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WHAT IS AN ENTREPRENEUR?
Entrepreneur Person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business. Differ from many small-business owners in their strong desire to make their business grow. Differ from managers through their overriding responsibility to sue the resources of the organization to accomplish their goals. Willing to take risks.
CATEGORIES OF ENTREPRENEURS
Financial Success
Two-thirds of all millionaires are self-employed. Path to riches is uncertain due to high failure rate.
Job Security
Over last decade, large companies have downsized, eliminating more jobs than they created. Key difference from traditional job is that an entrepreneurs job depends on the decisions of customers and investors and cooperation of ones own employees.
Quality of Life
Lifestyle Entrepreneur Person who starts a business to reduce work hours and create a more relaxed lifestyle. Yet, most entrepreneurs work long hours and at the whims of their customers. Many define quality of life by their ability to fulfill social objectives.
Globalization
Market products abroad and hire international talent. Growing internationally.
Education
One hundred U.S. colleges and universities offer entrepreneurship majors, 73 offer an emphasis in entrepreneurship, hundreds of others offer courses. Universities are helping students launch businesses. Some programs teach entrepreneurship to young people. Students who graduate from entrepreneurship programs are three times as likely as others to be self-employed and to help start new businesses.
Information Technology
Helps entrepreneurs work quickly and efficiently, provide attentive customer service, increase sales, and project professional images. Entrepreneurs also produce and market products that apply new information technology. Internet also presents a challenge because customers can check prices and buy online from large or small companies anywhere in the world.
CHARACTERISTICS OF ENTREPRENEURS
Vision
An overall idea for how to make their business a success.
Need to achieve
Enjoy the challenge of reaching personal goals and are dedicated to personal success.
Creativity
Typically conceive new ideas for products and services and devise innovative ways to overcome difficult problems and situations.
Buying an Existing Business Advantages: Employees already in place serve established customers and deal with familiar suppliers. Good or service is known in the marketplace. Necessary permits and licenses secured. May be easier to get financing. Some buy successful businesses to build on their success. Turnaround entrepreneurs buy struggling businesses and improve them to generate profits. Buying a Franchise Less risky than starting a new firm, but requires careful and energetic preparation.
Finding Financing
Seed capital Initial funding needed to launch a new venture. Average amount of seed money is $1.5 million, but median is $50,000. Fifty-four percent of entrepreneurs started with $50,000 or less. Debt Financing Debt financing Borrowed funds that entrepreneurs must repay. When business fails, owner must often declare bankruptcy. Can be difficult to get bank loan for start-up.
Equity Financing Equity financing Funds invested in new ventures in exchange for part ownership. May benefit entrepreneur with a good idea and skills but little or no money. Venture capitalists Business firms or groups of individuals that invest in new and growing firms in exchange for an ownership share. Angel investors Wealthy individuals who invest directly in a new venture in exchange for an equity stake. Angel networks match business angels with entrepreneurs. Isabella Capital and Springboard Enterprises focus on women. U.S. Hispanic Chamber of Commerce aids minority-owned businesses.
INTRAPRENEURSHIP
Intrapreneurship Process of promoting innovation within the structure of an existing organization. Example: 3M Researchers spend 15 percent of their time working on their own ideas without approval from management. A skunkworks project is initiated by an employee who conceives an idea and then recruits resources from within to turn it into a commercial product. Pacing programs are company-initiated projects that focus on a few products and technologies in which company sees potential for rapid marketplace winners. Helps firms retain valuable employees.