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Simple example of entrepreneur
The Nature and Importance of Entrepreneurs
References:•Entrepreneurship by Hisrich • Entrepreneurship by Bruce R. Barringer
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1. Do you ever question what you will be doing next year? What about five years down the road?
2. Are you sure the courses you are taking will help you fulfill your future goals?
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What Is An Entrepreneur?
• A person who sets up a business or businesses, taking on financial risks in the hope of profit.
• A vision-driven individual who assumes significant personal and financial risk to start or expand a business.
Who is an Entrepreneurrecognise opportunities where others see chaos or confusion
highly creative and innovative
possess business know-how , networks and general management skills
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Definition Of Entrepreneur
A concise, universally accepted definition has not yet emerged
-Almost all the definitions includes:1) initiative taking,2) the organizing and reorganizing of social and
economic mechanisms to turn resources and situations to practical account,
3) the acceptance of risk or failure.
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Why Entrepreneurship?
Key to economic development and growth
Creates jobs, income, and wealth
Source of new technology and products
T
The entrepreneur
The opportunity-spotter The project championThe inventorThe person who realizes the opportunity and is
determined to engage itThe person who makes things
happenThe originator of
the product or concept
The ideaIdentifying
the opportunity
Matching the idea to the
opportunity
Exploiting the
opportunity to build
somethingof value
Source: Bolton & ThompsonEntrepreneurs: Talent, Temperament, Technique 14
Entrepreneur as an innovator:
• an integral part of entrepreneurship• the act of introducing something new• the ability to create and conceptualize• to understand all the forces at work in the
environment• Tools have changed with advances in science
and technology but the ability to innovate has been present in every civilization.
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Entrepreneurship Versus Small Business Management
The terms entrepreneur and small business management are used interchangeably.
An entrepreneur or a person who engages in entrepreneurship is someone who innovates or creates.
A small business manager, on the other hand, is a person who is engaged in the actual management of a business
A small business owner who starts a small business but never creates new products or develops new ways to manage his business only engaged in one act of entrepreneurship when he started the business.
Some entrepreneurs never want to become full-time managers and would prefer to hire professional managers to look after the day-to-day activities associated with running a company. These entrepreneurs prefer to create rather than manage ventures.
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Why Become an Entrepreneur?
The three primary reasons that people become entrepreneurs and start their own
firms
Desire to be their own boss
Financial rewards
Desire to pursue theirown ideas
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Characteristics of Successful Entrepreneurs
Four Primary Characteristics
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Characteristics of Successful Entrepreneurs• Passion for the Business
• The number one characteristic shared by successful entrepreneurs is a passion for the business.
• This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives.
• Product/Customer Focus• A second defining characteristic of successful
entrepreneurs is a product/customer focus.• An entrepreneur’s keen focus on products and customers
typically stems from the fact that most entrepreneurs are, at heart, craftspeople.
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Characteristics of Successful Entrepreneurs
• Tenacity Despite Failure• Because entrepreneurs are typically trying something new, the failure rate is
naturally high.• A defining characteristic for successful entrepreneurs’ is their ability to
persevere through setbacks and failures.
• Execution Intelligence• The ability to fashion a solid business idea into a viable business is a key
characteristic of successful entrepreneurs.
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Entrepreneurial Process
1. Opportunity assessment2. Creation and length of
opportunities3. Real and perceived value
opp4. Risk and return opp
5. Opportunity v/s personal skills and goals
6. Competitive environment
Identify and evaluate the oppertunity
Entrepreneurial Process
Title pageTable of contents
Executive summaryMajor setions
Discription of businessDiscription of industry
Technology planMarketing planFinancial planProdution plan
Org planOppertional plan
Summaryappendix
Identify and evaluate the oppertunity Develop and business plan
Entrepreneurial ProcessIdentify and evaluate the oppertunity
Develop and business plan
Required resources
Determine resources neededDetermine existing resources
Identify resource gaps and available supplies
Develop access to needed resources
Entrepreneurial ProcessIdentify and evaluate the oppertunity
Develop and
business plan
Required resources
Develop management stylesUnderstand key variables for
successIdentify problems and potential
problemsImplement control systemDevelop growth strategy
Manage the enterprise
Common Myths About Entrepreneurs
• Myth 1: Entrepreneurs Are Born Not Made• This myth is based on the mistaken belief that some people are genetically
predisposed to be entrepreneurs.• The consensus of many studies is that no one is “born” to be an
entrepreneur; everyone has the potential to become one. • Whether someone does or doesn’t become an entrepreneur, is a function of
the environment, life experiences, and personal choices.
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Common Myths About Entrepreneurs
Although no one is “born” to be an entrepreneur, there are common traits and characteristics of
successful entrepreneurs• Achievement motivated• Alert to opportunities
• Creative• Decisive• Energetic
• Has a strong work ethic• Is a moderate risk taker
• Is a networker• Lengthy attention span
• Optimistic disposition• Persuasive• Promoter
• Resource assembler• Self-confident• Self-starter• Persistent
• Tolerant of ambiguity• Visionary
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Common Myths About Entrepreneurs
• Myth 2: Entrepreneurs Are Gamblers• Most entrepreneurs are moderate risk takers.• The idea that entrepreneurs are gamblers originates from
two sources:• Entrepreneurs typically have jobs that are less structured, and so
they face a more uncertain set of possibilities than people in traditional jobs.
• Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking.
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Common Myths About Entrepreneurs
• Myth 3: Entrepreneurs Are Motivated Primarily by Money.• While it is naïve to think that entrepreneurs don’t seek financial rewards,
money is rarely the reason entrepreneurs start new firms.• In fact, some entrepreneurs warn that the pursuit of money can be
distracting.
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Common Myths About Entrepreneurs• Myth 4: Entrepreneurs Should Be Young and Energetic.
• The most active age for business ownership is 35 to 45 years old.• While it is important to be energetic, investors often cite the
strength of the entrepreneur as their most important criteria in making investment decisions.
• What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success.
• These criteria favor older rather than younger entrepreneurs.
• Ray Kroc's success came later in life when he was past his 50th birthday.
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Common Myths About Entrepreneurs
• Myth 5: Entrepreneurs Are Always Inventors• The idea that entrepreneurs are inventors is a result of
misunderstanding and tunnel vi sion. • Although many inventors are also entrepreneurs,
numerous entrepreneurs encom pass all sorts of innovative activity.
• For example, Ray Kroc did not invent the fast-food franchise, but his innovative ideas made McDonald's the largest fast-food enterprise in the world
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• The Founder is an upcoming American biographical film directed by John Lee Hancock and written by Robert D. Siegel. The film portrays the story of Ray Kroc and his acquisition of the McDonald's fast food chain. The film stars Michael Keaton as Kroc and Laura Dern as his wife Ethel Fleming. The additional cast includes Nick Offerman, John Carroll Lynch, Patrick Wilson, Ric Reitz, and Wilbur Fitzgerald. The film is scheduled to be released on November 25, 2016.
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Common Myths About Entrepreneurs
• Myth 6: Entrepreneurs Are Doers, Not Thinkers• Although it is true entrepreneurs tend toward action, they
are also thinkers. Indeed, they are often very methodical people who plan their moves carefully.
• The emphasis today on the creation of clear and complete business plans is an indication that "think ing" entrepreneurs are as important as "doing" entrepreneurs.
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List of the Richest School Drop Out Billionaires and Successful Entrepreneurs
• Henry Ford (Ford)- Net Worth $199 Billion – Dropped out at 16.• Bill Gates (Microsoft)- Net Worth $78.8 Billion – Dropped out at
19. Gates attended Harvard in the fall of 1973, only to drop out two years later to found Microsoft with childhood buddy Paul Allen. In 2007, he ended up receiving an honorary degree from Harvard.
• Steve Jobs (Apple) Net Worth $8.3 Billion – Dropped out at 21. Jobs dropped out of college after one semester of Reed College to start Apple.
• Mark Zuckerberg: The youngest billionaire in the world, dropped out of Harvard to promote his social networking platform ($33.1 billion).
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Common Myths About Entrepreneurs
• Myth : Entrepreneurs Are Academic and Social Misfits
• The belief that entrepreneurs are academically and socially ineffective is a result of some business owners having started successful enterprises after dropping out of school or quitting a job.
• Today the entrepreneur is considered a hero—socially, economically, and academically. No longer a misfit, the entrepreneur is now viewed as a professional.
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Entrepreneurial Decision ProcessDeciding to become an entrepreneur by leaving
present Activity…….! Indeed, millions of ventures are formed despite recession, inflation, high interest rates, lack
of infrastructure, economic uncertainty, and the high probability of failure. Many entrepreneurs follow the entrepreneurial decision process, which entails a
movement from something to something—a movement from a present lifestyle to forming a new enterprise, as indicated in previous slide
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Change from Present Lifestyle
• The decision to leave a career or lifestyle is not an easy one. Work Environment: individuals tend to start businesses in
areas that are familiar.• R&D and Marketing
A negative force—disruption: Retirement, relocation, frustration, no growth opportunity,
unemployment etc.For example, a student who is not promoted after receiving an
MBA degree may become frustrated and decide to leave and start a new company.
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• Desirability of new venture formation: Aspects of a situation that make it
desirable to start a new company
The perception that starting a new company is desirable results from an individual’s culture, subculture, family, peers and teachers.
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• Possibility of new venture formation:Factors making it possible to create a new venture.
Several factors contribute to the creation of a new venture.
1. The Government 2. Formal education 3. Previous business experience 4. Marketing know how5. A role model6. Financial resources
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Types of Start-Up FirmsThe vast majority of small business fit
into this category. Salary – substitute firms offer
ordinary, easily available products or services to customers that are not particularly innovate.
Typically, they offer common products—retail merchandise, for example, or a service like accounting or hairstyling. Most small businesses are of this type
Cottage industry: A job or occupation carried out at home or on a part-time basis.
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These firms are not innovative, nor do they grow quickly.
Commonly, lifestyle companies promote a particular sport, hobby, or pastime and may employ only the owner or just handful people.
Examples:
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Gazelle Company- An extremely fast-growing company, which maintains consistent expansion of both employment and turnover over a prolonged period (for at least 4years) by at least 20% annually.
Also, gazelle companies usually are known for creating many new job opportunities.
Examples:
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Role of entrepreneurship in Economic Development
• It involves initiating and constituting change in the structure of business and society (i-e innovation).Innovation
Developing new stimulating investment products (& services) interest in the new venturefor the market
Expanding the capacity Utilizing new capacityfor growth and output
(supply side) (demand side) 43
Economic Impact of Entrepreneurial Firms
• Innovation• Is the process of creating something new, which is central
to the entrepreneurial process.• Small firms are twice as innovative per employee as large
firms.
• Job Creation• In the past two decades, economic activity has moved in
the direction of smaller entrepreneurial firms, which may be due to their unique ability to innovate and focus on specialized tasks.
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Entrepreneurial Firms’ Impact on Society and Larger Firms
• Impact on Society• The innovations of entrepreneurial firms have a dramatic impact on society.• Think of all the new products and services that make our lives easier,
enhanced our productivity at work, improved our health, and entertained us in new ways.
• Impact on Larger Firms• Many entrepreneurial firms have built their entire business models around
producing products and services that help larger firms become more efficient and effective.
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Microsoft's new CEO Satya Nadella to get $1.2 mn salary; total package at $18 mn• The new Microsoft CEO, will get a base annual salary of USD 1.2 million, but his
overall package after taking into account bonus and stock awards may reach USD 18 million a year besides various other perks.
• As per his new employment agreement, the Indian-origin CEO of USD 78-billion software major will be paid his salary on "semi-monthly" basis at an annual rate of USD 1.2 million.
• 46-year-old Nadella, who has been with Microsoft for 22 years, would also be eligible for a cash bonus, which can range from zero to 300 per cent, resulting into total payout of up to USD 3.6 million.
Besides this, Nadella, will get stock awards to the tune of USD 13.2 million, taking the total package to USD 18 million.
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IntrapreneurshipThe act of behaving like an entrepreneur while working (as
employee) within a established firm.The term is derived from a combination of "intra" or
internal, and "entrepreneurship.“ Intraprenuers are usually highly self-motivated, proactive
and action-oriented people who are comfortable with taking the initiative, even within the boundaries of an organization, in pursuit of an innovative product or service.
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Muhammad Yunus- A well-known contemporary social entrepreneur, founder and manager of Grameen Bank and its growing family of social venture businesses,
Awarded a Nobel Peace Prize in 2006.The work of Yunus and Grameen echoes a
theme among modern day social entrepreneurs that emphasizes the enormous synergies and benefits when business principles are unified with social ventures.
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Forms of Entrepreneurship• Political entrepreneur- The term may refer to any of the following:
someone (usually active in the fields of either politics or business) who founds a new political project, group, or political party
the function of political entrepreneurship consists in the direction of coercively obtained resources by the state toward processes of production which would not otherwise have taken place.
a businessman who seeks to gain profit through subsidies, protectionism, government contracts, or other such favorable arrangements with government(s) through political influence (also known as a rent-seeker).
a political actor (not necessarily a politician) who seeks to further his or her own political career and popularity by pursuing the creation of policy that pleases the populace.
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Social entrepreneurship• The process of pursuing innovative solutions to social
problems. Social entrepreneurs adopt a mission to create and sustain
social value. They pursue opportunities to serve this mission.
Today, nonprofits and non-governmental organizations, foundations, governments, and individuals also play the role to promote, fund, and advise social entrepreneurs around the planet.
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Lee Kuan Yew• Lee Kuan Yew(born Harry Lee Kuan
Yew, 16 September 1923 – 23 March 2015) was a Singaporean politician. He was the first Prime Minister of Singapore, governing for three decades. He is recognized as the founding father of modern Singapore, and the only leader known to bring an entire country from third-world to first-world status in a single generation.
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• Count the number of yes answers.Above17 score : You have the drive to be an entrepreneur13-17: Your entrepreneurial drive is not apparent but you
may defiantly have ability to be an entrepreneur, if you accept pains and gains of being your own boss.
Below 13: Your entrepreneurial drive is even less apparent. However if you work hard, you can be a superb Intrapreneur.
Remember: Regardless of your score, take time to educate, gain and develop experience in your area of interest.
This quiz is just a raw indicator, not scientifically validated indicator.
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Joke of the DayTeacher: When Mohammed Bin Qasim was at age of 18, he
conquered Sindh and you still don’t know the definition of Entrepreneurship.
Student: Sir, when Alexander was at age of 34, he conquered the world and you are still teaching entrepreneurship in SBKWU.
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CASE 1. Paul's Four Short ComingsPaul Enden has always been very reliable and a hard worker. For the past eight years Paul has been working in a large auto service garage. During this lime he has made a number of recommendations to the owner regarding new services that could be provided to cus tomers. One of these is called the "'fast lube." With this service people who want to have their oil changed and their car lubricated do not have to leave the auto and come back later in the day. Three service racks handle this job. It generally takes less than 10 minutes lo take care of a car, and most people can have the job completed within 25 minutes of the time they arrive. The service, which has become extremely popular with customers, re sulted in an increase in overall profits of 5 percent last year.
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Paul's wife believes he has a large number of ideas that could prove profitable. "You ought to break away and open your own shop," she has told him, Paul would like to do so, but he believes four things help account for entrepreneurial success and he has none of them. Here is how he explained it to his wife:"To be a successful entrepreneur, you have lo be a thinker, not a doer. I'm a doer. Think ing bores me. I wouldn't like being an entrepreneur. Second, those guys who do best as entrepreneurs tend to he inventors. I'm not an inventor. If anything, I think of new ap proaches to old ways of doing business. I'm more of a tinkerer than an inventor. Third, you've got to be lucky to be a successful entrepreneur. I'm hard working; I'm not lucky. Fourth, you have to have a lot of money to do well as an entrepreneur. I don't have much money. 1 doubt whether $50,000 would get me started as an entrepreneur."
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Questions1. Does Paul need to be an inventor to be an effective entrepreneur?
Explain your answer.2. How important is it that Paul have a lot of money if he hopes to be
an entrepreneur? Explain your answer.3. What is wrong with Paul's overall thinking? Be sure to include a
discussion of the myths of entrepreneurs hip in your answer.
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• Case Answers1. No, Paul does not need to be an inventor. That idea is one of the ten
most commonly known myths of entrepreneurship. Entrepreneurship covers all varieties of profit-making activities and, thus, is not limited to inventions.
2. While having start-up capital is always important in new ventures, it is not the only factor. In fact, many entrepreneurs are able to obtain enough capital through loans because the funding source believes in the managerial ability of the entrepreneur. Thus, having lots of money is not the only key to success.
3. Paul’s overall thinking is caught up in the typical mythical beliefs about entrepreneurship. The myths have arisen due to lack of knowledge and research about entrepreneurs. Therefore, people have simply believed that entrepreneurs are born not made and need luck, money, and ignorance to succeed. Paul is reflecting the traditionally accepted “folklore” that still exists due to the infancy of the current research. However, each year the research expands, knowledge increases, and contemporary entrepreneurs realize this weakness in the myths.
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Related Articles1. Self-employment as a Career Choice: Attitudes, Entrepreneurial
Intentions, and Utility Maximization ..2. Entrepreneurial Ecosystem: Case Study on the Influence of
Environnemental Factors on Entrepreneurial Success.
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