Chapter 1 The Foundation of Entrepreneurship

1. Chapter 1The Foundation of Entrepreneurship All About Entrepreneurship

2. What Creates Entrepreneurs? • Entrepreneur: • Someone who • Gathers resources • Accepts risk • Exploits opportunities • Creates new value • An easier definition? • Someone who starts a new business

3. Who Are the Entrepreneurs? • People who see opportunities • People who are tired of working for someone else • People 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

4. Who Is the Typical Entrepreneur? • High level of energy and tenacity • Willingness to accept educated risk • High level of self-motivation • High level of optimism • Skill at seeing opportunities • Skill at assembling resources

5. Entrepreneur of the Day • Mark 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.

6. What’s So Great About Entrepreneurship? • Carving your own path • Making a difference • Reaching your full potential • Possibly starting something with large returns • Doing what you love

7. Entrepreneurship – The Dark Side • You can lose everything you own. • You can fail. • Little downtime • Little family time • High stress levels • Responsibility and …. BLAME!

8. What Is Driving Entrepreneurship? • Trend toward a service economy • Low cost technology access • WWW • Growing access to international markets • Degrees in entrepreneurship • Societal acceptance of entrepreneurship

9. Who Are the Newest Entrepreneurs? • Teens, twenties, and thirties • Women • Own nearly half of all businesses! • Minorities • Growing faster than national average

10. Home Based Businesses • 53% 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.

11. Family-Owned Businesses • 90% 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

12. Small Business’s Effect on the Economy • 99.7% 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

13. The Down Side: Small Business Failure • After 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?

14. Most Common Mistakes • No management skills • No financial plan • Undercapitalization • Not enough marketing • No strategy • Uncontrolled growth • Poor location • Poor inventory control • Pricing not compatible with costs

15. Handling Failure • Accept 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.

16. How to Avoid Failure • Have a plan • Get the knowledge on your industry • Don’t undercapitalize your business • Be able to use your financial statements • Know your limits and work around them