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CHAPTER 1 LECTURE NOTES

1

Discuss the availability of entrepreneurial opportunities and give examples of highly successful businesses started by entrepreneurs.

PPT 1-1

Chapter 1

Entrepreneurship in
the New Millennium

PPT 1-2

Chapter 1

Learning Objectives

PPT 1-3

Striking Success Stories

A.    Entrepreneurial opportunities

·                      Point out today’s open door of opportunity—quality and customer service are                    keys to success.

         1.    ViaSat (Carlsbad, CA)

                 •     Started by three engineers with satellite communications equipment design experience

                 •     Developed “Manpack” to provide mobile military communications

                 •     Focused on technical expertise

                 •     Emphasized controlled business growth

             2.     C&B Industrial Safety, Inc. (Sunrise, FL)

                           •     Founded by Carla Conner in response to a disappointing experience as an    employee

                           •     Distributor of industrial safety equipment

                           •     Used sales skills from her corporate experience

                           •     Emphasizes open communication among employees to integrate their varied    experiences

             3.     Glory Foods (Columbus, OH)

                   •     Started by four partners—kept their existing jobs during start-up phase

                   •     Invested $20,000 of personal savings to get the company started

                   •     Took two years to develop and perfect recipes

                   •     Low-tech operation, but a leader in Southern-style food market

·      Ask students for general ideas gleaned from these examples. What ideas stand out in their thinking?

·         Identify the implications of these examples:

4    Diversity in entrepreneurship—these are three very different types of         ventures started by very different individuals.

       4     Great potential—these ventures started small but grew rapidly (even if in a                 controlled fashion).

       4     Creative thinking—these people saw opportunities. (What limits our ability           to see opportunities?)

       4     These entrepreneurs were very successful, but some more than others.

2

Identify three rewards and three drawbacks of entrepreneurial careers.

PPT 1-4/TM 1-1

Entrepreneurial
Incentives

[Acetate 1-1]

PPT 1-5

Drawbacks of

Entrepreneurship

B.     Rewards and drawbacks of entrepreneurship

1.    The reward of profit.

·          Profit is a strong motivator, but it’s a mistake to assume that it is the only                motivator.

2.    The reward of independence

             i     Identify “employment constraints” entrepreneurs can avoid.

4    Inflexible schedule—no more time clock and 8-to-5 routine

4    Supervisory evaluation—no subjective performance review

4    Locked-in strategy—change direction if you have a better idea

4    Established policies—make your own policies, set vacations, etc.

                     i    Identify “employment constraints” that entrpereneurs cannot avoid.

                         4    Customer demands

                         4    Government taxes and regulations

                         4    Need for long hours, hard work

                         4    Employee expectations

3.    The reward of a satisfying way of life

i       Ask students for examples of the personal rewards of the entrepreneurial lifestyle based on their observations of the lifestyles of parents or others.

i       Pride of ownership, self-esteem, and a sense of achievement

i       Chance to help the community in some way

4.    Drawbacks of entrepreneurship

i       Hard work, frustration, risk

i       What might accentuate drawbacks (e.g., lack of experience or resources)?

i       What types of ventures would present the greatest challenges (e.g., totally new ventures or innovative projects)?

3

Describe the various types of entrepreneurs, entrepreneurial management styles, and entrepreneurial ventures.

PPT 1-6/TM 1-2

Entrepreneurial

Characteristics

[Acetate 1-2]

C.      Who are the entrepreneurs?

            1.     Characteristics of entrepreneurs

i    Select a specific entrepreneur, preferably a local one, and identify that person’s apparent entrepreneurial characteristics. If no example comes to mind, use the ones cited in the text.

               a.    Need for achievement (e.g., Dell started Dell Computer Corporation during his freshman year of college and today has amassed a personal fortune worth more than $5 billion).

               b.   Willingness to take risks (e.g., Dell was willing to interrupt his education to devote his full energies to his computer company).

               c.    Self-confidence (e.g., the three engineers who founded ViaSat started the business because they believed they could design better systems on their own).

               d.   Passion for the business (e.g., William Williams and his partners spent two years developing and perfecting their recipes before launching Glory Foods).

i      Ask students for examples of entrepreneurs they know personally who exhibit one or more of these characteristics.

PPT 1-7

Three Types of

Entrepreneurs

2.    Women as entrepreneurs

·      Note the great growth of women-owned businesses.

·      Cite local examples, if possible.

·      Ask students for examples of mothers, sisters, or others who are entrepreneurs.

3.    Founders and followers

               a.    Founders—“pure entrepreneurs,” typically the biggest risk takers, the most creative

               b.   General managers—innovative, typically preside over ongoing, successful businesses

               c.    Franchisees—restricted in freedom, but having invested money and time

PPT 1-8/TM 1-3

Characteristics of Artisan and Opportunistic Entrepreneurs

4.    Artisan and opportunistic entrepreneurs

i      Differences in backgrounds and skills

i      Differences in attitudes and potential

a.      The artisan entrepreneur

b.     The opportunistic entrepreneur

5.    Entrepreneurial teams

i      The value of combining resources

i      The danger of possible conflict

PPT 1-9/TM 1-4

Types of Entrepreneurial Ventures
[Acetate 1-3]

6.    Entrepreneurial Ventures

a.        Marginal firms (but not unprofitable)

b.       Attractive small firms

c.        High-potential ventures

4

Explain three aspects of the changing context of small business.

PPT 1-10/TM 1-5

Three Challenges to

Small businesses

PPT 1-11/TM 1-6

Criteria for Defining

Smallness in Business

[Acetate 1-4]

PPT 1-12

Examples of SBA

Size Standards

PPT 1-13

Applications of New

Technology

D.      The changing context of small business

1.        Entrepreneurship and the size of firms

·      Ask the students how they would define “small business.”        

·          Despite numerous efforts to define “small business,” there is no                  generally accepted definition.

·       Emphasize and clarify the four-point definition used in the text.

2.     Competing with chains

·         Describe the obvious advantages of the large chain superstores.

·         Review Douglas Meredith’s plan to compete with superstores.

·         Have the students critique Meredith’s plan and think of additional tactics that may help small businesses deal with these mammoth rivals.

3.     The Information Age and the Internet

·          Describe information technology and its ability to create a more “level                  playing field” for competition between large and small firms.

·          Discuss the use of the Internet and its role in the future of small business.

4.        The global reach of small business

·       In what ways might small businesses actually have an edge in global business? What are the limitations of small firms in this arena?

5

Identify three tools that provide a potential competitive edge for small entrepreneurial firms.

E.     The winning hand of entrepreneurs

1.        Customer focus—small firms can achieve greater customer satisfaction and                         loyalty by their flexibility.

2.        Integrity and responsibility—small firms can foster a reputation for honesty                                          and reliability in their dealings and thereby win business.

3.        Innovation—many entrepreneurs are innovators, and this mindset is thus                         more likely to surface in the operation of the small firm.

6

Discuss factors that indicate a readiness for entrepreneurship.

PPT 1-14/TM 1-7

Types of Entrepreneurial

Career Opportunities

[Acetate 1-5]

F.     Getting started in entrepreneurship

1.    Four routes to entrepreneurship

·          The four alternatives are (1) start a business, (2) buy an existing business,                        (3) open a franchised business, and (4) enter a family business.

·          Ask students which path they would be most likely to follow? Why?

·          Summarize overall patterns for the class.

PPT 1-15/TM 1-8

Age Concerns in
Starting a Business

PPT 1-16/TM 1-9

Entrepreneurial

Refugees

2.    Age and entrepreneurial opportunity

·          What is the “ideal” time to start (e.g., late 20s to early 40s)?

·          What determines the two ends of this period (e.g., experience, family                         obligations, etc.)?

·          Are there any exceptions? (Find an example of a student in business.)

3.    Refugees as entrepreneurs

a.         The foreign refugee

b.        The corporate refugee

c.         Other types of refugees           

4.    Precipitating events

·          Discuss events that trigger entry into business, and give examples (e.g.,                  losing a job).

·          What is the relationship between “readiness for entrepreneurship” and a                         “precipitating event”? (The latter gives the nudge.)

·          Give or solicit examples of precipitating events behind the founding of                        specific firms.