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Japanese proverb:IF ONE CAN DO IT,YOU TOO

CAN DO IT, IF NONE CANDO IT, YOU MUST DO IT.

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The Nature & Importance of

Entrepreneurs

Chapter One

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(American Entrepreneur)

(English entrepreneur)

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Do the profile of these people fit your

perception of the career of an entrepreneur?

What does it takes to start and operate a

successful business

To understand this better, learn about

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Historical Evolution Of Entrepreneurship Earliest Period

Middle Ages

17th Century

18th Century

19th & 20th Century

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Go-Between is Marco Polo Sign contract with a money person(Venture

capitalist) to sell his goods

Loan the Merchant Adventurer at a 22.5%rate

VC passive risk bearer

MA took active role in trading- active riskbearer (Physical, emotional)

MC completes trip successfully profits were

divided- VC taking 75% & MA 25%

Earliest Period

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Actor & person who managed largeproduction projects

Individual didnt take risks but only

managed the project using the resourcesprovided

Usually by the Govt of the Country

Middle Ages

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Re-emergent connection of risk withentrepreneurship developed

E person who entered into contractualagreement with the government to perform aservice or to supply products

17th Century

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Person with capital was differentiated from

the one who needed capital E was distinguished from the capital

provided(Venture capitalist)

One reason for differentiation was theindustrialization occurring throughout theworld

Invention developed during this time werereaction to the changing world

18th Century

VC- professional money manager who makes riskinvestments from a pool of equity to obtain high ROR on

the investments

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E were viewed from Economic Perspective

E organizes & operates an enterprise forpersonal gain

Pays prices for material consumed in the

business, for land, personal services heemploys, capital he requires

20th Century- Notion of an E as an innovator

was established

19th & 20th Century

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Process of creating something new withvalue by devoting the necessary time and

effort, assuming the accompanyingfinancial, psychological, and social risks; &receiving the resulting rewards of

monetary and personal satisfaction

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The process of initiating a newbusiness venture, organizing the

necessary resources and assuming

the associated risks and rewards

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New business idea/opportunityanalysis

Business plan

Manage the resources/Legal form

Manage the resulting enterprise

STARTING AN ENTREPRENEURIAL FIRM-

Entrepreneurial process

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All definitions of entrepreneurshipincludes

Newness, organizing, creating, wealth andrisk taking

Thus,Entrepreneurs are found in allprofessions

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Def stresses on Four basic aspects1. Creation process creating something new

value to entrepreneur & audience for which it is developed

2. Entrepreneurship requires the devotion ofthe necessary time and effort

time & effort to create something new & make itoperational

3. Risk take a variety of forms, depending onthe effort of the entrepreneur

4. rewards of being entrepreneurindependence- personal satisfaction- forprofit entrepreneurs, monetary reward alsocomes into play

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What then causes a person to make this

difficult decision ?

Poor sales

Lack ofcapital

Lack of managerialtalent

Intensecompetition

Financial

RiskEmotional

risk

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Individuals have difficulty bringing theirideas to the market & creating a newventure

Yet entrepreneurial decisions have resultedin several new businesses through out theworld

Despite recession- inflation- high interestsrate, lack of infrastructure-economicuncertainty & high probability of failure

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Deciding to become an entrepreneur byleaving present activity

Changing frompresent life style

Work Environment

Disruption

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Change Environment

Not easy to leavecareer

Two work environments

1. R&D : individuals

develop new productideas & leave to formtheir own companieswhen these ideas are not

accepted by theiremployers

2. Marketing : becomefamiliar with customers

unfilled needs & wants-start enterprise

Disruption

Negative force retired Who have been fired

12% new businesslistings in the yellow

pages increased duringlayoff period

Student who is notpromoted after receiving

an MBA or otherprofessional-frustrated &start new company

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WHEN INDIVIDUAL PERCEIVES THAT

FORMING A NEW ENTERPRISE IS BOTH

What causes this personal disruption toresult in a new company being formed ?

Desirable Possible

Aspects of a situation thatmake it desirable to start a

new company

Factors making It possible tocreate a new venture

f

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Possibility of New Venture Formation

Government

Background

Marketing

Finance

Role Models

Provides infrastructure to help/support a new ventureGive roads-communication systems-transportation system-utilities- & economic stability TAX RATE can suppresscompany formation-since Co wont have money to start & grow

E must have necessary background-Education, previousbusiness experience skills needed to form & manage anew enterpriseEntrepreneurs are not born: they develop

Presence of market of sufficient size- must also be a level of

marketing know-how to put together the best total package ofproduct, price, distribution & promotion needed for successfulproduct launchingA Co. is more easily formed when the driving force is more frommarket demand than a technology push

Financial resources must be readily available

Most start ups comes from personal savings-credit-friends-relatives, there is often a need for additional seed capital

see someone else succeed makes it easier to picture yourselfengaged in a similar activity

Frequent comment of E if that person could do it, so can I

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The future of Entrepreneurship

In spite of the difference conceptualperspectives, there are common aspects:risk taking, creativity, independence &

rewards and future is all about the above.

The future for E is bright we are livingin the age of entrepreneurship.

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Class Discussion

Thanks