What is Entrepreneurship?

Academic Definition (Stevenson & Jarillo)

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.

Venture Capitalist (Fred Wilson)

Entrepreneurship is the art of turning an idea into a business.

Explanation of What Entrepreneurs Do

Entrepreneurs assemble and then integrate all the resources needed –the money, the people, the business model, the strategy—needed to transform an invention or an idea into a viable business.

Corporate Entrepreneurship

•   Is the conceptualization of entrepreneurship at the firm level.
•   All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial.
•   The position of a firm on this continuum is referred to as its entrepreneurial intensity.

There is tremendous interest in entrepreneurship in the U.S. and around the world.

According to the 2007 GEM study, 9.6% of Americans are actively engaged in starting a business or are the owner/manager of a business that is less than three years old.

Indications of Increased Interest in Entrepreneurship

Books: Amazon.com lists over 45,000 books dealing with entrepreneurship and 118,000 focused on small business.

College Courses: In 1985, there were about 250 entrepreneurship courses offered across all colleges in the United States. Today, more than 5,000 entrepreneurship courses are offered in two-year and four-year colleges and universities in the United States.

Why Become an Entrepreneur?

The three primary reasons that people become entrepreneurs and start their own firms

Desire to be their own boss

Desire to pursue their own ideas

Financial rewards

Characteristics of Successful Entrepreneurs

Four Primary Characteristics:-

Passion for the Business

The number one characteristic shared by successful entrepreneurs is a passion for the business. This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives.

Product/Customer Focus

A second defining characteristic of successful entrepreneurs is a product/customer focus. An entrepreneur’s keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople.

Tenacity despite Failure

Because entrepreneurs are typically trying something new, the failure rate is naturally high. A defining characteristic for successful entrepreneurs’ is their ability to persevere through setbacks and failures.

Execution Intelligence

The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs.

Common Myths about Entrepreneurs

Myth 1: Entrepreneurs Are Born Not Made

This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs. The consensus of many studies is that no one is “born” to be an entrepreneur; everyone has the potential to become one. Whether someone does or doesn't become an entrepreneur, is a function of the environment, life experiences, and personal choices.

Although no one is “born” to be an entrepreneur, there are common traits and characteristics of successful entrepreneurs.

Myth 2: Entrepreneurs Are Gamblers

Most entrepreneurs are moderate risk takers.The idea that entrepreneurs are gamblers originates from two sources:

§  Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs.

§  Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking.

Myth 3: Entrepreneurs Are Motivated Primarily by Money.

While it is naïve to think that entrepreneurs don’t seek financial rewards, money is rarely the reason entrepreneurs start new firms. In fact, some entrepreneurs warn that the pursuit of money can be distracting.

Myth 4: Entrepreneurs Should Be Young and Energetic.

The most active age for business ownership is 35 to 45 years old. While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important criteria in making investment decisions.

§  What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success.

These criteria favor older rather than younger entrepreneurs

Types of Start-Up Firms

Changing Demographics of Entrepreneurs

Women Entrepreneurs

  There were 6.2 million women owned businesses in 2002 (the most recent statistics available).  This number was up 20% from 1997.

Minority Entrepreneurs  Minorities owned roughly 18% of U.S. businesses in 2002.  This number was up 10% from

Senior Entrepreneurs 

Although statistics are not kept  on senior entrepreneurs, there is strong evidence that the number of older people choosing entrepreneurial careers is rapidly increasing.

Young Entrepreneurs  

Interest among young people in entrepreneurial careers is  growing.  According to a Gallop study, 7 out of 10 high school students  want to start their own business.
  Over 2,000 two-year and four-year colleges and universities  offer entrepreneurship courses.

Economic Impact of Entrepreneurial Firms

Innovation

Is the process of creating something new, which is central to the entrepreneurial process? Small firms are twice as innovative per employee as large firms.

Job Creation

In the past two decades, economic activity has moved in the direction of smaller entrepreneurial firms, which may be due to their unique ability to innovate and focus on specialized tasks.

Entrepreneurial Firms’ Impact on Society and Larger Firms

Impact on Society

The innovations of entrepreneurial firms have a dramatic impact on society. Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us in new ways.

Impact on Larger Firms

Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective.