Transcript Introduction to Entrepreneurship New Venture Development Walter Good Asper School of Business

Introduction to Entrepreneurship
New Venture Development
Walter Good
Asper School of Business
University of Manitoba
What is Entrepreneurship?
Researchers have been very inconsistent in their
definitions of ‘entrepreneurship’. Definitions have
emphasized a broad range of activities including:
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The creation of organizations
The carrying out of new combinations
The exploration of opportunities
The bearing of uncertainty
The bringing together of factors of production
And others
Some Examples
Richard Cantillon (circa 1730)
“Self-employment of any sort. Entrepreneurs
buy at certain prices in the present and sell at
uncertain prices in the future. The
entrepreneur is a bearer of uncertainty.”
Jean Baptiste Say (1816)
“The entrepreneur is the agent ‘who unites all means
of production and who finds in the value of the
products…the reestablishment of the entire capital
he employs, and the value of the wages, the interest,
and the rent which he pays, as well as profits
belonging to himself.’”
Joseph Schumpter (1934)
“The entrepreneur is the innovator who
implements change within markets through
the carrying out of new combinations. As
such, the entrepreneur moves the market
away from equilibrium”
Penrose (1963)
“Entrepreneurial activity involves identifying
opportunities within the economic system.
Managerial capacities are different from
entrepreneurial capacities.”
Kirzner (1979)
“The entrepreneur recognizes and acts upon
market opportunities. The entrepreneur is
essentially an arbitrageur.”
Gartner (1988)
“The creation of new organizations”
Timmons (1994)
“Entrepreneurship is creating something of
value from practically nothing”
Bygraves (1997)
“An entrepreneur is someone who perceives an
opportunity and creates an organization to
pursue it”
There
is no single accepted definition of
entrepreneurship.
•Small business?
•Micro business?
•Corporate entrepreneurship or intrapreneurship?
•High-growth firms?
•Family businesses?
•Franchises?
Entrepreneurship & Economic Thought
Joseph Schumpeter (1930s)
Israel Kirzner (1970s)
S
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“CREATIVE DESTRUCTION”
Entrepreneurship moves market
away from equilibrium
New combinations: new goods,
methods of production, new markets,
sources of supply, organizations.
“ENTREPRENEURIAL DISCOVERY”
Entrepreneurship moves market
toward equilibrium.
Entrepreneur alert to opportunities
that already exist and are waiting to
be noticed.
Entrepreneurs Can Play a Number of Roles
in the Economy
1. Create new product and/or service businesses.
2. Bring creative and innovative methods to developing or
producing new products or services.
3. Provide employment opportunities and create new jobs
as a result of growing their businesses consistently and
rapidly.
4. Help contribute to regional and national economic
growth.
5. Encourage greater industrial efficiency/productivity to
enhance our international competitiveness.
Some Facts About
Entrepreneurship
 1998 adult working population was 130 million,
17.3% or 21+ million were self-employed
 Since WWII small entrepreneurial firms have been
responsible for ½ of all innovation and 95% of all
radical innovation.
Entrepreneurship Drives Job &
Wealth Creation.
 Since 1980, large companies have lost more than
5M jobs, but 34M new jobs have been created.
 At any point in time, 8.5% of the adult population
is starting a new business.
 In 1950s 50,000 businesses were incorporated per
year. 770,000 businesses were incorporated in
1998.
Small businesses are the backbone of the North American Economy.
They create 2 of every 3 new jobs and produce 39% of the GNP.
 Firms with fewer than 20 employees currently
create almost 95% of net new jobs.
 Increasingly women are questioning traditional
corporate jobs to seek their careers in
entrepreneurship.
 People in their 50’s or 60’s are planning second
careers as entrepreneurs rather than retiring.
 The vast majority or nearly 3 million millionaires
accumulated their wealth through entrepreneurial
ventures.
The Components of Successful
Entrepreneurial Ventures
Opportunity
The Entrepreneur
Organization
Business Plan
Strategy
Resources
Outline of the Entrepreneurial Process
Decide to go into business for yourself
Assess your potential
Find an appropriate product or service idea
Buy a business
Start a new business
Acquire a franchise
Conduct a feasibility study
Technical feasibility
Market acceptability
Financial viability
Organize your business structure and legal requirements
Protect your idea
Arrange the necessary financing
Develop a comprehensive business plan
Myths About Entrepreneurship
Myth 1 Entrepreneurs are born, not made.
Myth 2 Anyone can start a business. It’s just a matter
of luck and guts.
Myth 3 Entrepreneurs are gamblers.
Myth 4 Entrepreneurs want to run the whole show
themselves.
Myth 5 Entrepreneurs are their own bosses and
completely independent.
Myth 6 Entrepreneurs work longer and harder than
corporate managers.
Myth 7 Entrepreneurs face greater stress and more
pressures, and thus pay a higher personal
price in their jobs than do other managers.
Continued
Myths About Entrepreneurship
(Continued)
Myth 8 Starting a business is risky and often ends in
failure
Myth 9 Money is the most important ingredient of
success
Myth 10 New business start-ups are for the young and
energetic
Myth 11 Entrepreneurs are motivated solely by their
quest for the almighty dollar
Myth 12 Entrepreneurs seek power and control over
other people so that they can feel “in charge”
STAGE TWO
Assess Your Potential for an Entrepreneurial Career
Realistically assess your potential for an
Entrepreneurial Career
Understand the
personal attributes
important for
success in a
business of your
own
Understand the
demands the
entrepreneurial
role will make on
you and your
family
Evaluate
your managerial
skills
Conduct a
personal financial
assessment
Develop a
personal
balance sheet
Assess your strengths and weaknesses
that will affect your ability to achieve
your entrepreneurial goals
Develop a
personal
budget
Attitudes and Behaviours Valuable for
Turning a Business Dream into Reality
 Commitment, Determination, and Perseverance
 A Success Orientation
 Opportunity and Goal Orientation
 Action Orientation and Personal Responsibility
 Persistent Problem Solving and a Need to Achieve
 A Reality Orientation
 The Ability to Seek and Use Feedback
 Self-Reliance
Continued
S
Attitudes and Behaviours Valuable for
Turning a Business Dream into Reality
(Continued)
 Self-Confidence
 A tolerance of Ambiguity and Uncertainty
 Moderate Risk-Taking and Risk Sharing
 The Ability to Respond Positively to Failure
 A Need for Status and Power
 Integrity and Reliability
 A Team Builder
Business Skills Needed by Successful
Entrepreneurs
1.
2.
3.
4.
Managing Money
Managing People
Directing Business Operations
Directing Sales and Marketing
Operations
5. Setting Up a Business