Understanding Entrepreneurship Entrepreneurship 02 09 2016 The process by which individuals either on their own or inside organizations pursue opportunities without regard to the resources they currently control 3 Schools of thought on the Entrepreneurial process 1 Morris Lewis Sexton o an integrated input output model that looks at which variables are put into the process in order to achieve a certain level of entrepreneurship 2 Ronstadt s career assessment approach o proposes that entrepreneurs make judgments about themselves the new venture and the environment based on where they are in their career 3 Gartner s conceptual framework o The process is affected by three major categories of variables The individual entrepreneur what they bring to the process The environment consists of all external variables that affect the process such as industry suppliers and markets The organization all of the strategic aspects of the new venture such as focus resources and strategic partnerships Small Business less than 500 employees 99 7 of all employers pay more than 45 of total US private payroll generated 65 of net new jobs gazelles term used to refer to a specific few rapidly growing firms 3 Categories of economic development for countries Factor driven economies rely on unskilled labor and the extraction of natural resources Here businesses are created out of necessity o Ex Uganda Guatemala Algeria Efficiency driven economies Are growing and in need of improving their production processes and quality of goods produces o Ex Argentina Russia South Africa Innovation driven economies Most advanced Where businesses compete based on innovation and entrepreneurship o Ex Denmark Israel UAE US Three Primary Characteristics of Entrepreneurial Ventures Innovative Value creating Growth oriented Entrepreneurial Trends Global Economic Turmoil o Countries economies are so interlinked that what happens in one country has ramifications at some level for every other country o Entrepreneurs have an open market with money flowing in towards green Green Power solutions The Women s Market o Women now comprise one third of all entrepreneurial activity globally The Internet Social Media and Mass Mingling o The internet and social media are not new trends but are producing new trends Preparing For the Entrepreneurial Journey 02 09 2016 7 Myths of Entrepreneurs 1 Entrepreneurs start business solely to make money o The number one reason is their need for independence and to create something new o They don t want to work for someone else 2 It takes a lot of money to start a business o More important are the management team and the market being addressed o The amount of resources the entrepreneur can access and or control are also more important 3 It takes a great idea o a great team and execution plan are much more important 4 The bigger the risk the bigger the reward o the goal is to reduce risk in any venture 5 A business plan is required for success o researchers do not agree on the relationship between a completed business plan and new venture success 6 Entrepreneurship is for the young and reckless o research supports the conclusion that being older can be an asset when starting a business 7 Entrepreneurship cannot be taught o there are many skills and behaviors that can be taught Paths to Entrepreneurship Home based o Represent 52 of all small businesses o Hobby businesses consulting freelance type businesses o Serial Entrepreneur An entrepreneur who starts one business and then moves o Portfolio Entrepreneur an entrepreneur who owns a minority or majority Serial or Portfolio Entrepreneur on to start another stake in several ventures Nonprofit entrepreneur Corporate entrepreneur o Entrepreneurship occurring inside an existing organization o Intrapreneur Challenges of Entrepreneurship long hours low pay Relying on other people for expertise and resources Facing failure at some point Needing to make major decisions often that affect other people s life Opportunities of Entrepreneurship Becoming independent Creating wealth Doing something you re passionate about Creating new jobs Preparing to become and Entrepreneur 1 Find a mentor o someone who is leading the type of life the entrepreneur envisions for o guide and gateway to contacts they would otherwise not have been able to themselves meet 2 Build a professional network 3 Learn about entrepreneurs 4 Understand personality and business preferences 5 Improve on or acquire new critical skills 6 Study an industry Recognizing and Shaping Opportunity 02 09 2016 Creativity Enables entrepreneurs to differentiate their businesses from competitors Make sure you re defining the problem correctly 7 Stage Dynamic of the Creative Process 1 Hearing the call o Honeymoon phase 2 Fear and Resistance 3 Resolution 4 Turning Point o Either moves on or gives up 5 Creation 6 Manifestation o Outcome 7 Fulfillment o Fears reconciled answered enough unknowns now comfortable moving on o Implementation of the action plan to turn the idea into reality 5 Categories of Innovation Joseph Schumpeter 1 A new product or substantial change in an existing product 2 A new process 3 A new market 4 New sources of supply 5 Changes in industrial organization Roadblocks to Creativity No time for creativity o Distractions such as multitasking create stress in the workplace No confidence o Confidence is the expectation of success Skillset to avoiding the roadblocks to creativity Design an environment to stimulate creativity o Minimize distractions o Devoting time each day to quiet contemplation o Spend more time with people in different fields of interest and move out of the comfort zone Log Ideas Take advantage of a personal network Return to Childhood Developing and Testing A Business Model 02 09 2016 What is a business model All definitions focus on the creation and capture of value How the company creates value for the customer and what the organization must do to become or remain viable First a business must create value by differentiating itself from competitors and or by meeting an unserved need in the market Second it captures value by monetizing its offering Why Business models fail 1 Flawed Logic 2 Limited Strategic Choices 3 Imperfect value creation and capture assumption 4 Incorrect assumptions about the value chain Developing A Concept For A New Business Value Proposition o The value for the customer o The reason the customer will buy Customer Definition o Who is the customer o The