Chapter # 1: Introduction to Entrepreneurship
Book: Entrepreneurship Successfully Launching New Ventures (6 th Edition)
Subject: Entrepreneurship and SME Management
Introduction to Entrepreneurship
- There is tremendous interest in entrepreneurship around the world.
- Although the highest rates of entrepreneurial start-up activity occur in low income
countries, where good jobs are not plentiful, the rate are also impressive in high-income
countries. According to the GEM study, 1 out of every 8 ½ (11.9%) of American adults is
actively engaged in starting a business or is the owner/manager of a business that is less
than three- and a half year old.
What is Entrepreneurship and Why Is It Important?
- Entrepreneurship is defined as the process by which individuals pursue opportunities
without regard to resources they currently control for the purpose of exploiting future
goods and services.
- We want to note here that established firms with an orientation toward acting
entrepreneurially practice corporate entrepreneurship.
- All firms fall on a conceptual continuum that ranges from highly conservative to highly
entrepreneurial.
Corporate Entrepreneurship
The conceptualization of entrepreneurship at the company level. Highly entrepreneurial
companies are proactive, innovative, and risk taking. The position of the firm on continuum that
ranges from highly conservative entrepreneurial is the entrepreneurial intensity.
Why Do People Become Entrepreneurs?
Three primary reasons people decide to become entrepreneurs and start their own firms:
1. To be their own boss
2. To pursue their own ideas
3. To pursue financial rewards
BE Their Own Boss: Many entrepreneurs wants to be their own boss because deither they have
had a long-term ambition to own their own business or they have become frustrated working in
traditional jobs.
Pursue Their Own Ideas: Some people are naturally alert, and when they recognize ideas for new
products or services, they have a desire to see those ideas realized.
Pursue Financial Rewards: People start their own firm to pursue Financial rewards. This
motivation, however, is typically secondary to the first two and often fail to live up to its hype.
Characteristics of successful Entrepreneurs
Four primary characteristics of successful entrepreneurs:
1. Passion for the business
2. Product/customer focus
3. Tenacity despite failure
4. Execution intelligence
Passion for the business: The number one characteristic shared by successful entrepreneurs is
passion for the business. This passion typically stems from the entrepreneur’s belief that the
business will positively influence people’s lives.
Product/Customer Focus: An entrepreneur’s keen focus on product and customer typically stems
from the fact that most entrepreneurs are, at heart, craftspeople.
Tenacity Despite Failure: The possibility of failure exists; setbacks and failures inevitably occur
during this process, and entrepreneurs’ test is their ability to persevere through setbacks and
failures.
Execution Intelligence: The ability to effectively execute a business idea means developing a
business model, putting together a new-venture team, raising money, managing finances, leading
employees, and so on.
Five Reasons Why Passion is important (*Passion for their business)
1. The ability to learn and iterate
2. A willingness to work hard for an extended period of time
3. Ability to overcome setback and no’s
4. The ability to listen to feedback on the limitations of your organization and yourself
5. Perseverance and persistence when the going gets tough
Common Myths about entrepreneurs
Five Common Myths regarding entrepreneurship
1. Entrepreneurs are born, not made
2. Entrepreneurs are gamblers
3. Entrepreneurs are motivated primarily by money
4. Entrepreneurs should be young and energetic
5. Entrepreneurs live the spotlight
Entrepreneurs are born not made: Everyone has the potential to become one, it’s all a function of
environment, life experience, and personal choices.
- However, people with self-employed parents are more likely to become entrepreneurs,
people who know an entrepreneurs are more than 2x likely to be involved in starting a new
firm.
Entrepreneurs are gamblers: Entrepreneurs are rather moderate risk takers.
- Myth originates from the fact that entrepreneurs have jobs that are typically less structures,
and that many entrepreneurs have a strong need to achieve and often set challenging goals
that is sometimes equated to risk taking.
Entrepreneurs are motivated primarily by money: Money is rarely the primary reason
entrepreneurs start new and persevere; they also say it can be distracting.
Entrepreneurs should be young and energetic: Entrepreneurial activity is fairly even spread out
over age ranges; majority in their thirties and forties and have work experience prior to launcing
own venture. Investors prefer experience, maturity and a solid reputation.
Entrepreneurs love the spotlight: Some are flamboyant, yet the vast majority do not attract public
attention and because they are working on proprietary products/services they avoid public notice.
Types of start-up firms
Three types of Start-up firms:
1. Salary Substitute Firms
2. Lifestyle Firms
3. Entrepreneurial Firms
Salary Substitute Firms: Are small firms that afford their owner or owners a similar level of income
to what they would earn in a conventional Job.
o Example of salary substitute firms are dry cleaners, convenience stores, restaurant,
accounting firms, and hairstyling salons
Lifestyle Firms: Provide their owner or owners the opportunity to pursue a particular lifestyle and
earn a living while doing so.
o Example of lifestyle firms include ski instructors, golf pros, and tour guides.
Entrepreneurial Firms: Bring new product and services to market by creating and seizing
opportunities.
o Exmples of entrepreneurial firms are Dropbox, Facebook, and Uber.
Changing Demograhpics of Entrepreneurs
Woman Entrepreneurs: Althrogh men are still more likely to start than woman, the number of
woman-owned business is increasing.
Minority Entrepreneurs: There’s substantial increase in minority entrepreneurs in US, they
outpaced that growth of non-minority firms in gross receipts, employment, and number of firms.
An important factor facilitating the growth of minority entrepreneurs is the number of
organizations that promote and provide assistance.
Senior entrepreneurs: The number of seniors (those 50 years of age and older) starting businesses
is substantial and growing. In 2015, 5.4 percent of new businesses were started by people 62 years
and older.
Millennial Entrepreneurs: A desire to pursue an entrepreneurial career is high among young
people. According to a Bentley University survey, 66 percent of millennials have a desire to start
their own businesses.
The Entrepreneurial Process
1. Deciding to become an entrepreneur: A triggering event prompts an individual to become
an entrepreneur.
2. Developing successful business ideas: includes opportunity recognition, feasibility analysis,
the development of an effective business model, industry analysis and writing a business
plan.
o Business Model: plan or recipe for how it create, delivers, and captures value for its
stakeholders.
o Business Plan: a written document that describes all the aspects of a business
venture in a concise manner.
3. Moving from an idea to an entrepreneurial firm: first step is to prepare an ethical and legal
foundation for a firm including selecting an appropriate form of business ownership.
4. Managing and growing the entrepreneurial firm: All firms must be managed and grown
properly to ensure their ongoing success.
Developing Skills for your Career
After studying this book, some readers will decide they do not want to become
entrepreneurs, others will conclude that becoming an entrepreneur at some point is desirable,
while still others will decide to launch an entrepreneurial venture as quickly as possible – but, for
all readers though, the tools, techniques, and concept discussed in this book will further develop
some of your “employability skills”.
Business ethics and social responsibility
Critical thinking
Collaboration
Data literacy
