What is Entrepreneurship?

My son is now an entrepreneur. Thats what youre called when you dont have a job. -Ted Turner Entrepreneurship is a management style that involves pursuing pursuit of opportunity without regard to resources controlled.

Any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team, or an established business.
A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced for the purpose of value creation. A Way of Managing and Leading!

Who is an entrepreneur?

High

Inventor Promoter

Entrepreneur Manager / Administrator

High

Creativity And Innovation

Low General management skills, business know-how, and networks

Entrepreneurial Profile
Some common characteristics: A desire for responsibility A preference for moderate risk Confidence in their ability to succeed Desire for immediate feedback A high energy level A future orientation Skill at organizing A value of achievement over money
e.g. Michael Dell of Dell Inc.; Pierre Omidyar of eBay Inc.; Herb Kelleher of Southwest Airlines

A Model of the Entrepreneurial Process

Communication Opportunity Resources Business Plan Ambiguity Fits & Gaps Exogenous factors Creativity

Leadership

Team

The Entrepreneurial Process 1. The Product Idea

The world will NOT beat a path to the door of the inventor of the better mousetrap Idea itself does not have value, its all about execution Being first is over-rated It is one among many relevant variable factors Look for Discontinuities How much R, how much D

The Entrepreneurial Process 2. The Market

Market demand Who is the customer? Are they reachable? How will the product or service be priced? Costs to deliver? Market share and growth potential? Competition Current competitors, strengths/weaknesses? How will the leaders react and how quickly? Why cant they do the same and put you out of business? Market structure and size Emerging and/or fragmented market? Barriers to entry? Margin analysis Helps to differentiate opportunity from idea What is your business model?

The Entrepreneurial Process 3. The Team

Entrepreneurial Leader
Learns and teaches faster, better Deals with adversity, is resilient Exhibits integrity, dependability, honesty Builds entrepreneurial culture and organization

Quality of the team

Relevant experience and track record Motivation to excel Commitment, determination and persistence Tolerance of risk, ambiguity, uncertainty Team focus of control Adaptability Leadership & Communication

The Entrepreneurial Process 4. Resources

Minimize and control versus maximize and own You dont need all the resources in place to succeed Money follows high potential opportunities with a strong management team

Different types of resources

Financial resources Assets People Your business plan

Think cash last!!!!! Understand and Marshall resources, dont be driven by them Doing more with less is a powerful competitive weapon

Reference Books
Entrepreneurship By: Hisrich, Peters, & Shepherd TMH 6th (Special Indian) Edition Essentials of Entrepreneurship and Small Business management By: Zimmerer & Scarborough Pearson Education 4th (Low Price) Edition

Entrepreneurship Strategies & Resources By: Marc J. Dollinger Pearson Education 3rd (Low Price) Edition

BUILDING THE BUSINESS PLAN

BEGINNING CONSIDERATIONS
1. 2. Observations: Most entrepreneurs find the process of developing a strategy dull and unnecessary; Tendency is to start a business, try several approaches and see what works. Strategic management the process of developing a game plan to guide a firm as it strives to accomplish its vision, mission, goals, & objectives and to keep it from staying off course. Strategically, a firms intellectual capital is likely to be the source of its competitive advantage.

3.

4.

Intellectual Capital
Comprised of three components: 1. Human Capital: Talent, skills, and abilities of firms work force. 2. Structural Capital: Accumulated knowledge and experience that a firm possess- Can take many forms including processes, software, patents, copyrights; the knowledge & experience of people. 3. Customer Capital: Established customer base, positive reputation, ongoing relationships & goodwill.

BUILDING A COMPETITIVE ADVANTAGE

Why & how a small firm must create a competitive advantage? Competitive advantage: the aggregation of factors that sets a small firm apart from its competitors & gives it a unique position in the market superior to its competition. A sustainable competitive advantage enhances the ability to develop Core Competencies. Core Competencies: A unique set of lasting capabilities that a company develops in key operational areas that allow it to vault past competitors.

Developing a Strategic Plan for a business using the Nine Steps

1. Develop a clear vision and translate it into a meaningful mission statement. 2. Assess firms strengths & weaknesses representing firms internal factor. 3. Scan the environment for opportunities & threats facing the business - basically external forces.

Developing a Strategic Plan for a business.

4. Identify the Key Success Factors (KSI) in the business. KSIs are relationships between a controllable variable and a critical factor influencing firms ability to compete in the market. Analyze the competition & develop a competitive profile matrix. Create firms goals & objectives Goals- broad, long-range attributes Objectives Quantifiable & more precise; should be specific, measurable, assignable, realistic, timely & written down.

5. 6.

Developing a Strategic Plan for a business.

7. Formulate strategic options and select the appropriate strategies. (A road map of the actions an entrepreneur draws up to fulfill a companys mission, goals, and objectives). Three basic strategies as identified by Michael Porter in Competitive Strategy: 1. Cost Leadership: a strategy in which a firm strives to be the lowcost producer relative to its competitors in the industry; 2. Differentiation: a strategy in which a company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion. 3. Focus: a strategy in which a firm selects one or more market segments, identifies customers special needs, wants and interests, and approaches them with a good or service designed to excel in meeting these needs, wants, and interests.

Developing a Strategic Plan for a business.

Small firms must develop strategies that exploit all of the competitive advantages of their size by: i. ii. iii. iv. v. vi. Responding quickly to customers needs; Remaining flexible & willing to change; Constantly searching for new, emerging market segments; Building and defending market niches; Erecting switching costs, the costs a customer incurs by switching to a competitors product or service, through personal service or loyalty; Remaining entrepreneurial & willing to take risks and act with lightning speed; Constantly innovating.

vii.

Developing a Strategic Plan for a business.

8. Conversion of strategic plans into Operating plans that guide the business on a daily basis & become visible, active part of the business. To make the plan workable, the entrepreneur should divide the plan into projects, carefully defining each one by the following: Purpose: What is the project designed to accomplish? Scope: Which areas of the firm be involved in the project? Contribution: How does the project relate to other projects & do the overall strategic plan? Resource Requirement: What human and financial resources are needed to complete the project successfully? Timing: Which schedules and deadlines will ensure project completion?

Developing a Strategic Plan for a business.

9. Establish accurate controls: Till now, the planning process has created firms objectives and has developed a strategy for reaching them, if ever, will the firms actual performance match stated objectives.

Entrepreneurs quickly realize the need to control actual results that deviate from plans.

Outline of a Business Plan

1. 2. 3. Introductory Page Name and address of business Name(s) and address(es) of principal(s) Nature of business Statement of financing needed Statement of confidentiality of report Executive Summary Three to four pages summerizing the complete business plan Industry Analysis Future outlook and trend Analysis of competitors Market segmentation Industry and market forecasts

Outline of a Business Plan.

4. 5. 6. Description of Venture Product (s)/Service (s) features Size of business Office equipment and personnel Background of entrepreneurs Production Plan Manufacturing process (amount subcontracted) Physical plant Machinery & Equipment Names of suppliers of raw materials Operational Plan Description of a companys operation Flow of orders for goods and/ or services Technology utilization

Outline of a Business Plan.

7. 8. 9. Marketing Plan Demand forecast Pricing of product/ service Customer benefits; Warranties and guarantees Distribution Channel Product/service promotion Organizational Plan Form of ownership Identification of partners or principal shareholders Authority of principals Management team background Roles and responsibilities of members of organization Assessment of Risk Evaluation of weakness of business New technologies Contingency plan

Outline of a Business Plan.

10. 11. 12. 13. Financial Plan: Pro-forma Income Statement Cash flow projection Pro-forma Balance sheet Break-even Analysis Sources and application of funds Appendix: (Supporting documentation) Letters regarding legal issues contracts, Patents, trademarks, insurance, licensing, leasing etc. Market research data Price-list from suppliers Critical Risks and contingencies Summary & Conclusions