Logic will get you from A to B.

Imagination will
take you everywhere
Albert Einstein

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CHAPTER 1
ENTREPRENEURSHIP

UNDERSTANDING
ENTREPRENEURSHIP

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Chapter Objectives
To understand the evolution of the term
entrepreneur
To study the reasons for the current growth in
entrepreneurship
To list various reasons driving a person to
starting a business
To explore the characteristics and skills of
successful entrepreneurs
To classify different types of entrepreneurs
To look at the reasons for entrepreneurial failure
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The Entrepreneur
entreprende, which means to undertake
Webster dictionary one who organizes, manages
and assumes the risks of a business or
enterprise
Richard Cantillion an entrepreneur is someone
who takes the risk of running an enterprise by
paying a certain price for securing and using
resources to make a product and reselling the
product for an uncertain price.
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Joseph Schumpeter - an innovator playing

the role of a dynamic businessman adding
material growth to economic development
Timmons - Entrepreneurship is the process
of creating or seizing an opportunity and
pursuing it regardless of the resources
currently controlled
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Reasons for Growth of

Entrepreneurship

Industry Structure
New technologies
Deregulation and privatization
Formation of new business communities
Increasing demand for variety
Government incentives and subsidies
Increasing flow of information

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Easier access to resources

Entrepreneurial education
Return on innovation
Entrepreneur as a Hero
Self-employment is highly valued
Rising dissatisfaction at job
Acceptance of ex-entrepreneurs in the job
market

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Impact of Entrepreneurial Firms

Job Creation
Economic growth
New Technology
Serving small markets

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Why Start a Business?

Control
The idea
Flexibility
Money

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Pros

&

You are the boss

All profits are yours
There will be great variety
in roles and tasks
Increases self confidence
Work can be very
satisfying
Success will give you
immense satisfaction

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Cons
You are alone
All decisions are yours
All losses are yours
Work may not be
satisfying
You will need to put in
long hours
Lack of success will effect
self esteem
Exiting the business is
difficult
Pressures will affect
social and family life
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Entrepreneurial Characteristics
Timmons:
1. commitment and determination;
2. leadership;
3. opportunity obsession;
4. tolerance of risk, ambiguity and uncertainty;
5. creativity, self-reliance and ability to adapt; and
6. motivation to excel.

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Bianchi
1. being an offspring of self-employed parents;
2. being fired from more than one job;
3. being an immigrant or a child of immigrants;
4. previous employment in a firm with more than
100 people;
5. being the oldest child in the family; and
6. being a college graduate.
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Entrepreneurial Skills

Creativity and Opportunity Evaluation

Real-time Strategy and Decision Making
Comfort with Change and Chaos
Teamwork
Evangelism, Selling, Negotiation, and Motivation
through Influence and Persuasion
Oral and Written Communication
Basics of Start-Up Finance, Accounting and Law
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Entrepreneurial Attitudes

Comfortable with lifestyle changes

Willingness to break / bend / stretch laws
Patience to start small
Prepared to make enemies
Comfort with confrontations
Dealing with failure
Willingness to learn

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Types of Entrepreneurs
Based on Timing of Venture Creation:
Early starters
Experienced
Mature
Based on Socio-cultural Variables:
1st generation entrepreneurs
From Business families
Minority entrepreneurs
Women Entrepreneurs
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Based on Entrepreneurial Activity:

Novice
Serial
Portfolio

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Reasons for Entrepreneurial Failure

Lack of experienced management

Few trained or experienced human resource
Poor financial management
Rapid growth
Lack of business linkages
Weak marketing efforts
Lack of information
Incorrect pricing
Improper inventory control
Short term outlook

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