A Primer in Entrepreneurship

Process by which large firms create new independent startups

1. Passion for the business

2. Product/Customer focus

3. Tenacity despite failure

4. Execution intelligence

It stems from the ehtrepreneur's belief that the business will positively influence people's lives

It stems from the fact that most successful entrepreneurs are, st heart, craftspeople.

Developing a new business may require experimentation before success is attained; setbacks and failures are inevitably; the litmus test for entrepreneurs is the abilityto presevere through setbacks and failures.

The ability to effectively execute a business idea means

- developing a business model

- putting together a new venture team

- raising money

- establishing partnerships

- managing finances

- leading and motivating employees

- translating thought, creativity, and Imagination into action and measurable results

- Practical intelligence

- good nerves

- tenacity

-Risk taking spirits

- Talkative, good communicator

- Solid education

- Energetic

(Equity helps)

- Female share is low anywhere in the world

but demographics is changing:

There are more women, immigrants, youngsters and elderly

More in elderly (causes/reasons):

-> corporate downsizing (die leute werden entlassen wegen dem alter)

->desire among older workers for more personal fulfillment

->need to earn additional income 

1. Be my own boss

2. Pursue (follow) own ideas (people like to see their new ideas realized)

3. Realize financial goals (typically secondary to the first two)

1. salary-substitute firms (Dry cleaners, Restaurants, hairstyling salons etc.)

       (small firms with same level of income of conventional job)

2. lifstyle firms (ski instructors, golf pros, etc.)

       (firms that provide their owner to pursue a particular lifstyle)

3. Entrepreneurial firms (google, ebay, etc.)

       (firms that bring new producst and services to market)

1. Necessity entrepreneurs

2. Opportunity entrepreneurs

Myth 1: Entrepreneurs are born, not made

       No one is "born" to be an entrepreneur, but there are common personality traits and characteristics of successful entrepreneurs (Creative, decisive, energetic, lengthy attention span, persuasive (überzeugend), optimistic character etc)

Myth 2: Entrepreneurs are gamblers

       they are usually moderate risk takers, as are most people.

Myth 3: Entrepreneurs are motivated primarily by money

       Entrepreneurs do seek financial rewards; money is rarely the primary reason entrepreneurs start new firm.

Myth 4: Entrepreneurs should be young and energetic

       more often than not, older, rather than younger, entrepreneurs have the qualities that investors are looking for

- B2B usually better than B2C

- Services, trade, e-commerce

- Software (scalability)

- MBO/MBI (Management Buy Out/In)

- Legal discontinuities

- Disruptive (zerstörerische) changes 

Entrepreneurship is important for the strength and stability of the economy.

Small entrepreneurial firms are responsible for 55 % of all US innovations. These innovations help working more efficiently and effectively.

Economic activity has moved increasingly in the direction of smaller entrepreneurial firms; possibly because of the ability to innovate and focus on specialized tasks

Today more than 97 % of all United States exporters are small businesses with fewer than 500 employees

10% of the OECD workforce is self-employed

80-90% of all US businesses are operated by self-employee

63% of the US and half of the UK population as well as Germans would like to be self-employed

... make lives easier,
... enhance productivity at work, ... improve our health,
... entertain us.

Bar-code scanner technology and the internet have made it easier for companies to track the purchasing behavior of their customers, but this raises privacy concerns.

Evidence shows that many entrepreneurial firms have built their entire business models around producing products and services that help larger firms to be more efficient or effective.

Schumpeter’s two greatest insights were that 1: innovation is the driving force not only of capitalism but also of economic progress in general, and that 2: entrepreneurs are the agents of innovation. 

Entrepreneurs are possessed by “the dream and the will to found a private kingdom”. But they are confronted with all sorts of obstacles. Innovation is hard to produce and harder to sustain: all successful businessmen stand on ground that is “crumbling beneath their feet”. And of course it produces losers as well as winners.

Siehe die Grafik

Siehe die Grafik

Having decided to become an entrepreneur, a successful business idea has to be developed which can eventually be turned into reality.

Siehe dazu die Grafik

An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business

Opportunity is:

1. attractive
2. timely
3. durable
4. anchored (connected) in a product, service, or business, that creates or adds value for its buyer or end user

An idea is a thought, impression, or notion, which may or may not meet the criteria of an opportunity.

(Many businesses fail not because the entrepreneurs that started them didn’t work hard, but because there was no real opportunity to begin with.)

It s a metaphor describing the time period in which a firm can realistically enter a new market.

The window of opportunity must be open for an entrepreneur to capitalize on an opportunity.

The market for a new product is established --> Window is open!

At some point, the market matures --> Window is closed (for new entrants)!

1. Observing trends
2. Solving a problem
3. Finding gaps in the marketplace

The first approach to identifying opportunities is to observe trends and study how they create opportunities for entrepreneurs to pursue.

Trends could be dictated through:

1. Economic Forces
2. Social Forces
3. Technological Advantages
4. Plotical and Regulatory Changes

Economic forces affect consumers’ level of disposable income. Individual sectors of the economy have a direct impact on consumer buying patterns.

Getting a handle on these forces by:

• studying and observing and

• purchasing market forecasts/analyses

Example: drop in interest rates ⇒ an increase in new home construction

An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle.

Some of the recent social trends that allow for new opportunities are the following:

• The aging of the population

• Family and work patterns

• The increasing diversity of the workforce

• The globalization of industry

• The increasing focus on health care and fitness

• The proliferation of computers and the Internet

• The continual increase in the number of cell phone users

• The increasing diffusion of the IoT (Internet of things)

• New forms of music and other types of entertainment

Example: Increase in share of elderly ⇒ demand for health care ⇒ substitution to robots

Given the rapid pace of technological change, it is vital for entrepreneurs to remain on top of how new technologies affect current and future opportunities. 

Once a technology is created, products emerge to advance it. (Sobald eine Technologie entwickelt ist, entstehen Produkte, die sie weiterentwickeln.)

Advances in technology frequently dovetail with economic and social changes to create opportunities.