Entrepreneurs: The Driving Force Behind Small Business

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Lecture: 7

The World of the EntrepreneurIn the U.S., entrepreneurs start more than

6 million businesses a year!Global Entrepreneurship Monitor (GEM)

Approximately 8% of the U.S. population is actively involved in entrepreneurial activity

Nearly 11% of people in 49 GEM countries studied are involved in starting a new business

What is an Entrepreneur? One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them

What is an Entrepreneur?An entrepreneur is someone who is willing to work 16 hours a day to keep from working 8 hours a day for someone else!

Characteristics of EntrepreneursSurvey: 61% of adults in the U.S. would

like to start their own business Willingness to take initiativePreference for moderate riskConfidence in their ability to succeedSelf-reliancePerseverance1

Desire for immediate feedback

1Perseverance is commitment, hard work, patience, endurance

High level of energyCompetitivenessFuture orientation

Serial entrepreneursSkilled at organizingValue achievement over money

Characteristics of Entrepreneurs

EntrepreneurshipOne characteristic of entrepreneurs stands

out:Diversity!

Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should)

How to Spot Entrepreneurial OpportunitiesCreativity vs. Innovation

Creativity – the ability to develop new ideas and to discover new ways of looking at problems and opportunities

Innovation – the ability to apply creative solutions to problems and opportunities to enhance or to enrich people’s lives

Monitor trends and exploit them early on

Take a different approach to an existing

market

Put a new twist on an old idea

How to Spot Entrepreneurial Opportunities

Look for creative ways to use existing

resources

Realize that others have the same problem

that you do

Notice what is missing

How to Spot Entrepreneurial Opportunities

Benefits of Small Business Ownership

The opportunity to:Control your own destinyMake a differenceReach your full potentialReap impressive profitsContribute to society and to be

recognized for your effortsDo what you enjoy and to have fun at it

Drawbacks of Small Business Ownership

Uncertainty of incomeRisk of losing your entire investmentLong hours and hard work

1 to 39 hours10%

40 to 49 hours29%

50 to 59 hours22%

60 to 69 hours19%

More than 70 hours20%

Small Business Owners' Work WeekNumber of Hours Worked per Week

Average workweek = 54 hours

Uncertainty of incomeRisk of losing your entire investmentLong hours and hard work Lower quality of life until the

business gets established

Drawbacks of Small Business Ownership

Uncertainty of incomeRisk of losing your entire investmentLong hours and hard workLower quality of life until the business gets

established

High levels of stress Complete responsibility Discouragement

Drawbacks of Small Business Ownership

The Cultural Diversity of Entrepreneurship

Young entrepreneurs

Entrepreneurial Activity by Age Group

The Cultural Diversity of Entrepreneurship

Young entrepreneurs

Women entrepreneurs

Entrepreneurial Activity by Gender

The Cultural Diversity of Entrepreneurship

Young entrepreneursWomen entrepreneurs

Minority-owned enterprises

Minority Business Ownership in the United States

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr0

10

20

30

40

50

60

70

80

90

EastWestNorth

The Cultural Diversity of Entrepreneurship

Young entrepreneursWomen entrepreneurs

Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs

Small Business by Industry

Small Businesses...Employ 50.2% of the nation’s private

sector workforcePay 45% of total private payrollCreate more jobs than big

businessesSBA estimates they create 79% of all net

new jobs in the U.S.

Are leaders in offering training and advancement opportunities to workersProvide 67% of workers with their first

jobs Account for 47% of business salesKey role in innovation:

Produce 13 times more patents per employees than large companies

Small Businesses...

Putting Failure into PerspectiveAbout 54% of new companies fail within 4

years Entrepreneurs are not affected by the

prospect of failureFailure – a natural part of the creative

process Successful entrepreneurs learn to fail intelligently

Avoiding the Pitfalls of Small Business Failure

Know your business in depth

Prepare a business plan

Manage financial resources

Understand financial statements

Learn to manage people

effectively

Set your business apart from the

competition

Maintain a positive attitude

Avoiding the Pitfalls of Small Business Failure