Chapter 6 - Entrepreneurship and Small Business

Chapter 6 – Entrepreneurship and Small Business THE NATURE OF ENTREPRENEURSHIP Entrepreneurship: Strategic thinking and risk-taking behavior that results in the creation of new opportunities for individuals and/or organizations. Who are the entrepreneurs? Entrepreneurs: o Risk-taking individuals who take actions to pursue opportunities and situations others may fail to recognize or may view as problems or threats. o Starts new ventures that bring life to new product and service ideas o Founders of businesses that become large-scale enterprises. Characteristics of entrepreneurs: o People who: Buy a local franchise outlet, open a small retail shop, operate a self-employed service business o People who introduce a new product or operational change in an existing organization o High energy level, high need for achievement, self-confidence, passion, control ENTREPRENEURSHIP AND SMALL BUSINESSES Ones with 100 or fewer employees and independently owned and operated. 50 percent of the private labour force works in small businesses. Are established by: o Starting a new business. o Buying an existing business. o Buying and running a franchise. Why They Fail… o Lack of experience , lack of expertise, lack of strategy and strategic leadership, poor financial control, growing too fast, insufficient commitment, ethical failure Entrepreneurship and the Internet The Internet offers numerous entrepreneurial opportunities. o Online buying and selling o Dot-com businesses Businesses are limited only by personal creativity. Business-to-Business (B2B) ventures are possible. International Business Entrepreneurship Provides strategic opportunities for small businesses. Creates exporting and importing opportunities. Supported through appropriate governmental and non-governmental organizations. Family Businesses Family businesses … Owned and financially controlled by family members. Largest percentage of businesses worldwide. www.notesolution.com Can provide an ideal business situation. Problems unique to family businesses: family business feud and succession problems NEW VENTURE CREATION The entrepreneur has to ask themselves if their idea is good, if it is a good strategy, if a market niche can be identified, if there is a new market that has not been discovered and if there is a first- mover advantage by exploiting a niche or entering a market before competitors Life Cycle of Entrepreneurial Firms Writing the Business Plan describes the direction of the new business and the financing needed to operate it what to include in a business plan: