Entrepreneurship Ch 1 PPT Recognize opportunities.pptx

1. Class 1, Chapter 1
Recognize Opportunities
Project Development &
Operations
Entrepreneurial Management
Prof. Sean WATTS,
PhD, GxMBA, MBA
DrSeanWatts.Teaching@gmail.com
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■ Business—buying and selling of
products and services.
■ Product—exists in nature or is made by
human beings and is tangible.
■ Service—work that provides time, skills,
or expertise and is intangible.
What Is Business?

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■ Employees—earn their living working
for someone else’s business.
■ Entrepreneurs—earn their living
starting, owning, and working for their
own business.
What Is an Entrepreneur?

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■ A scarce (limited) resource is something
of value that can be used to make
something else or fill a need.
■ Entrepreneurs add value to scarce
resources by shifting them from areas
of lower to higher productivity.
Entrepreneurs Add Value
to Scarce Resources

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■ What should be produced?
■ When will it be produced?
■ How will it be produced?
■ Who will produce it?
■ Who gets what is produced?
An economy is a country’s financial structure. It is the
system that produces and distributes wealth.
The Economic Questions

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What is a Small Business?
■ 0 to 500 full time employees
■ Approximately 99.9% of the 26.8 million
U.S. businesses are small
■ Small businesses employ about 50% of the
U.S. private workforce
■ Annual sales < $5 million

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■ Control over time
■ Fulfillment
■ Creation/Ownership
■ Control over compensation
■ Control over working conditions
Why Be an Entrepreneur?

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Costs and Benefits
of Entrepreneurship
Costs
■ Business failure
■ Obstacles
■ Loneliness
■ Financial insecurity
■ Long hours/hard work
■ Responsibility & stress
Benefits
■ Independence
■ Satisfaction
■ Financial reward
■ Self-esteem
■ Early retirement
■ Freedom

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■ Cost/Benefit Analysis—listing costs and benefits in order to
make decisions that are not emotional.
■ Costs—money and time invested
■ Benefits—money earned and knowledge and experience gained
■ Opportunity Cost—cost of the next-best investment
For cost/benefit analysis to be accurate, opportunity cost must
be included.
Cost/Benefit Analysis

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Entrepreneurship Options
■ Traditional for-profit enterprise
■ Social entrepreneurship including
venture philanthropy
■ Green entrepreneurship

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Shumpeter’s
Sources of Opportunity
▪ Use a new technology to produce a new product.
▪ Use existing technology to produce a new
product.
▪ Use an existing technology to produce an old
product in a new way.
▪ Find a new source of resources to produce more
efficiently.
▪ Develop a new market for an existing product.

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Not All Ideas are Opportunities
An opportunity is an idea that is
based on what customers need or
want and are willing to buy
sufficiently often at a high enough
price to sustain the business.

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Timmon’s Business Opportunity=
Idea + 4 Characteristics
1. Attractive to customers
2. Will work in the business environment
3. Can be executed in and existing
window of opportunity
4. Resources and skills to create the
business available to the entrepreneur

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Use SWOT to Evaluate Business
Ideas
■ Strengths
■ Weaknesses
■ Opportunities
■ Threats

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Roots of Opportunity
1. Problems
2. Changes
3. Inventions
4. Competition
5. Technological advances
Where others see problems, entrepreneurs recognize
opportunities.

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Pathways to Entrepreneurship
■ Start from the beginning
■ Buy an existing business
■ Secure franchise rights
■ License technology
■ (Do not steal someone else’s creativity)

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■ Profit—amount of money earned after
costs are paid.
■ Profit signals that an entrepreneur is
adding value to scarce resources.
■ Entrepreneurs try to make choices
(trade-offs) that will increase profit.
Profit Is the Signal

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Rules for Building
a Successful Business
1. Recognize an opportunity
2. Evaluate it with critical thinking (SWOT)
3. Build a team
4. Create a business plan
5. Gather resources
6. Establish ownership
7. Create wealth