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The Foundations of Entrepreneurship. Edited by : Noémi Piricz Based on : Thomas W. Zimmerer – Norman M. Scarborough: Essentials of Entrepreneurship and Small Business Management, Pearson Education International 2005, Chapter 1. Who is an Entrepr e neur?.

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the foundations of entrepreneurship

The Foundations of Entrepreneurship

Edited by: Noémi Piricz

Based on: Thomas W. Zimmerer – Norman M. Scarborough: Essentials of Entrepreneurship and Small Business Management, Pearson Education International 2005, Chapter 1

who is an entrepr e neur
Who is an Entrepreneur?
  • Let’s collect his/her most important characteristics!
  • Entrepreneur is one who creates a new business, taking certain risks and uncertainty,
  • for the purpose of achieving profit and growth,
  • by identifying opportunities and assembling the necessary resources
personal benefits of entrepreneurship
Personal Benefits of Entrepreneurship
  • 1. Opportunity to create your own destiny – „being able to follow his/her own interests, desire and fun”
  • 2. Opportunity to reap more profits (e.g. Bill Gates, M. Dell)
  • 3. Opportunity to contribute to society – trust and respect
drawbacks of entrepreneurship
Drawbacks of Entrepreneurship
  • Uncertainty of income
  • Risk of losing your entire investment
  • Long hours and hard work
  • High level of stress
  • Complete responsibility
  • Discouragement and disillusionment
the cultural diversity of entrepreneurship
The Cultural Diversity of Entrepreneurship
  • Young entrepreneurs – comparing with other generations they are 3 times more likely to launch businesses
  • Women entrepreneurs- still certain discrimination in work market,- the rate of women entrepreneurs is growing dynamically
Part-time entrepreneurs- popular gateway to entrepreneurship,- lower risk
  • Family business: two or more members of the same family have the financial control of the company- deep roots in family values, long term plans, trust etc.- bitter disputes, business and private life mixed, problem of finding a good leader after retirement
the power of small business
The Power of „Small” Business
  • Small business: employs fewer than 100 people (US)
  • In the US small firms employ 51 % of the nation’s private sector workforce, even though they posses less than one-fourth of total business assets!
  • Small businesses produce 51% of the American private GDP.
Small companies create four times more innovation per research and development dollar than medium-sized firms
the 10 deadly mistakes of entrepreneurship
The 10 Deadly Mistakes of Entrepreneurship
  • 1. Management mistakes – capacity, leadership ability, knowledge etc.
  • 2. Lack of experience – professional, economic, organizational, dealing with human resources etc.
  • 3. Poor financial control – undercapitalization (consequence: the firm runs out of capital before it is able to generate positive cash flow)
4. Weak marketing efforts – mistake: if the entrepreneurs dream it, customers will automatically come; instead of providing them with value, quality, convenience, service and fun!
  • 5. Failure to develop a strategic plan – „I don’t have time for it”
  • 6. Uncontrolled growth – expansion should be financed by the profit they generate or by capital contributions from the owners
7. Poor location – they often choose a vacant building
  • 8. Improper inventory control – neglected in many cases, problems: too much or too few inventory, and even too much of the wrong type of inventory
  • 9. Incorrect pricing – costs, aims, methods
  • 10. Inability to make the „entrepreneurial transition” – after the start up, growth usually requires radical changes in several fields…
key definitions of chapter 1
Key Definitions (of Chapter 1):
  • Entrepreneur
  • Part-time entrepreneurs
  • Family business
  • Small business
  • undercapitalization
  • cash flow