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Entrepreneurs (the driving force behind small business)
The document discusses entrepreneurs and small businesses. It notes that in the US, entrepreneurs start over 6 million businesses per year. Entrepreneurs take initiative, are willing to accept risk, and identify opportunities to create new businesses. While small businesses provide many benefits like flexibility and potential for high profits, there are also drawbacks such as long hours, stress, and risk of business failure. Overall, small businesses make up the vast majority of US companies and are a major driver of job creation and innovation.
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Entrepreneurs drive small businesses, with over 6 million new businesses started annually in the U.S.
An entrepreneur starts a business facing risks to achieve profit; they often work long hours for independence.
61% of U.S. adults want to start a business. Key traits include initiative, risk preference, confidence, and determination.
Factors include creativity and innovation. Entrepreneurs can spot opportunities by monitoring trends and unique approaches.
Small businesses allow personal control, social impact, potential profit, and fulfillment of passions.
Challenges include income uncertainty, investment risks, long hours, and initial quality of life issues.
Various demographics participate in entrepreneurship, including age, gender, and minority status.
Small businesses comprise 99.7% of U.S. businesses, employing over 50%, contributing significantly to GDP and job creation.
Approximately 54% of new businesses fail within 4 years. Learning from failure is crucial for entrepreneurs.
Essential tips for success in small business include thorough knowledge, planning, effective people management, and a positive mindset.
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- 1. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-11 Entrepreneurs: The Driving Force Behind Small Business
- 2. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-22 The World of theThe World of the EntrepreneurEntrepreneur In the U.S., entrepreneurs start moreIn the U.S., entrepreneurs start more than 6 million businesses a year!than 6 million businesses a year! Global Entrepreneurship Monitor (GEM)Global Entrepreneurship Monitor (GEM) Approximately 8% of the U.S. population isApproximately 8% of the U.S. population is actively involved in entrepreneurial activityactively involved in entrepreneurial activity Nearly 11% of people in 49 GEM countriesNearly 11% of people in 49 GEM countries studied are involved in starting a newstudied are involved in starting a new businessbusiness
- 3. Copyright ©2012 PearsonEducation, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-3
- 4. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-44 What is anWhat is an Entrepreneur?Entrepreneur? One who creates a new business inOne who creates a new business in the face of risk and uncertainty for thethe face of risk and uncertainty for the purpose of achieving profit and growthpurpose of achieving profit and growth by identifying opportunities andby identifying opportunities and assembling the necessary resourcesassembling the necessary resources to capitalize on themto capitalize on them
- 5. What is anEntrepreneur?What is an Entrepreneur? An entrepreneur is someone whoAn entrepreneur is someone who is willing to work 16 hours a day tois willing to work 16 hours a day to keep from working 8 hours a daykeep from working 8 hours a day for someone else!for someone else! Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-5
- 6. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-66 Characteristics ofCharacteristics of EntrepreneursEntrepreneurs SurveySurvey: 61% of adults in the U.S. would: 61% of adults in the U.S. would like to start their own businesslike to start their own business Willingness to take initiativeWillingness to take initiative Preference forPreference for moderatemoderate riskrisk Confidence in their ability to succeedConfidence in their ability to succeed IndependenceIndependence DeterminationDetermination Desire for immediate feedbackDesire for immediate feedback
- 7. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-77 High level of energyHigh level of energy CompetitivenessCompetitiveness Future orientationFuture orientation Serial entrepreneursSerial entrepreneurs Skilled at organizingSkilled at organizing Value achievement over moneyValue achievement over money Characteristics ofCharacteristics of EntrepreneursEntrepreneurs
- 8. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-88 EntrepreneurshipEntrepreneurship One characteristic of entrepreneursOne characteristic of entrepreneurs stands out:stands out: Diversity!Diversity! AnyoneAnyone – regardless of age, race,– regardless of age, race, gender, color, national origin, or anygender, color, national origin, or any other characteristic – can become another characteristic – can become an entrepreneur (although not everyoneentrepreneur (although not everyone should)should)
- 9. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-99 How to Spot EntrepreneurialHow to Spot Entrepreneurial OpportunitiesOpportunities Creativity vs. InnovationCreativity vs. Innovation CreativityCreativity – the ability to develop– the ability to develop new ideas and to discover newnew ideas and to discover new ways of looking at problems andways of looking at problems and opportunitiesopportunities InnovationInnovation – the ability to apply– the ability to apply creativecreative solutions to problems andsolutions to problems and opportunities to enhance or toopportunities to enhance or to enrich people’s livesenrich people’s lives
- 10. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1010 How to Spot EntrepreneurialHow to Spot Entrepreneurial OpportunitiesOpportunities Monitor trends and exploit them early onMonitor trends and exploit them early on Sonic MuleSonic Mule Take a different approach to an existingTake a different approach to an existing marketmarket Poo Poo Paper CompanyPoo Poo Paper Company Put a new twist on an old ideaPut a new twist on an old idea Green Grass at LastGreen Grass at Last
- 11. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1111 How to Spot EntrepreneurialHow to Spot Entrepreneurial OpportunitiesOpportunities Look for creative ways to use existingLook for creative ways to use existing resourcesresources Greenfields CoalGreenfields Coal Realize that others have the same problemRealize that others have the same problem that you dothat you do SkirtSportsSkirtSports Notice what is missingNotice what is missing Dogs on WheelsDogs on Wheels
- 12. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1212 Benefits of Small BusinessBenefits of Small Business OwnershipOwnership The opportunity to:The opportunity to: Control your own destinyControl your own destiny Make a differenceMake a difference Social entrepreneursSocial entrepreneurs Reach your full potentialReach your full potential Reap impressive profitsReap impressive profits Contribute to society and to be recognizedContribute to society and to be recognized for your effortsfor your efforts Do what you enjoy and to have fun at itDo what you enjoy and to have fun at it
- 13. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1313 Drawbacks of SmallDrawbacks of Small Business OwnershipBusiness Ownership Uncertainty of incomeUncertainty of income Risk of losing your entire investmentRisk of losing your entire investment Long hours and hard workLong hours and hard work
- 14. Source: MasterCard GlobalSmall Business Survey, 2007.Source: MasterCard Global Small Business Survey, 2007. Small Business Owners' Work Week Number of Hours Worked per Week 1 to 39 hours 10% 40 to 49 hours 29% 50 to 59 hours 22% 60 to 69 hours 19% More than 70 hours 20% Average workweek = 54 hours Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-14
- 15. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1515 Drawbacks of SmallDrawbacks of Small Business OwnershipBusiness Ownership Uncertainty of incomeUncertainty of income Risk of losing your entire investmentRisk of losing your entire investment Long hours and hard workLong hours and hard work Lower quality of life until the business getsLower quality of life until the business gets establishedestablished
- 16. Source: National Federationof Independent Businesses and Wells Fargo Bank, 2002.Source: National Federation of Independent Businesses and Wells Fargo Bank, 2002. 9.8% 33.5% 31.1% 17.8% 6.1% 1.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Under 25 25-34 35-44 45-54 55-64 65+ Age Owner Age at Business Formation Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-16
- 17. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1717 Drawbacks of SmallDrawbacks of Small Business OwnershipBusiness Ownership Uncertainty of incomeUncertainty of income Risk of losing your entire investmentRisk of losing your entire investment Long hours and hard workLong hours and hard work Lower quality of life until the business getsLower quality of life until the business gets establishedestablished High levels of stressHigh levels of stress Complete responsibilityComplete responsibility DiscouragementDiscouragement
- 18. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1818 Feeding theFeeding the Entrepreneurial FireEntrepreneurial Fire Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economicDemographic and economic factorsfactors Shift to a service economyShift to a service economy Technological advancementsTechnological advancements OutsourcingOutsourcing Independent lifestylesIndependent lifestyles E-Commerce and the World WideE-Commerce and the World Wide WebWeb International opportunitiesInternational opportunities
- 19. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-1919 The Cultural DiversityThe Cultural Diversity of Entrepreneurshipof Entrepreneurship Young entrepreneursYoung entrepreneurs
- 20. Source: Kauffman Foundation,Kauffman Index of Entrepreneurial Activity, 1996-2009.Source: Kauffman Foundation, Kauffman Index of Entrepreneurial Activity, 1996-2009. Entrepreneurial Activity by Age Group Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-20
- 21. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2121 The Cultural DiversityThe Cultural Diversity of Entrepreneurshipof Entrepreneurship Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs
- 22. Source: 2008 KauffmanIndex of Entrepreneurial Activity.Source: 2008 Kauffman Index of Entrepreneurial Activity. Entrepreneurial Activity by GenderEntrepreneurial Activity by Gender Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-22
- 23. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2323 The Cultural DiversityThe Cultural Diversity of Entrepreneurshipof Entrepreneurship Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs Minority-owned enterprisesMinority-owned enterprises
- 24. Source: based onMinorities in Business: A Demographic Review ofSource: based on Minorities in Business: A Demographic Review of Small Business Ownership, Small Business Administration, Office ofSmall Business Ownership, Small Business Administration, Office of Advocacy, April 2007.Advocacy, April 2007. Minority Business Ownership inMinority Business Ownership in the United Statesthe United States 0 10 20 30 40 50 60 70 80 90 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East West North Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-24
- 25. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2525 The Cultural DiversityThe Cultural Diversity of Entrepreneurshipof Entrepreneurship Young entrepreneursYoung entrepreneurs Women entrepreneursWomen entrepreneurs Minority-owned enterprisesMinority-owned enterprises Immigrant entrepreneursImmigrant entrepreneurs Part-time entrepreneursPart-time entrepreneurs
- 26. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2626 The Cultural Diversity ofThe Cultural Diversity of EntrepreneurshipEntrepreneurship Home-based business ownersHome-based business owners Family business ownersFamily business owners CopreneursCopreneurs Corporate castoffsCorporate castoffs Corporate dropoutsCorporate dropouts Retired Baby BoomersRetired Baby Boomers
- 27. Source: Small BusinessAdministration, 2009.Source: Small Business Administration, 2009. Small Business by Industry Copyright ©2012 Pearson Education, Inc. publishing as Prentice HallChapter 1 Entrepreneurs 1-27
- 28. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2828 Small Businesses...Small Businesses... Make up 99.7% of all the 29.3 millionMake up 99.7% of all the 29.3 million businesses in the U.S.businesses in the U.S. Employ 50.2% of the nation’s privateEmploy 50.2% of the nation’s private sector workforcesector workforce Pay 45% of total private payrollPay 45% of total private payroll Create more jobs than big businessesCreate more jobs than big businesses SBA estimates they create 79% of all net newSBA estimates they create 79% of all net new jobs in the U.S.jobs in the U.S.
- 29. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-2929 Are leaders in offering training andAre leaders in offering training and advancement opportunities to workersadvancement opportunities to workers Provide 67% of workers with their first jobsProvide 67% of workers with their first jobs Produce 51% of the nation’s private GDPProduce 51% of the nation’s private GDP Account for 47% of business salesAccount for 47% of business sales Key role in innovation:Key role in innovation: Produce 13 times more patents perProduce 13 times more patents per employees than large companiesemployees than large companies SmallSmall Businesses...Businesses...
- 30. 100% 81% 65% 54% 46% 40% 36% 32% 29% 27%25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% %ofSmallFirmsSurviving New 1 2 3 4 5 6 7 8 9 10 # of Years in Business Small Business Survival Rate Source: National Federation of Independent BusinessesSource: National Federation of Independent Businesses Business Policy GuideBusiness Policy Guide,, 2003.2003. Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 1-30Chapter 1 Entrepreneurs
- 31. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-3131 Putting Failure intoPutting Failure into PerspectivePerspective About 54% of new companies failAbout 54% of new companies fail within 4 yearswithin 4 years Entrepreneurs areEntrepreneurs are notnot paralyzed byparalyzed by the prospect of failurethe prospect of failure Failure – a natural part of the creativeFailure – a natural part of the creative processprocess Successful entrepreneurs learn to failSuccessful entrepreneurs learn to fail intelligentlyintelligently
- 32. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-3232 Avoiding the PitfallsAvoiding the Pitfalls ofof Small BusinessSmall Business FailureFailure Know your business in depthKnow your business in depth Prepare a business planPrepare a business plan Manage financial resourcesManage financial resources Understand financialUnderstand financial statementsstatements
- 33. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-3333 Avoiding the PitfallsAvoiding the Pitfalls ofof Small BusinessSmall Business FailureFailure Learn to manage peopleLearn to manage people effectivelyeffectively Set your business apart fromSet your business apart from the competitionthe competition Maintain a positive attitudeMaintain a positive attitude
- 34. Chapter 1 EntrepreneursChapter1 Entrepreneurs CopyrightCopyright ©2012 Pearson Education, Inc. publishing as Prentice Hall©2012 Pearson Education, Inc. publishing as Prentice Hall 1-1-3434 All rights reserved. No part of this publication may beAll rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical,in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the priorphotocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the Unitedwritten permission of the publisher. Printed in the United States of America.States of America. Copyright ©2012 Pearson Education, Inc.Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall Publishing as Prentice Hall