What is Entrepreneurship

Introduction

This is the era of the entrepreneur! Through the world, growing numbers of people are realizing their dreams of owning and operating their own business.Entrepreneurship is thriving. The past two decades have seen record numbers of

entrepreneurs launching new businesses and each year. American entrepreneurs alone start 3 to 4.3 million businesses each year and 84 percent are doing that for the first

time.

I. The World of the Entrepreneur

A study by the Global Entrepreneurship Monitor (GEM) found 11.3 percent of the adult population in the United States is working to start a business. North America, South America and Latin America lead the world in entrepreneurial activity.

II. What is an Entrepreneur?

An entrepreneur is one who creates a new business in the face of risk and uncertainty for achieving profit and growth opportunities and assembles the necessary resources to capitalize on those opportunities. While we may not be able to teach entrepreneurship, we can teach the skills of small business management. This is an important distinction to make to students. Noted psychologist David McClelland characterized high achievers/entrepreneurs as possessing these traits:

• Desire for responsibility

• Preference for moderate risk (risk eliminators)

• Confidence in their ability to succeed

• Desire for immediate feedback

• High level of energy

• Future orientation (serial entrepreneurs)

• Skill in organization

• Value of achievement over money Other characteristics of entrepreneurs include:

• High degree of commitment

• Willingness to accept risk, work hard and take action

• Flexibility

The Benefits of Entrepreneurship

The primary benefits entrepreneurs enjoy include the opportunity to:

• Create their own destiny

• Make a difference

• Reach their full potential

• Generate impressive profits

• Contribute to society and be recognized for their efforts

• Do what they enjoy and have fun at it!

IV. The Potential Drawbacks of Entrepreneurship

With these potential rewards, Entrepreneurship also presents risk and uncertainty.

Entrepreneurs may experience:

• Uncertainty of income –”The entrepreneur is the last one to be paid.”

• Risk of losing their entire investment

• Long hours and hard work

• Lower quality of life until the business gets established

• High levels of stress

• Complete responsibility

• Discouragement

  

V. Behind the Boom: What’s Feeding the Entrepreneurial Fire?

The rapid increase in entrepreneurs has been a result of:

• Considering entrepreneurs as heroes

• Entrepreneurial education

• Demographic and economic factors

• Shift to a service economy

• Technological advancements

• Independent lifestyles

• Commerce and the Internet

• Additional international opportunities

The Cultural Diversity in Entrepreneurship

Entrepreneurs are found in virtually every walk of life including:

• Young Entrepreneurs

• Women Entrepreneurs

• Minority Enterprises

• Immigrant Entrepreneurs

• Part-time Entrepreneurs

• Home-Based Businesses

• Family Businesses

• Copreneurs

• Corporate Castoffs

• Corporate Dropouts

VII. The Power of “Small” Business

Because big business is more visible than small business, most people underestimate the role of the small firm in the U.S. economy.

The definition of a “Small Business” is:

1. One which is independently owned and operated and not dominant in its field.

2. Eligibility requirements are based on the specific industry.

• Retailing – annual sales/receipts not exceeding $3.5 to $13.5 million.

• Services – annual receipts not exceeding $2.5 to $14.5 million.

• Wholesaling – yearly sales must not be over $9.5 to $22 million.

• Agriculture – annual receipts not exceeding $1.0 to $3.5 million.

• Construction – General construction with annual receipts not exceeding $17 million.

• Special Trade Construction – annual receipts not exceeding $7 million.

• Manufacturing – maximum number of employees may range from  500 to 1,500 depending on the industry.

The most commonly used measure of small business is the number of employees on a firm’s payroll. The White House Conference on Small Business definition is: A firm employing 500 people or fewer.

The Committee for Economic Development states that a small business must meet two of four stated criteria:

1. Management is independent.

2. Capital is supplied and ownership is held by an individual or a small group.

3. Area of operation is mainly local; markets need not be local.

4. Size is small when compared to the biggest unit in the field.