Entrepreneurship- the pursuit of lucrative opportunities by enterprising individuals.

-It involves creating new systems, resources, or processes to produce new goods or services and/or serve new markets. Small business - defined as having fewer than 100 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices. Entrepreneurial Venture - new business having growth and high profitability as primary objectives. Two primary sources of new-venture creation: Entrepreneurs- individuals who establish a new organization without the benefit of corporate sponsorship. Intrapreneurs- new venture creators working inside big companies Differences between Businessman and Entrepreneurs Businessman -Starts a business from an existing idea or concept -Focuses on competition -Stays safe -Profit oriented -Hire people to increase business productivity -Only gives importance to a part of the world as a whole (holistic) Why Become an Entrepreneur? Entrepreneurs start their own firms because they enjoy the challenge and profit potential seek independence and a feeling of being part of the action experience the satisfaction in building something from nothing see their progress blocked in big corporations new immigrants may be blocked from conventional means of advancement Entrepreneur -Starts a business from his own unique idea or concept -Focuses on cooperation -Risk taker and accountable -People (i.e., employee, customer, public) oriented -Hire people to give them productivity -Gives importance to the business business world (atomistic)

What does it take to succeed? Successful entrepreneurs are innovators and also have a good knowledge and skills in management, business and networking. In contrast: Inventors- highly creative but often lack the skills to turn their idea into a successful business. Manager- administrators-great at ensuring efficient operations but arent necessarily innovators. Promoters- have different set of marketing and selling skills that is useful for entrepreneurs, but these skills can be hired.

What Business Should You Start? The Idea. A great product, a variable market, and good timing are essential ingredients in any recipe for success. The Opportunity. Entrepreneurs spot, create, and exploit opportunities in a of ways. Consider the following possibilities: -Technological discoveries -Demographic Changes -Lifestyle and Taste Changes -Economic Dislocations -Calamities -Government initiatives and rule changes variety

Franchises -An entrepreneurial alliance between a franchisor and franchisee. For the franchisee, the opportunity is a wealth creation via a proven business concept. For the franchisor, the opportunity is wealth creation through growth. The Next Frontiers -One fascinating opportunity for entrepreneurs is outer space. The Internet -A seemingly limitless new frontier. It has radically changed our ability not only to communicate and play but also to conduct commerce.

5 successful business models in the e-commerce market: Transaction fee model -companies charge a fee for goods or services. Ex. Amazon.com and online travel agents. Advertising support model -advertisers pay the site operator to gain access to the demographic group that the operators site. Intermediary model -bringing buyers and sellers together and charging a commission for each sale. Ex. eBay, ayosdito.com, sulit.com.ph Affiliate model -sites pay commission to other sites to drive business to their own sites. Ex. Zazzle.com, Spreadshirt.com, CafePress.com Subscription model -charge a monthly or annual fee for site visits or access to site content. Ex. Newspapers and magazines Side Street As you head down the road, unexpected opportunities begin to appear.

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What Does It Take Personally? The following characteristics contribute to entrepreneurs success. Commitment and determination -Successful entrepreneurs are decisive, tenacious, disciplined, willing to sacrifice, and able to immerse themselves totally in their enterprises. Leadership -They are self-starters, team builders, superior learners, and teachers. Opportunity Obsession Tolerance of risk, ambiguity, and uncertainty Creativity, self-reliance, and ability to adapt Motivations to excel Making Good Choices Success is a function not only of personal characteristics but also of making good choices about the business you start.

High innovation, low risk- ventures of truly novel ideas with little risk.

Ex. Inventors of Lego Building blocks and Velero fasteners can build their products at hand with little expense High innovation, high risk- novel product ideas are accompanied by high risk because the financial investments are high and competition is great. Ex. New drug or new automobiles Low innovation, high risk- fairly conventional entries in well-established fields, high investment for small business entrepreneur and face direct competition Ex. New restaurants, retail shops, commercial outfits Low innovation, low risk- ventures that require minimal investment and/or face minimal competition for strong market demand.

SUCCESS AND FAILURE Success-the achievement of something planned or attempted. Failure-something that falls short of what is required or expected. Factors that Influence Success and Failure i. Risk >is the state that exists when the probability of success is less than 100% and losses may occur. >Entrepreneurs try to make a parachute by anticipating risks and cushioning their business to help it weather setbacks. ii. Economic Environment >The totality of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers and institutions. >For a new business owned by an entrepreneur, it is strategic to consider: Business Incubators-are protected environments for new, small businesses. > low rents > shared costs iii. a. b. c. d. e. f. g. Various Management-related Hazards You might not enjoy it Survival is difficult Growth creates new Challenges Its hard to delegate Misuse of Funds Poor Control Mortality

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Initial Public Stock Offerings (IPOs) >Or simply, Going Public Advantages: a. Raising more capital b. reducing debt or improving the balance sheet and enhancing net worth c. pursuing otherwise unaffordable opportunities d. improving credibility with customers and other stakeholders Disadvantages: a. expense, time and effort involved b. tend to prioritize more on stock price and capital gains than running the company properly c. creation of a long-term relationship with an investment banking firm that wont necessarily always be a good one.

INCREASING YOUR CHANCES OF SUCCESS Planning conscious systematic process of making a decision about a companys goals or activities.
a. Business Plan Steps:

1. Opportunity Analysis -description of the good or service

-an assessment of the opportunity - an assessment of the entrepreneur - specification of activities and resources needed - source(s) of capital 2. Business Plan describes all the elements involved in starting the new venture. > marketing > finance > manufacturing > human resources b. Key Planning Elements The Key Factors i. People-their ability to execute ii. Opportunity-favorable circumstances or situations iii. Competition-much like Benchmarking iv. Environmental Context-identifying the Macroenvironment v. Risk

c. Selling the Plan - Get the investors to support the plan Nonfinancial Resources

d. Legitimacy -the peoples judgment of a companys acceptance, appropriateness, and desirability. -helps overcome the liability of newness

e. Networks Establishment of Social Capital is vital. Helps entrepreneurs: gain access to useful information Gain trust and cooperation from others Recruit Employees Form successful business alliances Receive funding from venture capitalists Become more successful f. Top-Management Teams >Improves the companys image >Develops longer-term plans for expansion >Supports day-to-day activities >Develops a network of information sources
g. Advisory Boards Helps the entrepreneur learn basics such as: a. Cash-flow analyses b. Identifying needed strategic changes c. Building relationships with bankers, accountants and attorneys. h. Partners

Can help:
a. b. c. d. Access capital Spread the workload Share the risk Share Expertise

INTRAPRENEURSHIP Act of behaving like an entrepreneur while working within a large organization. >Building Support for your Idea Steps 1. Clearing the Investment-explain and seek idea from your boss. 2. Making Cheerleaders-find people who will support your idea. 3. Horse Trading-offer promises of payoffs from the project. 4. Get the Blessing-a guarantee from your boss upon presentation that your project is technically and politically feasible. >Building Intrapreneurship Two Approaches in Building Intrapreneurship: > Skunkworks project teams designated to produce a new product with a specific goal under a specified time frame.

> Bootlegging refers to informal efforts in which employees work to create new products and processes of their own choosing and initiative. >Management Challenges 1. Overreliance on a single project.
2. Too many intrapreneurial projects that causes spread efforts.

>Entrepreneurial Orientation The tendency of an organization to engage in activities assigned to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services. The 5 Tendencies: 1. to allow independent action 2. innovate 3. take risks 4. proactive 5. be competitively aggressive Prepared by: Alan Kirk R. Gultia Ivy Diane A. Avila