CHAPTER 1

1-1 Ch. 1: The Foundations of

Entrepreneurship
 The World of the Entrepreneur

 Every year U.S. entrepreneurs launch 550,000 new

businesses.
 Entrepreneurial spirit - the most significant economic
development in recent history.
 GEM study: 18.7% of adult population in the U.S. is
actively involved in trying to start a new business.

Ch. 1: The Foundations of 1-2

Entrepreneurship
 Believe it or not
•  There are almost 28 million small businesses in the US and over 22 million are
self employed with no additional payroll or employees (these are called non
employers)

•  Over 50% of the working population (120 million individuals) works in a small

business

• Small businesses have generated over 65% of the net new jobs since 1995

• Approximately 543,000 new businesses get started each month (but more

employer businesses shut down than start up each month)

• 7 out of 10 new employer firms survive at least 2 years, half at least 5 years, a

third at least 10 years and a quarter stay in business 15 years or more

• 52% of all small businesses are home-based14)   Non employers had average

revenues of $44,000

•  Around 80% of non employer businesses for 2011 (or 18 million businesses)

reported less than $50,000 in receipts

*http://www.forbes.com/sites/jasonnazar/2013/09/09/16-surprising-
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statistics-about-small-businesses/ Entrepreneurship
Ch. 1: The Foundations of Entrepreneurship 1-4
What is Intraepreneurship ?

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Entrepreneurship
 Video 1.1

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The World of the Entrepreneur
 Global Entrepreneurship Monitor (GEM) study
reports:
 Men are twice as likely to start a business as
women.
 Most entrepreneurs turn to family members and
friends for capital.
 Entrepreneurs are most likely to launch businesses
when they are between the ages of 25 and 44.

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Entrepreneurship
Who 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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Entrepreneurship
Characteristics of Entrepreneurs

• Desire for responsibility

• Preference for moderate levels of risk – risk
eliminators
• Confidence in their ability to succeed
• Desire for immediate feedback
• High levels of energy
• Future orientation – serial entrepreneurs
• Skilled at organizing
• Value achievement over money

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Entrepreneurship
Entrepreneurship
• 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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Entrepreneurship
Benefits of Entrepreneurship

The opportunity to:

• Create your own destiny
• Make a difference
• Reach your full potential
• Achieve impressive profits
• Contribute to society and to be recognized for
your efforts.
• Do what you enjoy and to have fun at it

Ch. 1: The Foundations of 1 - 11

Entrepreneurship
Drawbacks of Entrepreneurship

 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

Ch. 1: The Foundations of 1 - 12

Entrepreneurship
Feeding the Entrepreneurial Fire

• Entrepreneurs foreseen as heroes

• Spread of Entrepreneurial education
• Demographic and economic factors
• Global Shift to a service economy
• Continuous Technology advancements
• Independent lifestyle
• E-commerce and the Internet
• International Opportunities for scaling up and
Expansion

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Entrepreneurship
 FIGURE 1.3 U.S. Retail E-Commerce Revenues Source: Based on Forrester
Research, 2008.

Ch. 1: The Foundations of Entrepreneurship 1 - 14

The Cultural Diversity of Entrepreneurship

 Young entrepreneurs

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Entrepreneurship
1 - 16
The Cultural Diversity of Entrepreneurship
(continued)

 Women entrepreneurs

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Entrepreneurship
 FIGURE 1.4 Why Women Start Businesses
Source: U.S. Small Business
Administration, 2007.

Ch. 1: The Foundations of Entrepreneurship 1 - 18

The Cultural Diversity of Entrepreneurship
(continued)

 Minority-owned enterprises
 Immigrant entrepreneurs
 Part-time entrepreneurs

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Entrepreneurship
The Cultural Diversity of Entrepreneurship
(continued)

 Home-based businesses
 Family businesses
 Corporate castoffs
 Corporate dropouts
 Social entrepreneurs
 Retiring Baby Boomers

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Entrepreneurship
 FIGURE 1.5 Small Business by Industry
Source: U.S. Small Business
Administration, 2007.

Ch. 1: The Foundations of Entrepreneurship 1 - 21

Ten Deadly Mistakes of Entrepreneurship

1. Management mistakes
2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic plan
6. Uncontrolled growth
7. Poor location
8. Improper inventory control
9. Incorrect pricing
10. Inability to make the “entrepreneurial
transition”

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Entrepreneurship
Putting Failure Into Perspective

 Entrepreneurs are not paralyzed by the

prospect of failure.
 Failure – a natural part of the creative
process.
 Successful entrepreneurs learn to fail
intelligently.

Ch. 1: The Foundations of 1 - 23

Entrepreneurship
Avoiding the Pitfalls of Small Business Failure

• Know your business in depth

• Develop a solid business plan
• Manage financial resources
• Understand financial statements
• Learn to manage people effectively
• Set your business apart from the competition
• Maintain a positive attitude

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Entrepreneurship
 Conclusion
Entrepreneurs:
 Are an important part of the free enterprise system

 Are a diverse and talented group of people

 Represent a cross-section of society as a whole

 Are able to enhance the profitability of their businesses through acquiring

additional knowledge and experience

Ch. 1: The Foundations of Entrepreneurship 1 - 25

26 Ch. 1: The Foundations of
Entrepreneurship 1 - 26
 CHAPTER 2
Inside
Inside the
the Entrepreneurial
Entrepreneurial
Mind:
Mind: From
From Ideas
Ideas to
to Reality
Reality

Copyright © 2011 Pearson Education

Entrepreneurship

 Entrepreneurship – the result of a

disciplined, systematic process of applying
creativity and innovation to the needs and
opportunities in the marketplace.
 Entrepreneurs connect their creative ideas
with the purposeful action and structure of an
enterprise.
Creativity and Innovation

 Creativity – the ability to develop new ideas

and to discover new ways of looking at
problems and opportunities; thinking new
things
 Innovation – the ability to apply creative
solutions to problems or opportunities to
enhance or to enrich people’s lives; doing new
things.

Ch. 2: Inside the Entrepreneurial

Mind
Failure: Part of the Creative Process!

 For every 3,000 new ideas:

 Four make it to the development stage.
 Two are actually launched.
 One becomes a success in the market.

 On average, new products account for 40% of

companies’ sales!!
 Creativity is an important source of building a
competitive advantage.
Can We Learn to Be Creative?

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By overcoming paradigms and by suspending
conventional thinking long enough to
consider new and different alternatives!

Ch. 2: Inside the Entrepreneurial

Mind
Left-Brained or Right-Brained?

Entrepreneurship requires both left-and

right-brained thinking.
 Right-brained thinking draws on divergent
reasoning, the ability to create a multitude of
original, diverse ideas.
 Left-brained thinking counts on convergent
reasoning, the ability to evaluate multiple ideas
and to choose the best solution to a problem.

Ch. 2: Inside the Entrepreneurial

Mind
Barriers to Creativity
• Searching for the one “right” answer
• Focusing on “being logical”
• Blindly following the rules
• Constantly being practical
• Viewing play as frivolous
• Becoming overly specialized
• Avoiding ambiguity
• Fearing looking foolish
• Fearing mistakes and failure
• Believing that “I’m not creative”
Questions to Spur the Imagination
 Is there a new way to do it?
 Can you give it a new twist? Can you reverse it?
 Do you merely need more of the same? Do you need less of
the same?
 Is there a substitute? What if you do just the opposite?
 Can you combine ideas? Can you put it to other uses?
 What else could you make from this?
 Are there other markets for it?
 Can you eliminate it? Can you put it to another use?
 What idea seems impossible, but if executed, would
revolutionize your business?

Ch. 2: Inside the Entrepreneurial

Mind
Tips for Enhancing Individual Creativity
 Allow yourself to be creative
 Give your mind fresh input every day
 Observe the products and services of other companies, especially those
in completely different markets
 Recognize the creative power of mistakes
 Notice what is missing
 Keep a journal to record your thoughts and ideas
 Listen to other people and Listen to your beneficiaries
 Talk to a child
 Do something ordinary in an unusual way
 Keep a toy box in your office
 Do not throw away seeming “bad” ideas
 Read books on stimulating creativity or take a class on creativity
 Take some time off and Be persistent
The Creative Process

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Creative
Process
1- 38 Ch. 1: The Foundations of
Entrepreneurship
 1.Preparation
Get your mind ready for creative thinking.
 Adopt the attitude of a lifelong student.
 Read … a lot … and not just in your field of expertise.

2 - 39
 Clip articles of interest to you and save them.
 Take time to discuss your ideas with other people.
 Join professional or trade associations and attend their
meetings.
 Study other countries and their cultures.
 Travel to new places.
 Develop your listening skills.
 Eliminate creative distractions.
2.Investigation

Get your mind ready for creative thinking.

 Develop Solid understanding of the problem

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 Study the problem and understand its basic
components
 Who are you competitors ? What makes you
different ? What are their problems ? What
made them successful ?

Ch. 2: Inside the Entrepreneurial

Mind
3.Transformation
 Involves viewing both the similarities and the differences
among the information collected.
 Two types of thinking are required:

2 - 41
 Convergent – the ability to see the similarities
and the connections among various and often
diverse data and events.
 Divergent – the ability to see the differences
among various data and events.
 1 - 42
Ch. 1: The Foundations of
Entrepreneurship
 3.Transformation
 How can you transform information into
purposeful ideas?
 Grasp the “big picture” by looking for patterns
that emerge.
 Rearrange the elements of the situation.
 Use synectics, taking two seeming nonsensical
ideas and combining them.
 Remember that several approaches can be
successful. If one fails, jump to another.
4.Incubation
 Allow your subconscious to reflect on
the information collected :
 Walk away from the situation.

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 Take the time to daydream.
 Relax – and play – regularly.
 Dream about the problem or opportunity.
 Work on the problem in a different environment.

Ch. 2: Inside the Entrepreneurial

Mind
5.Illumination
 It may take place after 5 min or after 5 years …its
when you feel it down in your spinal cord …
 All previous stages come together to formulate an

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innovative

=
Ch. 2: Inside the Entrepreneurial
Mind
6.Verification
 Validate the idea as accurate and
useful.
 Is it really a better solution?

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 Will it work?
 Is there a need for it?
 If so, what is the best application of this idea in
the marketplace?
 Does this product or service fit into our core
competencies?
 How much will it cost to produce or to provide?
 Can we sell it at a reasonable price that will
produce a profit?

Ch. 2: Inside the Entrepreneurial

Mind
 2 - 47
Ch. 2: Inside the Entrepreneurial
Mind
Creative
Process
 Techniques for Improving
the Creative Process

 Brainstorming
 The goal is to create a large quantity of novel and

2 - 49
imaginative ideas.

 Mind-mapping
 A graphical technique that encourages thinking on
both sides of the brain, visually displays
relationships among ideas, and improves the
ability to see a problem from many sides.

Ch. 2: Inside the Entrepreneurial

Mind
Mind Mapping

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Ch. 1: The Foundations of
Entrepreneurship
 Techniques for Improving
the Creative Process

 Force Field Analysis

 A useful technique for evaluating the forces that support and

2 - 51
oppose a proposed change.
 Three columns:
 Center: Problem to be addressed

 Left: Driving forces

 Right: Restraining forces

 Score each force (-1 to +4) and add them.

Ch. 2: Inside the Entrepreneurial

Mind
 2 - 52
FIGURE 2.2 Sample Force Field Analysis

Ch. 2: Inside the Entrepreneurial

Mind 1 - 52
Protecting Your Ideas

 Patent – a Certificate from the Patent and

Trademark Office to the inventor of product,
giving the exclusive right to make, use, or sell
the invention for 20 years from the date of
filing the patent application.
FIGURE 2.4 Patent Applications and Patents Issued
The Six Steps to a Patent
6. File the patent application

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5. Complete the patent application

4. Study search results

3. Search existing patents

2. Document the device

1. Establish the invention’s novelty

Ch. 2: Inside the Entrepreneurial
Mind
Protecting Your Ideas
 Trademark – any distinctive word, symbol,
design, name, logo, slogan, or trade dress a
company uses to identify the origin of a

2 - 56
product or to distinguish it from other
goods on the market.
 Service mark – the same as a trademark
except that it identifies the source of a
service rather than a product.
 2 - 57
FIGURE 2.6 Trademark Applications and Trademarks and Renewals Issued
Ch. 2: Inside the Entrepreneurial
Mind 1 - 57
Protecting Your Ideas
 Copyright – an exclusive right that protects the
creators of original works of authorship such as
literary, dramatic, musical, and artistic works.

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 Copyrighted material is denoted by the symbol ©.
Protecting Your Ideas
Type of What It
Protection Covers

Copyright Works of original

authorship

Trademark Logos, names,

phrases

Design patent Look of an

original product

Utility patent How an original

product works

Business method A business

patent process

Source: Anne Field, “How to Knock Out Knock Offs,”

Offs,” Business Week,
Week, March 14, 2005.

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Mind
 Conclusion
 The creative process is a tenant of the
entrepreneurial experience.
 Success, and even survival itself, requires
entrepreneurs to tap their creativity.
 The seven steps of the creative process transform an
idea into a reality.
 Creativity results in value, and value provides a
competitive advantage.
 Entrepreneurs protect their creative ideas with
patents, trademarks, service marks, and copyrights
to sustain a competitive edge.
 Video 2.1

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Entrepreneurship
 Thank You

1 - 62 Ch. 1: The Foundations of

Entrepreneurship