Chapter 1The Foundation of EntrepreneurshipAll About Entrepreneurship

What Creates Entrepreneurs?Entrepreneur:

◦Someone who Gathers resources Accepts risk Exploits opportunities Creates new value

◦An easier definition? Someone who starts a new business

Who Are the Entrepreneurs?People who see opportunitiesPeople who are tired of working for someone elsePeople who have been laid off from working

somewhere else

Currently, most exist in North and South America◦ Why do you think this is?◦ Why do entrepreneurs also appear in developing

countries?◦ Countries with 10% or more citizens as business

owners: U.S., Canada, Peru, Iceland, Ecuador, Brazil, Australia, Argentina

Who Is the Typical Entrepreneur?High level of energy and tenacityWillingness to accept educated

riskHigh level of self-motivationHigh level of optimismSkill at seeing opportunitiesSkill at assembling resources

Entrepreneur of the DayMark Davis

◦Founded Insert Therapeutics Makes a drug, TI-101, that goes through

blood stream and attacks cancer cells without producing side effects

◦Founded the company because of his wife’s breast cancer

◦Started out as a chemical engineer at Cal Tech

◦Sold to Arrowhead Research Corp.

What’s So Great About Entrepreneurship?Carving your own pathMaking a differenceReaching your full potentialPossibly starting something with

large returnsDoing what you love

Entrepreneurship – The Dark SideYou can lose everything you own.

You can fail.Little downtimeLittle family timeHigh stress levelsResponsibility and …. BLAME!

What Is Driving Entrepreneurship?Trend toward a service economyLow cost technology accessWWWGrowing access to international

marketsDegrees in entrepreneurshipSocietal acceptance of

entrepreneurship

Who Are the Newest Entrepreneurs?Teens, twenties, and thirties

Women◦Own nearly half of all businesses!

Minorities◦Growing faster than national average

Home Based Businesses53% of businesses are home

based◦91% are only one employee

Keeps operating costs to a minimum

On average, makes $63,000/year and works 61 hours/week.

Family-Owned Businesses90% of all businesses are family-

owned and managed

They account for the majority of U.S. employment, wages and GDP

Succession plans are the biggest problem

Small Business’s Effect on the Economy99.7% of all businesses are small

businesses

A “small business” employs less than 100 people

Just 3% of small businesses created 70% of the jobs

Create 13 to 14 times the innovations per employee than larger companies

The Down Side: Small Business FailureAfter 3 years, about ½ of the small

businesses are still open

After 10 years, about ¼ are still open

Remember, not everyone opening a business is college-trained, or trained at all, for that matter.

Why do you think businesses fail?

Most Common MistakesNo management

skillsNo financial planUndercapitalizat

ionNot enough

marketingNo strategyUncontrolled

growth

Poor locationPoor inventory

controlPricing not

compatible with costs

Handling FailureAccept failure for what it

practically is – you lost some money, and you didn’t have a good idea, or you implemented it poorly

Must learn from mistakes

Ford started 3 companies before Ford worked. Hershey had 6. Dick’s came from 20 tries.

How to Avoid FailureHave a planGet the knowledge on your

industryDon’t undercapitalize your

businessBe able to use your financial

statementsKnow your limits and work

around them