Chapter 2 Preparing for the Entrepreneurial Journey Success isn t permanent and failure isn t fatal Mike Ditka Professional Football Coach Copyright Houghton Mifflin Company All rights reserved 2 2 Chapter One Recap Entrepreneurship is a way of thinking that is opportunity focused innovative and growth oriented this can be taught but having the passion to be an entrepreneur cannot be taught Entrepreneurship is not a linear process It s a fuzzy amorphous convoluted one Technological innovation is the primary engine of economic growth in the U S economy Entrepreneurs drive most technological innovation and the resulting new industry formation Copyright Houghton Mifflin Company All rights reserved 2 3 Chapter One Recap cont d Entrepreneurial ventures are responsible for about twice as many new jobs in the U S each year as large corporations Large U S corporations shrank in both size and scope in the face of the economically volatile 1970 s This spawned the Decade of Entrepreneurship the 1980 s Current trends in Entrepreneurship more woman and minority owned ventures internet based entrepreneurship faster and faster globalization Copyright Houghton Mifflin Company All rights reserved 2 4 Seven Myths Entrepreneurs start businesses solely to make money Truth The number one reason entrepreneurs start businesses is to fulfill their need for independence or their need to create something new They are generally SECONDARILY motivated by financial gain Copyright Houghton Mifflin Company All rights reserved 2 5 Seven Myths It takes a lot of money to start a business Truth Every year Inc magazine profiles entrepreneurs who started their businesses on 1 000 or less Research has determined that it s not the amount of capital an entrepreneur possesses but rather how many human resources founding team contacts strategic alliances mentors the entrepreneur can harness or control Copyright Houghton Mifflin Company All rights reserved 2 6 Seven Myths It takes a great idea to start a business Truth Most of the great businesses that have been successful for 50 or more years Disney Merck didn t start with a great idea but rather a great team who wanted to create an enduring company It s typically not a great idea but great execution in a growing market that makes a business a success Copyright Houghton Mifflin Company All rights reserved 2 7 Seven Myths A business plan is required for success Truth While there is no question that lenders investors and others want to see a business plan it is in fact not essential to have a formal plan in place before starting a business Successful businesses started without a business plan include Pizza Hut and Crate and Barrel More important than having a business plan Spending time and resources testing the market for the feasibility of a business concept in terms of actual sales Copyright Houghton Mifflin Company All rights reserved 2 8 Seven Myths The bigger the risk the bigger the reward Truth In is in fact the goal of most entrepreneurs to minimize the level of risk in any venture by doing such things as assessing the market writing a business plan and so forth By doing so they tend to increase their chances for success and retain more of the equity in their successful ventures There is no award in business for taking on the most risk Copyright Houghton Mifflin Company All rights reserved 2 9 Seven Myths Entrepreneurship is for the young and reckless Truth Men and women aged 45 64 are responsible for 36 percent of all entrepreneurial activity in the U S Men and women between the ages of 25 44 are responsible for 50 percent The other 14 percent are either minors or over age 65 Copyright Houghton Mifflin Company All rights reserved 2 10 Seven Myths Entrepreneurship cannot be taught Truth There is a lot about entrepreneurship that can be taught It s largely a business discipline like accounting or marketing What cannot be taught however is a burning desire to achieve Copyright Houghton Mifflin Company All rights reserved 2 11 The Truth About Entrepreneurs Research has failed to identify a stereotypical entrepreneur Copyright Houghton Mifflin Company All rights reserved 2 12 Pathways to Entrepreneurship The Home Based Entrepreneur over 50 of all U S businesses are home based sometimes this is required by a lack of resources sometimes it s a lifestyle choice most often entrepreneurs start businesses in their homes in order to reduce overhead and start up risk The Internet Entrepreneur low cost no bricks and mortar Copyright Houghton Mifflin Company All rights reserved 2 13 Pathways to Entrepreneurship Serial or Portfolio Entrepreneur start up multiple business and sell or keep them Traditional Entrepreneur bricks and mortar ie not solely on the internet Non profit Entrepreneur educational religious or charitable goals Ok to make a profit but such profits cannot be distributed to the owners profits must be churned back into the non profit Copyright Houghton Mifflin Company All rights reserved 2 14 Pathways to Entrepreneurship Corporate Venturer Large organizations are finding it necessary to provide an opportunity for entrepreneurial activity in order to compete Skunk works an autonomous group given a mandate to find and develop new products Operate outside the traditional lines of authority of the company but have access to its resources A fast flexible creative work environment Named after Lockheed s Stealth Fighter development group Copyright Houghton Mifflin Company All rights reserved 2 15 Table 2 1 Challenges and Opportunities with the Entrepreneur Career Path Copyright Houghton Mifflin Company All rights reserved 2 16 Preparing to be an Entrepreneur Find a mentor preferably someone leading the life you want to lead Build a network you really only need a few gatekeeper contacts Learn about entrepreneurs read about them and talk to them Copyright Houghton Mifflin Company All rights reserved 2 17 Preparing to be an Entrepreneur Identify your reasons for wanting to own a business I can t find a job is not a great reason Analyze your personality and your business preferences Do you like to work alone or need to be around people Are you willing and financially physically able to work long hours for little or no pay Copyright Houghton Mifflin Company All rights reserved 2 18 Preparing to be an Entrepreneur Improve or acquire critical skills ability to make frequent timely decisions ability to weigh the options in complex situations ability to be detail oriented Study