Part 2
Starting and
Growing Your
Business
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Chapter 6
Starting Your Own
Business: The
Entrepreneurship
Alternative
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Chapter Objectives
1. Define the term entrepreneur and distinguish among
entrepreneurs, small-business owners, and managers.
2. Identify three different types of entrepreneurs.
3. Explain why people choose to become entrepreneurs.
4. Discuss conditions that encourage opportunities for
entrepreneurs.
5. Describe the role of entrepreneurs in the economy.
6. Identify personality traits that typically characterize
successful entrepreneurs.
7. Summarize the process of starting a new venture.
8. Explain how organizations promote intrapreneurship.
6-3
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Chapter Overview
 People are increasingly choosing the path of
entrepreneurship
 To become an entrepreneur, learn as much
as possible by:
Completing academic programs
Gaining practical experience working
Reading newspaper and magazine articles
and biographies of successful
entrepreneurs
6-4
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What Is An Entrepreneur?
 A person who seeks a profitable opportunity
and takes the necessary risks to set up and
operate a business.
 Websites
Entrepreneurial Leadership
Entrepreneur
EntreWorld
6-5
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Categories of Entrepreneurs
6-6
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Categories of Entrepreneurs
 Classic entrepreneurs—person who
identifies a business opportunity and
allocates available resources to tap that
market.
6-7
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Categories of Entrepreneurs
 Intrapreneur—entrepreneurially oriented
person who develops innovations within the
context of a large organization.
 Change Agent—manager who tries to
revitalize an established firm to keep it
competitive.
6-8
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 Why People Become Entrepreneurs
6-9
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 U.S. Adults Currently Engaged in Starting a
Business
6-10
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Reasons to Choose Entrepreneurship
as a Career Path
 Desire to Be Your Own Boss
Self-management is the motivation of many
entrepreneurs
 Financial Success
Entrepreneurs:
Are wealth creators
Believe they won’t get rich working for
others
Path to riches can be long and uncertain
6-11
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Reasons to Choose Entrepreneurship
as a Career Path
 Job Security
Many workers lack job security
Growing percentage of Americans create
their own by starting their own firms
 Quality of Life
Gives the founder some choice over when,
where, and how to work
Many work extraordinarily long hours . . .
often at the whim of their customers
6-12
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 Factors Supporting and Expanding Opportunities
for Entrepreneurs
6-13
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The Environment for Entrepreneurs
 Globalization
Creates many opportunities for
entrepreneurs
Allows products to be sold overseas
Provides international talent pool
6-14
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The Environment for Entrepreneurs
 Education
Tremendous growth in educational
opportunity for would-be entrepreneurs via:
College Classes
Business schools helping students start
businesses
Other organizations like the Center for
Entrepreneurial Leadership
6-15
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The Environment for Entrepreneurs
 Information Technology
Provided a big boost for entrepreneurs
Helps entrepreneurs work quickly and
efficiently, provide attentive customer
service, increase sales, and project a
professional image
Has created demand for new products
Internet is also a challenge for
entrepreneurs
Customers can go online, quickly get
needed information, and buy from
anywhere in the world
6-16
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The Environment for Entrepreneurs
 Demographic and Economic Trends
Demographic trends create opportunities
for new goods and services
6-17
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The Environment for Entrepreneurs
 Entrepreneurship around the World
Growth of entrepreneurship is a worldwide
phenomenon
Level of entrepreneurship varies
considerably even among industrialized
nations
6-18
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 Levels of Entrepreneurial Activity in 10 Countries
6-19
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Influence of Entrepreneurs on
the Economy
 American entrepreneurs have given the world
goods and services that have changed the
way people live, work, and play
 Products include:
Ball-point pens
Netscape Navigator software
Fiberglass skis
Velcro fasteners
FedEx delivery service
MacDonald's
6-20
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Influence of Entrepreneurs on
the Economy
 Influence of Entrepreneurs on the Economy
6-21
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Influence of Entrepreneurs on
the Economy
 Innovation
Entrepreneurs:
Create new products
Build new industries
Bring new life to old industries
Since WWII, behind:
2/3rds of Inventions
95% of major innovations
6-22
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Influence of Entrepreneurs on
the Economy
 Job Generation
Vital source of new jobs
Typically hire small numbers of employees
per firm . . . spread over many companies
See potential employees where
established firms overlook them
Gazelles
6-23
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Influence of Entrepreneurs on
the Economy
 Diversity
Entrepreneurship offers excellent
economic opportunities for women and
minorities
6-24
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Characteristics of Entrepreneurs
6-25
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Characteristics of Entrepreneurs
 Vision
Have an overall idea for how to make a
business inspiration a success
 High Energy Level
Willingly work hard to realize their visions
 Need to Achieve
Need to work hard because they want to
excel
6-26
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Characteristics of Entrepreneurs
 Self-Confidence and Optimism
Believe in ability to succeed, and they instill
their optimism in others
 Tolerance for Failure
Entrepreneurs view setbacks and failures
as learning experiences
Not easily discouraged or disappointed
when things don’t go as planned
6-27
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Characteristics of Entrepreneurs
 Creativity
Entrepreneurs typically conceive new ideas
for goods and services
Devise innovative ways to overcome difficult
problems and situations
 Tolerance for Ambiguity
Take the uncertainties associated with
launching a venture in stride
6-28
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Characteristics of Entrepreneurs
 Internal Locus of Control
Believe that they control their own fates
Take personal responsibility for the
success or failure of their actions rather
than believing in luck or fate
6-29
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 Think You Might Be a Good Entrepreneur?
6-30
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Starting a New Venture
 Selecting a Business Idea
Finding something you love to do and are
good at doing
Determining whether your idea can satisfy
a need in the market
Success also depends on your offering
being appealing to the marketplace
6-31
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Starting a New Venture
 Buying an Existing Business
Some prefer not to assume the risks of
starting a new firm
 Buying a Franchise
Another less risky
way to begin a business
6-32
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Starting a New Venture
 Creating a Business Plan
Online Resources for Preparing a Business
Plan
6-33
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Starting a New Venture
 Finding Financing
Seed Capital—initial funding needed to
launch a new venture.
Debt Financing—borrowed funds that
entrepreneurs must repay.
6-34
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Starting a New Venture
 Finding Financing
Equity Financing—funds invested in new
ventures in exchange for part ownership.
Venture Capitalists—business firm or
group of individuals who invest in new and
growing firms.
6-35
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Starting a New Venture
 Finding Financing
Angel Investors—wealthy individuals who
invest directly in a new venture in
exchange for an equity stake.
6-36
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Intrapreneurship
 Intrapreneurship—process of promoting
innovations within the structure of an existing
organization.
Helps retain employees who might
otherwise leave to start their own
businesses
Intrapreneurship practiced in:
3M (e.g. skunkworks)
Thermo Electron
Xerox
Intuit
6-37
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