1. Lecture:
The
Entrepreneurial
Life

2. After studying this chapter, you should be able to…
• Define the terms entrepreneur and small business owner, and
explain how the terms are related.
• Explain the basic characteristics of
entrepreneurial opportunities, and give
examples of individuals who successfully
started their own businesses.
• Describe some motivators or rewards for
owning your own business.
• Identify some of the basic types of entrepreneurs
and entrepreneurial ventures.
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3. After studying this chapter, you should be able to…
5. Describe five potential competitive advantages
of small entrepreneurial companies compared
to large firms.
6. Discuss factors related to readiness for
entrepreneurship getting started in an
entrepreneurial career.
7. Explain the concept of an entrepreneurial
legacy and the challenges involved in
crafting a meaningful legacy.
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4. The Contributions of Small Business
• Small Businesses:
 Represent 99.7% of all firms with employees.
 Employ over 50% of employees in the private sector.
 Account for 45% of private payrolls.
 Generated 60 to 80% of net new jobs in past decade.
 Hire 40% of high-tech employees
 Represent 97.3% of all exporters.
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5. Who Are Entrepreneurs?
• Entrepreneurs are:
 A person who starts and/or operates a business.
 Individuals who discover market needs and launch new firms to meet
those needs.
 Risk takers who provide an impetus for change, innovation, and
progress.
 All active owner-managers
(founders and/or managers
of small businesses).
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6. What Is a Small Business?
• Criteria for Defining Smallness in Business
1. Small in size relative to larger competitors (fewer than 100
employees)
2. Localized business operations (except marketing)
3. Financing supplied by one person or small group
4. Has the potential to become more
than a “one-person show”
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7. Entrepreneurial Opportunities
• Entrepreneurial Opportunity
 An economically attractive and timely opportunity that creates value for
interested buyers or end users.
• Success Stories
 Ace Hotels (Seattle, Washington)
 Late Model Restoration (Waco, Texas)
 Five Guys Burgers and Fries (Lorton, Virginia)
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8. So You Want to Be an Entrepreneur
• Being an entrepreneur:
 Is extremely challenging.
 Takes undying love and passion to keep going.
 Can run in a family.
 Can help make the world a better place.
 Can make meaning in your life.
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9. EXHIBIT 1.1 Entrepreneurial Incentives
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10. Why People Become Entrepreneurs
• Reluctant Entrepreneur
 A person who becomes an entrepreneur as a result of some severe
hardship.
• Refugee
 A person who becomes an entrepreneur to escape an undesirable
situation.
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11. Is Owning a Small Business a Good Fit for You?
1. Am I passionate about my product or service?
2. What is my tolerance for risk?
3. Am I effective in making decisions?
4. Am I willing to take on numerous responsibilities?
5. Will I be able to avoid burnout?
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12. The Many Varieties of Entrepreneurship
• Founder (“Pure” Entrepreneur)
 A person who brings a new firm into existence
• “Second Stage” Entrepreneur
 An administrative entrepreneur who overseas the operations of a
ongoing business
• Franchisee
 An entrepreneur whose power is limited by the contractual relationship
with a franchising organization
• Entrepreneurial Team
 Two or more people working together as entrepreneurs
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13. Small Business Growth Potential and Profits
• High-Potential Venture (Gazelle)
 Has great prospects for growth
• Attractive Small Firm
 Provides substantial profits
to its owner
• Microbusiness
 Provides minimal profits
to its owner
• Lifestyle Business
 Permits the owner to follow
a desired pattern of living
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14. Artisan Entrepreneurs
• Artisan Entrepreneur
 A person with primarily technical skills and little business knowledge
who starts a business
• Characteristics:
 Take a paternalistic approach
 Are reluctant to delegate
 Use few sources of capital
 Have a traditional marketing strategy
 Focus on personal sales effort
 Have a short planning horizon
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15. Opportunistic Entrepreneurs
• Opportunistic Entrepreneur
 A person with both sophisticated managerial skills and technical
knowledge who starts a business
• Characteristics:
 Broad-based education
 Scientific approach to problems
 Willing to delegate
 Broad view of strategy
 Diversified marketing approach
 Longer planning horizon
 Sophisticated accounting and financial control
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16. Ten Mistakes Made by Startup Entrepreneurs
1. Going it alone.
2. Asking too many people for advice.
3. Spending too much time on product development, not
enough on sales.
4. Targeting too small a market.
5. Entering a market with no distribution partner.
6. Overpaying for customers.
7. Raising too little capital.
8. Raising too much capital.
9. Not having a business plan.
10. Overthinking your business plan.
Source: Adapted from Rosalind Resnick, “10 Mistakes That Start-Up Entrepreneurs Make,” Wall Street Journal, September 2, 2010, p. B2. http://www.abcbizhelp.net
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17. Women Entrepreneurs
• More Women Entrepreneurs
 More women than men are starting new businesses
 Many businesses are now majority female-owned
 Movement of women into nontraditional industries
• Problems Facing Female Entrepreneurs
 Discrimination and difficulties
related to gender
 Lack of access to credit
 Lack of networking connections
 Balancing work and family life
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18. Entrepreneurial Teams
• Entrepreneurial Team
 Is a two or more people who work together as entrepreneurs on one
endeavor.
 Is becoming more common.
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19. The Competitive Edge of Entrepreneurs
Customer
Focus
Special Competitive Quality
Niche Advantages of Performance
Entrepreneurial
Firms
Innovation and Integrity and
Globalization Responsibility
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20. Getting Started
• Age and Entrepreneurial Opportunity
Early Career Concerns Late Career Concerns
1. Getting an education 1. Fulfilling family
responsibilities
2. Gaining work experience
2. Attaining seniority
3. Acquiring financial in employment
resources 3. Earning investment in
a retirement program
20 25 35 45+
Age
Generation Y Generation X Baby Boomers
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21. Millennial Entrepreneurs (Gen-Y)
• Have no fear of technology
• Are idealistic and optimistic
• Are more collaborative
• Build elements of community in the business
• Start companies while studying entrepreneurship
• Fail fast, learn a lot, and
keep going
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22. Strong Commitment Strong Internal
to the Business Locus of Control
(Tenacity) (Self-Reliance)
Characteristics of
Successful
Entrepreneurs
Moderate Risk Takers
(Financial, Career,
Psychic Risks)
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23. Entrepreneurial Characteristics
(Timmons and Spinelli)
Commitment and
Determination
Motivation to
Excel Leadership
Attitudes and
Behaviors of
Entrepreneurs
Creativity, Self-
Opportunity
Reliance, and
Obsession
Adaptability
Tolerance of Risk,
Ambiguity, and
Uncertainty
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24. How to Fail as an Entrepreneur
1. Overestimate what you can do
2. Lack an understanding of the market
3. Hire mediocre people
4. Fail to be a team player
5. Be a domineering manager
6. Not share ownership in the business in an equitable way
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25. The Importance of Mentors
• Mentors
 Are knowledgeable persons who can offer guidance from their
experience in a given field.
 Teach entrepreneurs what and how to do.
 Provide entrepreneurs encouragement
when needed.
 Show them how to avoid mistakes.
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26. Success in Business and Success in Life
• Looking Back At An Entrepreneurial Life
 Proper values and actions lead to a good exit.
 Evaluating accomplishments
• Winning the Wrong Game
 The nature of the entrepreneurial endeavor reflects personal goals and
values.
• Crafting a Worthy Entrepreneurial Legacy
 The tangible items and intangible qualities passed on not only to heirs
but also to the broader society.
• Beginning with the End in Mind
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27. • attractive small firm
• entrepreneur • microbusiness
• bootstrapping
• small business
• lifestyle business
• entrepreneurial opportunity • artisan entrepreneur
• reluctant entrepreneur
• opportunistic
• refugee
• founder
entrepreneur
• franchisee • entrepreneurial team
• high-potential venture (gazelle) • niche market
• mentor
• entrepreneurial legacy
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–27