Intro to Entrepreneurship
ENT 2000 in a nutshell
ENT 2000 in a nutshell
A refresher for students who took ENT 2000 and what students possibly missed if they took MAN 3025
Definitions of Entrepreneurship
the process of creating value by putting together a unique combination of resources to exploit an opportunity.
setting up a business with the aim to make a profit.
Entrepreneur definitions - there are many
Traditional: “non-fixed income wage earners”.
OECD: "Entrepreneurs are those persons (business owners) who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets."
The entrepreneurial process (similar to the scientific method). There are many different models.
FGCU
1. Idea generation
2. Idea validation
3. Experimental design
4. Business model validation
5. Product validation
The Duke Entrepreneurship Manual
1. Idea Generation
2. Opportunity Evaluation
3. Planning
4. Company formation/launch
5. Growth
Entrepreneurial journey - source
Step 1: Inspiration – What is your motivation for becoming an entrepreneur?
Step 2: Preparation – Do you have what it takes to be an entrepreneur?
Step 3: Assessment – What is the idea you plan to offer through your venture?
Step 4: Exploring Resources – What resources and characteristics do you need to make this venture work?
Step 5: Business Plan – What type of business structure and business model will your venture have?
Step 6: Navigation – In what direction will you take your venture? Where will you go for guidance?
Step 7: Launch – When and how will you launch your venture?
A pivot is a change in strategy without a change in vision.
A startup is a temporary organization formed to search for a repeatable and scalable business model. (Steve Blank)
Theories of Entrepreneurship - statements of causality
Effectuation, Saras D. Sarasvathy
Involves evaluating resources that are available to use today and then deriving goals out of what can be made from the recombination of those resources rather than setting goals and then acquiring the resources. Five core principles.
Creative Destruction, Joseph Schumpeter
Celebrates the destruction of old ways, companies and legacies to make way for the new.
Disruptive Innovation, Clay Christensen
A modern approximation of creative destruction. New entrants succeed when they pursue disruptive innovation whereas incumbents tend to pursue sustaining innovations. Disruptive innovations are technologies, products and business models that are lower performing than incumbent offerings along traditional dimensions of performance, but compensate with increased simplify, convenience, customizability, or affordability.
“Customers 'hire' products to solve problems in their lives”.
Institutions are the formal and informal rules and norms that organise social, political and economic relations (North, 1990).
Formal institutions include the written constitution, laws, policies, rights and regulations enforced by official authorities.
Informal institutions are (the usually unwritten) social norms, customs or traditions that shape thought and behaviour (Leftwich & Sen, 2010; Berman, 2013).
Challenging institutions is how some entrepreneurs identify new opportunities.
Repetition Suppression is a force to change institutions.
Status Quo Bias is a force to maintain institutions.
Economic Systems
A free market economy is a market system whereby the pricing of goods and services is primarily determined by the sellers and buyers, and is hence based on demand and supply.
On the other hand, a command economy is an economy whereby the market system is fully controlled by the government.
The GEM classification of economies by economic development level
Factor-driven economies are the least developed. They are dominated by subsistence agriculture and extraction businesses, with a heavy reliance on (unskilled) labour and natural resources;
Efficiency-driven economies are increasingly competitive, with more-efficient production processes and increased product quality;
Innovation-driven economies are the most developed. In this phase, businesses are more knowledge-intensive, and the service sector expands.
Total early-stage Entrepreneurial Activity (TEA) GEM's most well-known index, representing the percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business. Data (under ENTREPRENEURIAL BEHAVIOUR AND ATTITUDES, click "Trends Over Time", check country, check TEA)
The Social Progress Index rigorously measures country performance on a wide range of aspects of social and environmental performance, which are relevant for countries at all levels of economic development.
The Social Progress Index aims to be a practical tool that will help leaders and practitioners in government, business, and civil society to implement policies and programs that will drive faster social progress.
Ethnography is the branch of anthropology that involves trying to understand how people live their lives.
Ethnographic Research = Customer Discovery
The study of decision making, and behavior is critical to understanding what people value, and delivering that value in the most effective way.
Classical Economic Theory is faulty because consumers are not rational.
Business Model Canvas - visual depiction of a business, a lean alternative to a formal business plan
The Customer Value Proposition (CVP) - a business or marketing statement that describes why a customer should buy a product or use a service.
Minimum Viable Product (MVP) - build, measure, learn
Finance: the study of sources of funding and the capital structure of corporations and the actions that managers take to increase the value of the firm to the shareholders, as well as the tools and analysis used to allocate financial resources.
Accounting: The systematic and comprehensive recording of financial transactions pertaining to a business.
Financial: Maintaining accurate financial statements and generating reports, especially for external stakeholders
Public companies legally required to follow GAAP (generally accepted accounting principles)
Managerial: Using financial data (ratios/benchmarks/etc.) to guide decision making within the company
Key concerns: budgeting, breakeven, costing & profit or loss, Return on Investment, Inventory turns, Credit & Collections
Four main financial statements
(1) balance sheets - show what a company owns and what it owes at a fixed point in time, detailed information about a company’s assets, liabilities and shareholders’ equity.
(2) income statements - show how much money a company made and spent over a period of time, shows the costs and expenses associated with earning that revenue.
(3) cash flow statements - show the exchange of money between a company and the outside world also over a period of time
(4) statements of shareholders’ equity - shows changes in the interests of the company’s shareholders over time