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The

The Foundations
Foundations of
of
Entrepreneurship
Entrepreneurship

Chapter 1 - A.
Kanneh
Outline
 The Entrepreneur
 Characteristics of Entrepreneurs
 Benefits and Risks of
Entrepreneurship
 Forces driving the
Entrepreneurial trend
 Deadly Mistakes of
Entrepreneurship

Chapter 1: Entrepreneurship 2
What Is an
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.
- Initiates process of creative destruction

Chapter 1: Entrepreneurship 3
Characteristics of
Entrepreneurs
1. Desire for personal responsibility/control
2. Preference for moderate risk – risk eliminators
(solid business plans)
3. Confidence in their ability to succeed
4. Desire for immediate feedback
5. High level of energy (long hrs and hard work)
6. Future orientation – serial entrepreneurs
7. Skilled at organizing
8. Value achievement over money
9. High degree of commitment
10. Tolerance for ambiguity/uncertainty, flexibility

Chapter 1: Entrepreneurship 4
Entrepreneurship
Diversity!

 Anyone – regardless of age, race,


gender, colour, national origin,
or any other characteristic – can
become an entrepreneur

Chapter 1: Entrepreneurship 5
Benefits of
Entrepreneurship
The opportunity to:
 Create your own destiny
 Make a difference
 Reach your full potential
 Reap impressive profits
 Contribute to society and to
be recognized for your efforts
 Do what you enjoy and to
have fun at it

Chapter 1: Entrepreneurship 6
Analysing Risks

High
Potential
Benefits

Low Potential Risks High

Chapter 1: Entrepreneurship 7
Which poses the greater
risk?
2 Types of entrepreneurs

 The firm-organising entrepreneur


 Takes risk in starting new business (old idea) with
existing product/service

 The innovative entrepreneur


 Produces new value to society - Product/service, method
or production or delivery, creates new market, new
source of supply, reorganises the industry

Chapter 1: Entrepreneurship 8
Drawbacks/Risks of
Entrepreneurship
1. Uncertainty of income
2. Risk of losing your entire
investment
3. Long hours and hard work
4. Lower quality of life until the
5. business
High gets
levels established
of stress
6. Complete responsibility
7. Discouragement/obstacles

Chapter 1: Entrepreneurship 9
Small Business Owners' Work Week
Numbe r of Hours Worke d pe r We e k

M ore than 60 hours Le ss than 30 hours


17% 11%

30 to 40 hours
24%

51 to 60 hours
20%

41 to 50 hours
28%

dapted from Dun & Bradstreet 21st Annual Small Business Survey Summary Report, 2002, p. 35.
Chapter 1: Entrepreneurship 10
Feeding the
Entrepreneurial Fire –
Forces driving the
1. trend
Entrepreneurs seen as heroes
2. Entrepreneurial education
3. Demographic and economic factors
4. Shift to a service economy
5. Technological advancements
6. Independent lifestyle (self-sustaining)
7. E-commerce and the World Wide Web
8. International opportunities

Chapter 1: Entrepreneurship 11
Ten Deadly Mistakes of
Entrepreneurship
1. Management mistakes –
leadership, judgement and
knowledge at the top
2. Lack of experience
3. Poor financial control – cash
management
4. Weak marketing efforts
5. Failure to develop a strategic
plan
Chapter 1: Entrepreneurship 12
Ten Deadly Mistakes of
Entrepreneurship
6. Uncontrolled growth
7. Poor location

8. Improper inventory control

9. Incorrect pricing (image


creation)
10. Inability to make the
“entrepreneurial transition” –
management style
Chapter 1: Entrepreneurship 13
Avoiding the
Pitfalls of
Small Business
Failure
 Know your business in depth
 Develop a solid business plan
 Manage financial resources
 Understand financial statements
 Learn to manage people effectively
 Keep in tune with yourself

Chapter 1: Entrepreneurship 14
So far…
 The Entrepreneur
 Characteristics of Entrepreneurs
 Benefits and Risks of Entrepreneurship
 Forces driving the Entrepreneurial trend
 Deadly Mistakes of Entrepreneurship

 Next - Inside the Entrepreneurial Mind:


From Ideas to Reality

Chapter 1: Entrepreneurship 15