business development - debt, quasi-equity, and equity through commercial, community development financial institution (CDFI), and public sources (federal, state).
Supportive environment – A supportive environment includes creating community and civic environments that celebrate and support entrepreneurs.
Entrepreneur networks, mentoring and coaching – This can include facilitating informal gatherings of entrepreneurs to share experiences and information, connecting entrepreneurs with experienced mentors, or offering coaching expertise to help entrepreneurs through specific business phases.
Training and technical assistance – This should include the creation of a system of advice, expertise and training appropriate to the needs of entrepreneurs. The source can be public, private, educational or nonprofit agencies.
Youth entrepreneurship – Such programs excite young people in schools, community colleges and universities about the possibilities of creating their own businesses. This assists with building the pipeline of future entrepreneurs in your region.”
Time: 5 minutes

10. Successful and Unsuccessful Entrepreneurs
Creative and Innovative
Position themselves in shifting or new markets
Create new products
Create new processes
Create new delivery
Unsuccessful
Poor Managers
Low work ethic
Inefficient
Failure to plan and prepare
Poor money managers

11. How Entrepreneurs Can Succeed
Plan and manage effectively
Assemble an expert team to execute the business concept
Test the opportunity in the marketplace
Recognize opportunity 11

12. Business Ideas Are a ‘dime a dozen’
Don’t fall in love with your own idea
Don’t hide it under a tarp in the back yard
Look before you leap (critically evaluate the potential for the business before starting)
You have to screen from 100 to 1,000 different ideas before you find a true opportunity that fits you in this place and at this time.
Avoid the service industry in a declining economy
Avoid the retail industry in a declining economy
Seek value-added, export-oriented businesses selling into growing markets

13. Generating New Business Ideas
Techniques include:
Group brainstorming/lateral thinking exercises
Research – observation, enquiry, play, prototype, experiment
Focus groups
Surveys
Analysis of and reflection on trends:
Economy
Society – social trends
Technology
Science
Political and regulatory changes
There is opportunity in change, chaos, complacency and even boredom.

14. Mental Locks/Barriers to Creativity
Focus on the right answer
That’s not logical
Follow the rules
Be practical
Avoid ambiguity
To err is wrong
Play is frivolous
That’s not my area
Don’t be foolish
I’m not creative

15. Idea versus Opportunity
Ideas are “a dime a dozen”
Opportunities are business ideas that offer the potential for a return on invested capital that more than offsets the costs of that capital on a risk-adjusted basis.

16. The Ideal Opportunity (Heaven)
A motivated and large market of customers prepared to pay any price for the product or service you offer
Repeated purchases are necessary for customers to satisfy their demand
Significant barriers of entry for any potential competitors preserving your market dominance for a long period of time
Little or no capital investment required
High profit margin (Selling price less cost to produce)
Few employees and little demand on your time

17. Little Opportunity (Business Hell)
Few customers, no repeat purchases, sporadic and unpredictable demand
Few barriers of entry for any potential competitors making it easy for anyone to enter the market to compete with you if you manage to develop the market
Large initial and on-going capital investment required
Low profit margin per unit (Selling price less cost to produce)

18. The Long Road to Success
Ideas  opportunities  feasibility  business plan  implementation  evaluation  modification  manage
Ideas
Feasibility Screening
(Proof of concept followed
By Financial viability
screening)
Implementation
(financing, resourcing)
Opportunities
Business
Plan
Evaluation

19. The Process Brainstorming New Product Innovations
Screening Those Ideas
Business Plan
Implementation

20. The Process - is like a funnel!
Creative / Soft-Thinking (Right Brain)
- brainstorm new product innovations
Logical / Hard-Thinking (Left Brain)
- formal business planning (opportunity screening, market forecasts, financial forecasts)

21. Figure 4.6 - The Product Planning and Development Process

22. …..will be discussed in the next session…..
A Good Business Plan is...
Complete
Short
Integrated
Prepared for the audience
Organized
…..will be discussed in the next session…..

23. Generate Your Business Idea and Build Your Business Team
Business idea must be feasible and marketable
Business can be liquidated at the end of this semester
Legal product only
Avoid food and beverage
No just resale/packaging

24. Organization CEO (1 student) Manager (1 student for each): Staff :
Product (ion)
Marketing
Human Resource
Finance
Staff :
5-7 for production and marketing dept.
1-2 for human resource and finance dept.

25. Let’s Do: Make your (tentative) organization!
Generate your business idea!
Determine your company’s name, vision, mission (s), logo, tag line!
Presented next session!

26. Drafting Your Action Plan
“Good plans shape
good decisions.
That's why good planning helps to make
elusive dreams come true.”
Lester Robert Bittel
Instructions:
Use Handout Six: Regional Entrepreneurship Action Plan to guide the team in putting together everything they have learned in this module.
Script:
“An action plan is exactly what the name suggests. It is a detailed list of actions that need to be taken to get you to your desired outcome. An action plan can be customized in many ways, but there are a minimum of four questions which must be answered:
What is the action being completed?
What are the resources needed to complete the action?
Who will be responsible for completing the action?
By when will the action be complete?
The action should be specific and small enough that it can be completed within 2-3 weeks. Resources required should include any special data needs, the time required, any specialized knowledge/training, tools, and supplies. The ‘who’ should be specific – names of individuals rather than a more generic reference to a committee. The goal here is have someone be responsible. If there is no name, the action should be removed from the plan.
The ‘when’ should be equally specific – a couple weeks, for example, is not an acceptable response, but May 12, 2012, is a very acceptable response.
Using Handout Six: Regional Entrepreneurship Action Plan, your group should complete the plan together, and each member should have a copy for reference.
As some actions are completed, new actions should be added when necessary. When the desired outcome is achieved, it is time for a new action plan. As milestones are achieved, don’t forget the power of celebration!”
Handout Six: Regional Entrepreneurship Action Plan
Time: 30 Minutes