Chapter 6 Starting Your Own Business The Entrepreneurship Alternative What is an Entrepreneur entrepreneur person who seeks a profitable opportunity and takes the necessary risks to operate a business entrepreneurs combine ideas and drive with money employees and other resources to create a business that fills a market need Entrepreneurs may also perform a managerial role but their overriding responsibility is to use the resources to accomplish goals Categories of Entrepreneurs classic entrepreneur person who identifies a business opportunity and allocates available resources to tap that market serial entrepreneur person who starts one business and then starts and runs additional businesses in succession social entrepreneur person who recognizes societal problems and uses business principles to develop innovative Reasons to Choose Entrepreneurship as a Career Path Being Your Own Boss self management is the motivation that drives many entrepreneurs Financial Success many entrepreneurs start their ventures with the specific goal of creating a profitable business and reaping its financial rewards because they believe they won t get rich by working for someone else Job Security working for a company is no guarantee of job security many people are deciding to create their own job security by starting their own businesses Quality of Life entrepreneurship is an attractive career option for people seeking to improve their quality of life The Environment for Entrepreneurs Globalization Education Information Technology Demographic and Economic Trends Characteristics of Entrepreneurs globalization of business has created many opportunities for entrepreneurs to market their products abroad Role of entrepreneurs is growing in most industrialized nations and free market countries in Europe Entrepreneurs in many other countries find it more difficult to start business gov t regulations taxes political attitudes The past 2 decades have brought tremendous growth in the number of educational opportunities for would be entrepreneurs Another way business education is responding to interest in entrepreneurship is by helping their students start firms Information technology helps entrepreneurs work quickly and efficiently provide alternative customer service increase sales and project professional images Many entrepreneurs have used IT to revolutionize stock trading systems use networking sites to target customers facebook Demographic trends ex Aging population Hispanic growth create opportunities for entrepreneurs to market new goods services Changing population influences who becomes an entrepreneur older entrepreneurs have access to retirement funds and home equity for financing Vision entrepreneurs begin with a vision an overall idea for how to make their business idea a success then they pursue it High Energy Level some entrepreneurs work full time at their regular day jobs and spend weeknight and weekend launching their start ups one major challenge balancing hard work with rest recreation and family Need to Achieve entrepreneurs work hard because they want to excel strong competitive drive helps them enjoy the challenge of reaching difficult goals and promotes dedication to personal success Self Confidence entrepreneurs believe in their ability to succeed they instill optimism in others some entrepreneurs have such confidence that they see what they want to see which can be an asset or limitation Tolerance for Failure entrepreneurs often succeed by sheer will and perseverance they also view setbacks as learning experiences and not easily discouraged Creativity entrepreneurs typically conceive new ideas for goods services and devise innovative ways to overcome difficult problems they often succeed by making creative improvements Tolerance for Ambiguity entrepreneurs take in stride uncertainties associated with launching a venture an important way entrepreneurs manage ambiguity is by staying close to customers so that they can adjust their offerings in keeping with customer desires Internal Locus of Control entrepreneurs have an internal locus of control which means they believe that they can control their own fates they take personal responsibility for the success failure of their actions rather than believing in luck or fate In choosing an idea for your business the 2 most important considerations are 1 finding something you love to do and 2 determining whether your idea can satisfy a need in the marketplace Many entrepreneurs look for a successful business owner executive to give advice to help venture Starting a New Venture Selecting a Business Idea Buying an existing business brings advantages o Established employees and customers o Good service known in marketplace o Necessary licenses permits secured o Getting financing is easier Finding Financing Seed capital initial funds needed to launch a new venture Most entrepreneurs rely on personal savings and loans from business associates family and friends to fund their start ups Debt Financing borrowed funds that entrepreneurs must pay back Loans from banks finance companies credit cards and family friends are all sources o o Credit cards have high annual interest charges home equity risks home but gets lower interest rates very few start ups raise money thru bank loans high risk for bank Equity Financing funds invested in new ventures in exchange for part ownership o Entrepreneur does not have to pay investors back b c they share in success of business o Partners may not agree on the future direction of the business o Venture Capitalists business firms individuals that invest in new and growing firms in exchange for an ownership o Angel investors wealthy individuals who invest directly in a new venture in exchange for an equity stake they wish to share Government Support for New Ventures help out new start ups Business incubators help entrepreneurs create new businesses from innovative ideas and create new jobs and strengthen economies gov t subsidies for incubators represent a good investment Enterprise zones specific geographic areas designated for economic revitalization encourage investment by offering tax advantages and incentives to business locating within the zone Intrapreneurship process of promoting innovation within the structure of an existing organization Established companies support Intrapreneurship activity in varied ways o A skunkworks project is initiated by an employee who conceives an idea then recruits resources to turn
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