The Foundations of
Entrepreneurship
The World of the Entrepreneur
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Every year in the U.S., entrepreneurs launch
850,000 new businesses.
Entrepreneurial spirit - the most significant
economic development in recent history.
GEM study: 11.3 percent of adult population
in the U.S. is actively involved in trying to
start a new business.
Chapter 1: Entrepreneurship
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Entrepreneurial Activity Across the Globe
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
TEA Index
Global TEA
Average
Argentina
Australia
Belgium
Brazil
Canada
Croatia
Denmark
Ecuador
Finland
France
Germany
Greece
Hong
Hungary
Iceland
Ireland
Israel
Italy
Japan
Netherlan
New
Norway
Peru
Singapor
Slovenia
South
Spain
Sweden
United
United
Total Entrepreneurial
Activity (TEA) Index
Persons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity
Country
Source: 2004 Global Entrepreneurship Monitor.
The World of the Entrepreneur
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GEM study
Globally 9.4 percent of adults are actively
engaged in trying to start a business.
 Men are twice as likely as women to start a
business (exactly the opposite trend in the U.S.,
however).
 Nearly one-third of global entrepreneurs are
between the ages of 25 and 44.
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Chapter 1: Entrepreneurship
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What Is an Entrepreneur?
One who creates a new business in the face
of risk and uncertainty for the purpose of
achieving profit and growth by identifying
opportunities and assembling the necessary
resources to capitalize on them.
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Characteristics of Entrepreneurs
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Desire for responsibility
Preference for moderate risk – risk
eliminators
Confidence in their ability to succeed
Desire for immediate feedback
High level of energy
Future orientation – serial entrepreneurs
Skilled at organizing
Value achievement over money
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Entrepreneurship
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One characteristic of entrepreneurs stands
out:
Diversity!
Anyone – regardless of age, race, gender,
color, national origin, or any other
characteristic – can become an entrepreneur
(although not everyone should).
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Benefits of Entrepreneurship
The opportunity to:
 Create your own destiny
 Make a difference
 Reach your full potential
 Reap impressive profits
 Contribute to society and to be recognized
for your efforts
 Do what you enjoy and to have fun at it
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Drawbacks of Entrepreneurship
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Uncertainty of income
Risk of losing your entire investment
Long hours and hard work
Lower quality of life until the business gets
established
High levels of stress
Complete responsibility
Discouragement
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Feeding the
Entrepreneurial Fire
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Entrepreneurs as heroes
Entrepreneurial education
Demographic and economic factors
Shift to a service economy
Technological advancements
Independent lifestyle
E-commerce and the World Wide
Web
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Feeding the
Entrepreneurial Fire
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Entrepreneurs as heroes
Entrepreneurial education
Demographic and economic factors
Shift to a service economy
Technological advancements
Independent lifestyles
E-commerce and the World Wide
Web
International opportunities
Chapter 1: Entrepreneurship
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The Cultural Diversity of
Entrepreneurship
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Young entrepreneurs
Women entrepreneurs
Chapter 1: Entrepreneurship
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Why Women Start Businesses
Frustrated with Other reasons
7%
"glass ceiling" at
big companies
23%
Saw a market
opportunity and
decided to pursue
it
24%
Source: Center for Women’s Business Research, 2004.
Gain control over
my schedule
46%
The Cultural Diversity of
Entrepreneurship
Young entrepreneurs
 Women entrepreneurs
 Minority-owned enterprises
 Immigrant entrepreneurs
 Part-time entrepreneurs
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The Cultural Diversity of
Entrepreneurship
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Home-based businesses
Family businesses
Copreneurs
Corporate castoffs
Corporate dropouts
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Small Business by Industry
Finance
8.0%
Other
7.3%
M anufacturing
5.8%
Service
39.2%
Wholesale
7.4%
Construction
11.8%
Retail
20.5%
Source: U.S. Small Business Administration, 2005.
Small Businesses...
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Make up 99.7 percent of all
businesses in the U.S.
Employ 51 percent of the nation’s
private sector workforce.
Create more jobs than big businesses.
Are leaders in offering training and
advancement opportunities to
workers.
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Small Businesses...
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Produce 51 percent of the nation’s
private GDP.
Account for 47 percent of business
sales.
Create 13X more innovations per
employee than large companies.
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Chapter 1: Entrepreneurship
Zipper, FM radio, laser, air
conditioning, escalator, light bulb,
personal computer, automatic
transmission, and many more!
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Small Business Survival Rate
% of Small Firms Surviving
100%
100%
90%
81%
80%
70%
65%
60%
54%
50%
46%
40%
40%
36%
30%
32%
29%
27%
25%
20%
10%
0%
New
1
2
3
4
5
6
# of Years in Business
Source: NFIB Business Policy Guide, 2003, p. 16.
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Ten Deadly Mistakes of
Entrepreneurship
1.
2.
3.
4.
5.
Management mistakes
Lack of experience
Poor financial control
Weak marketing efforts
Failure to develop a strategic plan
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Ten Deadly Mistakes of
Entrepreneurship
6.
7.
8.
9.
10.
Uncontrolled growth
Poor location
Improper inventory control
Incorrect pricing
Inability to make the “entrepreneurial
transition”
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Putting Failure into Perspective
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Entrepreneurs are not paralyzed by the
prospect of failure.
Failure – a natural part of the creative
process.
Successful entrepreneurs learn to fail
intelligently.
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Avoiding the Pitfalls of
Small Business Failure
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Know your business in depth
Develop a solid business plan
Manage financial resources
Understand financial statements
Learn to manage people effectively
Keep in tune with yourself
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