Chapter 7: Entrepreneurship
Small business
A business having fewer than 100 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices. US SBA definition is under 500 (!) employees.
Opportunity/Feasibility Analysis
A description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities and resources needed to translate your idea into a viable business, and your source(s) of capital.
Business plan
A formal planning step that focuses on the entire venture and describes all the elements involved in starting it.
Skunkworks
A group of intrapreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products
Product champion
A manager who takes "ownership" of a project and provides the leadership and vision that take a product from the idea stage to the final customer.
Intrapreneurs
A manager, scientist, or researcher who works inside an organization and notices opportunities to develop new or improved products and better ways to make them.
Entrepreneurial venture
A new business having growth and high profitability as primary objectives. Usually, they need to be scalable.
Myth 2: Entrepreneurs Are Gamblers
A second myth about entrepreneurs is that they are gamblers and take big risks. The truth is, most entrepreneurs are moderate risk takers.
Difference Between an Inventor and an Entrepreneur
-An inventor creates something new. -An entrepreneur puts together all the resources needed—the money, the people, the strategy, and the risk-bearing ability to transform the invention into a viable business.
Entrepreneurship Defined
-Entrepreneurship is the process by which individuals pursue opportunities without regard to the resources they currently control. -The essence of entrepreneurial behavior is identifying opportunities and putting useful ideas into practice. -The set of tasks called for by this behavior can be accomplished by either an individual or a group and typically requires creativity, drive, and a willingness to take risks.
Characteristics of Entrepreneurs
-Open to experience: they are original thinkers and take risks. -Internal locus of control: they take responsibility for their own actions. -High self-esteem: they feel competent and capable. -High need for achievement: they set high goals and enjoy working toward them.
Myth 4: Entrepreneurs Need a Lot of Experience.
-The most vibrant age range for early stage entrepreneurial activity is 25 to 34 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.
Origin of the Word "Entrepreneur"
-The word was originally used to describe people who "take on the risk" between buyers and sellers or "undertake" a task such as starting a new venture. -The "undertake" interpretation of the word has been central to its usage in English.
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.
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.
Scalability
In the formal definition it's the ability for a business to accept increased volume without impacting the contribution margin (Contribution margin= revenue - variable costs).
Entrepreneurs
Individuals who notice opportunities and take the responsibility for mobilizing the resources necessary to produce new and improved goods and services.
Initial public offering (IPO)
Sale to the public, for the first time, of federally registered and underwritten shares of stock in the company
