Chapter 1: The Foundations of Entrepreneurship
Chapter 1: The Foundations of Entrepreneurship MGMT 3850
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This 11 page Class Notes was uploaded by Alora Lornklang on Monday February 1, 2016. The Class Notes belongs to MGMT 3850 at University of North Texas taught by Brandi Everett in Spring 2016. Since its upload, it has received 308 views. For similar materials see Foundations of Entrepreneurship in Entrepreneurship at University of North Texas.
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Date Created: 02/01/16
Alora Lornklang MGMT 3850 Chapter 1: The Challenge of Entrepreneurship Lecture Notes: What is Entrepreneurship? The art or science of creating new business ventures, products, or processes and assuming the risks and rewards there of… Small businesses Make up 99% of the 27.9+ million businesses in the US Employ 50% of the nation’s private sector workforce. Create more jobs than big businesses. o 65% of net new jobs over the last decade 3% of small companies create 70% of net new jobs in the economy. Entrepreneurial Characteristics Risktaking (moderate) Need for achievement Selfconfidence (independence) Tolerance for ambiguity Internal locus of control We all know that entrepreneurs… Alora Lornklang MGMT 3850 Work hard Selfdisciplined Plan Frugal And live below their means Fail intelligently (trial and error) Skill Development Experience comes through apprenticeship, somewhere! Background Parents are entrepreneurs Ages 2245 Perceive few obstacles for themselves Most have significant industry experience A New Trend: Women Entrepreneurs Now own or coown 47% of businesses since 2007. Quickly approaching 50% of all entrepreneurs Start up activity is picking up significantly Motivation: Men vs. Women Alora Lornklang MGMT 3850 Men o Independence o Money o Achievement Women o Job satisfaction o Achievement o Opportunity o Money Male vs. Female: Methodology Males o Investors, bank loans, personal loans o Supporters are outside advisors o Then spouses Females o Personal assets or savings o Supporters are spouse, close friends o Business associates Alora Lornklang MGMT 3850 o Bankers Why do people become entrepreneurs? Lifestyle Flexibility Mobility Income potential Seize opportunity Others are serial entrepreneurs o They live to start, grow and sell businesses Types of Entrepreneurs Home based entrepreneurs (52%) o To earn a living and support family, toys, or habits o Control of their time o May be service or professional Cyber entrepreneurs o No brick and mortar operation o No ownership of physical infrastructure Warehouse Alora Lornklang MGMT 3850 Trucks o Uses technology to monitor: Customer relationship management Supply chain management Traditional entrepreneurs o Typically bricksandmortar o Higher percentage of jobs created o Have the skills to build the business PLOC skills (planning, leading, organizing, controlling) o Builds the business for the long run to harvest Serial entrepreneurs o Desire and ability to grow fast o Have some skills or can find them Usually not all of the PLOC skills o Get one business up and running and ready to start another business Others o Corporate castoff: forced to leave then started business o Corporate dropout: left company on own to start business Alora Lornklang MGMT 3850 o Social “treps”: Someone trying to solve a need o Baby boomers: Living longer o Immigrants: twice as likely to start business than native born o Minorities: increasing o Part time, hobby (etsy accounts) What is motivation? Motivation is the inner desire to satisfy an unsatisfied need. Through the motivation process, People go from need to motive to behavior to consequence to satisfaction to dissatisfaction. Varying satisfaction with the process. Maslow’s theory Alora Lornklang MGMT 3850 Top Ten Deadly Mistakes Management mistakes Lack of experience Poor financial control Weak marketing No strategic plan Uncontrolled growth Poor location Improper inventory control Incorrect pricing Failure to transition to general manager Intrapreneurship The entrepreneurial manager: behaves like an entrepreneur but isn’t one. Has skills, attitudes, and beliefs of an entrepreneur MAY not assume risk Are entrepreneurs needed in all entrepreneurial businesses? NO. Alora Lornklang MGMT 3850 What’s needed? Startups – need entrepeneurs High growth need entrepreneurs w/ high opportunity focus and high administrative skills Maturity need good managers with PLOC skills Stability need a savior, a “turnaround” specialist Entrepreneurship is the get rich slow opportunity. 1. What is an entrepreneur? Give a brief description of the entrepreneurial profile. An entrepreneur is someone who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessary resources to capitalize on them. An entrepreneurial profile can reveal a person’s desire for responsibility, preference for moderate risk, self reliance, confidence in their ability to succeed and other characteristics. Entrepreneurs are diverse and can’t be confined to a certain set of characteristics. 2. What are the major benefits of business ownership? The major benefits of business ownership are the opportunities to create your own destiny, to make a difference, to reach your full potential, to reap impressive profits, to contribute to society and to enjoy what you do. Alora Lornklang MGMT 3850 3. Briefly describe the role of the following groups in entrepreneurship: women, minorities, immigrants, part–timers, home–based business owners, family business owners, copreneurs, corporate castoffs and corporate dropouts. Women: The number of womenowned businesses is growing 1.5 times faster than the national average and women now own 30.4 percent of all privately held businesses in the United States. Minorities: Hispanics, African Americans, and Asians are the minority groups that are most likely to be entrepreneurs. Their success rate is still climbing. Immigrants: Immigrant entrepreneurs founded 24.3 percent of all the high technology companies started in the United States between 2006 and 2012. Their businesses also account for 12 percent of total business revenues. Part timers: Many part time entrepreneurs run online businesses from a spare bedroom in their homes or from wherever they are. A major advantage for them is that it is a lower risk to go into business in case of venture flops. Homebased business owners: A person starts a homebased business on average every 12 seconds. They employ 13.2 million workers. They are an important economic force; they generate $427 billion a year in sales. Family business owners: Of the nearly 28 million business in the United states, 90 percent are family owned and managed making them an integral part of our economy. Alora Lornklang MGMT 3850 Copreneurs: Entrepreneurial couples “create a division of labor that is based on expertise as opposed to gender.” Nearly 4 million couples operate businesses in the United States. Corporate castoffs: 77 percent of franchisors report that “secondcareer executives” are among the primary purchasers of their franchises. Corporate dropouts: Because they have college degrees, a working knowledge of business, and years of management experience, both corporate dropouts and castoffs may ultimately increase the small business survival rate. 4. What is a small business? What contributions do they make to our economy? A small business is one that employs fewer than 100 people. Small companies employ 49.2 percent of the nation’s private sector workforce. Almost 90 percent of businesses with paid employees are small, employing fewer than 20 workers, but small companies account for 43 percent of total private payroll in the United States. 5. Outline the causes of small business failure. The causes of small business failures are limited resources, inexperienced management, and lack of financial stability. Alora Lornklang MGMT 3850
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