Entrepreneurship Essentials
Entrepreneurship Fundamentals
Definition and Components
Entrepreneurship: The creation of an organization for the purpose of economic gain or growth under conditions of risk or uncertainty.
Common Components:
- Offer something new or something better
- New delivery system or distribution channel
- Entering an underserved or new market: A group of people that is not satisfied with what the market offers and they have to substitute with other products/services.
Environmental Impact
How does the environment affect entrepreneurship?
- Open and free markets
- Deregulation
- Political climate
- Economic and technological conditions
- Support systems: Availability of capital and banks, Tax rates and policies, Support services (SBA, venture capital firms, chambers of commerce, etc.)
Types of Businesses
Business Incubation
A business support process that accelerates the successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services. A business firm may be entrepreneurial, depending upon its initiatives.
Small Business
One that is independently owned and operated and which is not dominant in its field of operation. Defines size by number of employees or dollars in sales, depending upon industry.
Family Business
One owned and managed mostly by people who are related by blood and/or marriage.
- 30% reach the second generation
- 12% reach the third generation
- 3% reach the fourth generation and beyond
Family Business Success Tips
Recommendations to ensure a successful family business:
- Commitment to resolve conflicts quickly
- Clear job responsibilities and authority relationships
- Explicit criteria for family members
- Plan for management transitions
- Use of outside advisors/directors
Entrepreneurial Skills & Practices
Communication Competency
Successful entrepreneurs score higher than 82% of the population on their ability to express support and encouragement. Successful entrepreneurs succeed by helping other people, including their employees, partners, investors, and suppliers.
Strategic Practices
Delivering products and services that are perceived as high quality and that are seen by customers or clients as adding value.
Additional Strategic Practices:
- Generating new customers or clients that expand revenue
- Focusing marketing expenditures and developing customer-oriented employees
- Maintaining financial control of the firm
- Establishing strong commitments to ethical practices
Starting a Business
Business Start Strategies
- Buy Strategy: Acquire a competitor or an existing business idea.
- Start-up Strategy: Begin with an idea and develop a business plan.
- Franchise Strategy: Acquire a franchise, often offering a more predictable income stream.
Principle of Affordable Loss
The conscious determination of the amount of resources (money, time, and effort) entrepreneurs are willing to commit to an idea, which, in turn, influences the choices of strategies and methods needed to generate early revenues.
Finding Business Funding
- Entrepreneurs, family, friends
- Venture capitalists
- Business Angels
- Business incubators
- Government agencies
- Private sector
- Financial institutions
Business Planning Essentials
Business Model Canvas
A graphical template describing nine essential components:
- Customer Segments
- Value Propositions
- Channels
- Customer Relationships
- Revenue Streams
- Key Resources
- Key Activities
- Key Partnerships
- Cost Structure
Business Plan Definition
Describes the basic idea that is the foundation for the start-up and outlines how that idea can be turned into reality.
Essential Business Plan Components
- Executive Summary
- Business Description Component
- Marketing Component
- Location Component
- Management Component
- Financial Component
- Potential Critical-Risk Component
- Appendix & Bibliography