Introduction to Entrepreneurship

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Introduction to Entrepreneurship

• New Venture Development
• Walter Good
• Asper School of Business
• University of Manitoba

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What is Entrepreneurship?

• Researchers have been very inconsistent in their
  definitions of entrepreneurship. Definitions
  have emphasized a broad range of activities
  including
• The creation of organizations
• The carrying out of new combinations
• The exploration of opportunities
• The bearing of uncertainty
• The bringing together of factors of production
• And others

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Some Examples

• Richard Cantillon (circa 1730)
• Self-employment of any sort. Entrepreneurs buy
  at certain prices in the present and sell at
  uncertain prices in the future. The entrepreneur
  is a bearer of uncertainty.

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• Jean Baptiste Say (1816)
• The entrepreneur is the agent who unites all
  means of production and who finds in the value of
  the productsthe reestablishment of the entire
  capital he employs, and the value of the wages,
  the interest, and the rent which he pays, as well
  as profits belonging to himself.

5

• Joseph Schumpter (1934)
• The entrepreneur is the innovator who implements
  change within markets through the carrying out of
  new combinations. As such, the entrepreneur moves
  the market away from equilibrium

6

• Penrose (1963)
• Entrepreneurial activity involves identifying
  opportunities within the economic system.
  Managerial capacities are different from
  entrepreneurial capacities.

7

• Kirzner (1979)
• The entrepreneur recognizes and acts upon market
  opportunities. The entrepreneur is essentially an
  arbitrageur.

8

• Gartner (1988)
• The creation of new organizations

9

• Timmons (1994)
• Entrepreneurship is creating something of value
  from practically nothing

10

• Bygraves (1997)
• An entrepreneur is someone who perceives an
  opportunity and creates an organization to pursue
  it

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• There is no single accepted definition of
  entrepreneurship.
• Small business?
• Micro business?
• Corporate entrepreneurship or intrapreneurship?
• High-growth firms?
• Family businesses?
• Franchises?

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Entrepreneurship Economic Thought
Joseph Schumpeter (1930s)
Israel Kirzner (1970s)
S
S
D
D
CREATIVE DESTRUCTION Entrepreneurship moves
market away from equilibrium
ENTREPRENEURIAL DISCOVERY Entrepreneurship
moves market toward equilibrium.
New combinations new goods, methods of
production, new markets, sources of supply,
organizations.
Entrepreneur alert to opportunities that already
exist and are waiting to be noticed.
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Entrepreneurs Can Play a Number of Roles in the
Economy
1. Create new product and/or service
businesses. 2. Bring creative and innovative
methods to developing or producing new products
or services. 3. Provide employment opportunities
and create new jobs as a result of growing their
businesses consistently and rapidly. 4. Help
contribute to regional and national economic
growth. 5. Encourage greater industrial
efficiency/productivity to enhance our
international competitiveness.
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Some Facts About Entrepreneurship

• 1998 adult working population was 130 million,
  17.3 or 21 million were self-employed
• Since WWII small entrepreneurial firms have been
  responsible for ½ of all innovation and 95 of
  all radical innovation.

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Entrepreneurship Drives Job Wealth Creation.

• Since 1980, large companies have lost more than
  5M jobs, but 34M new jobs have been created.
• At any point in time, 8.5 of the adult
  population is starting a new business.
• In 1950s 50,000 businesses were incorporated per
  year. 770,000 businesses were incorporated in
  1998.

Small businesses are the backbone of the North
American Economy. They create 2 of every 3 new
jobs and produce 39 of the GNP.
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• Firms with fewer than 20 employees currently
  create almost 95 of net new jobs.
• Increasingly women are questioning traditional
  corporate jobs to seek their careers in
  entrepreneurship.
• People in their 50s or 60s are planning second
  careers as entrepreneurs rather than retiring.
• The vast majority or nearly 3 million
  millionaires accumulated their wealth through
  entrepreneurial ventures.

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The Components of Successful Entrepreneurial
Ventures
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Outline of the Entrepreneurial Process
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Myths About Entrepreneurship
Myth 1 Entrepreneurs are born, not made. Myth
2 Anyone can start a business. Its just a matter
of luck and guts. Myth 3 Entrepreneurs are
gamblers. Myth 4 Entrepreneurs want to run the
whole show themselves. Myth 5 Entrepreneurs are
their own bosses and completely independent. Myth
6 Entrepreneurs work longer and harder than
corporate managers. Myth 7 Entrepreneurs face
greater stress and more pressures, and thus pay a
higher personal price in their jobs than do other
managers.
Continued
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Myths About Entrepreneurship (Continued)
Myth 8 Starting a business is risky and often
ends in failure Myth 9 Money is the most
important ingredient of success Myth 10 New
business start-ups are for the young and
energetic Myth 11 Entrepreneurs are motivated
solely by their quest for the almighty
dollar Myth 12 Entrepreneurs seek power and
control over other people so that they can feel
in charge
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STAGE TWO Assess Your Potential for an
Entrepreneurial Career
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Attitudes and Behaviours Valuable forTurning a
Business Dream into Reality

• Commitment, Determination, and Perseverance
• A Success Orientation
• Opportunity and Goal Orientation
• Action Orientation and Personal Responsibility
• Persistent Problem Solving and a Need to Achieve
• A Reality Orientation
• The Ability to Seek and Use Feedback
• Self-Reliance

Continued
23
S
Attitudes and Behaviours Valuable forTurning a
Business Dream into Reality (Continued)

• Self-Confidence
• A tolerance of Ambiguity and Uncertainty
• Moderate Risk-Taking and Risk Sharing
• The Ability to Respond Positively to Failure
• A Need for Status and Power
• Integrity and Reliability
• A Team Builder

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Business Skills Needed by Successful
Entrepreneurs
1. Managing Money 2. Managing People 3. Directing
Business Operations 4. Directing Sales and
Marketing Operations 5. Setting Up a Business