SBM
Launching & Growing Entrepreneurial Venture
PART I: ENTREPRENEURSHIP
Small Business Management
A WORLD OF OPPORTUNITY
Chapter 1
THE ENTREPRENEURIAL LIFE
Dr. Bui Phuong Viet Anh
SBM
Small Business Management
SBM
THE INSTRUCTOR
Small Business Management
Dr. Bui Phuong Viet Anh
(Michael Bui)
Contact:
Mobile: 0919 292 588
Email: bpvietanh@gmail.com
Zalo: 0913562432
Chancellor, President of EAS Vietnam Academic Council
General Director of EAS Vietnam
Executive Doctor of Business Administration
TEXTBOOK: Small Business Management: Launching and Growing
Entrepreneurial Ventures 16th edition by Longenecker, Petty, Palich and Hoy;
South-Western Cengage Learning; ISBN 13:978.1.111.53287.1
MOODLE SITE: www.courses.keuka.edu
JOURNALS OR MATERIALS GERMANE TO THE COURSE:
GHUMAN, K. & ASWATHAPPA, K. (2010) Management concept, practice and cases,
New Delhi, McGraw Hill.
GHILLYER, A. (2009) Management: a real world approach, Boston, McGraw Hill.
LEWIS, P. S., GOODMAN, S. H. & FANDT, P. M. (2004) Management: challenges for
tomorrow’s leaders. 4th ed., a Mason, Ohio, Thomson/South-Western.
MADURA, J. (2004) Introduction to business Belmont, CA, Thompson/South-Western
PORTER, M. E. (1996) what is Strategy? Harvard Business Review, 59-77.
SCHERMERHORN, J. R. (2010) Introduction to Management. , John Wiley & Sons,
Inc.
Chapter
1
The
Entrepreneurial
Life
PowerPoint Presentation prepared by Charlie Cook, The University of West Alabama
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
SBM
Small Business Management
Launching & Growing Entrepreneurial Venture
PART I: ENTREPRENEURSHIP
A WORLD OF OPPORTUNITY
CHAPTER I
THE ENTREPRENEURIAL LIFE
Dr. Bui Phuong Viet Anh
After studying this chapter, you should be able to…
1. Define the terms entrepreneur and small
businessowner, and explain how the terms are
related.
2. Explain the basic characteristics of
entrepreneurial opportunities, and give
examples of individuals who successfully
started their own businesses.
3. Describe some motivators or rewards for
owning your own business.
4. Identify some of the basic types of
entrepreneurs and entrepreneurial ventures.
After studying this chapter, you should be able to…
5.Describe five potential competitive
advantages of small entrepreneurial
companies compared to large firms.
6.Discuss factors related to readiness for
entrepreneurship getting started in an
entrepreneurial career.
7.Explain the concept of an entrepreneurial
legacy and the challenges involved in
crafting a meaningful legacy.
The Contributions of Small Business
• Small Businesses:
1. Represent 99.7% of all firms with employees.
2. Employ over 50% of employees in the private sector.
3. Account for 45% of private payrolls.
4. Generated 60 to 80% of net new jobs in past decade.
5. Hire 40% of high-tech employees
6. Represent 97.3% of all exporters.
1–8
Who Are Entrepreneurs?
• Entrepreneurs are:
1. A person who starts and/or operates a business.
2. Individuals who discover market needs and launch
new firms to meet those needs.
3. Risk takers who provide an impetus for change,
innovation, and progress.
4. All active owner-managers (founders and/or
managers of small businesses).
1–9
What Is a Small Business?
• Criteria for Defining Smallness in Business:
1. Small in size relative to larger competitors (fewer
than 100 employees)
2. Localized business operations (except marketing)
3. Financing supplied by one person or small group
4. Has the potential to become more
than a “one-person show”
1–10
Entrepreneurial Opportunities
• Entrepreneurial Opportunity
• An economically attractive and timely opportunity that
creates value for interested buyers or end users.
• Success Stories
1. Ace Hotels (Seattle, Washington)
2. Late Model Restoration (Waco, Texas)
3. Five Guys Burgers and Fries (Lorton, Virginia)
1–11
So You Want to Be an Entrepreneur
Being an entrepreneur:
1. Is extremely challenging.
2. Takes undying love and passion to keep going.
3. Can run in a family.
4. Can help make the world a better place.
5. Can make meaning in your life.
1–12
EXHIBIT 1.1
Entrepreneurial
Incentives
1–13
Why People Become Entrepreneurs
1. Reluctant Entrepreneur
• A person who becomes an entrepreneur
as a result of some severe hardship.
2. Refugee
• A person who becomes an entrepreneur
to escape an undesirable situation.
1–14
Is Owning a Small Business a Good Fit for You?
1.
2.
3.
4.
5.
1–15
Am I passionate about my product or service?
What is my tolerance for risk?
Am I effective in making decisions?
Am I willing to take on numerous responsibilities?
Will I be able to avoid burnout?
The Many Varieties of Entrepreneurship
1. Founder (“Pure” Entrepreneur)
• A person who brings a new firm into existence
2. “Second Stage” Entrepreneur
• An administrative entrepreneur who overseas the
operations of a ongoing business
3. Franchisee
• An entrepreneur whose power is limited by the contractual
relationship with a franchising organization
4. Entrepreneurial Team
• Two or more people working together as entrepreneurs
1–16
Small Business Growth Potential and Profits
1. High-Potential Venture (Gazelle)
• Has great prospects for growth
2. Attractive Small Firm
• Provides substantial profits to its owner
3. Microbusiness
• Provides minimal profits to its owner
4. Lifestyle Business
• Permits the owner to follow a desired pattern of living
1–17
Artisan Entrepreneurs
1. Artisan Entrepreneur:
• A person with primarily technical skills and little business
knowledge who starts a business
2. Characteristics:
1. Take a paternalistic approach
2. Are reluctant to delegate
3. Use few sources of capital
4. Have a traditional marketing strategy
5. Focus on personal sales effort
6. Have a short planning horizon
1–18
Opportunistic Entrepreneurs
1. Opportunistic Entrepreneur
• A person with both sophisticated managerial skills and
technical knowledge who starts a business
2. Characteristics:
1. Broad-based education
2. Scientific approach to problems
3. Willing to delegate
4. Broad view of strategy
5. Diversified marketing approach
6. Longer planning horizon
7. Sophisticated accounting and financial control
1–19
1–20
Ten Mistakes Made by Startup Entrepreneurs
1. Going it alone.
2. Asking too many people for advice.
3. Spending too much time on product development, not
enough on sales.
4. Targeting too small a market.
5. Entering a market with no distribution partner.
6. Overpaying for customers.
7. Raising too little capital.
8. Raising too much capital.
9. Not having a business plan.
10.Overthinking your business plan.
Women Entrepreneurs
A. More Women Entrepreneurs
1. More women than men are starting new businesses
2. Many businesses are now majority female-owned
3. Movement of women into nontraditional industries
B. Problems Facing Female Entrepreneurs
1. Discrimination and difficulties related to gender
2. Lack of access to credit
3. Lack of networking connections
4. Balancing work and family life
1–21
Entrepreneurial Teams
Entrepreneurial Team
1. Is a two or more people
who work together as
entrepreneurs on one
endeavor.
2. Is becoming more
common.
1–22
1–23
The Competitive Edge of Entrepreneurs
Customer
Focus
Special
Niche
Innovation and
Globalization
Competitive
Advantages of
Entrepreneuria
l Firms
Quality
Performance
Integrity and
Responsibility
Getting Started
• Age and Entrepreneurial Opportunity
Early Career Concerns
Late Career Concerns
1. Getting an education
1. Fulfilling family
responsibilities
2. Gaining work experience
2. Attaining seniority
in employment
3. Acquiring financial
resources
20
25
Generation Y
1–24
3. Earning investment in
a retirement program
Age
35
Generation X
45+
Baby Boomers
Millennial Entrepreneurs (Gen-Y)
1.
2.
3.
4.
Have no fear of technology
Are idealistic and optimistic
Are more collaborative
Build elements of community in the
business
5. Start companies while studying
entrepreneurship
6. Fail fast, learn a lot, and keep going
1–25
Strong
Commitment
to the Business
(Tenacity)
Strong Internal
Locus of Control
(Self-Reliance)
Characteristics of
Successful
Entrepreneurs
Moderate Risk
Takers
(Financial, Career,
Psychic Risks)
1–26
Entrepreneurial Characteristics
(Timmons and Spinelli)
Commitment and
Determination
Motivation to
Excel
Creativity, SelfReliance, and
Adaptability
Leadership
Attitudes and
Behaviors of
Entrepreneurs
Opportunity
Obsession
Tolerance of
Risk, Ambiguity,
and Uncertainty
How to Fail as an Entrepreneur
1.
2.
3.
4.
5.
6.
Overestimate what you can do
Lack an understanding of the market
Hire mediocre people
Fail to be a team player
Be a domineering manager
Not share ownership in the business in an equitable way
1–28
The Importance of Mentors
Mentors:
1. Are knowledgeable persons who can offer guidance
from their experience in a given field.
2. Teach entrepreneurs what and how to do.
3. Provide entrepreneurs encouragement
when needed.
4. Show them how to avoid mistakes.
1–29
Success in Business and Success in Life
1. Looking Back At An Entrepreneurial Life
• Proper values and actions lead to a good exit.
• Evaluating accomplishments
2. Winning the Wrong Game
• The nature of the entrepreneurial endeavor reflects
personal goals and values.
3. Crafting a Worthy Entrepreneurial Legacy
• The tangible items and intangible qualities passed on not
only to heirs but also to the broader society.
4. Beginning with the End in Mind
1–30
Key Terms
• entrepreneur
• attractive small firm
• bootstrapping
• microbusiness
• small business
• lifestyle business
• entrepreneurial opportunity
• artisan entrepreneur
• reluctant entrepreneur
• opportunistic entrepreneur
• refugee
• entrepreneurial team
• founder
• niche market
• franchisee
• mentor
• high-potential venture (gazelle)
• entrepreneurial legacy
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–31