ENTREPRENEURSHIP

CONTENT

• Introduction to Entrepreneurship
• Recognizing Opportunities and Generating Ideas
• Feasibility Analysis
• Developing an Effective Business Model
• Industry and Competitor Analysis
• Writing a Business Plan
 CHAPTER 1:
INTRODUCTION TO
ENTREPRENEURSHIP
What is Entrepreneurship?

• Entrepreneurship is the process by which individuals pursue opportunities

without regard to resources they currently control.

• Entrepreneurship is the process of identifying and pursuing business

opportunities.
• Entrepreneurship is the process of creating value by bringing together

resources to exploit an opportunity.

• Entrepreneurship is the art of turning an idea into a business.
Why Entrepreneurship is Important?

Contribution to society:
• A major drive of innovation, economic development and growth

• Creates jobs and new markets

• Increases wealth and prosperity

• A source of new technologies and products

Corporate Entrepreneurship

‒ Existing firms can act entrepreneurially.

‒ 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.
Corporate Entrepreneurship

Entrepreneurial Firms Conservative Firms

•Proactive •Take a more “wait and see” posture

•Innovative •Less innovative

•Risk taking •Risk averse

The Entrepreneurial Process

• Step 1: Decision to become an entrepreneur

• Step 2: Developing successful business ideas

• Step 3: Moving from an idea to an entrepreneurial firm

• Step 4: Managing and growing an entrepreneurial firm

What is an Entrepreneur?

• An entrepreneur is a person who perceives an opportunity and creates an

organization to pursue it.

• An entrepreneur is a person who starts a business and is willing to risk loss

in order to make money.

• Entrepreneurs assemble and then integrate all the resources needed – the

money, the people, the business model, the strategy – to transform an

invention or an idea into a viable business.
Why Become an Entrepreneur?

Desire to be their own boss

• They have had a long-time ambition to own their own firms
• They have become frustrated working in traditional jobs
• Some entrepreneurs transition from a traditional job to owning their
own business more gradually
Why Become an Entrepreneur?
Desire to pursue their own ideas
• They recognize ideas for new products or services and have a desire to
see their ideas realized.
• Many entrepreneurs experience tremendous satisfaction when their
entrepreneurial idea catches on.
Why Become an Entrepreneur?

Financial rewards
• The average entrepreneur does not make more money than someone
with a similar amount of responsibility in a traditional job.
• The financial lure of entrepreneurship is its upside potential
Characteristics of Successful Entrepreneurs
Characteristics of Successful Entrepreneurs
Passion for the Business
• This passion gets a business going and keeps it going when times are
tough.
• It is important to be enthusiastic about a business idea, but it is also
important to understand its potential flaws and risks.
• The most effective business ideas take hold when the passion is
consistent with the skills and is in an area that represents a legitimate
business opportunity.
Characteristics of Successful Entrepreneurs (2 of 3)

Product/Customer Focus
• It’s important to think about management, marketing, finance, and the

like, none of those functions makes any difference if a firm does not
have good products with the capability to satisfy customers.
Characteristics of Successful Entrepreneurs (3 of 3)

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.
• It’s also important that entrepreneurs have sufficient tenacity to
overcome personal obstacles along with professional ones.
Characteristics of Successful Entrepreneurs (3 of 3)

Execution Intelligence
• Execution intelligence is the ability to fashion a solid business idea into a
viable business.
• The ability to effectively execute a business idea means developing a
business model, putting together a new venture team, raising money,
establishing partnerships, managing finances, leading and motivating
employees, and so on.
• It also demands the ability to translate thought, creativity, and imagination
into action and measurable results.
The Dark Side of Entrepreneurship

Entrepreneurs may face several different types of risk. These can be grouped
into four basic areas:
• Financial risk
• Career risk
• Family and social risk
• Psychic risk
Financial risk

In most new ventures, the individual puts a significant portion of their savings
or other resources at stake, which create a serious financial risk.
• This money or these resources will likely be lost if the venture fails.
• The entrepreneurs also may be responsible for company obligations that
far exceed their personal net worth. They are thus exposed to personal
bankruptcy.
Career risk

• A question frequently raised by would-be entrepreneurs is whether they

will be able to find a job or go back to their old job if their venture fail.

• This career risk is a major concern to managers who have a secure

organizational job with a high salary and a good benefits package.
Family and Social risk

• Starting a new venture uses much of the entrepreneur’s energy and time.
Consequently, their other commitments may suffer and there is increased
family and social risk.

• Entrepreneurs who are married, especially those with children, expose their
families to the risks of an incomplete family experience and the possibility
of permanent emotional scars.

• Old friends may vanish slowly because of missed get-togethers.

Psychic risk

• The psychic risk may be the greatest risk to the wellbeing of the
entrepreneur.

• Some entrepreneurs have been unable to bounce back, at least not

immediately. The psychological impact has proven too severe for them.
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.

• Many studies show 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 their environment, life experiences, and personal choices.

Common Myths About Entrepreneurs
Although no one is “born” to be an entrepreneur, there are common traits
of successful entrepreneurs:
• A moderate risk taker • Optimistic disposition
• Persuasive • A networker
• Promoter • Achievement motivated
• Resource assembler • Alert to opportunities
• Creative • Self-confident
• Self-starter • Decisive
• Tenacious • Energetic
• Tolerant of ambiguity • A strong work ethic
• Visionary • Lengthy attention span
Common Myths About 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.
Common Myths About Entrepreneurs

Myth 3: Entrepreneurs are Motivated Primarily by Money

• While it is naive to think that entrepreneurs don’t seek financial rewards,
money is not the primary motivation of entrepreneurs.
• In fact, some entrepreneurs warn that the pursuit of money can be
distracting.
Common Myths About Entrepreneurs

Myth 4: Entrepreneurs should beYoung and Energetic

• Entrepreneurial activity is fairly evenly spread out over age ranges.

• While it is important to be energetic, strength of entrepreneurs attracting

investors include experience, maturity, a solid reputation, and a track record
of success. These criteria favor older rather than younger entrepreneurs.
Myth 5: Entrepreneurs Love the Spotlight
• While some entrepreneurs are flamboyant, the vast majority of them do
not attract public attention.
 Group project
Find a potential
entrepreneurial idea and
develop a business plan
 CHAPTER 2:
RECOGNIZING
OPPORTUNITIES AND
G E N E R AT I N G I D E A S
What is An Opportunity?

• An opportunity is a favorable set of circumstances that creates a need for a

new product, service, or business.

• The key to opportunity recognition is to identify a product or service that

people need and are willing to buy, not one that an entrepreneur wants to
make and sell.
Four Essential Qualities of an Opportunity
Way to Identify An Opportunity?
First approach: Observing Trends

• The most important trends to follow are economic forces, social forces,

technological advances, political action and regulatory changes

• It is important for (potential) entrepreneurs to remain aware of changes in

these areas.
• It is important to distinguish between trends and fads.
Environmental Trends Suggesting Opportunity Gaps
Trend 1: Economic Forces
• Economic trends help determine areas that are ripe for new start-ups and
areas that start-ups should avoid.
• These forces include topics such as GDP, consumer spending, housing
price, international trade, interest rate, consumer spending patterns…
For example:
• A weak economy favors start-ups that help consumers save money
Trend 2: Social Forces
• Social trends alter how people and businesses behave and set their
priorities.
• These forces include topics such as aging of the population, the increasing
diversity of the population, growth in the use of mobile devices, an
increasing focus on health and wellness, desire for personalization…
For example:
• Social networking sites: Facebook, X, Instagram, Tiktok
Trend 3: Technological Advances
• Advances in technology frequently dovetail with economic and social
changes to create opportunities
• Technological advances also provide opportunities to help people perform
everyday tasks in better or more convenient ways.
• Once a technology is created, products often emerge to advance it
For example:
• Wearable devices
• Wireless earbuds, charge
• AI software
Trend 4: Political action and regulatory changes
• Political and regulatory changes also provide the basis for business ideas.
For example:
• Initial passage of Affordable Care Act in the U. S in 2010 provided
opportunities for entrepreneurs to launch electronic medical records’
start-ups, apps to help patients monitor their medications
• As of June, 2016, the FAA permitted drones to be used only under certain
conditions. Drone start-ups are waiting for the FAA to develop more
liberal rules and standards that will allow drones to be used for expanded
purposes.
Second approach: Solving a problem

• Sometimes identifying opportunities simply involves noticing a problem

and finding a way to solve it.

• These problems can be observed the challenges that people encounter in

their daily lives. There are many problems that have yet to be solved.
• Many companies have been started by people who have experienced a

problem in their own lives, and then realized that the solution to the
problem represented a business opportunity.
Third approach: Finding gaps in the Marketplace

• Gaps in the marketplace are the third source of business opportunities.

• A gap in the marketplace is often created when a product or service is

needed by a specific group of people but doesn’t represent a large enough

market to be of interest to mainstream retailers or manufacturers.
• Product gaps in the marketplace represent potentially viable business

opportunities.
Techniques for Generating Ideas
Brainstorming

• Brainstorming is simply the process of generating several ideas about a

specific topic.
• The approaches range from a person sitting down with a yellow legal pad

and jotting down interesting business ideas to formal “brainstorming

sessions” led by moderators that involve a group of people.
• As part of the brainstorming process, some people and groups construct

mind maps to organize their thoughts.

Brainstorming

Formal brainstorming sessions:

• The leader of the group asks the participants to share their ideas. One

person shares an idea, another person reacts to it, another person reacts to
the reaction, and so on.
• The session is not used for analysis or decision making—the ideas

generated during a brainstorming session need to be filtered and analyzed,

but this is done later.
Focus group

• A focus group is a gathering of 5 to 10 people who are selected because of

their relationship to the issue being discussed.

• Focus groups involve a group of people who are familiar with a topic, are

brought together to respond to questions, and who are able to shed light
on an issue through the give-and-take nature of a group discussion.
• Focus groups usually work best as a follow-up to brainstorming, when the

general idea for a business has been formulated.

Library and Internet Research

• Library research: industry-specific magazines, trade journals, industry

reports…
• Internet research: newspaper, magazine, news articles, blog, Facebook,

Twitter…
Other techniques

Customer advisory boards

• Some companies set up customer advisory boards that meet regularly to

discuss needs, wants, and problems that may lead to new ideas.
Day-in-the-life research
• The company routinely sends teams of testers to the homes and businesses

of its users to see how its products are working and to seek insights for
new product ideas.