PowerPoint Presentation by Charlie Cook

The University of West Alabama

Longenecker • Moore • Petty • Palich

© 2008 Cengage Learning.

All rights reserved.

Entrepreneurship: A World of Opportunity

CHAPTER 1

The

Entrepreneurial

Life

Part 1

© 2008 Cengage Learning. All rights reserved. 1–2

Looking AHEAD

1. Discuss the availability of entrepreneurial opportunities and give

examples of successful businesses started by entrepreneurs.

2. Explain the nature of entrepreneurship and how it is related to

small business.

3. Identify some motivators or rewards of entrepreneurial careers.

4. Describe the various types of entrepreneurs and entrepreneurial

ventures.

5. Identify five potential advantages of small entrepreneurial firms.

6. Discuss factors related to readiness for entrepreneurship and

getting started in an entrepreneurial career.

7. Explain the concept of an entrepreneurial legacy and the

challenges involved in crafting a worthy legacy.

After you have read this chapter, you should be able to:

© 2008 Cengage Learning. All rights reserved. 1–3

Entrepreneurial Opportunities

• Entrepreneurial Opportunity

An economically attractive and timely opportunity that

creates value for interested buyers or end users.

• Success Stories

Latemodel Restoration Supply (Waco, Texas)

http://www.latemodelrestoration.com

Spanx (Atlanta, Georgia)

http://www.spanx.com

MP4 Solutions (San Antonio, Texas)

http://www.airstripob.com

© 2008 Cengage Learning. All rights reserved. 1–4

Who Are Entrepreneurs?

• Entrepreneurs are:

A person who starts and/or operates a business.

Individuals who discover market needs and

launch new firms to meet those needs.

Risk takers who provide an impetus

for change, innovation, and

progress.

All active owner-managers

(founders and/or managers

of small businesses).

© 2008 Cengage Learning. All rights reserved. 1–5

The Contributions of Small Business

• Small Businesses:

Produce 14 times as many patents per employee

than do large companies, and are twice as likely to

turn them into market successes.

Account for half of the private gross domestic product.

Create more than 60% of net new jobs annually.

Pay 44.3% of private payrolls.

© 2008 Cengage Learning. All rights reserved. 1–6

What Is a Small Business?

• Criteria for Defining Smallness in Business

1. Financing supplied by one person or small group

2. Localized business operations (except marketing)

3. Business’ size small relative to larger competitors

4. Fewer than 100 employees

© 2008 Cengage Learning. All rights reserved. 1–7

Entrepreneurial Incentives1-2

© 2008 Cengage Learning. All rights reserved. 1–8

Why People Become Entrepreneurs

• Reluctant Entrepreneur

A person who becomes an entrepreneur as a result

of some severe hardship.

• Refugee

A person who becomes an entrepreneur to

escape an undesirable situation.

© 2008 Cengage Learning. All rights reserved. 1–9

The Many Varieties of Entrepreneurship

• Founder (“Pure” Entrepreneur)

A person who brings a new firm into existence.

• Administrative Entrepreneur

An entrepreneur who overseas the operations of a

ongoing business.

• Franchisee

An entrepreneur whose power is limited by the

contractual relationship with a franchising

organization.

• Entrepreneurial Team

Two or more people who work together as

entrepreneurs.

© 2008 Cengage Learning. All rights reserved. 1–10

Small Business Growth Potential and Profits

• High-Potential Venture (Gazelle)

A small firm that has great prospects for growth.

• Attractive Small Firm

A small firm that provides

substantial profits to its owner.

• Microbusiness

A small firm that provides

minimal profits to its owner.

• Lifestyle Business

A microbusiness that permits the owner to follow a

desired pattern of living.

© 2008 Cengage Learning. All rights reserved. 1–11

Artisan Entrepreneurs

• Artisan Entrepreneur

A person with primarily technical skills and little

business knowledge who starts a business.

• Characteristics:

Technical training

Paternalistic approach

Reluctance to delegate

Few sources of capital

Narrow view of strategy

Personal sales effort

Short planning horizon

© 2008 Cengage Learning. All rights reserved. 1–12

Opportunistic Entrepreneurs

• Opportunistic Entrepreneur

A person with both sophisticated managerial skills

and technical knowledge who starts a business.

• Characteristics:

Broad-based education

Scientific approach to problems

Willing to delegate

Broad view of strategy

Diversified marketing approach

Longer planning horizon

Sophisticated accounting

and financial control

© 2008 Cengage Learning. All rights reserved. 1–13

Women Entrepreneurs

• More Women Entrepreneurs

The number of women-owned firms grew nearly twice

as fast as that of all firms from 1997 to 2006.

Females owned 30% of all businesses as of 2006.

Women are moving into nontraditional industries.

• Problems Facing Female Entrepreneurs

Newness of entrepreneurial role

Lack of access to credit

Lack of networking

connections

Discrimination

© 2008 Cengage Learning. All rights reserved. 1–14

The Winning Hand of Entrepreneurship

Customer

Focus

Quality

Performance

Competitive

Advantages of

Entrepreneurial

Firms

InnovationIntegrity and

Responsibility

Special

Niche

© 2008 Cengage Learning. All rights reserved. 1–15

Age

Early Career Concerns

1. Getting an education

2. Gaining work experience

3. Acquiring financial

resources

Late Career Concerns

1. Fulfilling familyresponsibilities

2. Attaining seniorityin employment

3. Earning investment ina retirement program

25 35 4520

Getting Started

• Age and Entrepreneurial Opportunity

© 2008 Cengage Learning. All rights reserved. 1–16

Getting Started (cont’d)

Characteristics of

Successful

Entrepreneurs

Strong Commitment

to the Business

(Tenacity)

Moderate Risk Takers

(Financial, Career,

Psychic Risks)

Strong Internal

Locus of Control

(Self-Reliance)

© 2008 Cengage Learning. All rights reserved. 1–17

Entrepreneurial Characteristics(Timmons and Spinelli)

Commitment and

Determination

LeadershipMotivation to

Excel

Creativity, Self-

Reliance, and

Adaptability

Opportunity

Obsession

Tolerance of Risk,

Ambiguity, and

Uncertainty

Attitudes and

Behaviors of

Entrepreneurs

© 2008 Cengage Learning. All rights reserved. 1–18

Getting Started (cont’d)

• Taking the Plunge

Precipitating event

An event, such as losing a job,

that moves an individual to

become an entrepreneur.

• Finding “Go-To” Persons

Mentors for advice and counsel

• Growing and Managing the Business

© 2008 Cengage Learning. All rights reserved. 1–19

Living the Entrepreneurial Life

• Entrepreneurial Legacy

The tangible items and intangible qualities passed on

not only to heirs but also to the broader society.

Evaluating accomplishments

Disappointments in winning the wrong game

• Crafting a Worthy Legacy

The nature of the entrepreneurial endeavor reflects

personal goals and values.

• Beginning with the End in Mind

Proper values and actions lead to a good exit.

© 2008 Cengage Learning. All rights reserved. 1–20

Key TERMS

• entrepreneurial

opportunity

• entrepreneur

• reluctant entrepreneur

• refugee

• founder

• franchisee

• high-potential venture

(gazelle)

• attractive small firm

• microbusiness

• lifestyle business

• artisan entrepreneur

• opportunistic entrepreneur

• entrepreneurial team

• internal locus of control

• external locus of control

• precipitating event

• entrepreneurial legacy