Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 1-1.

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall1-1

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.1-2

Chapter 1

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.

In the U.S., entrepreneurs start more than 6.5 million businesses a year!

Global Entrepreneurship Monitor (GEM)Approximately 13% of the U.S. population aged 18-

64 is actively involved in entrepreneurial activityThe global average is also 13%

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Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall. 1-4


Entrepreneur: One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them

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Why Entrepreneurs Start Businesses


Characteristics of Entrepreneurs: Desire and willingness to take initiativePreference for moderate riskConfidence in their ability to succeedSelf-reliancePerseveranceDesire for immediate feedback

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More Characteristics of Entrepreneurs: High level of energyCompetitivenessFuture orientation

Serial entrepreneursSkilled at organizingValue of achievement over money

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Other Characteristics of Entrepreneurs: High degree of commitmentTolerance for ambiguityFlexibilityTenacity

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Conclusion? Diversity seems to be a central characteristic of

entrepreneurs Anyone – regardless of age, race, gender, color,

national origin, or any other characteristic – can become an entrepreneur (although not everyone should)Entrepreneurship is a skill that is learned

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Creativity vs. Innovation Creativity – the ability to develop new

ideas and to discover new ways of looking at problems and opportunities

Innovation – the ability to apply creative solutions to problems and opportunities to enhance or to enrich people’s lives

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Monitor Trends and Exploit Them Early OnIndependa

Travel – and Be InspiredEileen Fisher

Take A Different Approach To An Existing MarketI Do Now I Don’t

Put a New Twist on an Old IdeaVitaband

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Look for Creative Ways to Use Existing ResourcesDig This

Realize That Others Have the Same Problem That You DoMileWise

Take Time to PlayFlash Pals

Notice What Is MissingViking Range Corporation

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The opportunity to:Gain control over your own destinyMake a difference

Social entrepreneursReach your full potentialReap impressive profitsContribute to society and be recognized for your

effortsDo what you enjoy doing

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Uncertainty of incomeRisk of losing your entire invested capitalLong hours and hard workLower quality of life until the business gets

establishedHigh levels of stressComplete responsibilityDiscouragement

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Entrepreneurs as heroesEntrepreneurial educationDemographic and economic factorsShift to a service economyTechnological advancementsOutsourcingIndependent lifestylesE-Commerce, the Internet, and mobile computingInternational opportunities

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Young entrepreneurs

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New Entrepreneurs by Age Group


Young entrepreneursWomen entrepreneurs

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Entrepreneurial Activity Index by Gender


Young entrepreneursWomen entrepreneursMinority enterprises

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Percentage of New Entrepreneurs by Minority Group


Young entrepreneursWomen entrepreneursMinority enterprises Immigrant entrepreneursPart-time entrepreneursHome-based business owners

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Rules for a Successful Home-Based Business

Rule 1. Do your homework. Rule 2. Find out what your zoning restrictions are. Rule 3. Create distinct zones for your family and business dealings. Rule 4. Focus your home-based business idea. Rule 5. Discuss your business rules with your family. Rule 6. Select an appropriate business name. Rule 7. Buy the right equipment. Rule 8. Dress appropriately. Rule 9. Learn to deal with distractions. Rule 10. Realize that your phone can be your best friend—or your worst enemy.


Rules for a Successful Home-Based Business

Rule 11. Be firm with friends and neighbors. Rule 12. Maximize your productivity. Rule 13. Create no-work time zones. Rule 14. Take advantage of tax breaks. Rule 15. Make sure you have adequate insurance coverage. Rule 16. Understand the special circumstances under which you can hire outside employees. Rule 17. Be prepared if your business requires clients to come to your home. Rule 18. Get a post office box. Rule 19. Network. Rule 20. Be proud of your home-based business.


Young entrepreneursWomen entrepreneursMinority enterprises Immigrant entrepreneursPart-time entrepreneursHome-based business ownersFamily business owners

Family-owned business

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CopreneursCorporate castoffsCorporate “dropouts”Retired baby boomers

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Entrepreneurial Activity by Age Group1996-2012


Small business: one that employs fewer than 100 peopleSmall businesses:

Comprise 99.7% of the 27.2 million businesses in the U.S.

Employ 49.2% of the nation’s private sector workforce

Pay 43% of the nation’s total private payrollCreate more jobs than big businesses

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Small Businesses by Industry


Small businesses:Are leaders in offering training and advancement

opportunities to workersProvide 67% of workers with their first jobs Produce 46% of the nation’s private GDPAccount for 47% of business salesPlay a key role in innovation:

Produce 16.5 times more patents per employee than large companies

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About 52% of new companies fail within 5 years Entrepreneurs are not paralyzed by the prospect of

failureFailure is a natural part of the creative process

Successful entrepreneurs learn to fail intelligently

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Small Business Survival Rate


Know your business in depthPrepare a business planManage financial resourcesUnderstand financial statementsLearn to manage people effectivelySet your business apart from the competitionMaintain a positive attitude

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