Facilitating
Entrepreneurship
Alan Barefield
(662) 325-3207
alanb@srdc.msstate.edu
What is Entrepreneurship?
The quest for implicit personality traits and
factors (Chell et al, 1991) is over. We can
now recognize that entrepreneurship is a
dynamic form of social and economic
behavior in which people respond to
environmental signals about the availability
of opportunities and the resources with which
they can be exploited.
Rae and Carswell
What is Entrepreneurship?
An entrepreneur is a person who
sees opportunity, sizes up its
value, and finds the resources to
make the most of it.
Jim Nelson
University of Idaho
Characteristics of
Entrepreneurs

Entrepreneurs have:
A passion for what they do
 The creativity and ability to innovate
 A sense of independence and selfreliance
 (Usually) a high level of self
confidence
 A willingness and capability (though
not necessarily capacity or preference)
for taking risks

Characteristics of
Entrepreneurs

Entrepreneurs do not (usually)
have:
A tolerance for organizational
bureaucracies
 A penchant for following rules
 A structured approach to developing
and implementing ideas
 The foresight to plan a course of action
once the idea is implemented and
established

Specific entrepreneurship
areas
Business ideas and development
 Products or services
 Enterprises
 Marketing
 Operations
 Management
 Financial management

Marketing example

Custom slaughterhouse
Specialty slaughter and butcher to
Hispanic, Muslim, and BBQ markets
 Reproductive tracts to animal science
departments
 Beef eyes to medical schools
 Goat hides to specialty leather curer
 Consignment sales of ostrich and bison

Entrepreneurs vs.
managers

Management skills include:
Technical production skills
 Knowledge of marketing skills
 Organizational and human resource
skills
 Financial skills
 Ability to develop simple tasks to solve
complicated problems
 Ability to find complete and efficient
solutions to problems

What can we do?

Are we able to pick out true
entrepreneurs?



Our models don’t allow us to predict the
success of these persons
They typically get marked off as not being in
touch with reality
Our job as federal and state agencies may
be better suited to providing educational
programs on management skills
Where is the learner?
Are they at a teachable moment?
Unaware
to Aware
Early
Stage
Pre-launch Operating
& Launch
Start-up
Growth
Harvest
or Exit
•Where is the learner along this timeline?
•Where do you want the learner to be?
•Where should the learner be?
Examples
Engineers
Unaware
to Aware
Early
Stage
Business
Students
Family
Businesses
Pre-launch Operating
& Launch
Start-up
Growth
Harvest
or Exit
Practicing
Entrepreneurs
Provide exposure and
raise awareness
Unaware
to Aware
Early
Stage
Pre-launch Operating
& Launch
Start-up
•Potential methods
Growth
•Seminar series
•Large “sage on stage” courses
•Weekend courses
•Short distance learning courses
•Mentoring
•Simulations
Harvest
or Exit
Provide exposure and
raise awareness
Unaware
to Aware
Early
Stage
Pre-launch Operating
& Launch
Start-up
•Additional Potential methods
Growth
•Lectures with materials, texts, videos
•Guest speakers
•Face-to-face
•Teleconferencing
•Virtual guest speaker
•Additional readings, outside experiences
Harvest
or Exit
Provide exposure and
raise awareness
Unaware
to Aware
Early
Stage
Pre-launch Operating
& Launch
Start-up
Growth
Harvest
or Exit
•Develop building block course
•management, marketing, finance, accounting,
operations
•Customize these courses to the audience
•Develop self-paced learning modules
Provide exposure and
raise awareness
Unaware
to Aware
Early
Stage
Pre-launch Operating
& Launch
Start-up
Growth
Harvest
or Exit
•Develop required sequential courses
•Utilize an experiential learning environment
•Mentoring
•Business consulting
•Business plan project
•Incubators
Available Entrepreneurship
Programs and Curricula
Exploring
Entrepreneurship
What do these curricula
have in common?
They teach business
management skills!
And try to instill a sense
of discipline and order into
business planning!
What should be taught?

Business plan development
Organizational plan
 Management plan
 Marketing plan
 Operations and production plan
 Financial plan
 Overall growth plan

What should be taught?

Market development
What is marketing?
 Marketing versus advertising
 Marketing on a shoestring
 Merchandising, display, and storefront
layout
 Mass media marketing including radio,
TV, newspaper, flyers, etc.

What should be taught?

Financial management
Types of financial statements (income
statement, balance sheet, cash flow,
budget) and their relationship to the
firm’s health
 Financial record keeping strategies
 Financial performance evaluation
 Financial health improvement strategies

What should be taught?

Organizational plan
Who is the management team and
what is their experience?
 Who will make the decisions in specific
areas?
 How will overall planning versus day-today operations be divided among the
team?

What should be taught?

Operations and production mgt
What will be produced and how will it
be produced?
 What types of quality control standards
will be used?
 How will products be packaged and
shipped?
 Labor

What should be taught?

Labor
Who do you want to hire?
 What skills do they need?
 How is the compensation plan developed
and what are its components?
 Is there a promotion or performance
incentive plan?
 What is the disciplinary plan?

The Business Plan
Many potential business people
focus too much on the numbers
 Focus on these factors:

The People
 The Opportunity
 The Context
 Risk and Reward

Why not numbers?
Entrepreneurs are wildly optimistic
 Numbers are usually padded
 Investors know about this and
discount the numbers
 Leads to a cycle of inaccuracy
 Plan should contain some numbers
that demonstrate a business model
such as manufacturing yield

The People

Who are the “people?”
The men and women starting and
running the business
 Also includes outside parties who
provide key services or resources

• Accountants
• Lawyers
• Suppliers
Questions to answer
Where are the founders from?
 Where have they been educated?
 Where have they worked – and for
whom?
 What have they accomplished?
 What is their reputation in business?
 What experience do they have that
is relevant to this business?

Questions to answer
What skills, abilities, knowledge do
they have?
 How realistic are they about the
venture’s chance of success and
failure?
 Who else needs to be on the team
and do they recognize this?
 Can they recruit high-quality people?

Questions to answer
How do they respond to adversity?
 Do they have the internal fortitude
to make the difficult choices that lie
ahead?
 How committed are they to the
venture?
 What are their motivations?

The Opportunity

Is the market:
Large?
 Rapidly growing?
 Both?

Is the industry now, or can it
become, structurally attractive?
 It is easier to gain market share
from a growing market than from a
stagnant one

Questions to answer
Who is the customer?
 How does the customer make
purchasing decisions?
 To what degree is the product a
compelling purchase?
 How will pricing be determined?
 How will the product or service reach
all targeted customer segments?

Questions to answer
How much does it cost (in resources
and time) to acquire a customer?
 How much does it cost to support an
acquired customer?
 How easy is it to retain a customer?
 How much does it cost to produce
and deliver the product or service?

Questions to answer






Who are the venture’s competitors?
What resources do the competitors
control? Strengths and weaknesses?
How will they respond to the venture
entering the business?
How can the new venture respond to its
competitors’ response?
Who else might be able to exploit the
same opportunity?
Can you form alliances with potential or
actual competitors?
The Context

What is the big picture in terms of
these trends?
Regulatory environment
 Interest rates
 Demographic trends
 Inflation
 Other factors that change but cannot
be controlled by the entrepreneur

Addressing context
Awareness of venture’s context and
how it affects the venture
 How the changing of context will
likely affect the business
 What will management do if the
context grows unfavorable?
 How can management affect context
in a positive way?

Risk and Reward
All sane people want to avoid risk
 Entrepreneurs want to capture the
reward and give the risk to others
 Need to show people, opportunity,
and context from both good and bad
perspectives
 Talk about the end of the business
process

Warning Signs for Pending
Financial Difficulties
Significant increase in the level of
accounts payable
 Significant increase in the frequency
and amount of impulse purchases
 Decrease in the level of available
working capital
 Record keeping practices become
less important

Warning Signs for Pending
Financial Difficulties
Hides a large portion of financial
activities from other family members
and lenders
 Diversion of sales proceeds
 Living expenses increase rapidly and
expenditures for capital assets
increase
 Works less and plays harder
 Domestic situation changes

Attributes of Success
 Decisions
are made on the
bottom line
 Gross revenue is not treated like
manna from heaven
 If a task can’t be accomplished
in-house in a cost effective
manner, outsource it
Attributes of Success
 They
are not timid about tooting
their own horn about their
products or services
 Does not dwell on the
challenges of the competition;
realize that some have it and
some don’t
References




Clark D. Garland, U of Tennessee
James R. Nelson, U of Idaho, Teaching
Entrepreneurship to an Extension Audience –
What to teach and how to teach it, 2003 AAEA
meetings, Montreal, Canada.
William A. Sahlman, Harvard U, How to Write a
Great Business Plan, Harvard Business Review,
July-August, 1997.
Deborah H. Streeter, Cornell U, Teaching
Entrepreneurship in a Formal Academic Setting –
What to teach and how to teach it, 2003 AAEA
meetings, Montreal, Canada