CHAPTER 1

ENTREPRENEURSHIP

UNDERSTANDING
ENTREPRENEURSHIP

The Entrepreneur
entreprende, which means to undertake
Webster dictionary one who organizes,
manages and assumes the risks of a business
or enterprise
Richard Cantillion an entrepreneur is someone
who takes the risk of running an enterprise by
paying a certain price for securing and using
resources to make a product and reselling the
product for an uncertain price.

Joseph Schumpeter - an innovator playing

the role of a dynamic businessman adding
material growth to economic development
Timmons - Entrepreneurship is the process
of creating or seizing an opportunity and
pursuing it regardless of the resources
currently controlled

Reasons for Growth of

Entrepreneurship

Industry Structure
New technologies
Deregulation and privatization
Formation of new business communities
Increasing demand for variety
Government incentives and subsidies
Increasing flow of information

Easier access to resources

Entrepreneurial education
Return on innovation
Entrepreneur as a Hero
Self-employment is highly valued
Rising dissatisfaction at job
Acceptance of ex-entrepreneurs in the job
market

Impact of Entrepreneurial Firms

Job Creation
Economic growth
New Technology
Serving small markets

Why Start a Business?

Control
The idea
Flexibility
Money

Pros

&

You are the boss

All profits are yours
There will be great variety
in roles and tasks
Increases self confidence
Work can be very
satisfying
Success will give you
immense satisfaction

Cons
You are alone
All decisions are yours
All losses are yours
Work may not be
satisfying
You will need to put in
long hours
Lack of success will effect
self esteem
Exiting the business is
difficult
Pressures will affect
social and family life

Entrepreneurial Characteristics
Timmons Defines:
1. commitment and determination;
2. leadership;
3. opportunity obsession;
4. tolerance of risk, ambiguity and uncertainty;
5. creativity, self-reliance and ability to adapt; and
6. motivation to excel.

Bianchi
1. being an offspring of self-employed parents;
2. being fired from more than one job;
3. being an immigrant or a child of immigrants;
4. previous employment in a firm with more than
100 people;
5. being the oldest child in the family; and
6. being a college graduate.

Entrepreneurial Skills

Creativity and Opportunity Evaluation

Real-time Strategy and Decision Making
Comfort with Change and Chaos
Teamwork
Evangelism, Selling, Negotiation, and Motivation
through Influence and Persuasion
Oral and Written Communication
Basics of Start-Up Finance, Accounting and Law

Entrepreneurial Attitudes

Comfortable with lifestyle changes

Willingness to break / bend / stretch laws
Patience to start small
Prepared to make enemies
Comfort with confrontations
Dealing with failure
Willingness to learn

Entrepreneurial Motivation
Environment
IDEA

Personal
Goals
Entrepreneurial
Motivation

Entrepreneurial
Activity

Personal
Characteristics

Expectations

Match

Outcomes

Types of Entrepreneurs
Based on Timing of Venture Creation:
Early starters
Experienced
Mature
Based on Socio-cultural Variables:
1st generation entrepreneurs
From Business families
Minority entrepreneurs
Women Entrepreneurs

Based on Entrepreneurial Activity:

Novice ( Person who is inexperienced in a

job or situation)

Serial
Portfolio

Reasons for Entrepreneurial Failure

Lack of experienced management

Few trained or experienced human resource
Poor financial management
Rapid growth
Lack of business linkages
Weak marketing efforts
Lack of information
Incorrect pricing
Improper inventory control
Short term outlook

Thank you

 Warren Buffer says, Todays successful

companies live and die according to the
quality of their ideas.
Peter Drucker, Innovation is the specific
instrument of entrepreneurs, the means by
which they exploit change as an
opportunity for a different business

First Mover
Advantages
Technological
leadership: can also
lead to
Cost advantages
Economies of scale

Impose switching
costs on buyers

Disadvantages
Reveal underlying
business concept
Others can try
different resource
combinations
Investments in
resolving problems:
others can benefit
from learnings

Pre-selection

Uncover your personal traits

Knowledge and Experience
Goals and aspirations
Technical knowledge
Domain knowledge
Contacts

Sources of Business Ideas

Past work experience

Hobbies and interests
Strengths and abilities
Friends and family
Distribution channels
Travel
Books and magazines
Current trends
Research organizations
The web

Brainstorming
Some of the important rules are as follows:
Focus on quantity.
Postpone criticism.
Build on others ideas.
Encourage crazy ideas.
Work with a deadline.

Preliminary Research

Cost structure
Market structure
Technology
HR issues
Government regulations

Mind Maps

Five Questions Framework

Q1. Which is the market segment being
targeted?
Q2. What is the business model?
Q3. How big is your market?
Q4. How can you protect your business?
Q5. What are you getting out of it?

Porters Five Forces

SWOT Analysis
STRENGTH

WEAKNESS

OPPORTUNITY

THREAT