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Part 2

The Opportunity

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The Opportunity

Screen and choose opportunities withgreat care.

Venture capital investors fund no morethan 1 or 2 percent of the ventures they

review. Good opportunities have risks and

problems.

The perfect deal has yet to be seen.

Take steps to eliminate problems earlyduring opportunity screening.

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Chapter 3

The Entrepreneurial

Process

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Entrepreneurship Defined

Entrepreneurship a way of thinking,reasoning, and acting that is opportunityobsessed, holistic in approach, andleadership balanced for the purpose of valuecreation and capture.

(This definition of entrepreneurship has evolved over the past three

decades from research by Jeffry A. Timmons at Babson College and theHarvard Business School and has recently been enhanced by StephenSpinelli, Jr. former Vice Provost for Entrepreneurship and GlobalManagement at Babson College, and current President of Philadelphia

University).

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Entrepreneurship Results

Value: Creation

Enhancement

Realisation

Renewal

For:

Owners

Stakeholders

All Participants

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Entrepreneurship Results

Willingness to take risks: Personal

Financial

Calculated

Shift the odds of success.

Balancing risks with rewards.

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Entrepreneurship is NOTjust

Start-Ups Only

It includes companies and organisations: All types.

At all stages.

Can occur and fail to occur:

In old and new firms. Small and large firms.

Fast and slow growing firms.

Private, not-for-profit and public sectors.

All geographic points.

All stages of a nations development.

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Classic Entrepreneurship: The Startup

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Raw startup companyan innovative idea thatdevelops into a high growth company.

Qualities of a startup company:

Strong leadership from the main entrepreneur. Complementary talents and outstandingteamwork of team members.

Skill and ingenuity to find and controlresources.

Financial backing to chase opportunity.

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Beyond Startups

Giant firms of the past (IBM, Digital EquipmentCorporation, Sears, AT&T) once thought to beinvincible, have been reduced in size andscope by waves of entrepreneurial ventures.

Large companies face shrinking payroll whilenew ventures add jobs.

New entrepreneurial rivals are changing the

pace of business as usual.

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People Want to be Led!

People dont want to be managed. They want to be led.Ewing M. Kauffman

There are managers and leaders. Very few are both.

Leaders set aspirations and continually work at success.

Richard Pratt, Visy

Characteristics of giant firms: Hierarchical in structure

Leadership as managing and administering fromthe top down

Rewards for the largest (assets, budgets, etc.)

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The Fall of the Giants

Slow to change archaic strategy (average 6years). Slow to change outdated culture (average 10

to 30 years). Slow to recognise and incorporate:

entrepreneurship entrepreneurial leadership and entrepreneurial reasoning.

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Signs of Hope for Corporations

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Launching experiments and strategies torecapture the lost entrepreneurial spirit.

Working to instill the culture and practices ofentrepreneurial reasoning.

Applying entrepreneurial thinking to invent theirfutures.

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Metaphors for Entrepreneurship

Improvisational Quick Clever Creative

Resourceful Inventive Complex compare to music (jazz or

symphony conductor), sports (golf), chess

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Paradoxes of Entrepreneurship (1 of 3)

An opportunity with no or very low potentialcan be an enormously big opportunity. To make money you have to first lose money. To create and build wealth, one must relinquish

wealth. To succeed, one first has to experience failure.

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Paradoxes of Entrepreneurship (2 of 3)

Entrepreneurship requires considerablethought, preparation, and planning, yet isbasically an unplannable event.

For creativity and innovativeness to prosper,rigor and discipline must accompany the

process. Entrepreneurship requires a bias toward action

and a sense of urgency, but also demandspatience and perseverance.

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Paradoxes of Entrepreneurship (3 of 3)

The greater the organisation, orderliness,discipline, and control, the less you will controlyour ultimate destiny.

Adhering to management best practice(especially staying close to the customer that

created industry leaders in the 1980s), becamea seed of self-destruction and loss ofleadership to upstart competitors.

To realise the long-term equity value, you have

to forgo the temptations of short-termprofitability.

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Think Big for Higher Potential Ventures

Dont think too small. Smaller often means higher failure odds. Getting the odds in your favour. Entrepreneurship should not be a job

substitute. Odds for survival, growth, and a higher level ofsuccess, changes when the ventures reachesa size of 10-30 people with $2-$3 million inrevenues.

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Promise of growth: Expansion and building of long term value. Durable cash flow streams.

Venture Capital backing: Venture capital backing in Australia and NewZealand limited

Not essential for startup, nor a guarantee ofsuccess.

Private investors: Often harvested entrepreneurs.

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The Entrepreneurial Team

An entrepreneurial leader:

Learns and teachesfaster, better. Deals with adversity, is resilient.

Exhibits integrity, dependability, honesty. Builds entrepreneurial culture and organisation.

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The Entrepreneurial Team

Quality of the Team:

Relevant experience and track record. Motivation to excel.

Commitment, determination, and persistence. Tolerance of risk, ambiguity, and uncertainty. Creativity.

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The Entrepreneurial Team

Quality of the Team:

Team focus of control. Adaptability.

Opportunity obsession. Leadership. Communication.

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Sustainability as a Base

Achieving economic, environmental and socialgoals. Without compromising the same opportunity for

future generations. Driven by many factors.

By understanding these factors, the entrepreneurbuilds a firmer base girding the venture for thelong term.

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