ENTREPRENEURS_EFF_CH - Entrepreneurs The Driving Force Behind Small Business Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship The World of the

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Unformatted text preview: Entrepreneurs: The Driving Force Behind Small Business Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship The World of the Entrepreneur In the U.S., entrepreneurs start nearly 6 million businesses a year! Global Entrepreneurship Monitor (GEM) Approximately 10.5% of U.S. population is actively involved in trying to start a new business. Approximately 12% of people in 37 GEM countries studied are involved in starting a new business. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Japan Russi a Bel gi um France Hong Kong Croati a Sweden Tai wan Pol and Spain Netherl ands Fi nl and Sl oveni a Germ any Uni ted I tal y Singapore South Denm ark Hungary Switz erl and Israel Austral i a Norway Canada I reland Uni ted I cel and Chi na Mexi co Braz i l New Argentina Korea Chil e I n di a Thai l and Total Entrepreneurial Activity (TEA) Index Entrepreneurial Activity Across the Globe Persons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 TEA Index Global TEA Average Country Source: 2002 Global Entrepreneurship Monitor. 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. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship What Is an Entrepreneur? What Is an Entrepreneur? An entrepreneur is someone who is willing to work 16 hours a day to keep from working 8 hours a day for someone else! Why Entrepreneurs Went into Business 41% Joined fanily business 36% Wanted more control over future 27% Tired of working for someone else 25% Wanted to fulfill lifelong goal Have been downsized or laid off 0% 5% 5% 10% 15% 20% 25% Percentage Source: Dun & Bradstreet 19th Annual Small Business Survey, 2000. 30% 35% 40% 45% Characteristics of Entrepreneurs Desire to take initiative Preference for moderate risk Confidence in their ability to succeed Self­reliance Perseverance Desire for immediate feedback Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Characteristics of Entrepreneurs High level of energy Competitiveness Future orientation Serial entrepreneurs Skilled at organizing Value achievement over money Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship 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). Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Benefits of Small Business Ownership The opportunity to: Create your own destiny Make a difference Reach your full potential Reap impressive profits Contribute to society and to be recognized for your efforts Do what you enjoy and to have fun at it Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Drawbacks of Small Business Ownership Uncertainty of income Risk of losing your entire investment Long hours and hard work Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Small Business Owners' Work Week Number of Hours Worked per Week Less than 30 hours 11% More than 60 hours 17% 30 to 40 hours 24% 51 to 60 hours 20% 41 to 50 hours 28% Source: Dun & Bradstreet 21st Annual Small Business Survey, 2002. Drawbacks of Small Business Ownership Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Owner Age at Business Formation 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 16 . 8 % 16 . 7 % 15 . 9 % 15 . 2 % 9.8% 9.3% 8.5% 3.9% 2.2% Under 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 25 Age Source: National Federation of Independent Businesses and Wells Fargo Bank, 2002. 1. 7 % 65+ Drawbacks of Small Business Ownership 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 Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Feeding the Entrepreneurial Fire Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E­Commerce and the World Wide Web Feeding the Entrepreneurial Fire Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E­Commerce and the World Wide Web International opportunities The Cultural Diversity of Entrepreneurship Young entrepreneurs Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Aspiring Teenage Entrepreneurs Percent Interested in Starting a Business 89% 90% 86% 79% 80% 69% 70% 60% 50% 40% 30% 20% 10% 0% Asian/Pacific Islander Source: Milken Institute, 2003. African-American Hispanic-American White The Cultural Diversity of Entrepreneurship Young entrepreneurs Women entrepreneurs Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Wo men Owned B usinesses in the United States 12 . 0 10 . 0 8.0 6.0 4.0 2.0 0.0 19 7 8 19 8 1 19 8 4 19 8 7 Source: National Federation of Women Business Owners, 2003. 19 9 0 19 9 3 19 9 6 19 9 9 2002 The Cultural Diversity of Entrepreneurship Young entrepreneurs Women entrepreneurs Minority­owned enterprises Immigrant entrepreneurs Part­time entrepreneurs Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship The Cultural Diversity of Entrepreneurship Home­based business owners Family business owners Copreneurs Corporate castoffs Corporate dropouts Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship A Profile of Small Business by Industry Construction 12% Wholesale 8% Retail 20% Manufacturing 6% Finance 8% Other 6% Service 40% Source: Small Business Administration, 2002. Small Businesses... Make up 98.5% of all the businesses in the U.S. Employ 52% of the nation’s private sector workforce. Pay 45 % of total private payroll. Create more jobs than big businesses. Are leaders in offering training and advancement opportunities to workers. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Small Businesses... Produce 51% of the nation’s private GDP. Account for 47% of business sales. Create 4X more innovations per R & D dollar spent than medium­sized firms and 24X as many as large companies. Create two­thirds of all new inventions. Produce 13X to 14X more patents per employees than large companies. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Small Business Survival Rate % of Sm all Fi rms Survi vi ng 100% 100% 90% 81% 80% 70% 65% 60% 54% 50% 46% 40% 40% 36% 30% 32% 29% 27% 25% 20% 10% 0% New 1 2 3 4 5 6 # of Years in Business Source: National Federation of Independent Businesses Business Policy Guide, 2003. 7 8 9 10 Eleven Deadly Mistakes of Entrepreneurship 1. 2. 3. 4. 5. 6. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Management incompetence Lack of experience Forcing a flawed idea Undercapitalization Poor cash management Failure to develop a strategic plan Eleven Deadly Mistakes of Entrepreneurship 7. 8. 9. 10. 11. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Weak marketing effort Uncontrolled growth Poor location Lack of inventory control Inability to make the “entrepreneurial transition” 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. Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Avoiding the Pitfalls of Small Business Failure Know your business in depth Prepare a solid business plan Manage financial resources Understand financial statements Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship Avoiding the Pitfalls of Small Business Failure Learn to manage people effectively Set your business apart from the competition Keep in tune with yourself Chapter 1 Entrepreneurship Chapter 1 Entrepreneurship ...
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This note was uploaded on 01/11/2012 for the course MANAGEMENT MGT4914 taught by Professor Duweane during the Spring '11 term at Assumption College.

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