Introduction to Entrepreneurship

1. ABDM4233 ENTREPRENEURSHIP
The Foundations of
Entrepreneurship
by
Stephen Ong
Principal Lecturer (Specialist)
Visiting Professor, Shenzhen University

2. The World of the Entrepreneur
 Every year U.S. entrepreneurs launch
550,000 new businesses.
 Entrepreneurial spirit - the most
significant economic development in
recent history.
 GEM study: 18.7% of adult population
in the U.S. is actively involved in trying
to start a new business.
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3. TEA (2011)
Malaysia = 4.9%
Japan = 5.2%
Singapore = 6.6%
UK = 7.3%
USA = 12.3%
Thailand = 19.5%
China = 24%
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4. The World of the Entrepreneur
 Global Entrepreneurship Monitor (GEM)
study reports:
 Men are twice as likely to start a business
as women.
 Most entrepreneurs turn to family members
and friends for capital.
 Entrepreneurs are most likely to launch
businesses when they are
between the ages of 25 and 44.
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5. Global Entrepreneurship Monitor
(GEM) 2011 Report
 Estimated 388 million entrepreneurs actively engaged in
starting and running new businesses in 2011.
 Early-stage entrepreneurs comprised of :
 163 million women
 165 million between the ages of 18 and 35 years
 141 million expecting to create at least five new jobs in
the next five years
 65 million expecting to create 20 or more new jobs in the
next five years
 69 million with innovative products and services that are
new to customers and with few other competitors
 18 million selling at least 25% of their products and
services internationally 1-5

6. What is Entrepreneurship?
 Academic Definition (Stevenson & Jarillo)
 Entrepreneurship is the process by which
individuals pursue opportunities without regard to
resources they currently control.
 Venture Capitalist (Fred Wilson)
 Entrepreneurship is the art of turning an idea into
a business.
 Explanation of What Entrepreneurs Do
 Entrepreneurs assemble and then integrate all the
resources needed – the money, the people, the
business model, the strategy – to transform an
invention or an idea into a viable business.
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7. What is an Entrepreneur?
One who creates a new business in the face
of risk and uncertainty for the purpose of
achieving profit and growth by identifying
opportunities and assembling the necessary
resources to capitalize on them.
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8. Why Become an Entrepreneur?
The three primary reasons that people become
entrepreneurs and start their own firms
Desire to be their
own boss
Desire to pursue their
own ideas
Financial
rewards
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9. Characteristics of Successful Entrepreneurs
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Four Primary Characteristics
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10. Characteristics of Successful Entrepreneurs
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 Passion for the Business
 The number one characteristic shared by
successful entrepreneurs is a passion for the
business.
 This passion typically stems from the
entrepreneur’s belief that the business will
positively influence people’s lives.
 Product/Customer Focus
 A second defining characteristic of successful
entrepreneurs is a product/customer focus.
 An entrepreneur’s keen focus on products and
customers typically stems from the fact that most
entrepreneurs are, at heart, craftspeople.
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11. Characteristics of Successful Entrepreneurs
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 Tenacity Despite Failure
 Because entrepreneurs are typically trying
something new, the failure rate is naturally high.
 A defining characteristic for successful
entrepreneurs is their ability to persevere through
setbacks and failures.
 Execution Intelligence
 The ability to fashion a solid business idea into a
viable business is a key characteristic of
successful entrepreneurs.
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12. Common Myths About Entrepreneurs
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 Myth 1: Entrepreneurs Are Born, Not Made
 This myth is based on the mistaken belief that
some people are genetically predisposed to be
entrepreneurs.
 The consensus of many studies is that no one is
“born” to be an entrepreneur; everyone has the
potential to become one.
 Whether someone does or doesn’t become an
entrepreneur is a function of their environment,
life experiences, and personal choices.
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13. Common Myths About Entrepreneurs
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Although no one is “born” to be an entrepreneur, there are common
traits and characteristics of successful entrepreneurs
• A moderate risk taker • Optimistic disposition
• A networker • Persuasive
• Achievement motivated • Promoter
• Alert to opportunities • Resource assembler/
leverager
• Creative
• Self-confident
• Decisive
• Self-starter
• Energetic
• Tenacious
• Has a strong work ethic
• Tolerant of ambiguity
• Lengthy attention span
• Visionary
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14. Common Myths About Entrepreneurs
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 Myth 2: Entrepreneurs Are Gamblers
 Most entrepreneurs are moderate risk takers.
 The idea that entrepreneurs are gamblers
originates from two sources:
 Entrepreneurs typically have jobs that are less
structured, and so they face a more uncertain
set of possibilities than people in traditional
jobs.
 Many entrepreneurs have a strong need to
achieve and set challenging goals, a behavior
that is often equated with risk taking.
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15. Common Myths About Entrepreneurs
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 Myth 3: Entrepreneurs Are Motivated
Primarily by Money
 While it is naïve to think that
entrepreneurs don’t seek financial
rewards, money is rarely the reason
entrepreneurs start new firms.
 In fact, some entrepreneurs warn that
the pursuit of money can be
distracting.
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16. Common Myths About Entrepreneurs
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 Myth 4: Entrepreneurs Should Be Young and
Energetic
 Entrepreneurial activity is fairly easily spread out
over age ranges.
 While it is important to be energetic, investors
often cite the strength of the entrepreneur as their
most important criteria in making investment
decisions.
 What makes an entrepreneur “strong” in the eyes of an
investor is experience, maturity, a solid reputation, and a
track record of success.
 These criteria favor older rather than younger
entrepreneurs.
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17. Characteristics of
Entrepreneurs
 Desire for responsibility
 Preference for moderate levels of risk –
risk eliminators
 Confidence in their ability to succeed
 Desire for immediate feedback
 High level of energy
 Future orientation – serial entrepreneurs
 Skilled at organizing
 Value achievement over money
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18. Entrepreneurship
 One characteristic of entrepreneurs
stands out:
Diversity!
 Anyone – regardless of age, race,
gender, color, national origin, or any
other characteristic – can become an
entrepreneur (although not everyone
should).
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19. Benefits of Entrepreneurship
The opportunity to:
 Create your own destiny
 Make a difference
 Reach your full potential
 Reap impressive profits
 Contribute to society and to
be recognized for your efforts
 Do what you enjoy and to have fun at it
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20. Drawbacks of
Entrepreneurship
 Uncertainty of income
 Risk of losing your entire investment
 Long hours and hard work
 Lower quality of life until the business
gets established
 High levels of stress
 Complete responsibility
 Discouragement
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21. Feeding the
Entrepreneurial Fire
 Entrepreneurs as heroes
 Entrepreneurial education
 Demographic and economic factors
 Shift to a service economy
 Technology advancements
 Independent lifestyle
 E-commerce and the Internet
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22. FIGURE 1.3 U.S. Retail E-Commerce Revenues Source: Based on Forrester Research, 2008.
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23. The Cultural Diversity of
Entrepreneurship
 Young entrepreneurs
Jerry Yang, 29
David Filo, 31
Xiaofeng Peng, 33 1 - 23

24. Young Entrepreneurs
 Interest among young people in entrepreneurial
careers is high.
 According to a Harris Interactive survey, 40% of
people 8 to 21 years old said they’d like to start their
own business someday.
 A total of 59% of the 8- to 21- year olds said they
know someone who has started their own business.
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25. 1 - 25

26. The Cultural Diversity of
Entrepreneurship
(continued)
 Women entrepreneurs
Tian Wen Hua ,66
Wu Ying, 26
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27. Women Entrepreneurs
 There were 6.2 million women-owned
businesses in 2002 (the most recent statistics
available)
 This number was up 20% from 1997.
 There are a growing number of organizations
that support and advocate for women-owned
businesses.
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28. FIGURE 1.4 Why Women Start Businesses
Source: U.S. Small Business Administration, 2007.
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29. Senior Entrepreneurs
 The percentage of U.S.
entrepreneurs who are
seniors jumped from 15%
to 23% from 1996 to 2010.
 The increase is attributed to
corporate downsizing, a desire
among older workers for more
fulfillment in their lives, a need
for additional income, and
similar factors. 1-29

30. The Cultural Diversity of
Entrepreneurship
(continued)
 Young entrepreneurs
 Women entrepreneurs
 Minority-owned enterprises
 Immigrant entrepreneurs
 Part-time entrepreneurs
+ = US$2.9 B
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31. The Cultural Diversity of
Entrepreneurship
(continued)
 Home-based businesses
 Family businesses
 Copreneurs
 Corporate castoffs
 Corporate dropouts
 Social entrepreneurs
 Retiring Baby Boomers
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32. Economic Impact of Entrepreneurial
Firms
 Innovation
 Is the process of creating something new, which is
central to the entrepreneurial process.
 Several studies have found that small businesses
outperform their larger counterparts in terms of
obtaining patents.
 Job Creation
 Small businesses are the creators of most new
jobs in the U.S., and employ half of all private
sector employees.
 According to a Kauffman Foundation survey, 92%
of Americans say entrepreneurs are critically
important to job creation. 1-32

33. Small Businesses ...
 Make up 99.7% of the 30.14 million
businesses in the U.S.
 Employ 51% of the nation’s private
sector workforce.
 Create more jobs than big businesses.
 60% to 80% of net new jobs over the last
decade
 Are leaders in offering
training and advancement
opportunities to workers.
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34. Entrepreneurial Firms’ Impact on
Society and Larger Firms
 Impact on Society
 The innovations of entrepreneurial firms have a
dramatic 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.
 Impact on Larger Firms
 Many entrepreneurial firms have built their entire
business models around producing products and
services that help larger firms become more
efficient and effective.
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35. Small Businesses ...
(continued)
 Produce 51% of USA’s private GDP.
 Account for 47% of business sales.
 Create 13 times more patents per
employees than large companies.
 Zipper, light bulb, FM radio, laser,
air conditioning, escalator,
personal computer,
automatic transmission,
and many more!
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36. Malaysia
SME
Services
37% of
GDP
(2010)
FIGURE 1.5 Small Business by Industry
Source: U.S. Small Business Administration, 2007.
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37. Ten Deadly Mistakes of
Entrepreneurship
1. Management mistakes
2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic plan
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38. Ten Deadly Mistakes of
Entrepreneurship
1. Uncontrolled growth
2. Poor location
3. Improper inventory control
4. Incorrect pricing
5. Inability to make the
“entrepreneurial transition”
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39. Putting Failure Into
Perspective
 Entrepreneurs are not paralyzed by
the prospect of failure.
 Failure – a natural part of the
creative process.
 Successful entrepreneurs learn to
fail intelligently.
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40. Avoiding the Pitfalls of
Small Business Failure
 Know your business in depth
 Develop a solid business plan
 Manage financial resources
 Understand financial statements
 Learn to manage people effectively
 Set your business apart from the
competition
 Maintain a positive attitude
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41. The Entrepreneurial Process
The Entrepreneurial Process Consists of
4 Steps
Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an enterprise.
Step 4: Managing and growing the enterprise.
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42. Conclusion
Entrepreneurs:
 Are an important part of the free
enterprise system
 Are a diverse and talented group of
people
 Represent a cross-section of society as
a whole
 Are able to enhance the profitability of
their businesses through acquiring
additional knowledge and experience
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43. Tutorial Case Study 1
Rovio & Angry Birds
 Prepare answers to all questions before
class.
 Selected member of group to answer one
question in class.
 Submit hardcopy answers filed in a
personal plastic folder with
 Full Name
 Student ID #
 Tutorial Class ID #
 Course Code & Title
 Contact Email 1 - 43

44. Further Reading
 Barringer, Bruce R. & Ireland, R. Duane,
2011 Entrepreneurship – Successfully
launching new ventures 4th edition,
Pearson.
 Scarborough, Norman, M. 2011. Essentials
of Entrepreneurship and Small Business
Management. 6th edition. Pearson.
 Schaper, M., Volery, T., Weber, P. & Lewis, K.
2011. Entrepreneurship and Small
Business. 3rd Asia Pacific edition. John
Wiley.
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