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Ch.1:TheFoundationsofEntrepreneurshipCh.1:TheFoundationsofEntrTheWorldoftheEntrepreneurEveryyearU.S.entrepreneurslaunch565,000newbusinesses.Entrepreneurialspirit-themostsignificanteconomicdevelopmentinrecenthistory.GEMstudy:12.3%ofadultpopulationintheU.S.isactivelyinvolvedintryingtostartanewbusiness.1-2Ch.1:TheFoundationsofEntrepreneurshipTheWorldoftheEntrepreneurE2EntrepreneurialActivityAcrosstheGlobe

1-3Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurialActivityAcros3Entrepreneurship-FriendlyNations

1-4Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurship-FriendlyNati4TheWorldoftheEntrepreneurGlobalEntrepreneurshipMonitor(GEM)studyreports:Menaretwiceaslikelytostartabusinessaswomen.Mostentrepreneursturntofamilymembersandfriendsforcapital.Entrepreneursaremostlikelytolaunchbusinesseswhentheyare

betweentheagesof35and44.1-5Ch.1:TheFoundationsofEntrepreneurshipTheWorldoftheEntrepreneurG5WhatisanEntrepreneur?

Onewhocreatesanewbusinessinthefaceofriskanduncertaintyforthepurposeofachievingprofitandgrowthbyidentifyingopportunitiesandassemblingthenecessaryresourcestocapitalizeonthem.

1-6Ch.1:TheFoundationsofEntrepreneurshipWhatisanEntrepreneur? Onew6WhatisanEntrepreneur?1803:Jean-BaptisteSay:Anentrepreneurisaneconomicagentwhounitesallmeansofproduction-landofone,thelabourofanotherandthecapitalofyetanotherandthusproducesaproduct.Bysellingtheproductinthemarkethepaysrentofland,wagestolabour,interestoncapitalandwhatremainsishisprofit.Heshiftseconomicresourcesoutofanareaoflowerandintoanareaofhigherproductivityandgreateryield.

1934:Schumpeter:Entrepreneursareinnovatorswhouseaprocessofshatteringthestatusquooftheexistingproductsandservices,tosetupnewproducts,newservices.1-7WWhatisanEntrepreneur?1-7W7WhatisanEntrepreneur? 1961:DavidMcClleland:Anentrepreneurisapersonwithahighneedforachievement[N-Ach].Heisenergeticandamoderaterisktaker.

1964:PeterDrucker:Anentrepreneursearchesforchange,respondstoitandexploitsopportunities.Innovationisaspecifictoolofanentrepreneurhenceaneffectiveentrepreneurconvertsasourceintoaresource.

1971:Kilby:Emphasizestheroleofanimitatorentrepreneurwhodoesnotinnovatebutimitatestechnologiesinnovatedbyothers.Areveryimportantindevelopingeconomies.1-8WWhatisanEntrepreneur?1-8W8WhatisanEntrepreneur? 1975:AlbertShapero:Entrepreneurstakeinitiative,acceptriskoffailureandhaveaninternallocusofcontrol.

1975:HowardStevenson:Entrepreneurshipis"thepursuitofopportunitywithoutregardtoresourcescurrentlycontrolled."

1983:G.Pinchot:Intrapreneurisanentrepreneurwithinanalreadyestablishedorganization.

1985:W.B.Gartner:Entrepreneurisapersonwhostartedanewbusinesswheretherewasnonebefore.1-9WWhatisanEntrepreneur?1-9W9CharacteristicsofEntrepreneursDesireforresponsibilityPreferenceformoderatelevelsofrisk–riskeliminatorsConfidenceintheirabilitytosucceedDeterminationDesireforimmediatefeedbackHighlevelofenergyFutureorientation–opportunity,necessity,andserialentrepreneursSkilledatorganizingValueachievementovermoney1-10Ch.1:TheFoundationsofEntrepreneurshipCharacteristicsofEntrepreneu10CharacteristicsofEntrepreneursEntrepreneurstendtoexhibit:AhighdegreeofcommitmentToleranceforambiguityFlexibilityAwillingnesstoworkhardTenacity1-11Ch.1:TheFoundationsofEntrepreneurshipCharacteristicsofEntrepreneu11SourcesofEntrepreneurialSuccess

1-12Ch.1:TheFoundationsofEntrepreneurshipSourcesofEntrepreneurialSuc12BenefitsofEntrepreneurshipTheopportunityto:CreateyourowndestinyMakeadifferenceReachyourfullpotentialReapimpressiveprofitsContributetosocietyandto

berecognizedforyoureffortsDowhatyouenjoyandtohavefunatit1-13Ch.1:TheFoundationsofEntrepreneurshipBenefitsofEntrepreneurshipTh13DrawbacksofEntrepreneurshipUncertaintyofincomeRiskoflosingyourentireinvestmentLonghoursandhardworkLowerqualityoflifeuntilthebusinessgetsestablishedHighlevelsofstressCompleteresponsibilityDiscouragement1-14Ch.1:TheFoundationsofEntrepreneurshipDrawbacksofEntrepreneurshipU14Feedingthe

EntrepreneurialFireEntrepreneursasheroesEntrepreneurialeducationDemographicandeconomicfactorsShifttoaserviceeconomyTechnologyadvancementsIndependentlifestyleTheInternetandcloudcomputing1-15Ch.1:TheFoundationsofEntrepreneurshipFeedingthe

EntrepreneurialF15U.S.RetailE-CommerceRevenues

1-16Ch.1:TheFoundationsofEntrepreneurshipU.S.RetailE-CommerceRevenue16Feedingthe

EntrepreneurialFireEntrepreneursasheroesEntrepreneurialeducationDemographicandeconomicfactorsShifttoaserviceeconomyTechnologyadvancementsIndependentlifestylesTheInternetandcloudcomputingInternationalopportunities1-17Ch.1:TheFoundationsofEntrepreneurship(continued)Feedingthe

EntrepreneurialF17TheCulturalDiversity

ofEntrepreneurshipYoungentrepreneurs1-18Ch.1:TheFoundationsofEntrepreneurshipTheCulturalDiversity

ofEnt18EntrepreneurialActivitybyAgeGroup

1-19Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurialActivitybyAg19TheCulturalDiversity

ofEntrepreneurshipYoungentrepreneursWomenentrepreneursMinority-ownedenterprises1-20Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversity

ofEnt20GrowthinMinority–OwnedBusinessessince2002

1-21Ch.1:TheFoundationsofEntrepreneurshipGrowthinMinority–OwnedBusin21TheCulturalDiversityofEntrepreneurshipYoungentrepreneursWomenentrepreneursMinority-ownedenterprisesImmigrantentrepreneursPart-timeentrepreneurs1-22Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversityofEntr22TheCulturalDiversityofEntrepreneurshipHome-basedbusinessesFamilybusinessesCopreneursCorporatecastoffsCorporatedropoutsSocialentrepreneursRetiringbabyboomers1-23Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversityofEntr23SmallBusinesses...Makeup99.7%ofthe27.9millionbusinessesintheU.S.Employ50%ofthenation’sprivatesectorworkforce.Createmorejobsthanbigbusinesses.65%ofnetnewjobsoverthelastdecade3%ofsmallcompaniescreate70%ofnetnewjobsintheeconomy.Gazelles(>20%growth,$100K+sales)1-24Ch.1:TheFoundationsofEntrepreneurshipSmallBusinesses...Makeup9924SmallBusinessesbyIndustry

1-25Ch.1:TheFoundationsofEntrepreneurshipSmallBusinessesbyIndustry

125SmallBusinesses...Produce51%ofthenation’sprivateGDP.Accountfor47%ofbusinesssales.Create13timesmorepatentsperemployeesthanlargecompanies.Zipper,lightbulb,FMradio,laser,

airconditioning,escalator,

personalcomputer,

automatictransmission,

andmanymore!1-26Ch.1:TheFoundationsofEntrepreneurship(continued)SmallBusinesses...Produce5126TheTenDeadlyMistakesofEntrepreneurshipManagementmistakesLackofexperiencePoorfinancialcontrolWeakmarketingFailuretodevelopastrategicplanUncontrolledgrowthPoorlocationImproperinventorycontrolIncorrectpricingInabilitytotransitiongrowth1-27Ch.1:TheFoundationsofEntrepreneurshipTheTenDeadlyMistakesofEnt27PuttingFailureIntoPerspectiveEntrepreneursarenotparalyzedbytheprospectoffailure.Failure–anaturalpartofthecreativeprocess.Successfulentrepreneurslearntofailintelligently.1-28Ch.1:TheFoundationsofEntrepreneurshipPuttingFailureIntoPerspecti28BusinessStartsandClosures

1-29Ch.1:TheFoundationsofEntrepreneurshipBusinessStartsandClosures

129AvoidingthePitfallsof

SmallBusinessFailureKnowyourbusinessindepthDevelopasolidbusinessplanManagefinancialresourcesUnderstandfinancialstatementsLearntomanagepeopleeffectivelySetyourbusinessapartfromthecompetitionMaintainapositiveattitude1-30Ch.1:TheFoundationsofEntrepreneurshipAvoidingthePitfallsof

Smal30Ch.1:TheFoundationsofEntrepreneurshipConclusionEntrepreneurs:AreanimportantpartofthefreeenterprisesystemAreadiverseandtalentedgroupofpeopleRepresentacross-sectionofsocietyasawholeAreabletoenhancetheprofitabilityoftheirbusinessesthroughacquiringadditionalknowledgeandexperienceCh.1:TheFoundationsofEntrCh.1:TheFoundationsofEntrepreneurshipWhatisAhead?Section1: TheChallengeofEntrepreneurshipSection2: BuildingaBusinessPlan:

BeginningConsiderationsSection3: BuildingaBusinessPlan:

MarketingConsiderations BuildingaBusinessPlan:

FinancialMattersSection4: PuttingtheBusinessPlantoWork:

MakingtheNewVentureaSuccessCh.1:TheFoundationsofEntr1-33Ch.1:TheFoundationsofEntrepreneurship1-33Ch.1:TheFoundationso33Ch.1:TheFoundationsofEntrepreneurshipCh.1:TheFoundationsofEntrTheWorldoftheEntrepreneurEveryyearU.S.entrepreneurslaunch565,000newbusinesses.Entrepreneurialspirit-themostsignificanteconomicdevelopmentinrecenthistory.GEMstudy:12.3%ofadultpopulationintheU.S.isactivelyinvolvedintryingtostartanewbusiness.1-35Ch.1:TheFoundationsofEntrepreneurshipTheWorldoftheEntrepreneurE35EntrepreneurialActivityAcrosstheGlobe

1-36Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurialActivityAcros36Entrepreneurship-FriendlyNations

1-37Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurship-FriendlyNati37TheWorldoftheEntrepreneurGlobalEntrepreneurshipMonitor(GEM)studyreports:Menaretwiceaslikelytostartabusinessaswomen.Mostentrepreneursturntofamilymembersandfriendsforcapital.Entrepreneursaremostlikelytolaunchbusinesseswhentheyare

betweentheagesof35and44.1-38Ch.1:TheFoundationsofEntrepreneurshipTheWorldoftheEntrepreneurG38WhatisanEntrepreneur?

Onewhocreatesanewbusinessinthefaceofriskanduncertaintyforthepurposeofachievingprofitandgrowthbyidentifyingopportunitiesandassemblingthenecessaryresourcestocapitalizeonthem.

1-39Ch.1:TheFoundationsofEntrepreneurshipWhatisanEntrepreneur? Onew39WhatisanEntrepreneur?1803:Jean-BaptisteSay:Anentrepreneurisaneconomicagentwhounitesallmeansofproduction-landofone,thelabourofanotherandthecapitalofyetanotherandthusproducesaproduct.Bysellingtheproductinthemarkethepaysrentofland,wagestolabour,interestoncapitalandwhatremainsishisprofit.Heshiftseconomicresourcesoutofanareaoflowerandintoanareaofhigherproductivityandgreateryield.

1934:Schumpeter:Entrepreneursareinnovatorswhouseaprocessofshatteringthestatusquooftheexistingproductsandservices,tosetupnewproducts,newservices.1-40WWhatisanEntrepreneur?1-7W40WhatisanEntrepreneur? 1961:DavidMcClleland:Anentrepreneurisapersonwithahighneedforachievement[N-Ach].Heisenergeticandamoderaterisktaker.

1964:PeterDrucker:Anentrepreneursearchesforchange,respondstoitandexploitsopportunities.Innovationisaspecifictoolofanentrepreneurhenceaneffectiveentrepreneurconvertsasourceintoaresource.

1971:Kilby:Emphasizestheroleofanimitatorentrepreneurwhodoesnotinnovatebutimitatestechnologiesinnovatedbyothers.Areveryimportantindevelopingeconomies.1-41WWhatisanEntrepreneur?1-8W41WhatisanEntrepreneur? 1975:AlbertShapero:Entrepreneurstakeinitiative,acceptriskoffailureandhaveaninternallocusofcontrol.

1975:HowardStevenson:Entrepreneurshipis"thepursuitofopportunitywithoutregardtoresourcescurrentlycontrolled."

1983:G.Pinchot:Intrapreneurisanentrepreneurwithinanalreadyestablishedorganization.

1985:W.B.Gartner:Entrepreneurisapersonwhostartedanewbusinesswheretherewasnonebefore.1-42WWhatisanEntrepreneur?1-9W42CharacteristicsofEntrepreneursDesireforresponsibilityPreferenceformoderatelevelsofrisk–riskeliminatorsConfidenceintheirabilitytosucceedDeterminationDesireforimmediatefeedbackHighlevelofenergyFutureorientation–opportunity,necessity,andserialentrepreneursSkilledatorganizingValueachievementovermoney1-43Ch.1:TheFoundationsofEntrepreneurshipCharacteristicsofEntrepreneu43CharacteristicsofEntrepreneursEntrepreneurstendtoexhibit:AhighdegreeofcommitmentToleranceforambiguityFlexibilityAwillingnesstoworkhardTenacity1-44Ch.1:TheFoundationsofEntrepreneurshipCharacteristicsofEntrepreneu44SourcesofEntrepreneurialSuccess

1-45Ch.1:TheFoundationsofEntrepreneurshipSourcesofEntrepreneurialSuc45BenefitsofEntrepreneurshipTheopportunityto:CreateyourowndestinyMakeadifferenceReachyourfullpotentialReapimpressiveprofitsContributetosocietyandto

berecognizedforyoureffortsDowhatyouenjoyandtohavefunatit1-46Ch.1:TheFoundationsofEntrepreneurshipBenefitsofEntrepreneurshipTh46DrawbacksofEntrepreneurshipUncertaintyofincomeRiskoflosingyourentireinvestmentLonghoursandhardworkLowerqualityoflifeuntilthebusinessgetsestablishedHighlevelsofstressCompleteresponsibilityDiscouragement1-47Ch.1:TheFoundationsofEntrepreneurshipDrawbacksofEntrepreneurshipU47Feedingthe

EntrepreneurialFireEntrepreneursasheroesEntrepreneurialeducationDemographicandeconomicfactorsShifttoaserviceeconomyTechnologyadvancementsIndependentlifestyleTheInternetandcloudcomputing1-48Ch.1:TheFoundationsofEntrepreneurshipFeedingthe

EntrepreneurialF48U.S.RetailE-CommerceRevenues

1-49Ch.1:TheFoundationsofEntrepreneurshipU.S.RetailE-CommerceRevenue49Feedingthe

EntrepreneurialFireEntrepreneursasheroesEntrepreneurialeducationDemographicandeconomicfactorsShifttoaserviceeconomyTechnologyadvancementsIndependentlifestylesTheInternetandcloudcomputingInternationalopportunities1-50Ch.1:TheFoundationsofEntrepreneurship(continued)Feedingthe

EntrepreneurialF50TheCulturalDiversity

ofEntrepreneurshipYoungentrepreneurs1-51Ch.1:TheFoundationsofEntrepreneurshipTheCulturalDiversity

ofEnt51EntrepreneurialActivitybyAgeGroup

1-52Ch.1:TheFoundationsofEntrepreneurshipEntrepreneurialActivitybyAg52TheCulturalDiversity

ofEntrepreneurshipYoungentrepreneursWomenentrepreneursMinority-ownedenterprises1-53Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversity

ofEnt53GrowthinMinority–OwnedBusinessessince2002

1-54Ch.1:TheFoundationsofEntrepreneurshipGrowthinMinority–OwnedBusin54TheCulturalDiversityofEntrepreneurshipYoungentrepreneursWomenentrepreneursMinority-ownedenterprisesImmigrantentrepreneursPart-timeentrepreneurs1-55Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversityofEntr55TheCulturalDiversityofEntrepreneurshipHome-basedbusinessesFamilybusinessesCopreneursCorporatecastoffsCorporatedropoutsSocialentrepreneursRetiringbabyboomers1-56Ch.1:TheFoundationsofEntrepreneurship(continued)TheCulturalDiversityofEntr56SmallBusinesses...Makeup99.7%ofthe27.9millionbusinessesintheU.S.Employ50%ofthenation’sprivatesectorworkforce.Createmorejobsthanbigbusinesses.65%ofnetnewjobsoverthelastdecade3%ofsmallcompaniescreate70%ofnetnewjobsintheeconomy.Gazelles(>20%growth,$100K+sales)1-57Ch.1:TheFoundationsofEntrepreneurshipSmallBusinesses...Makeup9957SmallBusinessesbyIndustry

1-58Ch.1:TheFoundationsofEntrepreneurshipSmallBusinessesbyIndustry

158SmallBusinesses...Produce51%ofthenation’sprivateGDP.Accountfor47%ofbusinesssales.Create13timesmorepatentsperemployeesthanlargecompanies.Zipper,lightbulb,FMradio,laser,

airconditioning,escalator,

personalcomputer,

automatictransmission,

andmanymore!1-59Ch.1:TheFoundationsofEntrepreneurship(continued)SmallBusinesses...Produce5159TheTenDeadlyMistakesofEntrepreneurshipManagemen

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