ENT3003 Midterm Chapter s 1 5 Chapter 1 1 Job Creation a Small businesses are defined as a business with fewer than 500 employees i Ranges from high technology venture businesses to your small mom and pops business ii These small businesses account for 99 7 of all employees and account for 45 of the total US private sector payroll b They account for lots of job creation and are a major part in stimulating job growth in the economy 2 Business Failure a The Small Business Administration Office reports that 2 3 of new businesses survive at least two years i The survival rate at 4 years is 44 b Business survival is attributed to by i Sufficient Capital ii Having employees iii Entrepreneur s intention in starting a business c Firms that survive demonstrate superior levels of reliability and accountability 3 Entrepreneurship Definition a From class notes It is a mindset or way of thinking that focuses on growth of your firm and being creative innovative to produce success i May not always be about the money as money comes with success ii And you are risk adverse try to avoid risk b 1980 is the US birth of entrepreneurship and when it became popular 4 Entrepreneurial Evolution from the 1970 s a In 1970 they saw the beginning of three significant trends 1 Imports particularly in the automobile and machine tools industries were taking a huge share of the US industrial market i Macroeconomic turmoil ii International Competition iii Technological Revolution b At the end of 1970 s Interest rates were high i ii Gas prices up 50 iii Food prices skyrocketed iv Unemployment rate 10 v Dollar was devalued vi 1 5th of all firms at the end of 1970 faced foreign competitors with far more favorable cost structures with much lower labor costs 5 Entrepreneurial Evolution from the 1980 s a In the early 1980 s US business was in terrible shape i 27 drop in profits ii Large manufacturing companies shutting down b Smaller businesses seeked out opportunities Job creation i ii Found ways to subcontract work and become competitive c They called this the True Decade of Entrepreneurship i Mainstream press began focus on Entrepreneurial activities 1 Such magazines as Inc and Entrepreneur 6 Entrepreneurial Evolution the end of the 1980 s into the 1990 s a Researchers conducted studies on the growth of these new business ventures of this era i These business were internationalizing much earlier than expected and at a much smaller size 1 1995 being the birth of commercial internet usage ii Directors and Managers with significant international experience played a strong role in the internationalization of entrepreneurial ventures at start up b 1990 s and Internet Birth i 1990 s were characterized as the Information Age ii Global competition and resources were more readily available than ever iii The internet made entrepreneurship and the ability to compete alongside large established companies in the same markets a reality 7 Women s Role in Business and Business Creation a Women have different motives in business These motives are different because of how b Women specifically tend to redefine how business is done rather than attempt to make they view success differently a huge impact on the economy c Also differ on an impact because of the industries women choose to enter i 55 of all women owned businesses are in services 8 Social Responsibility a It is about a company s accountability to society i Ranges from proactive social programs to rewarding employees involved in community service b Businesses are getting away from just being a Checkbook Philanthropy type of business i Moving away from just cutting a check to a philanthropy now they are actually being actively involved in community service and devoting their own personal time and efforts Chapter 2 1 Myth It takes a lot of money to start a business a Many businesses have started from less than 1 000 in start up capital and now are multi million dollar companies b The amount of start up money is not a predictor of ultimate success c Some say it is not about the amount of capital the entrepreneur has at start up but rather how many resources the entrepreneur has access to i Founding team ii Their network iii Connections on the value chain 2 Myth It takes a great idea a Companies such as Walt Disney Sony and Merck didn t start with a great idea i They started with a great team who simply wanted to create an enduring company b It is often not the idea but the execution plan that makes the business a success 3 Myth The bigger the risk the bigger the reward a Entrepreneurs want to be risk adverse and limit the amount of risk on their venture b The Goal is to reduce the level of risk in any venture c No one expects the business to be worth less because risk was reduced d It is the entrepreneur s advantage to reduce risk for investors so that they can retain equity money from investors 4 Myth Entrepreneurship Cannot be Taught a It can be taught however those who may be born with a particular chemical make up may have more passion or be more prone to success b Being an entrepreneur takes discipline and like any discipline it can be learned 5 Types of Entrepreneurs a Serial Entrepreneur start another b Portfolio Entrepreneur i An entrepreneur who starts up one business gets it running and moves on to i An entrepreneur who owns a minority or majority stake in several ventures ii iii Consistently on the hunt for new ventures Involved with many ventures at the same time c Nascent Entrepreneur i Baby entrepreneur ii New to Business iii Inexperienced d Traditional Entrepreneur i The entrepreneur who starts a bricks and mortar business one that is in the wall or has a physical presence and builds it up until wealth is created ii Owns for life and not interested in selling iii It is a business with a location and not an online venture 1 Examples would be found in retail manufacturing services and health care e Non Profit Entrepreneur i Nonprofit organizations 1 Socially responsible 2 Produces profits but must invest profits back within the business rather than paying it out to owners 3 Pays salaries to employees 4 Tax exempt status to attract donations from companies 6 Corporate Venture a Those entrepreneurial like ventures inside large companies and are distinct from other types of projects that these firms take on i Example guys who invented the Post it who worked for 3M found it on accident b These ventures involve activities that are typically new to the company so the