Lecture 1 & 2

Investors often cite the ____ of an entrepreneur as their most important criteria in making investment decisions. 4 things that give them this

strength! What makes an entrepreneur "strong" in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success.

Guidelines to Organizing a Board of Advisors

- Advisors will become disillusioned if they don't play a meaningful role in the firm's development and growth. - A firm should look for board members who are compatible and complement one another in terms of experience and expertise.

Social entrepreneurship

- Is entrepreneurship aimed at solving social problems through the creation of businesses - Can have a wide range of profit vs. social benefits - Also referred to as social enterprise

Broader team. Who is around the founder?

- Key employees - board of directors - board of advisors - management - lenders & investors - other professionals

Lenders and Investors

- Lenders and investors have a vested interest in the companies they finance, often causing them to become very involved in helping the firms they fund. - Help by providing guidance and lending advice, particularly for financial oversight.

Tips about teams in entrepreneurship

- Most entrepreneurs do not go into business alone; they do so as a team - Entrepreneurship is not about the individual hero - At the very least they have support and advice from those around them - Family entrepreneurship common and critical

Effectuation steps:

- Start with who you are, what you know, and whom you know (not with pre-set goals) - Invest what you can afford to lose - extreme case $0 (not expected return) - Build a network of self-selected stakeholders (not competitive analysis) - Embrace and Leverage surprises (not avoid them)

Good managers use 'causal' thinking. They start with and focus on...?

- Starts with a desired and relatively known outcome - Focuses on the best means to generate that outcome (efficiency and optimization of a known solution for a known outcome) using existing means

Attributes of Effective Boards (6)

- Strong communication with the CEO - Complementary mix of talents - Decisiveness - Mutual respect and regard for each other and the management team - Ability and willingness to stand up to the CEO and top managers - Strong ethics

Disadvantages of teams

- Team members may not get along. - If the founders have similar areas of expertise, they may duplicate rather than complement one another. - Personal relationships can be damaged

Good team member characteristics (3)

- Trustworthy, loyal and dependable - Takes initiative - Gives energy (as opposed to being an energy suck)

Moving from an idea to an entrepreneurial firm (4)

- preparing the proper ethical and legal foundation - assessing a new venture's financial strength and viability - building a new venture team - getting financing or funding

Developing successful business ideas (5)

- recognizing opportunities and presenting ideas - feasibility analysis - writing a business plan - industry and competitive analysis - developing an effective business model

Intrapreneurship

An entrepreneur is someone who, through his or her skills and passion, creates a business and is willing to take full accountability for its success or failure. An intrapreneur, on the other hand, is someone who utilizes his or her skill, passion and innovation to manage or create something useful for someone else's business... with entrepreneurial zest.

Meaning of effectuation

Effectuation is a way of thinking that serves entrepreneurs in the processes of opportunity identification and new venture creation.

Distinguishing Characteristic of a managerial mindset versus a entrepreneurial mindset

managerial: Selecting between given means to achieve a pre-determined goal entrepreneurial: Imagining possible new ends using a given set of means

Good managers use what kind of thinking? Good entrepreneurs use what kind of thinking?

mangers use "casual" thinking entrepreneurs use "effectual" thinking

Entrepreneurs assemble and then integrate all the resources needed (6) so that they can...

the passion, money, the people, the support, the business model, the strategy - to transform an invention or an idea into a viable business

reason to be an entrepreneur in high income and low income countries

-The majority of people in high-income countries are drawn to entrepreneurship to take advantage of attractive opportunities -The reverse is true of people in low-income countries, who tend to be drawn to entrepreneurship primarily because of necessity (resulting from a lack of career prospects)

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

1. Desire to be their own boss 2. Desire to pursue their own ideas 3. Financial rewards

Characteristics of a successful entrepreneur (4)

1. Passion for business - The number one characteristic! This passion typically stems from the entrepreneur's belief that the business will positively influence people's lives or because it confirms an identity 2. product/customer focus 3. tenacity despite failure 4. execution intelligence - The ability to turn a plan into reality

Types of start-up firms

1. Salary substitute firms - provide their owner or owners a similar level of income to what they would be able to learn in a conventional job 2. Lifestyle firms - provide owner or owners the opportunity to pursue a particular lifestyle, and make a living at it. time spent working is enjoyable 3. Growth firms - the opportunity to pursue growing profits

55% of Canadian businesses have

<4 employees

Board of Advisors and 4 interesting things about them

A board of advisors is a panel of experts who are asked by a firm's managers to provide counsel and advice on an ongoing basis. - Possesses no legal responsibility for the firm and gives nonbinding advice. - Can give credibility to the firm. - An advisory board can be established for general purposes or can be set up to address a specific issue or need. - Do not need to be formalized

Entrepreneurship Impact on Individuals (4)

Income Autonomy and freedom Positive feelings and emotions such as pride Identity impacts

Four myths about entrepreneurs

Myth 1: Entrepreneurs Are Born, Not Made - everyone has the potential to become one. Whether someone does or doesn't become an entrepreneur is largely a function of their environment, life experiences, and personal choices. Myth 2: Entrepreneurs Are Gamblers - this came to be because people think: Entrepreneurs jobs are less structured so uncertain future. A strong need to achieve and set challenging goals, a behaviour that is often equated with risk taking. Myth 3: Entrepreneurs Are Motivated Primarily by Money - some entrepreneurs warn that the pursuit of money can be distracting. Myth 4: Entrepreneurs Should Be Young and Energetic

Key components of ventures

Product, money, marketing

What does the board of directors do?

Responsible for governance: Direction of firm - provides guidance and develops mission, vision, and values/ethics Control - monitors performance and ensures corrective action is taken where needed Legitimacy - signals credibility

Advantages to having a team

Teams bring more talent, resources, and ideas to a new venture. Teams bring a broader and deeper network of social and professional contacts to a new business. The psychological support that the cofounders of a business can offer one another can be an important element of a new venture's success.

Entrepreneur 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 that were created by entrepreneurs - Provide products and services that bigger firms will not - Keep money locally - Contribute to communities

The lean start up circle

build, measure, learn ideas, code, data