Getting Started
Chapter 1
What is
The Entrepreneurial Process
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Patterns of Entrepreneurship Management
4th Edition, Chapter 1
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Presentation Outline
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
• What is Entrepreneurship
– Definition
– Examples
• Entrepreneurial Characteristics
– Why?
– The Choices
– Types
– Common Characteristics
• Organizational Fragility
• The Importance of Networks
• The Initial Stages
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
What is Entrepreneurship?
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Root of the Word
• From the French word entreprendre, which
refers to individuals who “undertook” the risk
of a new enterprise
Today’s Meaning
• The process of planning, organizing,
operating, and assuming the risk of a business
venture
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
What is Entrepreneurship?
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Today’s Meaning cont.
• More than just the creation of a business; it
also includes the generation and
implementation of an idea.
• It is about being a dynamic thinker and
operator which includes effective
communication to all of your stakeholders
• It is not about being a maverick;
entrepreneurs must think tactically and
strategically, and operate in a similar fashion
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Quick Facts
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
• Annual creation of 600,000 to 800,000 new
companies
• More employees work for entrepreneurial
ventures than any other sector in the economy
• No sector of the U.S., and world, economy
has been as vital, dynamic, and creative as
entrepreneurship
• Think:
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
The Ups and Downs ....
Chapter 1
What is
Entrepreneurship is usually a Roller-Coaster Ride
Entrepreneurship?
Spider-web
Model
Orders
Approvals
Yes it does!
Have a fix
Customers
like it!
Qualification
New fix works
Yes it is!
Yields
are low
No it
doesn’t
Networks
The 5 Stage
Entrepreneurial
Process
New cost model
looks good!
It works!
Enthusiasm
The
Entrepreneurial
Mindset
Ecstasy
Have
an idea!
Doesn’t work
Cost too high
Not proprietary
Despair
Vision
Time
Commercialization
From R. J. Saldich
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Some Reasons to Become an
Entrepreneur
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
Entrepreneurs learn to think differently.
Triggers to start your own venture:
• Independence and Freedom from the restrictions and
bureaucracy of corporate life
• Being able to “do your own thing”
• Plateauing in current job
• Opportunity for sustained growth and mobility
• Flexibility
• Financial reward
• Loss of Current Employment
The 5 Stage
Entrepreneurial
Process
“Looking back, the day that I got fired was the best day of my life”
……successful entrepreneur.
Copyright 2012 Jack M. Kaplan & Anthony C. Warren
Types of Entrepreneurs
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
The Choice
• As the economy has shifted to place a premium on
portable skills and knowledge, as well as effective
networks, entrepreneurship has become a viable
career alternative.
• Entrepreneurs are classed into several categories:
• Serial Entrepreneur—Someone who starts, grows,
and sells several businesses over the course of their
career.
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Types of Entrepreneurs
Chapter 1
Types of Entrepreneurs – 2
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
• Aspiring Entrepreneurs—Dream of starting a
business; they hope for the chance to be their own
bosses, but have not yet made the leap from their
current employment into the uncertainty of a startup.
Research indicates that, at any given time, 7 million
adults are trying to start businesses in the U.S.
Networks
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Types of Entrepreneurs
Chapter 1
Types of Entrepreneurs – 3
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
• Lifestyle Entrepreneurs—Have developed an
enterprise that fits their individual circumstances and
style of life. Intention is to earn income for
themselves and their families. Sometimes referred to
as “small businesses” or “mom-and-pop shops”. 13
million Americans (25 million if you count parttimers) run their own business from home.
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Types of Entrepreneurs
Chapter 1
Types of Entrepreneurs – 4
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
• Growth Entrepreneurs—Have both the desire and
ability to grow as fast and as large as possible. Their
firms are the most dynamic job generators in the U.S.
economy. There are over 300,000 entrepreneurial
companies with more than 50 employees that are
growing at a rate of 20 percent per year.
Networks
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Types of Entrepreneurs
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Ask Yourself “What Type am I”
• One of the major mistakes aspiring entrepreneurs
make when starting out is NOT to closely question
what they want to be when “they grow up”.
• Each type of entrepreneur is a control and lifestyle
choice with many advantages and disadvantages that
must be considered
• Decide early on what is most important to you –
control, wealth, lifestyle…..
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Entrepreneurial Traits
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Common Characteristics of Entrepreneurs:
• Passionately seek new opportunities and are always
looking for the chance to profit from change and
disruption in the way business is done
• Pursue opportunities with tremendous discipline
• Pursue only the very best opportunities, and avoid
exhausting themselves and their organizations by
chasing after every option
• Focus on execution—specifically, adaptive execution
• Engage the energies of everyone in their domain
• Lead by example, network, and communicate well
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Entrepreneurial Traits
Chapter 1
What is
Entrepreneurs are Comfortable in Paradoxical
Situations. They Learn to Balance:
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
Ambiguity vs. Planning
Creativity vs. Discipline
Urgency vs. Patience
Flexibility vs. Organizational Structure
Responsiveness vs. Systematic Processes
Risk Taking vs. Controlled Risk
Short Term Actions vs. Long Term Goals
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
The Spider-Web Model
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
• Managing a Start-up is analogous to building and
maintaining a fragile Spider-web which is under
continuous attack.
• Unlike a large company with specialists for different
functions, entrepreneurs must learn “on-the-job” and
fulfill many roles simultaneously, many for which
they have no experience or training.
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Near-Neighbor Networks
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
•The Interstate Network is an example in which each node has a
similar characteristic…it is connected more or less equally with its
neighbors.
•Such networks offer little value to entrepreneurs.
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Scale-Free Networks
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
The 5 Stage
Entrepreneurial
Process
•The Airline Network is an example in which certain nodes
have a highly concentrated set of connections.
•Entrepreneurs identify and network with highly connected
people, or key influencers and build network power into their
business models.
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
The Internet(work)
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Internet map courtesy of A. Barabasi
Networks
The 5 Stage
Entrepreneurial
Process
The Internet is an example of a “Scale-free” network.
Entrepreneurs exploit its unique characteristics for finding
resources, tackling problems and creating efficient market entry
strategies.
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Getting Started - Stage 1
Chapter 1
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Stage 1: Conducting Opportunity Analysis
•
•
•
•
Innovate and create the vision
Conduct market analysis and research
Evaluate the competition
Research pricing and sales strategies
Networks
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Getting Started – Stage 2
Chapter 1
What is
Stage 2: Developing the Plan and Setting up
the Company
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
•
•
•
•
Set goals and objectives
Start writing the plan
Investigate new processes and technologies
Determine pricing, market, and distribution channels
Networks
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Getting Started – Stage 3
Chapter 1
What is
Stage 3: Acquiring Financial Partners and
Sources of Funding
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
•
•
•
•
Innovate and create the vision
Conduct market analysis and research
Evaluate the competition
Research pricing and sales strategies
Networks
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
Getting Started – Stage 4
Chapter 1
What is
Stage 4: Determining the Resources Required
and Implementing the Plan
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
• Determine value of licenses, patents, and copyrights
• Prepare the organization for growth
• Develop a business model to maximize value
retention and sustainability
• Manage the finances
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren
And Possibly – Stage 5
Chapter 1
Stage 5: Scaling and Harvesting the Venture
What is
Entrepreneurship?
The
Entrepreneurial
Mindset
Spider-web
Model
Networks
• Prepare a full business plan
• Discuss options and alternatives
– Sell or merge
– Go public
– Form a strategic alliance
• Communicate the opportunity
The 5 Stage
Entrepreneurial
Process
Copyright 2013 Jack M. Kaplan & Anthony C. Warren