The Foundations of

Entrepreneurship
 The World of the Entrepreneur
• A new business is born every 11 seconds in the
United States
• One of 12 Filipinos is actively involved in trying to
start a new business.
 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.
 Characteristics of Entrepreneurs
• Desire for responsibility
• Preference for moderate risk
• Confidence in their ability to succeed
• Desire for immediate feedback
• High level of energy
• Future orientation
• Skilled at organizing
• Value achievement over money
 The “Type E” Personality
Common Traits of Entrepreneurs:
 Aggressively pursues goals; pushes self and others
 Seeks autonomy, independence and freedom from
boundaries
 Sends consistent messages; very focused
 Acts quickly, often without deliberating
 Keeps distance and maintains objectivity
Cont…

• Pursues simple, practical solutions

• Willing to take risks; comfortable with uncertainty
• Exhibits clear opinions and values; has high expectations
• Impatient; “just do it” mentality
• Positive, upbeat, optimistic; communicates confidence
Common Themes in Definitions of Entrepreneurship

Process
The
Uniqueness Entrepreneur

Defining
Growth Entrepreneurship Innovation

Profit or Organization
Nonprofit Creation
Creating
Value
 The Development of Entrepreneurship
Theory
18th Century

Richard Cantillon: Coins Entrepreneur bears risks

term entrepreneur and plans, supervises,
organizes, and owns
(“go-between” or “between
factors of production
taker”)
 The Development of Entrepreneurship
Theory

19th Century

Jean Baptiste Say: Distinction made between those

who supplied funds and earned
Proposed that profits from
interest and those who profited
entrepreneurship were separate
from managerial abilities
from profits of capital ownership
The Development of Entrepreneurship
Theory

20th Century

Joseph Schumpeter: Peter Drucker:

Described the entrepreneur as Described the
someone who is an innovator entrepreneur as someone
and someone who “creatively who maximizes
destructs”
opportunity
 Myths About Entrepreneurship

1. Successful entrepreneurship takes only a great idea.

2. Entrepreneurship is easy.
3. Entrepreneurship is a risky gamble.
4. Entrepreneurship is found only in small businesses.
5. Entrepreneurial ventures and small businesses are identical.
 The Entrepreneurial Process
Starting the Venture:
 Researching Feasibility
 Planning the Venture
Exploring the Identifying  Organizing the Venture
Entrepreneurial Opportunities/
 Launching the Venture
Context Possible
Competitive Advantage Managing the Venture:
 Managing Processes
 Managing People
 Managing Growth
 Special Issues
 Rewards of Being an Entrepreneur
 High degree of independence— freedom from constraints
 Get to use a variety of skills and talents
 Freedom to make decisions
 Accountable to only yourself
 Opportunity to tackle challenges
 Feeling of achievement and pride
 Potential for greater financial rewards
 Feeding the
Entrepreneurial Fire
• Entrepreneurs as heroes
• Entrepreneurial education
• Demographic and economic factors
• Shift to a service economy
• Technological advancements
• Independent lifestyles
• E-Commerce and the World Wide Web
• International opportunities
 Challenges of
Being an Entrepreneur
 Must be comfortable with change and uncertainty
 Must make a bewildering number of decisions
 May face tough economic choices
 Must be comfortable with taking risks
 Need many different skills and talents
 Must be comfortable with the potential for failure
 The Cultural Diversity of
Entrepreneurship
• Young entrepreneurs
• Women
• Minority-owned enterprises
• Immigrant entrepreneurs
• Part-time entrepreneurs
• Home-based businesses
• Family businesses
• Copreneurs
• Corporate castoffs
• Corporate dropouts
 Nine Deadly Mistakes of
Entrepreneurship
1. Management incompetence
2. Lack of experience
3. Poor financial control
4. Failure to develop a strategic plan
5. Uncontrolled growth
 Nine Deadly Mistakes of
Entrepreneurship
(continued)

6. Poor location
7. Improper inventory control
8. Incorrect pricing
9. Inability to make the “entrepreneurial
transition”
Differences Between Small Businesses and
Entrepreneurial Ventures

 Independently owned, operated, and  Innovative practices

financed
 Goals are profitability and growth
 Less than 100 employees
 Seeks out new opportunities
 Doesn’t emphasize new or
innovative practices  Willingness to take risks

 Little impact on industry

 Benefits of Small Business Ownership

The opportunity to:

• create your own destiny
• make a difference
• reach your full potential
• reap unlimited profits
• contribute to society and be recognized for your
efforts
• do what you enjoy and have fun at it
 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
 Small Business by Industry

Financial Other
8.0% 7.3%
Services
Construction
39.2%
11.8%

Manufacturing
5.8%
Wholesale Retail
7.4% 20.5%
 Small Business Survival Rate

100%
% of Small Firms

80%
Surviving

60%
40%
20%
0%
New 2 4 6 8 10
# of Years in Business
 Avoiding the Pitfalls of
Small Business Failure
• Know your business in depth
• Develop a solid business plan
• Manage financial resources
• Understand financial statements
• Learn to manage people effectively
• Keep in tune with yourself
 9 Tips from Fastest Growing Companies

1. Stop paying lip service to customer service

2. Be willing to share the pie with your
employees
3. Be prepared to make sacrifices
4. Spread yourself out, not thin
 10 Tips from Fastest Growing Companies
(continued)
5. Break down the walls
6. Stay one step ahead
7. Invest in yourself
8. Be different
9. Look where you’re going
 Motto for Entrepreneurs
• Conceive it
• Believe it
• Achieve it!