18 January Small businesses and entrepreneurships
News Story: Mirror, mirror on the wall, is this dress for me? • Mirror designed by IconNicholson: Social Retailing • Enables shopping with their friends -- remotely • mirrors intended for outside store fitting rooms • mirror sends live video feed allowing text message responses • touch screens on the three-paneled mirror • choose matching shoes or accessories • select a different outfit without physically putting the garment on • Reuters, Jan 17 (article)
Primary Components of a New Business • Opportunity • Market demand • Market size and structure • Margin analysis (can you make money?) • Resources • Team • An “A” team with a “B” idea is better than a “B” team with an “A” idea
Market size and structure • Emerging markets • room for new businesses • Fragmented markets • large number of players, none with significant market share • No strong competition • Proprietary barriers to entry • keep large players from entering the market • patents, trademarks, etc. • Potential for high level of sales • Worth the investment
Margin analysis • Differentiate opportunity from idea • An idea may not be practical • An opportunity is • Initial goal: reasonable break-even • Longer term • Low cost provider • Lower capital requirement than competition • Premium price
What makes a company succeed? • A unique business idea • “Outside the box” thinking • Customer focus • Continued innovation and diversification • Good management • Smart partnerships
Consider Starbuck’s • Started 33 years ago as a single store • Changed the way the world thinks about coffee • How did they do it? • What was their unique idea?
And sometimes we need a break … • Look Like My Dog Contest
Myths about Entrepreneurs • Entrepreneurs are born, not made • may be born with a flair for innovation, energy • work experience, know-how, contacts, business skills can be acquired • Anyone can start a business; it's luck and guts • difference between idea and opportunity • entrepreneur, not bureaucrat • Entrepreneurs are gamblers • calculated risks • Entrepreneurs want to run the whole show • doing everything yourself limits growth • Entrepreneurs are their own bosses and completely independent • partners, investors, customers, employers, suppliers, community • Entrepreneurs work longer and harder than corporate managers • some do some don't
Myths about Entrepreneurs • Entrepreneurs have greater stress, pressure, and pay a higher personal price • no evidence that it is more stressful • sense of accomplishment, fun, flexibility • Starting a Business is risky and often ends in failure • true in many cases; 80% fail in first 5 years • success is higher with right people and finances • Money is the most important part of success • if the other important parts are there, money tends to follow • New Business startup is for young and energetic • age brings experience; financial stability or obligations • Entrepreneurs are motivated for quest for money • most motivated by a market opportunity and the chance to make a difference in a particular industry. • some motivated by the opportunity to make a contribution to society. • Entrepreneurs seek power, control over others to feel in charge • responsibility, achievement, results rather than power • thrive on accomplishment, outperforming competition • control comes from results they achieve
Advantages Sense of autonomy Own decisions to some extent Challenge of being involved in a start-up Positive feelings from knowing this is your creation Financial control Ability to mold the business to meet your goals Disadvantages Burden of responsibility Never being able to leave the job at work Little margin for error Your future is at stake Financial insecurity e.g., pensions Personal sacrifices Time away from your family and other activities that you enjoy Advantages & Disadvantages
Women Entrepreneurs • 8 million women in US with own business • 1/3 of all business • from 1991-1994 women led firms have created more jobs than the top 100 companies in Canada • women have been creating jobs 4 x as fast as average of all firms • women led business have higher survival rate • Why? • Glass ceiling • Alternative life style • Other?
Social Entrepreneurs • Social entrepreneurs: change agents for society • Power of a new idea equally as applicable to business or social concept • Business entrepreneur: new industries • Social entrepreneur: new solutions to social problems • Both visionary and realist -- practical implementation of the vision • Ideas must be user-friendly, understandable, and ethical • Solve problem by changing the system • Local change makers
Historical Examples Susan B. Anthony (U.S., 1820-1906) women's rights Florence Nightingale (U.K., 1820-1910) modern nursing John Muir (U.S., 1838-1914) conservationist Margaret Sanger (U.S., 1879-1966) family planning Jean Monnet (France, 1888-1979) European unity Vinoba Bhave (India, 1895-1982) land gift (Bhoodhan) movement (redistribution of more than 7,000,000 acres of land) Maria Montessori (Italy, 1892-1952) early childhood education
Look at the Dates • Why are they all in the nineteenth or twentieth century? • When did entrepreneurial businesses begin? • What has happened since then? Last 25 years?