Entrepreneurship

An Introduction

Entrepreneurial Job Creation

An engine that drives the economy

Job Creation


Since 1980
 

34 million new jobs have been created in the US Essentially all of them by entrepreneurial companies

  

In the 1960 s 4/5 employees went to work for the Fortune 500 In the 1980 s 1/5 In the 1990 s 1/14 Firms with 100 or less employees create most of the new jobs in the US

Entrepreneurship
Because it is opportunity driven and rewards only for talent and performance- and could care performanceless about religion, sex, skin color, social class, national origin and the like- it enables people to likepursue and realize their dreams, to falter and to try again, and to seek opportunities that match who they are, what they want to be, and how and where they want to live. timmons, p.5

Entrepreneurship A Definition


Entrepreneurship is:
       

A way of thinking, reasoning and acting Opportunity obsessed Resource stingy Holistic in approach Leadership balanced Creation and/or recognition of opportunities The will and initiative to seize these opportunities Willingness to take risks in a calculated and orderly fashion Shift the odds to your favor

The Startup Company



 

Success involves building a teamteamcomplementary skills and talents Sensing an opportunity where others see only chaos Find and control resources to pursue the opportunity Insuring we don t run out of cash Don t manage-lead! manage-

Why Do Startup Companies Succeed?



Established Industry leaders

   

look to service and stay close to current customers Do what has worked in the past Find and encourage today s opportunities Reward people who accumulate assets, people, budgets, plants, products and headcount Won t support programs their current customers explicitly don t want.

The startup company has an edge, not because the established company can t compete, but because it isn t looking. Even when it sees the enemy coming, it is so set in its ways, e.g. culture and strategy, that it can t change fast enough.

Successful startups


 

Reward people for new business opportunities Taking calculated risks Be on the edge The entrepreneur, experiencing entrepreneurial terror, has to be terror, afraid to panic and constantly focuses on what do I do next .

Paradoxes of Entrepreneurship


  

First you lose money, then you make money. The Seven-up rule. SevenShare the wealth with those who are in the pits with you Entrepreneurship has a strong reactive componentcomponent-you can t plan it all Discipline is crucial Patience is crucial , so is persistence Control is an illusion. If you are in control, you are going too slow.

Dream Big Dreams

          

Unless this business can pay you at least five times your present salary, the risk and wear and tear won t be worth it. Job substitute businesses Concepts for businesses that change the way people live or work Most ventures are small Age is no barrier-Col Sanders at KFC barrierThe smaller the business the higher the failure rate- regardless of ratetime The longer the business exists, the higher the failure rate The higher the growth rate of the company, and the earlier in the life that growth occurs, the better the chances of survival. Venture Capitalist backing increases the survival rate dramatically Find backers who add value, not just money The Life style venture

The Entrepreneurial Process

 

A systematic Viewpoint The elements



Opportunity, Resources, and the Team

 

The Relationships Communications, creativity, leadership

The Opportunity


The Opportunity is at the heart of the process and is evaluated based on

  

Market Demand Market Structure Financial analysis

Market Demand
 The

market demand for the product or service

there a demand  Can the customer be reached  Does the product or service deliver value  Market share-growth potential share Is growth sustainable
 Is

Market Structure
The
 Is

market structure and size

the market emerging or fragmented  How big is it  What are the barriers of entry  How aggressive is the competition

Financial Evaluation
The

financial analysis

 Can

I make money at this  What are the capital requirements  Can I break even in 1-2 years 1-

Resources


Understand and Marshall resources

Creativity is a key element  Resources consist of

   

Financial Physical assets People The business plan

Think Cash last, minimize and control the resources needed  It s not a rocket. You don t need all the resources on board to start.


The Team
 Teams

must be lead (as opposed to managed) so the entrepreneur must exhibit leadership within a leadership system  Leadership system consists of leader, followers and the context

The entrepreneurial context is unique



The leader
   

Learns and teaches faster and better Deals with adversity and is resilient Exhibits integrity, dependability and honesty Builds an entrepreneurial culture and organization Relevant track record and experience Motivated to excel Determination and persistence Tolerance of ambiguity, risk and uncertainty Creative Team focus of control Adaptable Opportunity obsessed

The followers (the team)

       

Fit and Balance



How the entire system of elements and relationships fits together and stays stable over time.


Feedback loops and stability

How the founder decides when to perturb the system to avoid brontosaurus capitalism. How the founder decides when to bring the system back into balance as it grows

Cowboy or Successful Mgr?



Entrepreneurial Reasoning-The ReasoningEntrepreneurial Mind



Successful entrepreneurs exhibit a combination of attitudes and behaviors and solid general management skills.

Attitudes and behaviors